Energy Law

Clawing Back the “Jackpot” Won During the Texas Blackouts

March 28, 2021
Economics, Energy Law, Regulatory

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

March 7, 2021
Energy Law, Public Health, Regulatory

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?

February 13, 2021
Climate Change, Energy Law, Environment

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

November 7, 2020
Energy Law, Environmental Law

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.

Extracting Favors: Fossil-Fuel Companies Are Using the Pandemic to Lobby for Regulatory Rollbacks and Financial Bailouts

October 17, 2020
Climate Change, COVID-19, Energy Law, Environment, Environmental Law, Regulatory

Christopher Cerny, MJLST Staffer

In the waning months of World War II, Winston Churchill is quoted, perhaps apocryphally, as saying, “[n]ever let a good crisis go to waste.” It seems fossil-fuel companies have taken these words to heart. While in the midst of one of the greatest crises of modern times, oil, gas, and coal companies are facing tremendous economic uncertainty, not only from the precipitous drop in demand for gasoline and electricity, but also from the rise of market share held by renewable energy. In response, industry trade groups and the corporations they represent are engaged in an aggressive lobbying campaign aimed at procuring financial bailouts and regulatory rollbacks. The federal government and some states seem inclined to provide assistance, but with the aforementioned rise of renewable energy, many see the writing on the wall for some parts of the fossil-fuel industry.

The ongoing COVID-19 pandemic continues to inflict immeasurable havoc on a global scale. The virus and the mitigation efforts designed to curb its spread have dramatically changed the way humankind interacts with each other and the world around us. In the United States, nearly all states at one time or another implemented mandatory shelter-at-home orders to restrict movement and prevent the further spread of the novel coronavirus. These orders have, in many ways, completely restructured society and the economy, with perhaps no sector being more impacted than transportation. At the peak of the virus in the United States, air travel was down 96% and, in April 2020, passenger road travel was down 77% from 2019. Similarly, the pandemic has altered America’s energy consumption. For example, the Midcontinent Independent System Operator reports a decrease in daily weekday demand in March and April of up to 13% and a national average decline of as much as 7% for the same time frame. A secondary impact of these market disruptions is on the fossil-fuel industry. The decrease in electricity demand has further diminished the already declining coal market, while the fall off in travel and transportation has radically impacted oil prices.

On April 20, a barrel of oil traded for a loss for the first time ever when demand fell so low that the cost storing oil exceeded its sale price. While the price of a barrel of oil, the world’s most traded commodity, has since improved, as of October 1st, the U.S. stock index for domestic oil companies remains down 57% in 2020. Similarly, coal consumption in the United States is projected to decline 23% this year. Natural gas remains resilient, with U.S. demand only dropping 2.8% between January and May of 2020. However, much of natural gas’s buoyancy comes at the expense of lower prices. These numbers are dire, especially for coal and oil, two domestic industries already on the decline due to the rise in renewable energy.

Fossil-fuel companies have gone on the offensive. The oil and gas industry is responding to these calamitous figures and grim financials by lobbying state and federal lawmakers for financial bailouts and the relaxation of environmental regulations. The California Independent Petroleum Association, an oil and gas trade group, requested an extension for compliance with an idle well testing plan that would push 100% program compliance from 2025 to 2029. Further, the trade group asked California to scale back on Gov. Gavin Newsom’s plan to increase the staff of the California Energy Management Division, the state agency charged with oversight of oil and gas drilling. In Texas, the Blue Ribbon Task Force on Oil Economic Recovery, created at the behest of the state oil and gas regulatory body and composed of representatives and leaders of Texas’s oil and gas trade groups, recommended the suspension of particular environmental testing and extensions for environmental reporting to the state agency. The Louisiana Oil and Gas Association asked Louisiana Gov. John Bel Edwards to suspend the state’s collection of severance taxes.

On the national stage, the Independent Petroleum Association of America asked the Chairman of the Federal Reserve to support changes to the Main Street Lending Program, a part of the CARES Act, to expand the eligibility requirements to include many oil and gas producers. The American Fuel and Petrochemical Manufacturers, a refiners trade association, called on the Trump administration and the Environmental Protection Agency (EPA) to waive biofuel policies that mandate the blending of renewable corn-derived ethanol in petroleum refining. The American Petroleum Institute also reached out to the Trump administration seeking the waiver of record keeping and training compliance.

