2016 National Renewable Energy Policy Forum: What’s Next? Driving Growth in a New Policy Landscape Explores a World of Clean Power Plans and Favorable Tax Incentives; Exposes Potential Cracks
by Joanne Ivancic* (Advanced Biofuels USA) For a meeting about renewable energy held on St. Patrick’s Day, EPA Acting Assistant Administrator for the Office of Air and Radiation, Janet McCabe, began her address with appropriate words from an old Irish blessing:
May the wind be always at your back.
May the sun shine warm upon your face;
May the rains fall soft upon your fields.
From the rest of her presentation and for a substantial part of the rest of the conference, speakers celebrated enjoyment of the fruits of that blessing–wind power, solar power, biomass power. And, for them, favorable tax policies such as the Investment Tax Credit (ITC) and Producer Tax Credits (PTC) and the Clean Power Plan (CPP) in 2015.
Celebrating 2015 Achievements Cautiously
The feeling at this conference was cautious celebration. The Supreme Court stay on implementation of the CPP put a bit of a damper on the excitement and subdued overly optimistic visions of the future for the renewable power generation sector.
One significant sobering consideration was the realization that the carefully balanced decreasing tax incentives that were designed to dovetail with the increased markets resulting from CPP implementation could be significantly out of align if the stay on the CPP lasts more than a year or so. The lack of a fully staffed US Supreme Court, also possibly lasting for more than a full court session, could also impact the timing of this market development.
Senator Chuck Grassley (R-Iowa) was quite adamant that, although he accepted an award for his support of renewable energy and his work on these tax bills, he had no desire to extend the phase out of tax benefits to the industry which were intended to be temporary, even if the intended timelines changed.
For those interested in renewable energy for the transportation sector, not much was said about liquid biofuels beyond Senator Grassley’s mention of their importance and his continued support of them as part of the renewable energy portfolio of Iowa.
EPA’s McCabe did note that heavy duty vehicle greenhouse gas emissions and fuel economy standards were recently finalized; and that light duty vehicle greenhouse gas emissions and fuel economy standards should be finalized this summer. She mentioned CO2 standards for aviation, but did not express an opinion about using life cycle carbon analysis as part of that effort as a way to encourage renewable jetfuel development and use.
What It Will Take to Get Carbon Pricing
Senator Sheldon Whitehouse (D-RI) was most heartily, sincerely enthusiastic and optimistic about the promise of renewables.
He said that in private backroom discussions, many who publicly deny support for renewable energy and related policies express more favorable understanding of the issues and desire to see legislation passed that addresses climate change challenges. He believes that there could be significant support for a revenue neutral carbon fee. It could happen, he said, if legislators had reason to overcome their fear of retribution threatened by corporate lobbyists opposing such moves.
In hallway conversations, the solution was clear for renewable energy interests to be able to make equally credible threats to run successful primary opponents against those who don’t support legislation that addresses climate change challenges in productive ways. Getting the human and financial resources for this effort–that’s the real challenge.
Renewable Energy–The Different Worlds of Transportation and Power Generation?
While listening to the panels focused on electrical generation, distribution and customer relations, some of the differences between electricity energy and transportation energy–and a few of the implications for the difference in investor interest and policy development–became clear.
For one, utilities are intimately involved in producing, procuring and providing renewable power energy in a regulated marketplace with public utility commissions tasked with serving as a place for consumers and producers to mediate their differences. If the price of feedstock or equipment rises; utilities can obtain rate increases.
For another, utilities and fuel providers, fossil and renewable, have joined together to promote increased use of their products with an eye to increasing their markets. As Ethan Zindler, Head of Policy and Head of Americas for Bloomberg New Finance noted, electricity use in the US has plateaued, with the only foreseeable increase in demand coming from the transportation sector, driven (so to speak) by plug-in electric vehicles.
In the liquid fuel transportation energy sector, fossil fuel interests (Big Oil/Oil Majors/Big Gas) look at increased efficiency leading to decreased demand consistent with stated federal policies and general public interest; and renewable fuels competing for this diminishing market. This is complicated by the need for oil companies to sell the “bottom of the barrel” into the fuels market because it has no other use or market; it cannot be made into higher value chemicals; and it could become hazardous waste but for the fuels market.
In addition, the less regulated transportation fuels market exposes its viability to the vicissitudes of international oil prices which spooks investors looking for sure things, leaving development of “never-been-done-before” conversions of wastes, residues and sustainably grown energy crops in the lurch.
