Energy Law

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

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?

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

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?

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

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

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.

 


Clawing Back the “Jackpot” Won During the Texas Blackouts

Isaac Foote, MJLST Staffer

For most Texans, the winter storm in February 2021 meant cold temperatures, uncertain electricity at best, and prolonged blackouts at worst. For some energy companies, however, it was like “hitting the jackpot.” We here at MJLST (in Madeline Vavricek’s excellent piece) have already discussed the numerous historical factors that made Texas’s power system so vulnerable to this storm, but in the month after power was restored to customers, a new challenge has emerged for regulators to address: who will pay the estimated $50 billion in electricity transactions carried out during the week of blackouts. A number estimated to eclipse the total sales on the system over the previous three years!

At the highest level, the Texas blackouts were a result of the electric grid’s need to be ‘balanced’ in real time, i.e. always have sufficient electricity supply to meet demand. As the winter storm hit Texas, consumers increased demand for electricity, as they turned up electric heaters, while simultaneously a lack of winterization drove natural gas, wind, and nuclear electricity producers offline. So, to “avoid a catastrophic failure that could have left Texans in the dark for months,” Texas grid operator, the Electric Reliability Council of Texas (ERCOT), needed to find a way to drastically increase electricity supply and reduce electricity demand. Blackouts were the tool-of-last-resort to cut demand, but ERCOT also attempted to increase supply through authorizing an extremely high wholesale price of electricity. Specifically, ERCOT and the Texas Public Utility Commission (PUC) authorized a price of $9,000 per megawatt hour (MWh), over 340 times the annual average price of $26/MWh.

These high prices may have kept some additional generation online, but they also resulted in devastating impacts for consumers (especially those using the electric provider Griddy) and electric distributors (like Brazos Electric Power Cooperative that has already filed for Chapter 11 bankruptcy protection). Now, the Independent Market Monitor (IMM)for the PUC is questioning whether the $9,000/MWh electricity price was maintained for too long after the storm hit: specifically, the 32 hours following the end of controlled blackouts between February 17th and 19th. The IMM claims that the decision to delay reducing the price of electricity “resulted in $16 billion in additional costs to ERCOT’s market” that will eventually need to be recovered from consumers.

The IMM report on the issue has created a showdown in Texas Government between the State Senate, House, and the PUC. Former Chair of the PUC, Arthur D’Andrea, argued against repricing as “it’s just nearly impossible to unscramble this sort of egg,” while the State Senate passed a bill that would require ERCOT to claw back between $4.2 billion and $5.1 billion in from generators for the inflated prices. D’Andrea’s opposition to the clawback has already resulted in his resignation, but it appears unlikely this conflict will be resolved as the State House may concur with the PUC’s position.

There is further confusion over whether such a clawback would be legal in the first place. Before his resignation, D’Andrea implied such a clawback was beyond the power of the PUC. However, Texas Attorney General Ken Paxton issued an opinion that: “the Public Utility Commission has complete authority to act to ensure that ERCOT has accurately accounted for electricity production and delivery among market participants in the region. Such authority likely could be interpreted to allow the Public Utility Commission to order ERCOT to correct prices for wholesale electricity and ancillary services during a specific timeframe . . . provided that such regulatory action furthers a compelling public interest.”

Going forward it appears that the Texas energy industry will be facing a wave of lawsuits and bankruptcies, whatever the decisions made by the PUC or legislators. However, it is important to remember that someone will end up bearing responsibility for the billions of dollars in costs incurred during the crisis. While most consumers will not see this directly on their electricity bill, like those using Griddy had the misfortune to experience, these costs will eventually be transferred onto consumers in some ways. Managing this process in conjunction with rebuilding a more resilient energy system will be a challenge that Texas energy system stakeholders, policymakers, and regulators will have to take on.


Everything’s Bigger in Texas, Including Power Outages

Madeline Vavricek, MJLST Staffer

On last week’s episode of “now what?”, Texas was experiencing massive power shortages following a winter storm, leaving hundreds of thousands of Texans without power and water. An estimated 4.3 million Texans were rendered without power for up to a week as the cold snap that swept the nation caused Texas’s power grids to fail. Though the power grid is back up and Texas has returned to its regularly scheduled spring temperatures, last month’s empty grocery store shelves and power shortages have yet to melt from many Texans’ memories. As massive electric bills arrive in citizens’ mailboxes (hello, surge pricing!), lawsuits levied against power companies, and bankruptcies filed by energy companies, one might ask why Texas, far from being the coldest part of the United States that week, was so thoroughly and singularly felled by the winter weather. The answer, perhaps unsurprisingly, is both political and economic, and requires a history lesson as well.

