The Biden administration’s pressure on Congress to enact a national clean electricity standard in the US is pitting utilities with substantial natural gas capacity against environmental groups who want the fuel to be excluded from potential clean energy standards. These tensions pose yet another obstacle to establishing a mandatory federal CES, a key part of President Joe Biden’s goal of decarbonizing the energy sector by 2035.
Since the beginning of his presidency, Biden has promoted the creation of a nationwide CES to help achieve his climate goals and made the policy part of his infrastructure-focused American Employment Plan, launched in March. But key parts of Biden’s infrastructure plan need congressional approval, and negotiations with lawmakers on the issue have become increasingly tense.
On June 8, infrastructure talks between Biden and key US Senate Republicans came to a halt, with Republican Party lawmakers constantly pushing for a smaller, more streamlined package focused on traditional projects such as new or renovated roads and bridges. .
Democrats could try to move Biden’s infrastructure plan through budget reconciliation, a process that allows legislation to be passed by a simple majority in both houses of Congress. But some climate advocates in Congress are questioning whether provisions like the CES will be part of an infrastructure bill.
“The mood has left the infrastructure discussion, as it has deviated from bipartisanship. It may not come back,” tweeted Senator Sheldon Whitehouse, DR.I., a member of the Senate Environment and Public Works Committee, on June 7th. “I don’t see the preparatory work for a tight Senate climate vote taking place in the administration “and Congress is ‘running out of time’ to push this legislation forward, he added.
Meanwhile, US Senator Joe Manchin, DW.Va., who chairs the Senate Energy and Natural Resources Committee and is a swing vote in the narrowly divided upper house, frustrated his party’s more liberal members by seeking time to win a bipartisan commitment through regular order.
Manchin is working with several other senators on a bipartisan infrastructure proposal. While the offer may include climate clauses, Manchin may hesitate to support a CES proposal if he thinks it’s too punitive for fossil fuels, since the West Virginia legislator’s home state is a major producer of coal and gas.
Along with broader uncertainty about infrastructure legislation and the role of climate policy within it, divisions have emerged over how a potential CES should be applied to natural gas generation.
With gas currently supplying about 40% of US electricity production, most major CES bills in Congress in recent years have made room for the energy source. Gas has replaced a substantial amount of carbon intensive coal capacity over the past decade and could incorporate carbon capture technologies to achieve little or no emissions.
“We cannot forget the role of natural gas and what it plays in reducing emissions,” said Jennifer Loraine, managing director of public policy at Duke Energy Corp., in an interview. “Therefore, a CES must recognize that by providing a permanent partial credit for [natural] gas.”
A comprehensive climate bill introduced by US Representative Frank Pallone, Jr., D-N.J. And other Democratic leaders of the House Energy and Commerce Committee in March included a CES aligned with Biden’s goal of 100% free energy emissions by 2035.
The project would initially allow natural gas-fired power plants to receive partial credits for clean electricity if they emit less than 0.82 metric tons of CO2 per MWh, adjusted for upstream GHG emissions. TThis limit drops to 0.4 metric tons per MWh by 2035, meaning that less gas generation would qualify for CES over time.
But the 2035 lower limit is still nearly equal to the emissions from a combined cycle natural gas plant with no carbon capture installed, said Abhoyjit Bhown, head of carbon capture research and development at the Electric Power Research Institute.
Other CES bills in Congress give similar credit to gas-fired and longer-term power plants.
American Electric Power Co. Inc. and Xcel Energy Inc. have endorsed a CES bill introduced in 2020 by US Rep. Diana DeGette, D-Colorado, which aims for 100% clean energy by 2050. The legislation would allow generators to receive zero – emission credits for upstream methane and carbon emission reductions as well as carbon capture technologies.
The AEP also supported a bipartisan bill introduced in 2020 by US Representatives Kurt Schrader, D-Ore., and David McKinley, R-W.Va. The project, which aims at an 80% cut in carbon dioxide emissions from the energy sector by mid-century, would credit every generation with annual CO2 intensity below 0.825 metric tons per MWh.
In addition, the proposal by Sen. Tina Smith of the US, D-Minn., CES 2019, which Xcel supports, would allow the issuance of sources for receive partial credit if they produce less than 0.4 metric tons of CO2 per MWh. Smith’s bill would place the US energy sector on path to zero net emissions by 2050.