Not to be left behind, the coal industry ramped up its lobbying as well. In an opinion piece, the CEO of America’s Power, a coal trade group extolled the virtues of the fleet of coal power plants and their necessity in the recovery from the COVID-19 pandemic. The National Mining Congress, the coal industry’s lobbying arm, sent a letter to the Trump administration and Congressional leaders asking for an end to the industry’s requirements to pay into funds for black lung disease and polluted mine clean-up

These lobbying efforts are being met with varied levels of success. In a move that garnered criticism from the Government Accountability Office, the Department of the Interior through the Bureau of Land Management cut royalties on oil and gas wells leased by the federal government, saving the industry $4.5 million. The EPA scaled back enforcement of pollution rules, instead relying on companies to monitor themselves. The Governors of Texas, Utah, Oklahoma, and Wyoming sent a letter asking the EPA to waive the biofuel blending regulations in support of the refiners trade group. In September, the EPA denied the request. The Governor of Louisiana agreed to delay the collection of the severance tax, a revenue source for the state that can normally bring in $40 million per month. The Louisiana state legislature later voted to reduce the severance tax on oil and gas from 12.5% to 8.5% for the next eight years. The EPA finalized a rule that it is not “appropriate and necessary” to regulate certain hazardous air pollutants, including mercury, emitted from coil and oil fired power plants.

It is difficult to discern what impact these industry efforts and resulting government actions will have in the long term. The financial measures may have propped up an industry that otherwise would have suffered permanent damage and bankruptcies without the influx of relief and capital. However, environmental groups are more concerned with the regulatory rollbacks. For example, after the EPA chose to allow companies to self-monitor pollution, there was a year-over-year decline of 40% in air emissions tests at industrial facilities and over 16,500 facilities did not submit required water quality reports. The ramifications of the state and federal acquiescence to the fossil-fuel industry’s requested regulatory non-compliance may end up costing the American tax payers millions of dollars, causing irreparable immediate harm to the environment, and delaying critical action needed to mitigate anthropogenic climate change.

Turning the Sky Orange and the Lights Off: West Coast Wildfires Diminish Solar Power Generation

September 23, 2020
Climate Change, Energy Law, Environment, Environmental Law

Isaac Foote, MJLST Staffer

On September 9th, 2020 social media feeds were taken over by images of the sky above San Francisco.  As if it was a scene out of Bladerunner 2049, the sky turned a remarkable shade of orange due to smoke from forest fires raging across the West Coast. The fires have had a devastating effect on the region; they have burned over five million acres of forest, forced over 500,000 people to evacuate their homes, and killed over 30 people. Further, the combustion of millions of trees has threatened air quality across the United States and has released over 83 million tons of CO2 emissions into the atmosphere. This is more CO2 than power plants in both California and Oregon release in a typical year and is another example of how climate change perpetuates itself.

In addition to CO2, when forests burn they also spew incredible amounts of soot (another name for black carbon) into the atmosphere. This soot can then join together with water vapor to create pyrocumulonimbus clouds in the stratosphere which, in turn, are very effective at absorbing light from the sun. Because carbon absorbs more blue light than red light, these soot clouds caused the ominous coloration of the sky above San Francisco on September 9th.

While most of the focus on forest fire smoke has (rightfully) been around its potential health effects, the absorption effect mentioned above can also have a significant impact on solar power installations. At a micro scale, the impact of forest fire smoke can be intense. One small scale solar installation in Cupertino, California saw a 95% reduction in energy generation on September 9th. Outside of California, a Utah study demonstrated that a single forest fire within 150 miles of a solar array reduced generation by 12.5% over a three day period following the start of the fire.

At the systemic level, California Independent System Operator (California ISO) reported that at times on September 10th statewide solar generation was reduced by ⅓ compared to typical summer levels. While this did not set off rolling blackouts (as California ISO was forced to implement in mid-August), a 33% shock to generation is a worrying sign for the future. After all, this wave of wildfires already resulted in significant strain on the California transmission system independent of solar disruption. California has a 100% clean energy generation target for 2045 (SB 100 (de León, 2018)) and projections estimate solar will need to constitute a large percentage of California’s energy production to meet this goal. While energy planners factor the instability of solar generation into forecasts of energy production, typical state-wide drops of this magnitude usually occur in winter, when energy demand is reduced due to lower temperatures. With the increased prevalence and intensity of forest fires, California grid operators must be wary of sudden smoke-related drops going into the future, especially during the hot and dry weather that corresponds with both forest fires and high energy usage.

According to the Solar Energy Industries Association, “[a] worst-case wildfire scenario could reduce annual solar-energy production from affected installations by as much as 2%.” While this impact may seem small on the scale of the energy system, some back of the envelope math estimates this worst-case scenario would reduce California’s annual solar production by 569 gigawatt-hours or $94,340,000 in retail sales at current production levels. This calculation is not even considering additional maintenance costs and efficiency reductions that analysts worry may be necessary if soot settles onto solar panels after leaving the atmosphere.

