This article is the second in a series by Robert J. Klee, Ph.D., J.D. exploring policies from states across the country that, if adopted nationally with sufficient speed and ambition, could form the basis for the deep decarbonization of the U.S. economy. Read the rest of the series here.
Klee is a lecturer at the Yale School of Forestry & Environmental Studies and Yale Law School, and the former commissioner of the Connecticut Department of Energy and Environmental Protection (2014-2019).
To limit climate change to manageable levels, the federal government — all of it — needs to be in the deep decarbonization business. Proposals like the Green New Deal reflect a growing recognition of this imperative, but don’t lay out specific mechanisms for getting the job done.
For years, though, red and blue states across the country have been building the policy architecture we need for ambitious national climate action. A fundamental component of this mobilization will be setting targets for greenhouse gas emissions and creating tools to achieve them. The federal government can follow the states’ lead on setting economy-wide greenhouse gas targets, establishing renewable energy requirements for electric utility portfolios, and building out new renewable energy generation.
Setting Economy-Wide Greenhouse Gas Targets
As the old business adage goes, “what gets measured, gets managed.” Twenty-two states and the District of Columbia have taken this advice to heart and have set economy-wide greenhouse gas targets or goals that guide all state actions.
Most of these states have a mix of near-term targets for 2010 or 2020 (often focused on stabilizing emissions at a baseline from the 1990s or early 2000s), and long-term targets for 2050 (often seeking 80-100% reductions from that baseline). The leading states also have ambitious interim targets for 2030 (or thereabouts) that will mobilize their resources, and focus their policies and programs on meaningful greenhouse gas emission reductions over the next decade. Connecticut, for example, recently joined that leading pack of states with the 2018 update to its Global Warming Solutions Act, which mandates greenhouse gas emission reductions of 45% below 2001 levels by 2030. In Massachusetts, another pacesetting state, citizens have gone to court (and won) to enforce the state’s economy-wide targets.
Following these leading states as a guide, the best way to drive performance of all parts of the big, broad federal bureaucracy is to set a binding greenhouse gas emission target, and then hold all agencies and all decisions accountable to it. Universal application of the greenhouse gas target ensures that federal agencies don’t act at cross-purposes — as many currently do today.
Using the numbers from the Intergovernmental Panel on Climate Change’s special report on Global Warming of 1.5°C as a guide, the binding economy-wide greenhouse gas target should be set at least 50% below 2010 annual emission levels by 2030, and at carbon-neutrality by 2050. We know our national greenhouse gas emissions in 2010 — about 7 billion metric tons of carbon dioxide equivalents (translating emissions of methane, nitrous oxide and other greenhouse gases into proportionate units of carbon dioxide). The 2030 target would be 50% of those emissions — 3.5 billion metric tons. The 2050 target would be zero net emissions, achieved through decarbonization of the economy and pulling carbon dioxide from the atmosphere through natural or technological means.1
Following leading states as a guide, the best way to drive performance of all parts of the big, broad federal bureaucracy is to set a binding greenhouse gas emission target, and then hold all agencies and all decisions accountable to it.
The obvious place to put such an economy-wide greenhouse gas target is in the Clean Air Act, where it would guide the Environmental Protection Agency’s (EPA) regulation of power plants, industrial facilities, and vehicles large and small. This would make clear and indisputable that the EPA’s mission and purpose includes dramatically reducing greenhouse gas emissions and preemptively defeat the claims of executive overreach the past administration has had to battle when implementing the now-defunct Clean Power Plan.
But the EPA and the Clean Air Act are only part of the story. The Federal Power Act of 1935 (part of the original New Deal), and the mission of the Federal Energy Regulatory Commission (FERC), must be rewritten and redirected to embrace the deep decarbonization of our energy systems as our new, unifying national energy policy.
Any rapid decarbonization effort will have two fundamental and complementary components: (1) cleaning up the electricity on the grid, and (2) electrifying nearly everything that currently combusts fossil fuels (such as transportation, manufacturing, and building heating and cooling). FERC is central to both.
Currently, FERC, the electric transmission grid operators (Regional Transmission Organizations and Independent System Operators), and the state utility regulators form a byzantine statutory and regulatory structure over the U.S. energy system. These entities support and protect the traditional regulatory compact — that in exchange for monopoly status, public utilities must provide reliable power, at the lowest cost, to all customers. This compact has historically used economically efficient markets as its main tool, and has been fuel neutral. In New England, for example, these markets build combined cycle natural gas power plants2 that run on fuel oil in the winter when natural gas supplies are constrained. But the fossil-fuel-based energy the market delivers is not what the New England states actually want, or what the planet needs.
