Energy Law

NEPA and Climate Change: Are Environmental Protections Hindering Renewable Energy Development?

October 9, 2024
Climate Change, Energy Law, Environmental Law, Regulatory

Samuel Taylor, MJLST Staffer

The National Environmental Protection Act, or “NEPA”, has been essential in protecting America’s air and water, managing health hazards, and preserving environmental integrity. For decades, environmental activist groups, the government, and regular citizens relied on and benefitted from enforcing these NEPA against those looking to pollute, poison, or endanger Americans and their environment. NEPA, however, is proving to be less suitable for addressing the country’s  imminent environmental challenge: climate change. As proponents of green energy scramble to ditch fossil fuels, NEPA and its procedural requirements are accused of delaying or halting renewable energy projects. Environmental protection laws remain essential to stopping the dangers they were passed to stop, and many new green energy projects pose additional risks to the environment, but we also need to transition away from fossil fuels as fast as possible to avoid the worst consequences of climate change. The conflict between the need to address climate change and the need to maintain environmental protections has created a regulatory challenge that may not have a perfect solution.

Enacted in 1970, NEPA was the first major environmental protection measure taken in the US.[i] The “magna carta” of environmental laws applies to all “major federal actions significantly affecting the environment”.[ii] Major federal actions can include everything from infrastructure projects like proposed dams, bridges, highways, and pipelines, to housing developments, research projects, and wildlife management plans.[iii] Before a federal agency can act, there are a series of procedures they must follow which force them to consider the environmental impacts of the potential action. These procedures involve community outreach, the effects of past and future actions in the region, and providing the public with a detailed explanation of the agency’s findings, and often take years to fully complete.[iv] By requiring the government to follow these procedures “to the fullest extent possible,” NEPA aims to ensure that environmental concerns are given sufficient consideration before any harmful actions are taken.[v] Notably, NEPA is not a results-oriented statute, but a process-oriented one.[vi] No agency decision can be made until after its procedures are followed, but once they are, NEPA does not mandate a particular decision.[vii] NEPA does not even require that environmental concerns be given more weight than any other factors.[viii] Nevertheless, if an agency fails to properly follow NEPA procedures, all resulting decisions can be invalidated if challenged in the courts.[ix]

Though passing NEPA was the first step Congress took towards addressing environmental concerns, and decades of NEPA success stories have followed, there is growing concern about its  ability to adapt to the pressing challenges presented by global climate change.[x] NEPA, critics say, drastically slows the government’s ability to invest in green energy because each step of the procedure can be challenged in court.[xi] Corporate competitors in the renewable energy sector, environmental interest groups, concerned citizen groups, and Native American tribes have all challenged various projects’ compliance with NEPA requirements.[xii] Many of these groups have legitimate concerns about the projects, and NEPA allows them to stall or halt development while the government is forced to further consider their potential environmental impacts. This causes direct conflict between these valid concerns and efforts to reverse the country’s reliance on fossil fuels.[xiii] Collectively, the long procedures and potential legal challenges that accompany NEPA’s requirements present serious hurdles to the production of green energy.

Legal experts disagree, perhaps not surprisingly, over the extent to which NEPA hinders the production of green energy sources. Some groups believe the rhetoric surrounding NEPA’s deficiencies is an exaggeration, citing data that shows only a very small percentage of green energy projects actually require the production of EISs.[xiv] Others present NEPA and other environmental protection laws as serious hurdles preventing the production of renewable energy at the pace we need to avoid the worst effects of climate change.[xv] They argue that this data is not properly representative of all clean energy projects, ignores the delays caused by litigation, and does not properly account for the likelihood that delays will get worse in the future.[xvi] Because there is little consensus regarding the extent of the problem, there is likewise almost no agreement on a potential solution.

 Lawmakers and legal scholars have proposed a range of approaches to the NEPA problem. Most drastically, a bill introduced to the U.S. House Committee on Natural Resources by Representative Bruce Westerman would largely eradicate most NEPA provisions by limiting consideration of new scientific evidence, allowing some projects to go exempt from NEPA’s requirements, and drastically limiting community instigated judicial review.[xvii] Other proposals are more modest, including permitting reform to favor green energy projects, placing some limits on judicial review, and collecting more comprehensive data on NEPA issues.[xviii] Still others are staunchly against most reforms, arguing that weakening any NEPA provisions would open the door for greater environmental abuses.[xix] The differing opinions on the scope of the problem and the wide range of proposed solutions amount to a problem that will not be easy to solve.

The legal community is divided on the efficacy of existing NEPA regulations that have, for decades, promoted environmental protection. In the face of climate change and the accompanying need for renewable energy, it must be determined whether NEPA is truly hindering the switch to green energy. The United States must build more renewable energy infrastructure if we are to avoid the worst consequences of global climate change, but with concern growing that our own environmental protection laws are hindering progress, it will be challenging to move forward in a manner that balances the need for green energy production against the necessity of strong environmental protection laws.

 

Notes

[i] Sam Kalen, NEPA’s Trajectory: Our Waning Environmental Charter From Nixon to Trump, 50 Environmental Law Reporter 10398, 10398 (2020).

[ii] Id.; Mark A. Chertok, Overview of the National Environmental Policy Act: Environmental Impact Assessments and Alternatives (2021); 42 U.S.C. §§ 4321–70.

[iii] Elly Pepper, Never Eliminate Public Advice: NEPA Success Stories, Natural Resources Defense Council (Feb. 1, 2015), https://www.nrdc.org/resources/never-eliminate-public-advice-nepa-success-stories#:~:text=The%20NEPA%20process%20has%20saved,participated%20in%20important%20federal%20decisions.

[iv] Chertok, supra note ii; 42 U.S.C. §§ 4321–70.

[v] Chertok, supra note ii; Catron County v. U.S.F.W.S., 75 F.3d 1429, 1437 (10th Cir. 1996).

[vi] Chertok, supra note ii; Catron County at 1434.

[vii] Chertok, supra note ii.

[viii] Balt. Gas & Elec. Co. v. Nat. Res. Def. Council, Inc., 462 U.S. 87, 97 (1983).

[ix] Chertok, supra note ii (citing Lands Council v. Powell, 395 F.3d 1019, 1027 (9th Cir. 2005)).

[x] Pepper, supra note iii; Aidan Mackenzie & Santi Ruiz, No, NEPA Really Is a Problem for Clean Energy, Institute For Progress (Aug. 17, 2023), https://ifp.org/no-nepa-really-is-a-problem-for-clean-energy/#nepa-will-harm-clean-energy-projects-even-more-in-the-future; Darian Woods & Adrian Ma, Environmental Laws Can Be an Obstancel in Building Green Energy Infrastructure, NPR (Apr. 13, 2022), https://www.npr.org/2022/04/13/1092686675/environmental-laws-can-be-an-obstacle-in-building-green-energy-infrastructure.

[xi] Mackenzie & Ruiz, supra note x; See, e.g. Ocean Advocates v. U.S. Army Corps of Engineers, 402 F.3d 846 (9th Cir. 2005) (where the agency finding of no significant impact was challenged by an environmental protection group); Sierra Club v. Bosworth, 510 F.3d 1016 (9th Cir. 2007) (where the agency’s EIS analysis was challenged by the Sierra Club).

[xii] Niina H. Farah, Tribes Sue Over NEPA Review for Oregon Offshore Wind Auction, Politico (Sep. 18, 2024), https://www.eenews.net/articles/tribes-sue-over-nepa-review-for-oregon-offshore-wind-auction/; Christine Billy, Update: Congestion Pricing: A Case Study on Interstate Air Pollution Disputes, New York State Bar Association (Sep. 23, 2024), https://nysba.org/update-congestion-pricing-a-case-study-on-interstate-air-pollution-disputes/; Jonathan D. Brightbill & Madalyn Brown Feiger, Environmental Challenges Seek to Block Renewable Projects, Winston & Strawn LLP (Sep. 1, 2021), https://www.winston.com/en/blogs-and-podcasts/winston-and-the-legal-environment/environmental-challenges-seek-to-block-renewable-projects.

[xiii] Farah, supra note xii; Brightbill & Feiger, supra note xiv.

[xiv] Ann Alexander, Renewable Energy and Environmental Protection Is Not an Either/Or, Natural Resources Defense Council (Jan. 18, 2024), https://www.nrdc.org/bio/ann-alexander/renewable-energy-and-environmental-protection-not-eitheror.

[xv] Mackenzie & Ruiz, supra note x.

[xvi] Alexander, supra note xiv; Mackenzie & Ruiz, supra note x.