Of course, none of this is to argue against the increased adoption of solar generation in California. In fact, rapidly moving from a fossil fuel based economy to one based on renewable energy is the most important step in preventing future large forest fires as “the link between climate change and bigger fires is inextricable.” Additionally, advocates of distributed solar argue that increased residential solar adoption may help mitigate the stresses that forest fires place on the electric grid. Instead, this should be treated as another example of the costs of climate change and, consequently, fossil fuel use. Even with aggressive reductions in greenhouse gas emissions, forest fires will continue in the American West and soot will continue to harm solar efficiency. The best solution is for grid operators (like California ISO) and government planners (like the California Energy Commission) to understand the risks forest fires pose to solar generation and factor that into their long term (like the Annual Planning Renewable Net Short) and short term planning processes.

Davos Attendees Seek Political Cover Under 1 Trillion Trees

March 16, 2020
Climate Change, Energy Law, Environment

Noah Cozad, MJLST Staffer

At the World Economic Forum (otherwise known as Davos), the most popular subject was something called the Trillion Tree Initiative to help fight climate change. Nearly every attendee at the forum committed to the initiative. Including President Trump, who in the past has forcefully denied climate change’s existence, calling it a “hoax” invented by the Chinese. President Trump even mentioned the initiative in the State of the Union, and a GOP representative has introduced a bill that would commit the United States to planting 3.3 billion trees every year for the next 30 years. Davos describes the initiative as a “mass-scale nature restoration,” that hopes to provide up to one-third of the emission reductions necessary for the Paris Agreement targets. Practically, the initiative seeks to provide a single platform for a variety of reforestation projects and to mobilize funds and support.  This initiative was started by the UN as part of the New Decade of Ecosystem Restoration, 2021-2030. The UN says the initiative “is about, conserving, restoring, and growing trees. Indeed, the goal of 1 trillion trees by 2030 includes conservation of existing trees (i.e. avoided deforestation), the restoration and natural regeneration of previously degraded forest lands, including actual reforestation and tree-planting schemes on suitable agriculture land, . . . as well as urban tree planting.”

The idea of planting 1 trillion trees comes from a controversial 2019 article in Science. The article finds that global tree restoration is currently one of the most effective carbon drawdown solutions. Accordingly, planting 1 trillion trees has the potential to store 25% of the current atmospheric carbon pool. The study focuses on reforestation, as opposed to afforestation which is planting trees where none were before. Critics have argued that this is an unreliable way to fight climate change and is not a meaningful substitute for cutting back on emissions. Further, it is a very slow solution, for example it takes 25 years for a tree planting project to offset a single commercial flight.

While it is undeniable that planting large amounts of trees will help with climate change, there are still many issues with this idea. The initiative seems like a silver bullet, relatively apolitical, and very easy for people to grasp onto and understand (unlike climate change, which as a whole is extremely complex). But herein lies many of the problems. For one the initiative completely shifted the focus of Davos away from proven solutions like carbon taxes. While carbon taxes are difficult and very political, a trillion trees is a good way for banks and pension funds, that are financially exposed to fossil fuel companies for $1.4 trillion, to act as if they’re doing something. Further, simply planting tons of trees might be bad for an individual ecosystem. In fact the Coalition for Environmental Justice in India has had to ask Leonardo DiCaprio from going forward with a tree planting project as ecologists say the current plan will dry up rivers, harm the floodplains, destroy biodiversity, and eventually make the area uninhabitable for the trees in the first place. The UN itself has said that the project is NOT a silver bullet and should instead be one smaller part of a larger plan.

Perhaps the biggest issue is that the initiative provides political cover to those making climate change worse and distracts from better solutions. Absent other climate policies, the United States would need to plant an area over twice the size of Texas to offset emissions. Trees play a critical role in climate change, but the best way to utilize them is to protect current forests and let them grow back naturally. And the best way to do that is to provide protections for the indigenous peoples living there, according to University of Minnesota Natural Resources Professor Forrest Fleischman. Professor Fleischman stated, “people are getting caught up in the wrong solution. . . . Instead of the guy from Saleforce saying, ‘I’m going to put money into planting a trillion trees,’ I’d like him to go and say, ‘I’m going to put my money into helping indigenous people in the Amazon defend their lands.’. . . That’s going to have a greater impact.”