Therefore, following the lead of states like California, Massachusetts, New York, and Oregon, the new FERC mission must be the delivery of cleaner, cheaper, more reliable and more equitable energy. And, that new mission must trickle down to the archaic regulatory structures that flow from FERC, and redefine the regulatory compact that grants utilities monopoly power. This shift in FERC’s mission and statutory mandate is a necessary prerequisite to usher in the four pillars of the energy system of the future: (1) zero-carbon baseload power from wind, solar, hydropower and nuclear; (2) grid-level and distributed energy storage to accommodate intermittent renewables; (3) a robust data management system for real-time control of energy demand, distributed solar and battery storage at the consumer level; and (4) some residual amount of peak load, balancing or emergency backup generation, likely from highly efficient combined-cycle natural gas generators.
Transforming the EPA and FERC is a good start, but how would we ensure that the binding economy-wide greenhouse gas target would guide all federal policies, regulations, programs and permits? The answer: incorporate the target into the original, most elegant and most ready-for-a-comeback U.S. environmental law: The National Environmental Policy Act of 1970.
As currently written, this nearly 50-year old law simply requires the federal government to make informed decisions. It applies when the federal government issues regulations, permits or funds private actions, makes federal land management decisions, constructs publicly-owned facilities, or does countless other things. Each agency goes through a long, arduous process to determine the potential environmental harm of any proposed action. The act empowers citizens to sue if they don’t think the federal government faithfully engaged in the process.
Long on process, the act ultimately falls short because it does not require federal agencies to choose the least-harmful path they spent years analyzing. That’s where the update would come in. Adding a hard economy-wide greenhouse gas target to the National Environmental Policy Act — an absolute number to measure all federal actions against — would give this original environmental law new life and purpose.
Every federal action between now and 2030 would either add to, subtract from, or do nothing for our greenhouse gas emissions. Policies, programs and permits that subtract from or do nothing to our emissions — think land preservation, high-speed rail investments, leases of federal land for solar arrays, regulations to prevent methane leaks from wells and pipelines, or the Obama-era Clean Power Plan — would be fine. Those that add to our emissions — think leases for oil and natural gas exploration, permits for fossil fuel pipelines from Canada, or President Donald Trump’s Affordable Clean Energy rule — would be prohibited under a climate-focused National Environmental Policy Act.
Creating a National Clean Energy Standard
A national greenhouse gas target is necessary for taking on climate change, but it’s not sufficient in and of itself. Transforming how we produce, use and regulate energy will also be core to any deep decarbonization strategy.
Twenty-nine states and the District of Columbia (covering over 55% of national retail electricity sales) have renewable portfolio standards to decarbonize what comes out of the electric outlets in the homes and businesses of those states. Under a renewable portfolio standard, utilities must obtain a portion of their electricity (often increasing over time) from renewable or zero-carbon resources, often through the purchase of renewable energy credits that offset emissions by supporting the development of clean energy projects.
California, with the 2018 passage of its Senate Bill 100, now requires its utilities to procure 50% of their electricity from wind, solar and other renewables by 2026, 60% of electricity from renewables by 2030, and 100% carbon-free energy by 2045. The transition from the term “renewable” to “carbon-free” in 2045 is intentional and important. Beyond 2030, California’s target can be met by continued growth in renewables, or by large-scale hydropower, nuclear or fossil-fuel combustion with carbon capture and storage.
In April 2019, Washington state passed Senate Bill 5116. Like California, Washington’s law requires 100% carbon-free energy by 2045 — which could be met with renewables or other zero-carbon technologies. But Washington specifically phases out coal by 2025 (it is currently 14% of the state’s electric load, mostly imported from outside of Washington).
Also unlike California, Washington requires 100% carbon-neutral energy by 2030, at least 80% of which must be from actual carbon-free energy generated in Washington. The other 20% could come from one of three alternative compliance mechanisms: (1) purchasing renewable energy credits from clean energy projects outside of Washington; (2) utility investments in “energy transformation projects” that reduce fossil fuel consumption in areas other than the existing electric grid, such as utility investments in electric vehicle infrastructure, weatherization or the generation of renewable natural gas from organic wastes; or (3) paying a penalty, which effectively amounts to a $100-per-ton carbon tax.
To be fair, Washington is already about 75% carbon free: they get about 68% of their electricity from hydropower, 4% from nuclear, and 3% from wind, solar and other renewables. So achieving 100% carbon-free energy by 2030 is well within striking distance, particularly with the mandatory phase out of coal by 2025. Nonetheless, the state’s 100% target represents an important example for other jurisdictions to emulate.