[xvii] Defenders of Wildlife, Defenders Slams Bill Aiming to Rollback NEPA and Gut Environmental Protections, (Sep. 10, 2024), https://defenders.org/newsroom/defenders-slams-bill-aiming-rollback-nepa-and-gut-environmental-protections.

[xviii] Brian Potter, Arnab Datta & Alec Stapp, How to Stop Environmental Review from harming the Environment, Institute For Progress (Sep. 13, 2022), https://ifp.org/environmental-review/.

[xix] Alexander, supra note xiv; Sierra Club

 

 

 

 

Floating Fans in the Ocean: Recognizing the Significance of Maine’s Recent Bill Regarding Offshore Wind Development Projects

November 13, 2023
Energy Law, Environment, Environmental Law

Peter Lyon, MJLST Staffer

Recent efforts in Maine have continued the push for developing sustainable energy sources, specifically including offshore wind energy projects in the Gulf of Maine. Offshore wind projects have captured other coastal states’ and the federal government’s interest for quite some time, though the industry is not well developed due to several practical setbacks and pushback from different stakeholders. Maine has the potential to be a leader in this area, as a bill it passed in July lays more of the groundwork for developing offshore wind energy projects, calls attention to the development of innovative technology, and implements means to adequately address the interests of relevant stakeholders.

“An Act Regarding the Procurement of Energy from Offshore Wind Resources”

Maine Governor Janet Mills signed a bill in July to further the development of offshore wind energy projects in the Gulf of Maine, making several amendments to a previous bill and enacting six additional sections.[1] One of the major changes includes declaring a new wind energy goal of three gigawatts of installed capacity by December 2040. This could meet approximately fifty percent of Maine’s anticipated electricity needs at that time.[2] This goal is different from Maine’s unmet 2009 goal of two gigawatts of installed capacity by 2015 and is likely attributable to supply chain issues, higher interest rates, and the rising prices of materials.[3]

To facilitate its three gigawatts by 2040 goal, the bill establishes a process for competitive contracting by requiring the solicitation process and project proposals to be consistent with the Maine Offshore Wind Roadmap issued in 2023,[4] which emphasizes five key topics.[5] It also includes sections pertaining to offshore wind power transmission, supporting the development of port infrastructure and innovative technologies. This may include technologies such as floating or bobbing platforms because the Gulf of Maine is too deep for fixed-structure turbines[6] and storage capacity technology such as large batteries, which would maximize the amount of energy that can be used as it is needed.[7]

The bill also expands the minimum number of advisory board members of the Offshore Wind Research Consortium – a collaborative research initiative created by the bill – from seven to twelve members to reach a wider stakeholder audience. The new advisory board member requirements include adding the “Commissioner of Inland and Wildlife” (or the commissioner’s designee), “at least one individual who is a member of a federally recognized Indian tribe” in Maine, “two individuals with expertise in marine and wildlife habitats,” and “at least one individual with experience in commercial offshore wind power development.”[8] The bill also requires the opportunity for public comment during the project solicitation process.

Engaging with relevant stakeholders at this early stage allows the Consortium’s research to explore and mitigate risks in offshore wind development projects such as the potential negative impact on commercial fishing, species degradation, and harm to ecosystems. These kinds of concerns mirror much of the resistance to offshore wind projects, non-specific to the Gulf of Maine, and the bill emphasizes specific actions to answer them.

Addressing Stakeholder Concerns

Calls for offshore wind energy development have been met with pushback from multiple stakeholder groups, including Native American tribes, members of the commercial fishing industry, and local residents. These and other stakeholders voice concerns about environmental, economic, and social issues. For example, some people argue that installing offshore wind farms could disrupt key fishing and lobstering grounds, which generate more than $1.5 billion for Maine’s economy.[9] This disruption could happen by changing fish migration patterns, changing water temperatures by running large electrical cables onshore, and limiting fishers’ ability to access fishing grounds due to turbine structures being in the way.[10] Another concern is that animals, like the Eastern red bat and other bat species, are vulnerable to flying into wind farm structures.[11] Others simply worry that installing offshore wind farms will disrupt the environment’s natural beauty, as wind farms will be a sort of visual pollution.

In addition to seeking input from relevant stakeholders, the new bill anticipates these kinds of risks and includes specific actions to avoid or mitigate them. The Offshore Wind Research Consortium funds will now also be used to “support conservation that supports species and habitats impacted by offshore wind development,”[12] including research that aims to “avoid or minimize the impact of floating offshore wind power projects on ecosystems and existing uses of the Gulf of Maine.”[13]

Proposals for the development and construction of offshore wind projects must include a “fishing communities investment plan” which “supports innovation and adaptation in response to environmental change, shifting resource economics, and changes in fishing practices associated with offshore wind power development.”[14] Proposals given priority are those that are outside critical fishing and lobstering areas, provide employment and contracting opportunities to people from disadvantaged communities, provide financial or technical support for research regarding wildlife, fisheries, and habitats impacted by offshore wind development, or promote hiring Maine residents and affected community members.[15] Under the bill, proposals must seek to minimize an offshore wind project’s impact on the environment’s visual and scenic character.[16]

The Current State of Offshore Wind Development in the U.S.

Maine is not the only jurisdiction pursuing offshore wind development projects. Most of the locations for offshore wind projects are in federal waters, which means that they often require permits issued by the Bureau of Ocean Energy Management (BOEM), which is housed in the Department of the Interior.[17] The federal government has allocated floating wind leases and has a goal to meet fifteen gigawatts of installed capacity by 2035.[18] Projects are underway in Maine, California, and Oregon, with more in the pipeline.[19]

Maine has the potential to be a leader in offshore wind development projects as its bill passed in July demonstrates the importance of engaging relevant stakeholders, conducting research to avoid or mitigate negative environmental impacts, and prioritizing developments that show commitment to social values. It also emphasizes the role of innovative technology like floating turbines, which are especially relevant because about eighty percent of the world’s offshore wind resource capacity is in locations not well-suited for fixed structures.[20] Offshore wind projects can spur economic growth[21] and contribute to the procurement of sustainable energy while decreasing reliance on non-sustainable sources like fossil fuels. Other jurisdictions should look to Maine’s bill as a great start in the early development of an industry with enormous potential.

Notes

[1] 2023 Me. SP 766.

[2] Maria Gallucci, Maine to go all in on offshore wind, Canary Media (July 25, 2023), https://www.canarymedia.com/articles/wind/maine-to-go-all-in-on-offshore-wind.

[3] Id.

[4] Maine Offshore Wind Roadmap Advisory Committee, The Maine Offshore Wind Roadmap, State of Maine Governor’s Energy Office (February 2023), https://www.maine.gov/energy/sites/maine.gov.energy/files/inline-files/Maine_Offshore_Wind_Roadmap_February_2023.pdf.

[5] Maine’s Offshore Wind Roadmap, State of Maine Governor’s Energy Office, https://www.maine.gov/energy/initiatives/offshorewind/roadmap (last visited Nov. 6, 2023) (stating the Roadmap’s objectives include “supporting economic growth and resiliency, harnessing renewable energy, advancing Maine-based innovation, supporting Maine’s seafood industry, and protecting the Gulf of Maine’s ecosystem.”).

[6] Heather Richards, Gulf of Maine wind could power 100% of New England—Report, E&E News (Oct. 31, 2023), https://subscriber.politicopro.com/article/eenews/2023/10/31/gulf-of-maine-wind-could-give-new-england-a-power-jolt-report-00124295.

[7] Id. (“Offshore wind from the Gulf of Maine could satisfy 72% of New England’s power demand but battery storage is critical; without the right storage capacities, offshore wind could only meet approximately 37% of New England’s needs.”).

[8] 2023 Me. SP 766.

[9] Maria Gallucci, Maine to go all in on offshore wind, Canary Media (July 25, 2023), https://www.canarymedia.com/articles/wind/maine-to-go-all-in-on-offshore-wind.

[10] Bureau of Ocean Energy Management, Gulf of Maine Draft Wind Energy Area (WEA) Notice, Regulations.gov

(October 18, 2023), https://www.regulations.gov/document/BOEM-2023-0054-0001 (see public comments).

[11] Heather Richards, Gulf of Maine wind could power 100% of New England—Report, E&E News (Oct. 31, 2023), https://subscriber.politicopro.com/article/eenews/2023/10/31/gulf-of-maine-wind-could-give-new-england-a-power-jolt-report-00124295.