Nearly half a century after Thomas Edison’s 1880 invention of the light bulb, the advent of the power grid was gaining traction in the nation’s cities and becoming less of a luxury and more of a necessity. This created a highly profitable market for electricity where previously no market had existed, and the expansion of the industry only shed light on ways that electric companies were utilizing the novel market to their advantage. This expansion eventually lead to the passage of the 1935 Public Utility Holding Company Act (PUHCA) under President Franklin D. Roosevelt. The Act outlawed the “pyramidal structure” of interstate utility holding companies, preventing holding companies from being more than twice removed from their operating subsidiaries, and required companies with a ten percent stake or greater in a utilities market to register with the Securities and Exchange Commission for monitoring. Essentially, this legislation was to prevent energy companies from operating as monopolies in the relatively new energy market, a move met with vehement opposition by the utility companies themselves; the bitter feeling was mutual, with FDR notably calling the holding companies “evil” in his 1935 State of the Union address.

While PUHCA inconvenienced these villainous utility companies’ interstate operations, there was one loophole left available to them: their “evil” was left unregulated within the state, allowing holding companies that operated within a single state unregulated under PUHCA.  While the Act was effective, decreasing the number of holding companies from 216 to 18 between 1938 and 1958, creating a “a single vertically-integrated system which served a circumscribed geographic area regulated by either the state or federal government.” It was following the 1935 passage of PUHCA that Texas power companies decided to band together within the state rather than submit to the federal regulation at hand. By only operating within state lines, Texas companies effectively skirted federal regulation and interference, politically maneuvering itself to an energy independence largely made possible through Texas’s energy-rich natural resources.

In the late sixties, the federal government created two main power grids to serve the country: the Eastern Interconnection and the Western Interconnection. Texas opted out of this infrastructure, choosing instead to form its own grid operator, called the Electric Reliability Council of Texas, or ERCOT. The ERCOT grid “remains beyond the jurisdiction of the Federal Energy Regulatory Commission,” the federal entity that regulates the power grid for the rest of the nation. ERCOT took on additional power following the 1999 move to deregulate the energy economy in Texas, an effort to create a completely free market for electricity in the state to benefit both consumers and companies. This independence had most Texans’ ardent approval . . . until the cold front rolled in late February 2021, obstructing the flow of the state’s natural gas and leading to the failure of 356 electric generators state-wide. While other Southern states relied on the national power grid to maintain their electricity, Texas had no one but itself to fall back on, and was quite literally left out in the cold.

While some argue that the independent electrical grid was not to blame for Texas’s misfortunes, insisting that the cold temperatures in the rest of the nation meant there wouldn’t be much energy to spare anyway, it is undeniable that the deep freeze has called attention to many cons of Texas’s pro-deregulation energy market. Though there is what could be considered an “instinctive aversion to federal meddling” in avoiding federal regulation, as well as sensible reasons for a state of Texas’s size and natural resources to remain separate from the other 47 continental United States, the reality remains that many Texans suffered at the hands of its own power grid. As the bills pile up and Texans increase the water bottles they have in their pantry at any given time, one can see how some might favor the security of a more regulated system over the freedom that lead to surge pricing, dry faucets, and dark homes.  However, as with all government regulation, there is a price to pay, and perhaps the Lone Star State prefers to stay “lone” for that very reason. Either way, Texas, now warmer and well-lit, is no doubt grateful to return to our 2021 definition of “normal” and hoping that their lives stop sounding like a verse of a beloved Bill Joel song (no, not Piano Man).


America is Ready to Fight Climate Change. Is the Grid?

Valerie Eliasen, MJLST Staffer

Climate change is perhaps the most serious threat to our planet’s future. From a rise in average temperatures to more frequent floods, fires, hurricanes, and other natural disasters, the evidence of a warming planet is clear. Scientists warn that climate change and its dangerous effects will continue to worsen unless a strong response to counteract the threats is undertaken immediately. In response to these worries and widespread support of the issue by consumers, numerous large corporations have begun setting goals to combat climate change.

The Biden administration has also prioritized the issue. Among his first acts in office, President Biden signed an executive order, which acted to “place the climate crisis at the forefront of [the] Nation’s foreign policy and national security planning.” Among many other things, Biden’s executive order created a new position to “elevate the issue of climate change” and directed the United States to rejoin the Paris Agreement. The executive order includes a goal to “achieve net-zero emissions, economy-wide, by no later than 2050” and “a carbon pollution-free electricity sector no later than 2035.”

To achieve such a lofty goal, businesses and corporations across the country will need to rapidly change how they do business. It’s easy to see that single use plastics will begin to disappear and that electric vehicles will become more commonplace, but what will the shift to cleaner energy look like?

California provides us with an interesting case study. California is well known for its aggressive and progressive approach to climate change. The State established a detailed climate plan in 2006, which outlines the ways in which the State will reduce emissions and emphasize clean energy in the long run. While a deeper look at California’s experience with aggressive climate policy over the past few years can help us envision what the United States’ increasingly electric future will look like, it provides us with some warnings as well.

The first problem is capacity. Because California’s renewable energy sources primarily come from solar and wind generation, a huge problem is presented when the sun doesn’t shine, the wind slows down, and backup resources aren’t available. In August 2020, when extreme heat hit the southwest, California didn’t have enough of its own energy to power its residents’ air conditioners. Further, the states California often borrows energy from in cases of shortage were experiencing the same heat wave and did not have resources to spare. The result: the first rolling blackouts in close to 20 years. Much of California’s problem lies in its ability to provide energy after the sun sets. The technology to efficiently store energy for later use is not developed enough to provide the kind of storage needed. Further, several of California’s fossil fuel plants have been retired in recent years and haven’t been replaced with enough non-solar energy sources. With increasingly hotter summers and insufficient sources of consistent energy, blackouts are likely to reoccur.