A national clean energy standard should reflect both the leading states’ level of ambition, and the reality that we currently generate much of our electricity from carbon-emitting sources: 35% comes from natural gas, 27% from coal, 19% from nuclear, 7% from hydropower and 12% from renewables (wind, solar, and biomass). A national standard that would keep us on track for our economy-wide greenhouse gas emissions target would (1) phase out coal nationwide by 2030; (2) require 80% carbon-free electricity by 2030 (double our current carbon-free generation), where up to 10% could come from energy transformation projects (borrowing the idea from Washington state); and (3) ensure 100% carbon-free electricity by 2045.
But states have discovered that it’s not enough to simply legislate the use of clean energy; they need to get involved in actually constructing it. Building new nuclear power plants or new large-scale hydropower dams — or deploying carbon capture and storage at a substantial number of fossil fuel generators — is unlikely over the next decade. Therefore, this 80% carbon-free electricity goal by 2030 would represent a massive investment in renewables and grid-scale energy storage, while maintaining our existing zero-carbon resources. An ambitious national clean energy standard would require deliberate and consistent efforts to build this new clean energy generation.
Procuring Grid-Scale Clean Energy
What would a national build-out of new clean energy capacity look like? States in the Mid-Atlantic and southern New England complement their renewable portfolio standards with competitive procurements of grid-scale clean energy, run by either the state or its utilities. The costs of these procurements are borne by the state’s electric ratepayers.
Massachusetts, Connecticut and Rhode Island were early leaders and innovators in the use of competitive procurements of grid-scale clean energy. These states were granted authority by their legislatures to procure hundreds to thousands of megawatts (MW) of a wide range of renewable and zero carbon resources (wind, solar, hydropower and nuclear), transmission projects to deliver clean energy, and grid-scale energy storage installations to balance intermittent renewables. The state runs the competitive procurement for this clean energy on behalf of all ratepayers, and once a winning bidder emerges, has the utility enter into contracts with the winner to deliver that clean energy at a fixed price, typically over a 15- or 20-year term.
States have discovered that it’s not enough to simply legislate the use of clean energy; they need to get involved in actually constructing it.
Competition is a key component of an effective procurement strategy. For example, Connecticut saw the average price for grid-scale renewables drop from 17 cents per kilowatt-hour(kWh) in its 2012 procurement, to 12 cents/kWh in 2013, to around 9 cents/kWh in 2016 — almost a 50% price drop in 4 years. Prices fell again in 2018: Connecticut procured nine solar projects (two of which included grid-scale storage) at an average of 4.9 cents/kWh — another almost 50% price drop in just 2 years.
State procurements are now proliferating around a particular renewable resource that holds tremendous promise and opportunity for the mid-Atlantic and Northeastern U.S. — offshore wind. With hundreds of gigawatts of potential wind resources relatively close to major load centers, on relatively shallow continental shelf, in a relatively consistent and strong wind zone, the east coast has been dubbed the Saudi Arabia of offshore wind. States are leading the charge to spur development of these resources. In 2017, Maryland approved a 350 MW offshore wind project, and in 2018, Massachusetts, Connecticut and Rhode Island collectively procured 1,500 MW of offshore wind. Additional procurements are happening in New York, New Jersey and throughout New England. These procurements have ushered in the development of a new offshore wind industry along the eastern seaboard.
To meet the national clean energy standard, part of FERC’s new decarbonization mandate should mirror the states by empowering FERC to run competitive, regional procurements for grid-scale clean energy, transmission that helps deliver that energy, and grid-scale storage that helps balance intermittent renewable energy. The costs of these procurements would be spread across all ratepayers in that region.
National targets, renewable portfolio standards and renewable energy procurement will get the nation started on building a low-carbon economy. That effort, however, will also require revamping our electric grid. The next installment in this series explores how to make that transformation happen.
1 In theory we have a number of options to achieve these “negative” emissions of carbon dioxide: reforestation (replanting trees that have been cut down) and afforestation (planting trees on marginal lands where they haven’t been in recent history); bio-energy production with carbon capture and storage (using plants to pull carbon dioxide from the atmosphere, extracting energy from those plants, then sequestering the carbon dioxide from the energy production underground); direct air capture technology (using chemical and physical processes to pull carbon dioxide directly from the atmosphere, then sequestering it underground or in long-lived products); and sustainable agriculture practices to retain soil carbon and reduce or capture emitted methane.
2 These combined-cycle natural gas plants capture some energy from the plants’ exhaust, and are way more efficient than traditional coal, oil or older single-cycle natural gas plants. But they still run on fossil fuels, emit greenhouse gases, and won’t solve our climate crisis on their own.