[12] 2023 Me. SP 766.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Nicholas P. Jansen, Reducing the Headwinds: the Need for a Federal Approach to Siting Offshore Wind Interconnection Infrastructure, Despite Protective State Laws, 26 Ocean & Coastal L.J. 123 (2021).

[18] Juliana Ennes, California’s floating wind lead threatened by fast-rising Maine, Reuters (September 14, 2023, 10:57 AM), https://www.reuters.com/business/energy/californias-floating-wind-lead-threatened-by-fast-rising-maine-2023-09-14/.

[19] Maria Gallucci, Maine to go all in on offshore wind, Canary Media (July 25, 2023), https://www.canarymedia.com/articles/wind/maine-to-go-all-in-on-offshore-wind.

[20] Id.

[21] Maine Offshore Wind Roadmap Advisory Committee, The Maine Offshore Wind Roadmap, State of Maine Governor’s Energy Office (February 2023), https://www.maine.gov/energy/sites/maine.gov.energy/files/inline-files/Maine_Offshore_Wind_Roadmap_February_2023.pdf.

A Tax on the EPA’s Power: The Supreme Court and the Future of Carbon Pricing

April 27, 2023
Climate Change, Energy Law, Environment, EPA, Tax

Quinn Milligan, MJLST Staffer

As climate change becomes a topic of increasing popularity worldwide, policy makers and the legal community alike have turned their attention to fashioning appropriate mechanisms to address carbon emissions. Of the myriad proposals made in recent years, carbon pricing has come to the forefront of climate policy regimes worldwide. Although carbon pricing has been implemented in various parts of the world, the legal system of the United States presents various legal challenges.

Carbon pricing, at a simple level, is an economic tool designed to reduce carbon emissions by forcing individuals and companies to internalize the externality price of the carbon they emit.[1] Caron pricing is implemented predominantly in one of two methods: cap-and-trade systems or a carbon taxation system. A cap-and-trade system is the process of placing a “cap” on the amount of carbon (measured in tons) that can be emitted by those under the regulatory purview of the given cap-and-trade; typically companies are the target of these systems. Once the emissions cap has been set, the regulators allocate “allowances” for all or part of the total cap. Companies that emit less than their allocated cap can sell or trade their remaining allowances to other companies under the cap-and-trade regulation. In essence, the cap-and-trade system creates a monetary incentive for companies to reduce their carbon emissions.[2] In contrast, a carbon tax is much more straightforward. Carbon taxes are imposed on the emission of carbon dioxide that arises through production or consumption of fossil fuels based on the amount of carbon dioxide those activities produce.[3] The tax will be assessed per unit of emissions, typically per ton of carbon dioxide.

Both carbon taxes and cap-and-trade systems are designed to create an economic incentive for companies to reduce their carbon emissions in order to combat climate change at a large scale. While there are various economic arguments for and against the efficiency of both carbon taxes and cap-and-trade systems, there is evidence that both can be effective when well designed and administrated. Importantly, the goal of both main forms of carbon pricing is to take advantage of the financial rationality of actors in the economy and incentivize them to reduce their carbon emissions. Ultimately the policy goal behind incentivizing reduction in carbon emissions is to combat climate change by shifting the burden onto the polluters.[4]

While carbon pricing systems have proven to be an effective method of reducing carbon emissions, the legal system presents important challenges to their implementation. The most recent challenge to the ability of regulators and policy makers came from the Supreme Court’s recent decision to curtail the power of the Environmental Protection Agency (EPA) to limit carbon emissions in West Virginia v. Environmental Protection Agency.[5] The Supreme Court’s decision in late June of 2022 dictated that the EPA cannot put state-level caps on carbon emissions under the Clean Air Act of 1970. The Supreme Court went on to clarify that the power to decide how the U.S. would power itself lies with Congress, and decisions on emissions must come from Congress.[6] The decision represents a signal from the Supreme Court to regulatory agencies generally, not just the EPA, that regulations must arise from the powers specifically delegated by Congress to those agencies.

Previously, the EPA had been using the Clean Air Act to regulate climate change in various manners, particularly through regulation of carbon emissions. In specific, the Court found that the Clean Power Plan established under the Obama administration exceeded the regulatory power granted to the EPA by Congress under the Clean Air Act.[7] The Supreme Court further decided that the power to promulgate rules which would have transformational impacts on the economy must be specifically granted by Congress to regulatory agencies.[8] In this specific context, the Court ruled that the regulation of carbon emissions sought by the EPA would have such transformational impacts on the economy. The Court specified that any time a regulatory agency in the U.S. attempts to promulgate any rule which may have a transformational impact on the economy – which was to regulate carbon emissions and address climate change in this instance – the rule would be presumptively invalid unless Congress had already specifically authorized the agency to promulgate rules and regulations in the area.

This ruling significantly reduces the EPA’s ability to regulate carbon emissions and climate change.[9] The importance of this decision is not so much that the EPA will never be able to regulate carbon emissions or attempt to address climate change, but instead that the accomplishment of the policy goals underlying EPA regulation will certainly be delayed. Because the majority decision emphasized that regulatory decisions of economic and political significance must be supported by clear Congressional authorization, the EPA has been thrown into a sort of stalemate. The direct finding in West Virginia v. EPA that the Clean Power Plan was not adequately supported by Section 111(d) of the Clean Air Act set the EPA’s timetable for accomplishing its policy goals back years.

As many have noticed in recent years, extreme weather events have become more frequent and more severe; our climate is changing before our very eyes. One of the most ironic features of this Supreme Court decision is that the growth of the administrative state maligned by the majority opinion has directly accompanied extreme increases in atmospheric carbon dioxide levels the Clean Power Plan aimed to combat.

Although carbon pricing systems have shown promise in incentivizing participants in the global economy to decrease their carbon emissions, the Supreme Court’s decision in West Virginia v. EPA certainly made it difficult for the EPA to enact any sort of carbon pricing scheme in the near future.[10] At a time when climate change is only becoming a more important issue, the Court’s decision has made the primary environmental agency in the U.S. less able to achieve policy goals that would combat it. While other countries have found success implementing carbon pricing systems, at least for the time being, that option appears unavailable in the U.S.

Notes

[1]https://seors.unfccc.int/applications/seors/attachments/get_attachment?code=TJQGYTI096K3J33ANM1HDWYEU51VRXNC

[2] https://www.edf.org/climate/how-cap-and-trade-works

[3] https://www.c2es.org/content/carbon-tax-basics/

[4] https://www.worldbank.org/en/programs/pricing-carbon

[5] https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf

[6] https://www.cfr.org/in-brief/supreme-court-epa-west-virginia-ruling-delay-us-climate-change-action

[7]https://www.cnbc.com/2022/06/30/-supreme-court-says-epa-lacks-authority-on-climate-standards-for-power-plants.html

[8] https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf

[9] https://www.npr.org/2022/06/30/1103595898/supreme-court-epa-climate-change

[10]https://www.hsph.harvard.edu/news/features/the-supreme-court-curbed-epas-power-to-regulate-carbon-emissions-from-power-plants-what-comes-next/

 

A New Iron Age: New Developments in Battery Technology

April 14, 2023
Climate Change, Energy Law, Environment, Infrastructure, New Technology

Poojan Thakrar, MJLST Staffer

Introduction

In coming years, both Great River Energy and Xcel Energy are installing pilot projects of a new iron-air battery technology.[1] Both utilities are working with Boston-based company Form Energy. Great River Energy, which is Minnesota’s second-largest energy provider, plans to install a 1.5-megawatt battery next to its natural gas plant in Cambridge, MN. Xcel Energy, the state’s largest energy provider, will deploy a 10-megawatt battery in Becker, MN and Pueblo, CO. The batteries can store energy for up to 100 hours, which the utilities emphasize as crucial due to their ability to provide power during multi-day blizzards. The projects may be online as early as 2025, Form Energy says.[2]

The greater backdrop for these battery projects is Minnesota’s new carbon-free targets. Earlier this year, with new control of both chambers, Minnesota Democrats passed a bill mandating 100 percent carbon-free energy by 2040.[3] Large utility-scale batteries such as the ones proposed by Great River Energy and Xcel can play an important role in that transition by mitigating intermittency concerns often associated with renewables.

Technology

This technology may be uniquely suited for a future in which utilities rely more heavily on batteries. While this technology is less energy-dense than traditional lithium-ion batteries, the iron used at the heart of the battery is more abundant than lithium. [4] This allows utilities to sidestep many of the concerns associated with lithium and other minerals required in traditional batteries.[5] Iron-air batteries also tend to be heavier and larger than lithium-ion batteries that store equivalent energy. For batteries in phones, laptops, and cars, weight and volume are important features to keep in mind. However, this new technology could help accelerate uptake of large utility-scale batteries, where weight and volume are of less concern.