As Betty Watson, Deputy Director of Policy and Electricity Markets for SolarCity said, utilities are designed to operate in a one-sided market. Customers taking more control wreck the business plan of utilities, so utilities find themselves working to prevent customer engagement. They are looking for ways to change that dynamic and enable customer engagement in a way that is consistent and supportive of a valid business plan for utilities.
Compare that to the transportation fuels sector where customers engage every day with their fuel providers when they go to the pump and decide which fuel to purchase and decide which service station gets their business.
Utilities also can develop strong relationship with major corporate customers such as Google and Amazon, both represented on panels at this conference. Both agreed that financial considerations incentivized “going green;” that the sustainable, renewable aspects were nice spill-over. Next generation advanced renewable transportation fuels aren’t there yet; and ethanol that has the financial edge on petroleum fuel runs into delivery infrastructure controlled by its competition and engine design innovations stymied by federal agency actions and inaction.
Another difference in obtaining policy supports for renewable electrical energy: As Rhone Resch, President & CEO of Solar Energy Industries Association said, people are employed in the solar industry in every Congressional district; even states who are opposed to the CPP have lots of solar.
Although there may be existing or potential biofuels and renewable chemical opportunities in just about every Congressional district; most legislators, their staff and their constituents are not aware of them. Many people see biofuels as the benefitting Midwestern farmers only.
Biofuels will benefit from some spill-over from the popularity of renewable power. Roger Ballentine, President of Green Strategies, believes that campaigning in a general election against climate change won’t work.
Conflict, Competition and Collaboration
In a recent commentary in BioCycle Magazine, Jim Lemon and Michael Lemon write, “EVs are a climate change solution only if they are paired with growth in renewable electricity. Otherwise they will have the unintended consequence of increasing fossil fuel consumption. A Washington Post article (“Electric Cars and the Coal that Powers Them”) describes the importance of matching growing EV adoption with increased renewable energy generation, and the consequences of a mismatch.”
This is a sentiment Advanced Biofuels USA has been expressing for years. An uncomfortable insight that might be gleaned from this ACORE meeting is that if we are to achieve goals of decreasing energy use in general as a way to use all of the Earth’s resources most sustainably, efficiently and effectively, the power/heat energy sector should be looking, as the transportation sector does, at decreasing use of fuels.
We must recognizing that wind farms, solar farms and transmission lines also impact land use change. And, transmission line opponents in the Midwest ask why they should have to live beneath high voltage lines, why their property values and view sheds should be harmed to transmit power to the East when there’s plenty of wind there.
And we will find that fossil fuel energy for heat/power and transportation will be looking at diminishing markets which may cause a rift between the natural gas and solar/wind/geothermal/wave and other renewable energy interests. Just as Big Oil and renewable transportation fuels interests went their separate ways after collaborating on the 2005 Renewable Fuel Standard, believing that markets were growing, that there would be room for all and fossil fuel companies would diversify into renewable fuel products.
Biofuels for Here, Now and a Generation to Come; Preparing for a Transition to EVs
Those with concern for the environment and for mitigating and adapting to the ravages of climate change need to beware of unintended consequences of transitioning to plug-in electric vehicles, at least not before the grid is sufficiently renewable and not before energy storage systems are removed from reliance on imported rare earth metals. Why replace reliance on one limited extracted resource for another limited extracted (imported) resource? Why replace influence of OPEC with the influence of China?
And, with appreciation that today’s vehicles last 200,000 miles or more and can be expected to be using the roads for at least another generation, if not longer, we need to fuel them conscientiously. Until EVs and electric-powered public and freight transportation can be successfully paired with renewable power and storage, we need to use sustainable, renewable liquid fuels for transport.
Future Together or Apart?
Biofuels and renewable power interests should work in concert toward a future of shared success, with appropriate technologies and most efficient use of Earth’s resources as the primary objective. They should not waste energy fighting for the benefit of fossil fuel interests.
This conference exposed the different worlds in which power/heat interests and liquid transportation interests operate. These communities may share goals of transition to a truly sustainable renewable future. They need to understand and appreciate the value of each to achieving this goal. And determine not to hinder the others’ progress; but to find ways and opportunities for collaboration.
If utility-provided energy use continues on the plateau or diminishes as customers find alternatives or increase their conservation, renewable energy providers may find themselves in the same ballpark as renewable transportation fuel providers, pitching against all fossil fuel interests. And, they should have laid some foundations for moving forward together rather than holding each other back.
*Joanne Ivancic serves as the executive director of Advanced Biofuels USA.
Photos by J.Ivancic