Overall, the Trillion Tree Initiative is a good start, but should not be allowed to provide political cover for those invested in fossil fuels, and climate deniers. For example, the folks at Davos continue to support President Bolsonaro of Brazil, who has rolled back protections of indigenous people and the Amazon, one of the world’s largest carbon sinks, thus allowing large swathes of the tropical forest to burn and the people who live there to be killed. The trillion tree initiative should not distract us from such actions that ultimately make climate change worse. Instead of one, simplistic solutions, we should push for multiple, better solutions such as protecting public lands, forests, and the rights of the indigenous peoples who live there and protect the environment, along with planting more trees.

Controversial Community Solar Garden Program Is a Target of Minnesota’s 2019 Legislative Session

March 8, 2019
Energy Law, Environmental Law, Solar Energy

Hannah Payne, MJLST Staffer 

In 2013, Minnesota’s legislature opened the way for certain solar projects with the passage of the Community Solar Garden Program. The program requires Xcel Energy to purchase the energy created by Community Solar Gardens (“CSGs”) that are under a certain generation capacity. CSGs represent a middle ground between residential rooftop solar and large-scale, utility-owned solar. The idea is that medium-sized solar arrays are built in or near communities by developers, local residents buy subscriptions, and then the utility buys the energy from the array and credits the resident subscribers’ accounts. Solar developers sell subscriptions by highlighting the chance to save money and help the environment.

CSGs have been controversial since the inception of the program. Along with the significant growth of CSGs in Minnesota have come concerns about the sales practices of developers, who have been accused of misrepresenting the certainty of profit or stage of project development. The Attorney General warns consumers to “make sure they fully understand a subscription agreement and carefully consider whether they are willing to commit to its terms.” Opponents also decry that the majority of the capacity – 90% – of CSGs is purchased by commercial and other non-residential customers, undercutting the idealistic image of CSGs bringing renewable energy tangibly closer to communities. However, CSG advocates point out that the vast number of subscribers – 92% – are actually residential; they just use less energy than commercial customers.

At the heart of the controversy is the price issue. Opponents of the CSG program, including Xcel, say that it is far cheaper to produce solar energy in a large-scale setting. Xcel recently committed to going 100% carbon-free by 2050, and is likely focused on building renewable capacity efficiently. On the other side, proponents claim that Xcel’s lack of tolerance for competition has resulted in the undervaluation of CSGs because the social benefits and avoided costs have been ignored.

In any case, the CSG program looks poised to undergo change this year; several CSG bills have been introduced in the legislature. Senator Mike Goggin, a nuclear plant manager at Xcel, has proposed total repeal of the CSG program. Another bill would require Public Utilities Commission approval of CSG projects and cap the amount of capacity that may be built within the program annually at 25 Megawatts (there is currently no limit). Other proposals aim to improve developer sales practices, one listing detailed disclosures to be required in promotional materials, another calling for the state’s Clean Energy Resource Team partnership to develop a “disclosure checklist” for developers. Yet another bill would fund a study of “economic benefits to farmers” to investigate if the CSG program may be tweaked to be more farmer-friendly.

Minnesota is a national leader when it comes to CSGs; many will be watching to see how the legislation develops. As Xcel and others get more serious about renewable energy, conversations and controversies around renewables can only be expected to increase. Watching a debate like this unfold is a great way to keep a finger on the pulse of the energy world in this exciting time.

Renewable Energy vs. National Parks

February 6, 2019
Energy Law, Environment, Environmental Law, Property Law, Solar Energy

By: Bethany Anderson

That’s what happened in Animal Welfare Institute v. Beech Ridge Energy LLC, where a wind energy facility was curtailed because it stood in the migration pathway of an endangered species—Indiana bats. The court allowed the facility to operate, but with significant constraints. For instance, though construction on those turbines already under construction could continue, Beech Ridge could operate only after it applied for and obtained an Incidental Take Permit (“ITP”), which would immunize Beech Ridge from certain ESA penalties for killing and injuring bats. Moreover, construction of additional turbines was conditioned on obtaining an ITP. Additionally, the Court ordered the Fish and Wildlife Service (“FWS”) to determine when Beech Ridge could actually operate after Beech Ridge obtained an ITP, taking into account the migration and hibernation patterns of the bats (see this report for a brief discussion on the aftermath of the Beech Ridge case).

In a similar energy against nature context, significant outcry (see this article) over oil and gas drilling in and around national parks arose in the last year. The Trump Administration opened up more public lands for mineral leasing, and directed agencies to revise or rescind rules that burden domestic energy development. Environmental groups lamented the endangerment of pristine public lands, darkness of wilderness night skies, quiet of natural soundscapes, and tech- and industry-free experiences many visitors crave. These are all legitimate concerns because the experiences, sounds, and sights preserved in our national parklands are preserved relatively unspoiled only in these limited corners of the country. The groups’ sentiment seems to be “let’s just drill somewhere else, okay? It’s a big country. Preservation uses claim few acres in the scheme of things.”