If your high school chemistry is rust-y, take a look at this graphic by Form Energy. When discharging electricity, the battery ‘inhales’ oxygen from the air and converts pure iron into rust. This allows electrons to flow, as seen on the right side of the graphic. As the battery is charged, the rust ‘exhales’ oxygen and converts back to iron. The battery relies on this reversible rust cycle to ultimately store its electricity. Form Energy claims that its battery can store energy at one-tenth the cost of lithium-ion batteries.[6]

Administrative Procedures

Xcel has recently filed a petition with the Minnesota Public Utilities Commission (MPUC), which has jurisdiction over investor-owned utilities such as Xcel.[7] The March 6th petition seeks to recover the cost of the pilot battery project. This request was made pursuant to Minnesota statute 216B.16, subd. 7e, which allows a utility to recover costs associated with energy storage system pilot projects.

In addition, the pilot project qualifies for a standard 30 percent investment tax credit (ITC) as well as a 10 percent bonus under the federal Inflation Reduction Act because Becker, MN is an “energy community.”  An “energy community” is an area that formerly had a coal mine or coal-fired power plant that has since closed. Becker is home to the Sherco coal-fired power plant, which has been an important part of that city’s economy for decades. The pilot may also receive an additional 10 percent bonus through the IRA because of the battery’s domestic materials. Any cost recovery through a rider would only be for costs beyond applicable tax grants and potential future grant awards. The MPUC has opened a comment period until April 21st, 2023. The issue at hand is: should the Commission approve the Long Duration Energy Storage System Pilot proposed by Xcel Energy in its March 6, 2023 petition? [8]

As a member-owned cooperative, Great River Energy does not need approval from the MPUC to recover the price of the battery project through its rates.

Conclusion

Ultimately, this is a bet on an innovative technology by two of the largest electricity providers in the state. If approved by the MPUC, ratepayers will foot the bill for this new technology. However, new technology and large investment projects are crucial for a cleaner and more resilient energy future.

Notes

[1] See Kirsti Marohn, ‘Rusty’ batteries could hold key to Minnesota’s carbon-free power future, MPR News (Feb. 10, 2023), https://www.mprnews.org/story/2023/02/10/rusty-batteries-could-hold-key-to-carbonfree-power-future. See alsoRyan Kennedy, Retired coal sites to host multi-day iron-air batteries, PV Magazine (Jan. 26, 2023) https://pv-magazine-usa.com/2023/01/26/retired-coal-sites-to-host-multi-day-iron-air-batteries/.

[2] Andy Colthorpe, US utility Xcel to put Form Energy’s 100-hour iron-air battery at retiring coal power plant sites, Energy Storage News (Jan. 27, 2023), https://www.energy-storage.news/us-utility-xcel-to-put-form-energys-100-hour-iron-air-battery-at-retiring-coal-power-plant-sites/.

[3] Dana Ferguson, Walz signs carbon-free energy bill, prompting threat of lawsuit, MPR News (Feb. 7, 2023), https://www.mprnews.org/story/2023/02/07/walz-signs-carbonfree-energy-bill-prompting-threat-of-lawsuit.

[4] Form Energy Partners with Xcel Energy on Two Multi-day Energy Storage Projects, BusinessWire (Jan. 26, 2023), https://www.businesswire.com/news/home/20230126005202/en/Form-Energy-Partners-with-Xcel-Energy-on-Two-Multi-day-Energy-Storage-Projects

[5]See Amit Katwala, The Spiralling Environmental Cost of Our Lithium Battery Addiction, Wired UK (May 8, 2018), https://www.wired.co.uk/article/lithium-batteries-environment-impact/. See also The Daily, The Global Race to Mine the Metal of the Future, New York Times (Mar. 18, 2022), https://www.nytimes.com/2022/03/18/podcasts/the-daily/cobalt-climate-change.html

[6] https://formenergy.com/technology/battery-technology/ (last visited Apr. 6, 2023)

[7] Petition Long-Duration Energy Storage System Pilot Project at Sherco, page 4, Minnesota PUC (Mar 6, 2023),

https://www.edockets.state.mn.us/edockets/searchDocuments.do?method=showPoup&documentId={8043C886-0000-CC18-A0DF-1A2C7EA08FA1}&documentTitle=20233-193670-01

[8] Notice of Comment Period, Minnesota PUC (Mar 21, 2023),

https://www.edockets.state.mn.us/edockets/searchDocuments.do?method=showPoup&documentId={90760487-0000-C415-89F7-FDE36D038B2C}&documentTitle=20233-194113-01

Charged Up! the Inflation Reduction Act of 2022 and Its Impacts on Energy Storage Capacity in the U.S.

December 5, 2022
Climate Change, Energy Law, Environment, Solar Energy

Quinn Milligan, MJLST Staffer

The Inflation Reduction Act of 2022 (the IRA) is one of the most significant steps the U.S. government has ever taken towards fighting climate change. Over a decade, the IRA dedicates nearly $400 billion to clean energy tax incentives with the aim of reducing carbon emissions and aiding the U.S. energy economy in speeding up its transition away from fossil fuel based energy generation.[1] One of the most interesting features of the IRA’s emphasis on clean energy is the energy storage industry. The IRA extends the coverage of the 30% Investment Tax Credit (ITC) to standalone energy storage projects, and creates a system by which standalone battery projects can earn up to 70% in tax credits, with additional incentives linked to involvement in low-income housing and other projects.[2]

Why is that such a big deal? At a high level, one of the main obstacles to reliance on renewable energy sources, other than nuclear power, is the variability of their supply generation. Variability is easy to understand at a cursory level: You can’t rely on solar power when it’s not sunny out or wind energy when there’s no wind. So, variability of energy production from renewable sources has long been an obstacle to the increased dispatch of renewable sources.[3] Increased transmission capacity and energy storage capacity provide a solution to the variability in generation of renewable energy sources.[4]

The manner in which the Federal Energy Regulatory Committee (FERC) regulates the Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) accentuates the impact of generation variability on the ability of renewable resources to be widely utilized. These ISOs and RTOs operate independently of the federal government to ensure that U.S. citizens have reliable access to affordable energy.[5] In essence, for huge swaths of the country, ISOs and RTOs oversee the markets wherein energy is purchased from generators and resold to retail suppliers, which provide energy to end consumers.[6] The ISOs and RTOs both forecast and plan for the energy needs of their areas of oversight, and then coordinate the purchase and sale of those contracts to fulfill the energy needs. These purchases happen at multiple different time scales, ranging from forward contracts, to day-ahead markets, and even minutes before requirement.[7] Because planning and forecasting make up such an important part of how energy is purchased, the variability of generation from renewables has historically made it very hard for ISOs and RTOs to rely on renewably sourced energy to fulfill any sort of energy need other than minutes-ahead contracts. However, that is the very problem many of the incentives in the IRA may help to solve.

The huge tax incentives given out to standalone energy storage projects are critical policy achievements that will go very far in aiding the U.S. to accomplish its lofty goal of reducing carbon emissions up to 40% below 2005 levels by 2035, as the Biden Administration claims will be accomplished with help of the IRA.[8] One huge change the IRA made to climate policies enacted under the Obama Administration was to remove the solar charging of battery storage in order to receive tax credits. Under the IRA, as opposed to prior legislation, investment in projects to create better storage will receive the IRA’s ITC regardless of what source of energy is used to fill that battery capacity.[9] This ITC for energy storage capacity pairs hand-in-hand with the tax credits extended under the IRA to renewables; for example, the IRA extends the current tax breaks for solar and wind generation for another 10 years.

The emphasis on energy storage capacity increases means ISOs, RTOs and other energy utilities will have less need to rely on fossil fuel energy sources to power their grids, as cleanly produced energy can be stored and dispatched on a longer-term basis to store power and make up for variability in generation. The other important aspect of increases in electricity storage capacity is that ISOs and RTOs can more comfortably rely on renewable energy sources to respond to fluctuations in peak demand periods than ever before.[10] Responding to changes in demand during peak demand hours has long been one of the main challenges for utilities, and one of the reasons our grid has continued to rely on fossil-fuel-based energy for so long. Its generation is reliable, cheap, established and abundant.[11] The increase in energy storage capacity resulting from the IRA’s incentive structure will help ISOs and RTOs transition more fully toward reliance on renewable energy in short-term markets, as well as the long-term capacity markets, by minimizing reliability concerns previously raised by generation variability.

