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All Eyes on FERC: Energy vs. Environment

Key Elements Needed in FERC’s Revised Pipeline Policy

FERC does not have the luxury to focus only on NEPA and issues dealing with GHG emissions, landowner and environmental justice (EJ) community issues. While important issues, interstate natural gas facilities are critical infrastructure. FERC’s decisions on new interstate natural gas facilities will have to equally consider energy security and resilience of the natural gas and the electric grids. [node:read-more:link]

Reimagining Hydropower and Green Hydrogen

Hydropower projects can produce green hydrogen

The US, European Union, and other countries that have set net-zero carbon emission targets and participate in the Paris Accord are placing big bets on wind and solar to produce green hydrogen (H2). Here in the US lawmakers and policy makers seem to have overlooked hydropower as a source of renewable energy even though it accounts for 52 percent of the nation’s renewable electricity generation and 7 percent of total electricity generation . For example, indigenous communities and environmental groups are opposed to hydropower because of its impacts on fish, wildlife, and water quality.

Many hydropower owners are taking a hard look at the economic value of their projects in light of climate change, aging infrastructure, increased operating costs due to environmental compliance, and evolving electricity markets. Many small hydropower projects are especially affected by the above factors since they provide only electric energy and not the peaking capacity and ancillary services valued by the electric grid. Nevertheless, these projects have value since a growing number now contain license conditions to reduce environmental impacts when they were initially built. In a previous column, this author also discussed a way for owners of “low impact hydropower” to fully monetize their project’s attributes by seeking renewable energy certificates (RECs).

This author now also suggests that hydropower can play a significant role in jumpstarting the production and distribution of green hydrogen (H2). However, this will require all hydropower owners and developers to reimagine how their projects will operate and diversify their revenue streams over the next 20 years. If hydropower projects can produce sufficient quantities of green H2, they could accelerate efforts to decarbonize natural gas by blending green H2 in the natural gas grid and help states meet their net-zero emissions. On November 23, 2020, Southern California Gas Co. and San Diego Gas and Electric announced the creation of a Hydrogen Blending Demonstration Program . This program is the first in California and the nation.

One of the biggest challenges with the hydropower industry has been its laser focus of trying to influence Congress and regulators on streamlining the siting process instead of reimagining a non-traditional role for hydropower outside of the electric grid. The National Hydropower Association (NHA) has influenced both Congress and the Federal Energy Regulatory Commission (FERC) to streamline its environmental and regulatory reviews to some degree. The NHA has had some success to date but is still short of what is expected by many hydropower owners and developers . For example, FERC has promulgated an expedited process for issuing original licenses for qualifying facilities at existing nonpower dams and for closed-loop pumped storage projects, pursuant to sections 3003 and 3004 of the America’s Water Infrastructure Act of 2018. NHA has also seen progress in extending the time to construct new hydropower projects and set a minimum FERC license term of 40 to 50 years instead of 30 to 50 years.

Despite the above progress, FERC’s regulatory reviews remain some of the most comprehensive and take years for staff to complete, despite the size of the hydropower project. Both small and large hydropower projects that were licensed or constructed prior to passage of the National Environmental Policy Act of 1969 (NEPA) are especially challenged by new environmental conditions included in new licenses and operating conditions. 

NEPA REVIEW, POWER PURCHASE AGREEMENTS, AND FINANCING CHALLENGES

Comprehensive NEPA reviews and compliance with environmental laws during the life of a hydropower project are here to stay and are not likely to change. Despite being a form of renewable energy, many hydropower projects are lightning rods for public controversy and duplicative regulation by other federal and state agencies other than FERC. The controversy centers on competing use of rivers. Many indigenous communities and environmental groups and environmental agencies want to use water to restore anadromous fish runs and protect fish, wildlife, water quality, and recreation. In contrast, hydropower owners and other communities want to use the project for power generation, water supply, and flood control and other developmental uses, including the prevention of salt-water intrusion on ground water in coastal areas. Download the complete article in the Climate & Energy Journal. [node:read-more:link]

Comments on FERC's Certification of New Interstate Natural Gas Facilities

US Natural Gas Pipelines

Russo on Energy LLC (RoE) filed comments on FERC's Notice of Inquiry on whether, and if so how, it should revised its current policy on whether interstate gas facilities are in the public interest. RoE's views were based on its independent research and did not represent any of the current stakeholders in Docket No. PL18-1-000. RoE comments can be summarized as follows:

  1. FERC should not second guess the markets nor abandon precedent agreements entirely as a determination of need. Instead, the Commission should supplement its needs analysis with official comments from state energy agencies and public utility commissions, especially when affiliate companies are involved;
  2. FERC should use it new Office of Public Participation and existing Dispute Resolution Service to facilitate settlements among gas facility applicants and landowner, EJ communities and other stakeholders including state agencies;
  3. FERC should condition certificates to implement technologically feasible mitigation measures to reduce intended and unintended methane and CO2 emissions or require the development of such plans during the life of the project;
  4. FERC should increase oversight and enforcement of conditions to mitigate environmental impacts during construction and ensure restoration of land;
  5. FERC should require on the ground surveys to identify environmental justice communities and not rely solely on census data;
  6. FERC should use the 4 As of energy security (availability, accessibility, affordability and acceptability) as a framework to determine whether or not a project is in the public interest;
  7. FERC should revise it Pipeline Policy to communicate to interstate natural gas pipeline applicants that it values mitigation measures that reduce intended and unintended methane and CO2 emissions on proposed facilities; and
  8. FERC's revised policy statement should also communicate the natural gas and oil industry how it values decarbonization efforts being developed using Responsibly Sourced Gas, Renewable Natural Gas and Blending of Hydrogen in natural gas pipelines.

Download the official comments here. [node:read-more:link]

Rethinking Low Impact Hydropower and Renewable Energy Certificates

Low Impact Hydropower Project

Wind and solar projects along with their related renewable energy certificates RECs) are on the minds of energy generators, consumers and policy makers. This begs the question as to why hydropower and specifically low impact hydropower are not eligible to receive the same attention. A closer look at the issue reveals both the states and consumers have much to say about the technologies that qualify for RECs. In fact, low impact hydropower projects may qualify for RECs under some individual State Renewable Portfolio Standards (RPS) or the US Environ- mental Protection Agency’s (EPA) Green Power Partnership but not all.

This places the burden on a hydropower developer who believes that their project qualifies for a REC to either work with the relevant state agencies to determine the project’s eligibility and then with third-party validation organizations such as the Low Impact Hydropower Institute (LIHI) and the Center for Resource Solutions Green-e Standard (CRS)2 to be eligible to receive a REC. That may be difficult and expensive, because a state’s view of hydropower is based in part on past regulatory practices associated with the construction and operation of hydropower projects. Some states may understand this, but it may be difficult for them to make exceptions to existing rules and regulations even when a project’s operation changes and benefits environmental resources.

The process of obtaining RECs for a hydro- power project is complicated because the definition of “low impact hydropower” is not defined by federal law. In fact, many states and consumers automatically exclude hydropower because of its reputation as being threatening to the environment and aquatic life. In contrast, states and consumers readily embrace wind and solar as projects that would qualify for RECs even though the effects of wind farms on bird and bat populations and the large environmental land requirements of solar projects are well known. This author believes that rethinking the definition of low impact hydropower is long over- due. States and most consumers fail to recognize the significant changes in law and the Federal Energy Regulatory Commission’s (FERC) regulatory program and case law regarding US hydropower that have occurred since the passage of the National Environmental Policy Act (NEPA) of 1969. When these factors are considered, this author believes there are large numbers of hydropower projects that would qualify as “low impact” and ultimately qualify for RECs. If that occurred, hydropower could be recognized for its contribution in various state RPS programs and in the EPAs Green Power Partnership and play a larger role in the nation’s energy transition away from fossil fuel generation. This would benefit hydropower owners and companies wishing to decarbonize their organizations. Read the full article in the Climate and Energy Journal. [node:read-more:link]

Responsibly Sourced Natural Gas: Time to Change the Natural Gas Industry’s Narrative

Benefits of Responsibly Sourced Natural Gas

The majority of companies in the natural gas and liquefied natural gas (LNG) industry seem fixated on promoting natural gas as the clean “bridge fuel” to further deployment of renewable energy technologies. While natural gas emits far less carbon dioxide (CO2) than coal or oil used to generate power and heat, , it still is a “fossil fuel” that contributes to the adverse effects on climate. Fossil-fuel opponents are increasingly skeptical of the climate benefits reported by the US natural gas and LNG industry. These opponents often cite a  study released in April 2020 that showed methane emissions from the Permian basin of West Texas and New Mexico, one of the largest oil-producing regions in the world, are more than two times higher than federal government estimates.  