Smith, McKinley and Schrader are expected to present their respective proposals at this Congress. Spokespersons for DeGette have not responded to a request about when the Colorado legislature can resubmit its bill.
“It is imperative that a CES encourage innovation and the development of new dispatchable carbon-free resources that are available 24 hours a day, 7 days a week, in all weather conditions,” said Xcel spokeswoman Julie Borgen. “But it should also allow energy suppliers to maintain existing nuclear power plants and dispatchable generation like natural gas to ensure reliability and affordability until new technologies become commercially available.”
In addition to the substantial amount of gas-fired generation already in operation, the US is expected to add about 60 GW of new gas-fired capacity in 2021-2027, according to data compiled in February by S&P Global Market Intelligence.
Companies with the most planned new gas flared capacity in the US in 2021-2027 include FGE Power LLC, Ember Partners L.P., NTE Energy, NextEra Energy Inc. and Emera Inc., Market Intelligence data shows.
some green groups complain
While most major CES bills only offer partial credit for fossil fuel-based generation without carbon capture, some environmental groups think this is too much.
In a letter sent to Congressional leaders in May, some 700 environmental and social justice groups, including Friends of the Earth and the Center for Biological Diversity, urged Congress to pass a 100% renewable energy standard. They considered resources such as gas, nuclear power and fossil fuel-powered plants with carbon capture as “false solutions”.
“Even a partial credit for fossil fuel resources that tries to take into account life cycle emissions runs the risk of subsidizing environmental damage in coming years,” the letter states. “Allowing dirty energy to be combined with clean energy under a federal energy standard would prolong the existence of sacrificial zones around dirty energy investments and delay the transition to a truly clean and renewable 100% energy system.”
in a recent blog post, Friends of the Earth said less than 1% of gas-fired installations would be excluded from receiving a partial credit during the first decade of the CES proposed in the House energy committee’s comprehensive climate bill. The group also said that most gas plants would qualify for credits below the limit of 0.4 metric ton per MWh of carbon.
The limit would only exclude most gas plants, the group predicted, if the US Environmental Protection Agency “accurately and aggressively measured” methane leaks from natural gas infrastructure. But Friends of the Earth said the EPA has in the past failed to accurately measure the lifecycle emissions of other fuels, raising doubts about its ability to do so for a CES.
“A lifeline for fractured gas and other bogus solutions is no better than nothing,” said Lukas Ross, program manager for Friends of the Earth. “If a clean energy standard like President Pallone’s project is included in the American Employment Plan, progressive climate activists across the country will rise up and oppose the project.”
If Democrats get on the same page regarding infrastructure legislation, the reconciliation process could help them sidestep Republican resistance, especially if Democrats include bold climate measures.
But adding a CES to an infrastructure-focused reconciliation project would still be difficult. The CES would need to be structured to meet the budgetary requirements of the reconciliation process, including that change government spending or revenue by a certain amount.
“In Washington, there’s a home industry that has grown up trying to think of how something that is functionally similar to a CES could go through budget reconciliation,” said Conrad Schneider, director of defense for the Clean Air Task Force. But Schneider noted that such a program would need to be narrowly crafted to comply with the Byrd Rule, which prohibits provisions deemed “foreign” to the US budget by the Senate Congressman.
With talks dragging into the summer, the desire for a deal could lead Democrats and Republicans to band together around bipartisan legislation similar to the McKinley-Schrader bill, said Samuel Thernstrom, founder and CEO of the Innovation Reform Project Energetics. Thernstrom, who is working to build support for McKinley-Schrader, noted that the bill would make big investments in technologies like long-term energy storage and carbon capture in the first decade before emissions reduction targets appear.
“I think the list of first-choice members isn’t long today,” Thernstrom said in an interview. “But the list of members who are looking for [McKinley-Schrader] thinking, ‘You know, I might not get my first choice, but this is something I could get,’ I think it’s significant. “
Jeff Holmstead, a former assistant EPA air office administrator who now represents public services at the law firm Bracewell LLP, said legislation that falls “in the middle” of the McKinley-Schrader and DeGette bill could have “a real chance”.
“There are a lot of people in the business community who believe this would be a good policy and would provide some regulatory certainty,” said Holmstead.