The real genius of the IRA’s focus on the energy storage capacity from a policy standpoint is that all battery projects put into service after December 31, 2022, receive the ITC, even if they are powered by fossil fuels.[12] Unlike many climate change policies before it, this approach means the entire U.S. energy grid, and not just the renewables sector, will be incentivized to address a critical constraint on the deployment of renewably generated electricity and subsequently ease the transition of the grid away from fossil-fuel-generated electricity.

As time goes forward, the price of renewable energy continues to go down as compared to fossil-fuel-generated energy; in fact, renewable energy today is generally cheaper than fossil fuel energy.[13] That begs the question of why most of our electricity is sourced from fossil fuels when FERC directs the ISOs and RTOs to power the grid affordably. The reliability of renewable energy generation has long been one of the obstacles standing in the way of a transition to renewable energy generation, and the IRA’s electricity storage incentives go far in setting up the U.S. to successfully build the storage capacity needed to finally make a transition away from carbon reliance.

Notes

[1] https://www.mossadams.com/articles/2022/08/inflation-reduction-act-clean-energy-credits

[2] https://www.utilitydive.com/spons/ira-sets-the-stage-for-us-energy-storage-to-thrive/635665/#:~:text=The%20Inflation%20Reduction%20Act%20(IRA,70%20percent%20with%20additional%20incentives.

[3] https://www.rff.org/publications/explainers/renewables-101-integrating-renewables/

[4] https://climatechangeresources.org/storage/

[5] https://www.ferc.gov/power-sales-and-markets/rtos-and-isos

[6] https://bestpracticeenergy.com/2020/05/21/energy101-electricity-iso/#:~:text=What%20exactly%20do%20ISOs%20and,actions%20are%20unbiased%20and%20neutral.

[7] https://www.iso-ne.com/markets-operations/markets/da-rt-energy-markets/

[8]https://crsreports.congress.gov/product/pdf/R/R47262#:~:text=The%20same%20analyses%20estimated%20that,prices%2C%20among%20other%20uncertain%20factors

[9] https://www.ny-engineers.com/blog/energy-storage-tax-credit-before-and-after-the-inflation-reduction-act

[10] https://www.ncsl.org/research/energy/energy-storage-for-a-modern-electric-grid-technology-trends-and-state-policy-options.aspx

[11] https://www.solarreviews.com/blog/fossil-fuels-pros-and-cons#fossil-fuel-pros-and-cons

[12]https://www.mossadams.com/articles/2022/08/inflation-reduction-act-clean-energy-credits “Standalone battery storage. “If placed in service after December 31, 2022, standalone battery storage qualifies for the ITC, regardless of whether it’s charged by a renewable source.”

[13] https://www.weforum.org/agenda/2021/07/renewables-cheapest-energy-source/

Electric Vehicles: The Path of the Future or a Jetson-Like Fantasy?

November 6, 2022
Administrative Law, Climate Change, Energy Law, Industry, Infrastructure, Social Welfare, Supply Chain, Transportation

James Challou, MJLST Staffer

Last week President Biden contributed to the already growing hype behind electric vehicles when he heralded them as the future of transportation. Biden touted that $7.5 billion from last year’s infrastructure law, Public Law 117-58, would be put toward installing electric vehicle charging stations across the United States. This mass rollout of electric vehicle chargers, broadly aimed to help the US meet its goal of being carbon neutral by 2050, constitutes an immediate effort by the Biden administration to tackle pollution in the sector responsible for the largest share of the nation’s greenhouse gas emissions: transportation. The administration’s short-term goal is to install half a million chargers by 2030. However, not all are as confident as President Biden that this movement will be efficacious.

The “Buy America” Obstacle

Despite President Biden’s enthusiasm for this commitment to funding widespread electric vehicle charging stations, many experts remain skeptical that supply can keep up with demand. Crucially, Public Law 117-58 contains a key constraint, dubbed the “Buy America” rule, that mandates federal infrastructure projects obtain at least 55% of construction materials, including iron and steel, from domestic sources and requires all manufacturing to be done in the U.S.

Although labor groups and steel manufacturers continue to push for these domestic sourcing rules to be enforced, other groups like automakers and state officials argue that a combination of inflation increasing the cost of domestic materials and limited domestic production may hamstring the push towards electric vehicle charging accessibility altogether. One state official stated, “A rushed transition to the new requirements will exacerbate delays and increase costs if EV charging equipment providers are forced to abruptly shift component sourcing to domestic suppliers, who in turn may struggle with availability due to limited quantities and high demand.”

Proponents of a slower implementation offer a slew of different solutions ranging from a temporary waiver of the Buy America rules until domestic production can sustain the current demand, to a waiver of the requirements for EV chargers altogether. The Federal Highway Administration, charged with oversight of the EV charger program, proposed an indeterminate transitional period waiver of the Buy America rules until the charger industry and states are prepared to comply with requirements.

Domestic Manufacturer Complications

Domestic manufacturers are similarly conflicted about the waiver of the Buy America rules, with some thinking they may not be able to meet growing demand. While many companies predict they can meet Buy America production requirements in the future, the Federal Highway Administration specified in its waiver proposal that a mere three manufacturers, all based in California, presently believe they have existing fast charger systems that comply with Buy America requirements.

Predictably, the waiver proposal is divisive amongst domestic manufacturers. Some companies are onboard with the waiver and requested even more flexibility. This includes automakers like Ford and General Motors, who say that a process of moving all supply chains to the US demands more time, particularly at the scale necessary to match the surge in federal funding. This is largely seen as the most stakeholder friendly move as it offers companies the opportunity to use the duration of the waiver to see if a clear competitive market materializes which in turn benefits stakeholders.

Contrarily, others have asked for the waiver period to be shortened to allow them to quickly recoup their investments into Buy America compliant manufacturing upgrades. Some companies are even more aggressive; they oppose the waiver altogether and argue that the waiver would disadvantage manufacturers that intentionally put money into meeting the Buy America requirements. These companies posit that domestic manufacturing provides immediate benefits like augmenting supply chain security and electric-vehicle cybersecurity and warn against dependency on foreign governments for electrical steel needs. They further add that the Buy America rule will fuel growth in the US market and create manufacturing jobs. Labor groups and some lawmakers have adopted this stance as one lawmaker from Ohio commented, “[f]ederal agencies should implement the new Buy America provisions as quickly as possible to give American companies the certainty they need to move forward with investments.”

Other Implementation Difficulties

 The inclusion of the Buy America rule in this legislation is not the only aspect of the EV charging project that has generated considerable debate. Regional challenges pose more of an issue than originally anticipated. Although many states reported common potential hurdles like vandalism, range anxiety, supply chain, and electricity challenges, unique geographic problems have also arisen. For example, Nebraska reported in its plan that a shift to electric vehicles could decrease revenue collection from gas tax. Iowa aired out concerns about stations being hit by and damaged by snow plows. Michigan cited rodent damage as a potential concern. Finally, Oklahoma flagged political opposition to the chargers as a problem that could be both pervasive and fatal to the overall electric charging process.

Moreover, the law caught a substantial amount of flak for a curious decision to skip interstate rest stops when installing the EV charging stations. Although at first glance this would appear to be a pivotal oversight, it stems from a 1956 law that restricts commercial activity, in this case including electric car charging, at rest stops. The Federal Highway Administration, to alleviate these concerns, issued guidance that says electric vehicle chargers should be “as close to Interstate Highway Systems and highway corridors as possible” and generally no more than one mile from the exit. Furthermore, some of the older rest stops are excluded from the 1956 guidance. However, this is not enough to sate critics as many continue to fight for the 1956 law to be changed. They claim that the existence of the restriction drastically inconveniences drivers, planners, and vehicles while potentially creating a wealth disparity by forcing low-income families, who traditionally rely more on public rest areas, to avoid purchasing electric vehicles.

Conclusion

President Biden deserves to be lauded for his ambitious plan for electric vehicles which attempts to square combating the effects of climate change with preserving American manufacturing while simultaneously improving infrastructure. It is worth questioning whether the law would be more effective if it simply focused its efforts on one of these areas. As a commentator at the Cato Institute noted, “The goal of infrastructure spending should be better infrastructure — and if you’re trying to pursue policies to mitigate climate change, well that should be the overall goal … Anything that hinders that should be avoided.”  Only time will reveal the answer to this question.