The recent outcry misses, however, concern over greener energy projects that also threaten wilderness and nature values. Like in Beech Ridge, there are two sometimes competing goals here. Renewables serve climate change goals, displacing carbon-emitting energy sources like coal, natural gas, and oil. National parklands preserve land and culture in their natural and historical state. What happens when green energy development requires a huge expanse of flat land exposed to sun year round? A solar facility one mile from Mojave National Preserve presents an example. Is such a land use plan any less invasive than drilling? Maybe it’s quieter and lower to the ground, and maybe it serves a goal that those in the nature fight can get behind better than oil and gas drilling. In this instance, the solar facility still a mile away and does not in any way reach into the park through something comparable to directional drilling. But the facility uses land that was previously untouched and is still potentially visible from parks. As another example, what happens when the only way to get offshore wind online is to construct a high-voltage transmission line across a historic park? Developers say alternative energy sources that replace closing coal plants require a transmission line crossing a historic trail. Opponents say the line undermines the historic atmosphere of the trail and surrounding park area, and may open the floodgates to more industrialization in historic and pristine areas. In the same way as oil and gas drilling, these developments undermine some of the wilderness and historic values park advocates fight for.

So how do we balance these seemingly competing values? National parks are to be preserved unimpaired for the enjoyment of present and future generations. That mandate may conflict with climate change-combatting green energy tech seeking the most effective locations for new facilities.

The 9B regulations (“regulations”) that govern nonfederal oil and gas rights in and around national parks are a framework from which to balance renewables with the preservation mandate. The regulations require a plan of operations, plans in case of spills or other emergencies, a security bond in case of harm to park resources, and eventual restoration of the land, returning it as close to its original status as possible after operations conclude. Renewables are likely more permanent than an oil or gas well, so space and distance restrictions will need to be stricter. But a similar plan of operations, with mitigation strategies and emergency contingencies, is a good start, especially since the regulations are already in place in one piece of the energy sector. As energy technology develops, it constantly brings novel challenges into the existing legal context. The 9B regulations provide a starting point for the ever-growing green energy versus preservation debate.

Big Houses With Big Energy Demands

October 1, 2018
Energy Law, Environment

Bethany Anderson, MJLST Staffer 

A recent Aspen Times article says Pitkin County, home of the popular Aspen ski resort and numerous mountain mansions, will target larger homes as it heightens energy efficiency requirements and raises energy prices. The proposed change would increase a per-square-foot energy consumption fee from $1 to $45 for homes over 5,750 square feet and to $60 for homes over 8,250 square feet. While some argue changing these requirements is the best way to reduce energy demand on strained resources, others say the consumption fees don’t address key aspects of large home construction: the resources used in construction, the waste of resources in demolition, and the energy demand from pools, hot tubs, and snow-melting driveways

The U.S. isn’t alone in balancing growing (in various senses) housing demands and energy consumption constraints. Similar home size concerns arise in Australia, where housing units have increased in size while the number of residents per unit has decreased. That means energy usage per unit increases.

On the other hand, in an era of innovation and new technologies, smaller doesn’t necessarily mean more efficient. One Virginia man doubled the size of the house on his lot but cut energy bills. He says it’s not about being “eco-friendly” or about building a smaller home; rather, it’s about taking the time and effort – and shouldering the cost – needed to construct a sound, well-insulated home.

All of this poses legal and technological challenges. Technologically, how can (some) people get what they want – a big, “American-dream” house – without overconsuming energy? More investigation into construction techniques and materials – as professed by that Virginia man – could prove fruitful. Legally, can residences be regulated in the manner Pitkin County wants to regulate? Homes have not historically been regulated as products under the EPCA, a 1975 statute concerned primarily with energy supply, demand, and efficiency. Perhaps more comprehensive regulation, or including homes under the EPCA, would solve the energy demand and efficiency problems Pitkin County faces in a more equitable way than slapping on fees for large homes. New Jersey offers a rebate for homes that meet energy efficiency standards – maybe rewards are better than penalties. Australia proposes adding embodied energy, or the energy used in each step of production of a certain thing, to the cost calculus. And, though Pitkin County is considering increased fees, it has thus far not supported square footage limits for snow-melt driveways, pools, hot tubs, or patios. These might be good starting points for striking a balance between big demand for big things against limited energy resources.

 

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