The second problem is the grid. With the United States’ new emissions goals and continued societal shift towards combatting climate change, we are likely to see a large shift to electric appliances and vehicles. Additionally, the use of air-conditioning could increase nearly 60 percent by 2050 due to the planet’s warming temperatures. As such, the power grids are going to need to be able to handle more variable sources of energy and increased demand of electricity in the coming years. The power grids in place in many regions of the United States are not cut out for these changes. California, for example, has the “least reliable electrical power system in the US . . . with more than double the outages of any other state over the last decade” and will likely only become more unreliable as clean energy sources are phased in and others are phased out. The power industry is going to need to invest countless dollars into making power grids more flexible and robust than what we have now. One article likens this process to rebuilding a plane mid-flight.

The nation’s new environmental goals are a vital and important step in combating climate change. Inaction is not an option. Failure is not an option. And thankfully, President Biden’s executive order has the force of law, so the government will be better able to make sure these goals are met. But unless policymakers understand that many of the recent issues in California were caused by poor planning and poor coordination between policymakers and energy producers, California’s reality will become a nationwide problem. The government and the States need to work closely with the power industry, to invest a large amount of money into improving and strengthening the grid, and to expand the amount of renewable energy available day and night. This may be the only way to keep the lights on while helping the planet stay cool.


“IceBreaker” Freshwater Offshore Wind Project Cracks Through Regulatory Jam

Ben Cooper, MJLST Staffer

An offshore wind project in Lake Erie, churned by regulatory crosscurrents, has begun flowing towards construction once again. But followers of the IceBreaker Wind project can be forgiven for harboring reservations about what lies ahead, due to the long-running back-and-forth. Back-and-forth notwithstanding, critics and proponents alike look at IceBreaker Wind as an, ahem, icebreaker to clear the path for more offshore wind in the Great Lakes.

IceBreaker Wind Project

For more than a decade, the Lake Erie Energy Development Corporation (LEEDCo) has been working to advance a windfarm eight miles off the coast of Cleveland in Lake Erie. The project would have six turbines with a combined production to power 7,000 homes. Outside advocates are split on the project: some environmental groups (like the Sierra Club and the Ohio Environmental Council) support IceBreaker Wind, while other environmental groups (like the Black Swamp Bird Observatory and the American Bird Conservancy) are leading the legal challenges to it. Additionally, a group of lakefront property owners and a coal company have become involved in the opposition to the project.

As this project has moved through the regulatory framework, stakeholders have continually pointed out that it will likely chart the course for future offshore wind projects in the Great Lakes. Up until this point, the future of freshwater offshore wind has been aspirational. The CEO of LEEDCo says this approach makes sense when launching a new industry: “[U]ntil you climb that first hill and see what’s out there, you better focus on that first hill.” Now that IceBreaker Wind has cleared some of its most significant hurdles, others in the industry are beginning to peak over the top of that first hill.

Diamond Offshore Wind Moves in on the Great Lakes

Way back when IceBreaker Wind was just a concept, optimism bubbled throughout the Great Lakes region about the promise of offshore wind. Major cities like Chicago, Buffalo, New York, and Cleveland sit just a few miles away from strong, consistent winds. The appeal of offshore wind in the Great Lakes is obvious: abundant energy close to the population centers that need it. Yet, the challenges are evident in IceBreaker’s decade-long saga.

With all the uncertainty that crept into the IceBreaker Wind project, proposals and planning for other offshore wind projects in the Great Lakes quieted down. Still, industry has kept its eyes on IceBreaker—looking for a proof of concept project to lay out the “pathway to responsible development.” Based on recent movement, it seems like players in the freshwater offshore wind space have seen the pathway they need.

One move has been in response to New York State’s 70% renewable energy target by 2030. Diamond Offshore Wind, a subsidiary of Mitsubishi Corporation, thinks the answer lies at least in part in a wind farm in Lake Erie off the coast of Buffalo. This project is in its earliest stages and is still waiting for the results of a feasibility study New York State is conducting.

Even with all the uncertainty of offshore wind development in the Great Lakes, there is a regulatory benefit to these freshwater projects over their ocean counterparts: while offshore projects in the ocean require approval from the Bureau of Ocean Energy Management (BOEM), projects in the Great Lakes do not require BOEM’s involvement. This is notable because BOEM has been frustratingly absent from offshore wind development over the past few years.

Conclusion

Even with the benefits of advancing these offshore wind projects in the Great Lakes rather than the ocean, these projects are costly and time intensive. It makes sense that developers are cautious to jump into the unknown. Since IceBreaker Wind cleared some of its last major hurdles, however, we should expect to see more companies embarking on projects to harness the country’s greatest untapped natural resource.