A Solution Enabled by the Conflict in Ukraine, Cryptocurrency Regulation, and the Energy Crisis Could Address All Three Issues

April 17, 2022
Climate Change, Cryptocurrency, Energy Law, New Technology, Regulatory, Securities Law

Chase Webber, MJLST Staffer

This post focuses on two political questions reinvigorated by Vladimir Putin’s invasion of Ukraine: the energy crisis and the increasing popularity and potential for blockchain technology such as cryptocurrency (“crypto”).  The two biggest debates regarding blockchain may be its extraordinarily high use of energy and the need for regulation.  The emergency of the Ukraine invasion presents a unique opportunity for political, crypto, and energy issues to synergize – each with solutions and positive influence for the others.

This post will compare shortcomings in pursuits for environmentalism and decentralization.  Next, explain how a recent executive order is an important turning point towards developing sufficient peer-to-peer technology for effective decentralization.  Finally, suggest that a theoretical decentralized society may be more well-equipped to address the critical issues of global politics, economy, and energy use, and potentially others.

 

Relationship # 1: The Invasion and The Energy Crisis

Responding to the invasion, the U.S. and other countries have sanctioned Russia in ways that are devastating Russia’s economy, including by restricting the international sale of Russian oil.  This has dramatic implications for the interconnected global economy.  Russia is the second-largest oil exporter; cutting Russia out of the picture sends painful ripples across our global dependency on fossil fuel.

Without “beating a dead dinosaur” … the energy crisis, in a nutshell, is that (a) excessive fossil fuel consumption causes irreparable harm to the environment, and (b) our thirst for fossil fuel is unsustainable, our demand exceeds the supply and the supply’s ability to replenish, so we will eventually run out.  Both issues suggest finding ways to lower energy consumption and implement alternative, sustainable sources of energy.

Experts suggest innovation for these ends is easier than deployment of solutions.  In other words, we may be capable of fixing these problems, but, as a planet, we just don’t want it badly enough yet, notwithstanding some regulatory attempts to limit consumption or incentivize sustainability.  If the irreparable harm reaches a sufficiently catastrophic level, or if the well finally runs dry, it will require – not merely suggest – a global reorganization via energy use and consumption.

The energy void created by removing Russian supply from the global economy may sufficiently mimic the well running dry.  The well may not really be dry, but it would feel like it.  This could provide sufficient incentive to implement that global energy reset, viz., planet-wide lifestyle changes for existing without fossil fuel reliance, for which conservationists have been begging for decades.

The invasion moves the clock forward on the (hopefully) inevitable deployment of green innovation that would naturally occur as soon as we can’t use fossil fuels even if we still want to.

 

Relationship # 2: The Invasion and Crypto   

Crypto was surprisingly not useful for avoiding economic sanctions, although it was designed to resist government regulation and control (for better or for worse).  Blockchain-based crypto transactions are supposedly “peer-to-peer,” requiring no government or private intermediaries.  Other blockchain features include a permanent record of transactions and the possibility of pseudonymity.  Once assets are in crypto form, they are safer than traditional currency – users can generally transfer them to each other, even internationally, without possibility of seizure, theft, taxation, or regulation.

(The New York Times’ Latecomer’s Guide to Crypto and the “Learn” tab on Coinbase.com are great resources for quickly building a basic understanding of this increasingly pervasive technology.)

However, crypto is weak where the blockchain realm meets the physical realm.  While the blockchain itself is safe and secure from theft, a user’s “key” may be lost or stolen from her possession.  Peer-to-peer transactions themselves lack intermediaries, but hosts are required for users to access and use blockchain technology.  Crypto itself is not taxed or regulated, but exchanging digital assets – e.g., buying bitcoin with US dollars – are taxed as a property acquisition and regulated by the Security Exchange Commission (SEC).  Smart contract agreements flounder where real-world verification, adjudication, or common-sense is needed.

This is bad news for sanctioned Russian oligarchs because they cannot get assets “into” or “out of” crypto without consequence.  It is better news for Ukraine, where the borderless-ness and “trust” of crypto transaction eases international transmittal of relief assets and ensures legitimate receipt.

The prospect of crypto being used to circumvent U.S. sanctions brought crypto into the federal spotlight as a matter of national security.  President Biden’s Executive Order (EO) 14067 of March 9, 2022 offers an important turning point for blockchain: when the US government began to direct innovation and government control.  Previously, discussions of whether recognition and control of crypto would threaten innovation, or a failure to do so would weaken government influence, had become a stalemate in regulatory discussion. The EO seems to have taken advantage of the Ukraine invasion to side-step the stagnant congressional debates.

Many had recognized crypto’s potential, but most seemed to wait out the unregulated and mystical prospect of decentralized finance until it became less risky.  Crypto is the modern equivalent of private-issued currencies, which were common during the Free Banking Era, before national banks were established at the end of the Civil War.  They were notoriously unreliable.  Only the SEC had been giving crypto plenty of attention, until (and especially) more recently, when the general public noticed how profitable bitcoin became despite its volatility.

EO 14067’s policy reasoning includes crypto user protection, stability of the financial system, national security (e.g., Russia’s potential for skirting sanctions), preventing crime enablement (viz., modern equivalents to The Silk Road dark web), global competition, and, generally, federal recognition and support for blockchain innovation.  The president asked for research of blockchain technology from departments of Treasury, Defense, Commerce, Labor, Energy, Homeland Security, the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC), SEC, Commodity Futures Trading Commission (CFTC), Environmental Protection Agency (EPA), and a handful of other federal agencies.

While promoting security and a general understanding of blockchain’s potential uses and feasibility, the order also proposes Central Bank Digital Currencies (CBDC).  CBDCs are FedCoins – a stablecoin issued by the government instead of by private entities.  Stablecoins (e.g., Tether) are a type of crypto whose value is backed by the US Dollar, whereas privately issued crypto (e.g., Bitcoin, Ether) are more volatile because their value is backed by practically nothing.  So, unlike Tether, a privately issued stablecoin, CBDCs would be crypto issued and controlled by the U.S. Treasury.

Imagine CBDCs as a dollar bill made of blockchain technology instead of paper.  A future “cash transaction” could feel more like using Venmo, but without the intermediary host, Venmo.

 

Relationship # 3: Crypto and Energy

Without getting into too many more details, blockchain technology, on which crypto is based, requires an enormous amount of energy-consuming computing power.

Blockchain is a decentralized “distributed ledger technology.” The permanent recordings of transactions are stored and verifiable at every “node” – the computer in front of you could be a node – instead of in a centralized database.  In contrast, the post you are now reading is not decentralized; it is “located” in a UMN database somewhere, not in your computer’s hard drive.  Even a shared Google Doc is in a Google database, not in each of the contributor’s computers.  In a distributed system, if one node changes its version of the distributed ledger, some of the other nodes verify the change.  If the change represents a valid transaction, the change is applied to all versions at each node, if not, the change is rejected, and the ledger remains intact.

These repeated verifications give blockchain its core features, but also require a significant amount of energy.

For most of the history of computers, computing innovation has focused primarily on function, especially increased speed.  Computer processing power eventually became sufficiently fast that, in the last twenty-ish years, computing innovation began to focus on achieving the same speed using less energy and/or with more affordability.  Automotive innovation experienced a similar shift on a different timeline.

Blockchain will likely undergo the same evolution.  First, innovators will focus on function and standardization.  Despite the popularity, this technology still lacks in these areas.  Crypto assets have sometimes disappeared into thin air due to faulty coding or have been siphoned off by anonymous users who found loopholes in the software.  Others, who became interested in crypto during November 2021, after hearing that Ether had increased in value by 989% that year and the crypto market was then worth over $3 trillion, may have been surprised when the value nearly halved by February.

Second, and it if it is a profitable investment – or incentivized by future regulations resulting from EO14067 – innovators will focus on reducing the processing power required for maintaining a distributed ledger.

 

Decentralization, and Other Fanciful Policies

Decentralization and green tech share the same fundamental problem.  The ideas are compelling and revolutionary.  However, their underlying philosophy does not yet match our underlying policy.  In some ways, they are still too revolutionary because, in this author’s opinion, they will require either a complete change in infrastructure or significantly more creativity to be effective.  Neither of these requirements are possible without sufficient policy incentive.  Without the incentive, the ideas are innovative, but not yet truly disruptive.

Using Coinbase on an iPhone to execute a crypto transaction is to “decentralization” what driving a Tesla running on coal-sourced electricity is to “environmentalism.”  They are merely trendy and well-intentioned.  Tesla solves one problem – automotive transportation without gasoline – while creating another – a corresponding demand for electricity – because it relies on existing infrastructure.  Similarly, crypto cannot survive without centralization.  Nor should it, according to the SEC, who has been fighting to regulate privately issued crypto for years.