The time has come for the natural gas and LNG industry to recognize that the “bridge” for natural gas may be much shorter than previously thought.

            This author believes the time has come for the natural gas and LNG industry to recognize that the “bridge” for natural gas may be much shorter than previously thought. It’s time for the industries and individual companies to shelve slogans and take action to distinguish US natural gas from other global sources by embracing a narrative of “Responsibly Sourced Gas (RSG).” To do otherwise, increases the risk that natural gas and LNG will fall victim to the growing movement to decarbonize the heating, power and transportation sectors via an all electrification strategy. Federal and state policy makers, regulators and lawmakers could begin questioning whether US natural gas and LNG industries could even play a role in the clean energy economy envisioned by the incoming Biden Administration and evidenced by the Biden-Sanders Climate Action Plan. Read more by downloading the entire article [PDF] from the Climate & Energy Journal. [node:read-more:link]

Carbon Pricing in Wholesale Electricity Markets—Options for Fossil-Fuel Generators

This article was co-authored by Jack Gross, a graduating senior of the George Washington University class of December 2020.

On October 15, 2020, the Federal Energy Regulatory Commission (FERC) announced in a proposed policy statement that it had jurisdiction over carbon pricing mechanisms within the wholesale electricity markets. In that same policy statement, FERC also confirmed it had the authority to approve such rules if brought forward by regional transmis- sion organizations (RTOs) and independent system operators (ISOs).

FERC’s announcement ushers in a new era of wholesale electricity market regulation, particularly for fossil-fuel power generators using natural gas, coal, and biomass. These generat- ing resources will no longer be able to rely on

inexpensive fuels to remain competitive. Instead, they will have to navigate carbon pric- ing mechanisms for existing and future power plants if they are to remain competitive in wholesale electricity markets designed to decarbonize the electric power sector. As is the case with any new proposal from FERC, it will take time for RTOs and ISOs to develop carbon pricing proposals with their stakeholders and market participants. This gives companies time to discuss and develop strategies.

Because fossil-fuel power generators consist of regulated electric utilities, electric and gas utilities and independent power producers (IPPs), each of their approaches to dealing with carbon pricing will likely vary. Some companies might take a “business as usual” approach, including operating existing power plants until the end of their existing economic life, even if it’s shortened by carbon pricing. Generation owners may also decide to do one or more of the following to address carbon pricing in wholesale electricity: [node:read-more:link]

New NEPA Reforms could delay Renewables and Clean Electric Transmission

Federal Lands where trigger NEPA

On July 16, 2020, the President’s Council on Environmental Quality (CEQ) finalized an overhaul of the guidelines for implementing the National Environmental Policy Act (NEPA) regulations (rule). Supporters of the new regulations applauded the changes, but the states and numerous national environmental groups vowed to challenge the new rule in the courts. The timing of the final rule just prior to the Presidential election in November will also create a great deal of uncertainty for projects currently undergoing NEPA reviews and possible delays by those planning projects. [node:read-more:link]

Hydrogen: Hype or a Glide Path to Decarbonizing Natural Gas – Part 2

We continue the analysis of hydrogen which began in Part 1. This time we cover the following topics:

  • The status of efforts to blend hydrogen in the U.S. grid,
  • What hydrogen blending means for decarbonizing natural gas,
  • Regional opportunities to increase hydrogen in the U.S. and to serve Fuel-Cell Electric Vehicles (FCEV), and
  • The Disconnect between hydrogen policy and green hydrogen production shortages

Hydrogen: Hype or a Glide Path to Decarbonizing Natural Gas – Part 1

Existing technologies that produce blue hydrogen with carbon capture, use, and storage (CCUS) could be a bridge to widespread production of green H2, which is produced with renewable energy without carbon dioxide (CO2) emissions. By incentivizing and encouraging higher production of blue H2, which primarily uses natural gas, and green H2, the transportation sector could be decarbonized to combat the adverse effects of climate change. [node:read-more:link]

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