At first glance, EO 14067 seems to be the nail in the coffin for decentralization.  Proponents designed crypto after the 2008 housing market crash specifically hoping to avoid federal involvement in transactions.  Purists, especially during The Digital Revolution in the 90s, hoped peer-to-peer technology like blockchain (although it did not exist at that time) would eventually replace government institutions entirely – summarized in the term, “code is law.”  This has marked the tension between crypto innovators and regulators, each finding the other uncooperative with its goals.

However, some, such as Kevin Werbach, a prominent blockchain scholar, suggest that peer-to-peer technology and traditional legal institutions need not be mutually exclusive.  Each offers unique elements of “trust,” and each has its weaknesses.  Naturally, the cooperation of novel technologies and existing legal and financial structures can mean mutual benefit.  The SEC seems to share a similarly cooperative perspective, but distinguished, importantly, by the expectation that crypto will succumb to the existing financial infrastructure.  Werbach praises EO 14067, Biden’s request that the “alphabet soup” of federal agencies investigate, regulate, and implement blockchain, as the awaited opportunity for government and innovation to join forces.

The EPA is one of the agencies engaged by the EO.  Pushing for more energy efficient methods of implementing blockchain technology will be as essential as the other stated policies of national security, global competition, and user friendliness.  If the well runs dry, as discussed above, blockchain use will stall, as long as blockchain requires huge amounts of energy.  Alternatively, if energy efficiency can be attained preemptively, the result of ongoing blockchain innovation could play a unique role in addressing climate change and other political issues, viz., decentralization.

In her book, Smart Citizens, Smarter State: The Technologies of Expertise and the Future of Governing, Beth Simone Noveck suggests an innovative philosophy for future democracies could use peer-to-peer technology to gather wide-spread public expertise for addressing complex issues.  We have outgrown the use of “government bureaucracies that are supposed to solve critical problems on their own”; by analogy, we are only using part of our available brainpower.  More recently, Decentralization: Technology’s Impact on Organizational and Societal Structure, by local scholars Wulf Kaal and Craig Calcaterra, further suggests ways of deploying decentralization concepts.

Decentralized autonomous organizations (“DAOs”) are created with use of smart contracts, a blockchain-based technology, to implement more effectively democratic means of consensus and information sharing.  However, DAOs are still precarious.  Many of these have failed because of exploitation, hacks, fraud, sporadic participation, and, most importantly, lack of central leadership.  Remember, central leadership is exactly what DAOs and other decentralized proposals seek to avoid.  Ironically, in existing DAOs, without regulatory leadership, small, centralized groups of insiders tend to hold all the cards.

Some claim that federal regulation of DAOs could provide transparency and disclosure standards, authentication and background checks, and other means of structural support.  The SEC blocked American CryptoFed, the first “legally sanctioned” DAO, in the state of Wyoming.  Following the recent EO, the SEC’s position may shift.

 

Mutual Opportunity

To summarize:  The invasion of Ukraine may provide the necessary incentive for actuating decentralized or environmentalist ideologies.  EO 14067 initiates federal regulatory structure for crypto and researching blockchain implementation in the U.S.  The result could facilitate eventual decentralized and energy-conscious systems which, in turn, could facilitate resolutions to grave impending climate change troubles.  Furthermore, a new tool for gathering public consensus and expertise could shed new light on other political issues, foreign and domestic.

This sounds suspiciously like, “idea/product X will end climate change, all political disagreements, (solve world hunger?) and create global utopia,” and we all know better than to trust such assertions.

It does sound like it, but Noveck and Kaal & Calcaterra both say no, decentralization will not solve all our problems, nor does it seek to.  Instead, decentralization offers to make us, as a coordinated society, significantly more efficient problem solvers.  A decentralized organizational structure hopes to allow humans to react and adapt to situations more naturally, the way other living organisms adapt to changing environments.  We will always have problems.  Centralization, proponents argue, is no longer the best means of obtaining solutions.

In other words, one hopes that addressing critical issues in the future – like potential military conflict, economic concerns, and global warming – will not be exasperated or limited by the very structures with which we seek to devise and implement a resolution.

Hydrogen – The Fuel of the Future?

March 5, 2022
Climate Change, Energy Law, Environment, Regulatory

Max Meyer, MJLST Staffer

Hydrogen is viewed by many as being a key part of reducing global greenhouse gas emissions. Recently, a bipartisan group of lawmakers expressed interest in hydrogen and want to support its adoption in the United States. When used as a fuel source, hydrogen produces only water and heat. It could potentially be used to power cars, trucks, and airplanes and generate electricity. Hydrogen is used on a fairly minimal scale today, but entities ranging from industry to government are increasing investment in the technology. Currently, hydrogen is regulated by a variety of federal agencies, but no comprehensive regulatory scheme exists.

 

Hydrogen Production 

Hydrogen is one of the most abundant elements on earth, but it only exists in compound form with other elements. Hydrogen has the highest fuel content of any fuel by weight.

Hydrogen can be separated from compounds in a few different ways. It can be produced from steam-methane reforming which accounts for 95% of hydrogen production in the U.S. In this process, “natural gas (which is mostly methane) reacts with high pressure, high temperature steam in the presence of a catalyst to produce a mixture of mostly hydrogen and carbon monoxide.” The product stream is then processed further to produce a stream of mostly hydrogen. Water can be added to this mixture to convert the carbon monoxide into carbon dioxide. If the carbon dioxide is subsequently capture and stored underground, the hydrogen produced is referred to as blue hydrogen. If the carbon dioxide is not captured, the hydrogen is called grey hydrogen.

Hydrogen can also be produced from water by electrolysis which splits water molecules into pure hydrogen and oxygen using electricity. When renewable energy is used for electrolysis the resulting hydrogen is often referred to as green hydrogen.

 

Why Is It Important?

Using fuel cells, hydrogen can produce electricity. A fuel cell contains two electrodes, one negative and one positive, with an electrolyte in the middle. Hydrogen is fed into the negative electrode and air is fed into the positive end. At the negative end, a catalyst separates the hydrogen molecules into protons and electrons. To produce electricity, the electrons go through an external circuit before entering the positive electrode. Then, the protons, electrons, oxygen unite to produce water and heat. Fuel cells can be used in a number of applications ranging passenger and commercial vehicles to powering buildings.

 

Current Regulatory Framework

Hydrogen is regulated by several federal agencies. The Pipeline and Hazardous Materials Safety Administration (PHMSA) regulates hydrogen pipelines. PHMSA’s mission is to “protect people and the environment by advancing the safe transportation of energy and other hazardous materials[.]” Thus, PHMSA’s regulation of hydrogen pipelines is focused on safety. The Occupational Safety and Health Administration (OSHA) regulates hydrogen in workplaces OSHA’s regulation of hydrogen specifically covers the installation of hydrogen systems. The Environmental Protection Agency (EPA) also regulates hydrogen in several ways. Hydrogen is regulated under the EPA’s Mandator Greenhouse Gas Reporting Program, Effluent Standards under the Clean Water Act, and Chemical Accident Prevention program. However, the EPA’s regulation of hydrogen is primarily a result of hydrogen’s relationship to fossil fuels. The regulations are concerned with the production of hydrogen from fossil fuels such as the methane steam reform process outlined above.

The Department of Energy (DOE) has invested in research and development concerning hydrogen. In 2020, the DOE released its Hydrogen Program Plan. The DOE’s program is intended to “research, develop and validate transformational hydrogen and related technologies… and to address institutional and market barriers, to ultimately enable adoption across multiple applications and sectors.”

In 2021, Congress passed an infrastructure bill with $9.5 billion of funding for clean hydrogen initiatives. $8 billion of that funding is directed towards the creation of Regional Clean Hydrogen Hubs across the country to increase the use of hydrogen in the industrial sector. $1 billion is for clean hydrogen electrolysis research to lower costs from producing hydrogen using renewable energy. Finally, $500 million is for Clean Hydrogen Manufacturing and Recycling to “support equipment manufacturing and strong domestic supply chains.”

 

Regulation in the Future

The federal government currently does not regulate the construction of hydrogen pipelines. Presently, the Federal Energy Regulatory Commission (FERC) under the Natural Gas Act “regulates the siting, construction, and operation of interstate natural gas pipelines.” If Congress were to give FERC this same power for hydrogen pipelines it would allow for national planning of the infrastructure and lead to a comprehensive pipeline network. Recently, members of Congress have considered the regulatory framework covering hydrogen pipelines and if additional authority over these pipelines should be given to FERC or other federal agencies. However, these discussions are still in the preliminary stages.

Hydrogen has the potential to play a large role in the United States’ effort to reduce greenhouse gas emissions. It can be used in a variety of industries including the transportation and industrial sectors. Congress has recognized hydrogen’s importance and must continue to invest in lowering the costs of hydrogen production and building hydrogen infrastructure.

How the Biden Administration Has Made Offshore Wind a Priority

December 22, 2021
Climate Change, Energy Law

Max Meyer, MJLST Staffer

Since coming into office in January of 2021, the Biden Administration has made fighting climate change and reducing domestic greenhouse gas (GHG) emissions a priority. In particular, the Biden Administration set a goal of doubling the nation’s offshore wind capacity in Executive Order 14008. Reaching this goal would result in 30 Gigawatts (GW) of offshore wind capacity. Developing offshore wind energy will help states reach their clean and renewable energy goals as many sates on the coast do not have large wind energy resources on land. Since the issuance of Executive Order 14008, the Department of the Interior (DOI) has taken several steps towards reaching that goal.

Statutory Authority

Under the Outer Continental Shelf Lands Act (OCSLA) (codified at 43 U.S.C. ch. 29), passed in 1953, the Secretary of the Interior is charged with the administration of mineral exploration and development of the Outer Continental Shelf (OCS). The OCS is defined as “all submerged lands lying seaward of state coastal waters (3 miles offshore) which are under U.S. jurisdiction.”

In the Energy Policy Act of 2005 (EPAct), Congress created the OCS Renewable Energy Program to be administered by the DOI. Under this authority, the DOI in 2009 promulgated regulations for leases, easements, and rights-of-way for renewable energy development in the OCS. The Bureau of Ocean Energy Management (BOEM), under the DOI, is the agency tasked with overseeing the renewable energy development program.

Regulatory Authority

The BOEM renewable energy development program is broken into four steps: (1) planning, (2) leasing, (3), site assessment, and (4) construction and operations. During the first step, BOEM identifies Wind Energy Areas (WEAs) which are “locations that appear most suitable for wind energy development.” After WEAs have been identified, BOEM issues a public notice to gauge the interest in leasing land in the WEA. Depending on the interest received from BOEM, leasing is done through either a competitive or noncompetitive leasing process.

After leasing is completed, the lessee must submit a Site Assessment Plan (SAP) to BOEM. The purpose of the SAP is for the lessee to provide documentation so that BOEM can evaluate whether the project will comply with applicable regulations. The agency can either approve, approve with modification, or disapprove the SAP. Finally, the lessee must produce a Construction and Operations Plan (COP). As the name suggests, this submission includes a “detailed plan for the construction and operation of a wind energy project on the lease.” BOEM reviews the COP, including environmental review, and can either approve, approve with modification, or disapprove the COP.

Recent Offshore Wind Developments

In May 2021, the DOI approved the COP for the Vineyard Wind project located near Martha’s Vineyard and Nantucket. This is the first large-scale, offshore wind project in the United States. The project will have 800 Megawatt (MW) of energy capacity which is enough to power 400,000 homes and businesses. Construction of the project began in November 2021. One of the first steps in the construction process will be placing two transmission cables to transmit electricity from the Vineyard Wind project to the mainland.

Also in November 2021, the DOI approved the COP for the South Fork Wind making it the second large-scale, offshore wind project in the United States. This project off the coasts of New York and Rhode Island will have a capacity of 130 MW which is enough to power approximately 70,000 homes.

In addition to granting final approval of several projects, BOEM has also taken action in the earlier steps of the OCS renewable energy process. For the Carolina Long Bay WEA, located off the coast of the Carolinas, the BOEM began taking public comments on a proposed lease. In October, BOEM received the COP for the Mayflower Wind project. This project would also be located near Martha’s Vineyard and Nantucket and would have an energy capacity of more than 2 GW. If approved, the Mayflower Wind project would be one of the largest offshore wind projects in the United States. BOEM also published a Call for Information and Nominations to gauge commercial interest in wind energy development in the Gulf of Mexico.

BOEM has also taken steps to advance offshore wind in the Pacific Ocean in 2021. In July, BOEM published a Call for Information and Nominations to determine commercial interest in the Morro Bay Call Area East and West Extensions, a portion of the Morro Bay WEA. This WEA is located off the coast of Central California. Finally, BOEM designated the Humboldt WEA off the northern coast of California moving closer to the leasing process in this area.

Despite heavy support from the Biden Administration, offshore wind does face opposition. The commercial fishing industry has emerged as a strong opponent of these projects. The industry is concerned that the turbines will impact fish and hinder access to fishing grounds. The Biden Administration could face legal challenges to offshore wind development, particularly under the National Environmental Policy Act (NEPA), from the fishing industry. One such challenge in Fisheries Survival Fund v. Haaland, 858 F. App’x 371 (D.C. Cir. 2021) has proven unsuccessful for the fishing industry.

While the DOI and BOEM have taken many actions to further develop offshore wind in the United States, much more will have to be done to reach the Biden Administration’s goal of 30 MW of offshore wind capacity by 2030. Nonetheless, offshore wind is an important resource for coastal states looking to decarbonize their energy generation and for reaching the Biden Administration’s decarbonization goals.

One Person’s Trash Is Another’s Energy

April 18, 2021
Climate Change, Energy Law, Environment

Carlton Hemphill, MJLST Staffer

It comes to many as a literal and metaphorical breath of fresh air to see the new administration’s interest in reducing the effect we have on the environment, but achieving a goal of net-zero emissions by 2050 is no small feat for such a large country and requires leaving no stone unturned. Much of the recent focus in the media has been on increasing the prevalence of electric cars and switching to renewable energy sources that do not emit carbon dioxide or other greenhouse gases, such as wind and solar. That being said, there is another often overlooked process that, while not the end all solution, can still help us achieve this goal of reducing greenhouse gases, and in my opinion should be getting more attention than it is currently receiving. I am referring to the use of anaerobic digesters.

The Dirty Details:

Let’s face it, people generate a lot of waste, both food waste and excrement. Everybody eats and everybody poops. Moreover, the animals we raise for food also generate an enormous amount of waste. Methane, a byproduct from the decomposition of organic matter such as excrement, acts as a greenhouse gas if released into the atmosphere before being burned. Compared to CO2, methane is 25 times as powerful as a greenhouse gas. Anaerobic digesters use microbes to break down organic waste to produce methane (referred to as biogas) which is then burned to generate electricity.

This is not a novel concept either. Some cities and farms have already taken steps to implement anaerobic digesters for harnessing biogas from sewage and manure. States like Connecticut and New York already implement biogas programs, and many dairy farms across the nation have anaerobic digesters that produce methane from manure. A town in Colorado even powers vehicles using poop . . . yes, you read that correctly.

However, across the country the potential of biogas has not yet been fully realized, meaning there is still a large amount of methane escaping into the atmosphere as a greenhouse gas that could instead be captured and transformed into electricity. The American Biogas Council states that there are currently over 2,200 biogas production sites across the U.S. with the potential for an estimated 14,958 additional sites “ripe for development.”

The biggest barriers to widespread implementation of biogas production stem from a combination of economic feasibility, infrastructure, and lack of political support. Biodigesters can require a large capital investment to setup with financial benefits not being immediately realized. Additionally, while wastewater treatment plants and landfills have existing infrastructure better suited for conversion to biogas production and utilization, rural farms would need either pipes to move the gas or connection to the electrical grid to sell back the generated electricity. Without the necessary political support, in the form of government programs financially incentivizing anaerobic digestion, these issues will continue to act as a deterrent.

Federal eye on Biogas:

While the recent executive orders dealing with the climate crisis do mention mitigating methane emissions, the focus is instead on mining in the oil and gas sectors and not repurposing existing organic matter. It seems then that in our nation’s quest to go green we are overlooking the potential to transform the very waste we create. With food waste constituting the second largest category of solid waste sent to landfills, and cities producing millions of tons of sewage annually, implementing anaerobic digesters would provide numerous environmental advantages. They save landfill space, prevent methane from leaking into the atmosphere, and generate electricity reducing our reliance on other forms of electrical generation.

Fortunately, the EPA recognizes the value in biogas production and, if Biden’s proposed $14 billion in spending towards climate change materializes, the EPA may be able to allocate some of that funding towards developing new sites. When creating new laws and policies aimed at climate change perhaps it is best to always keep in mind the universal law of conservation of energy. Energy is neither created nor destroyed, but rather transformed; what we flush down the drain or discard as trash still has energy and it is up to us to utilize it.

 

Home | Contact Publishing Services | My Account