Energy & Climate Policy Update: Strategies for Wyoming - - PowerPoint PPT Presentation

“Energy & Climate Policy Update: Strategies for Wyoming Policymakers in a Low-Carbon Environment

Wyoming Infrastructure Authority’s Spring Energy Conference; Jackson, Wyoming March 29, 2019

News from the Past Couple of Weeks Alone

Sources: https://thehill.com/policy/energy-environment/436183-google-gm-launch-group-focused-on-expanding-renewable-energy; https://cleantechnica.com/2019/02/05/bp-to-support-investor-call-for-alignment-with-paris-agreement/; https://www.ft.com/content/87cfc31e-44e7-11e9-b168- 96a37d002cd3; https://www.cnn.com/2019/03/20/investing/occidental-carbon-neutral-oil-shale/index.html

And Just This Morning

Source: E&E News (March 29, 2019)

Presentation Overview

 Update on International, Federal, Regional & State Energy/Climate Laws & Policies of Relevance for Wyoming  Current State of Play of U.S. Energy Markets  Update on the Wyoming CarbonSAFE Project  Possible Strategies for Wyoming Policymakers in a Low-Carbon Environment

Energy/Climate Law & Policy Update

Climate Policy Has Been a Fixture of International Law for Decades

 United Nations Framework Convention on Climate Change (1992)

• U.S. is a Party
• “Objective” is “stabilization of greenhouse gas concentrations in the atmosphere at a

level that would prevent dangerous anthropogenic interference with the climate system”; generally understood to mean global annual mean surface temperature increase should not exceed 2°C above pre-industrial levels

• “Pre-industrial levels” (~1750) were about 280 ppm CO2
• The 2°C target equates to about 450 ppm CO2 by 2050
• As of March 25, 2019, the level was 411 ppm CO2

 Kyoto Protocol

 U.S. not a Party, but relevant for Wyoming because we export energy  Effectively ends next year

The Keeling Curve (Scripps Institution of Oceanography)

Source: https://scripps.ucsd.edu/programs/keelingcurve/

2°C = 450 ppm

Paris Agreement: the New International Climate Treaty “Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels …”

Sources: Paris Agreement, art. 2 (FCCC/CP/2015/L.9); IPCC Special Report -- https://www.ipcc.ch/2018/10/08/summary-for- policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/; https://www.ipcc.ch/sr15/

 Takes effect next year; will replace the Kyoto Protocol  U.S. is a Party, but has filed papers to start the four-year process of withdrawing

• Yesterday, House D’s introduced a bill to keep the U.S. in the Paris Agreement

 Requires the effective de-carbonization of all fossil energy systems by 2050  That 2050 date has been pushed forward, however, under last fall’s IPCC 1.5C report

Regulation of GHG Emissions is Authorized Under Federal Law; & EPA is Still Regulating

 U.S. Supreme Court: Greenhouse gases (GHGs) are “air pollutants” under the Clean Air Act and the U.S. Environmental Protection Agency (EPA) has authority to regulate them (Massachusetts v. EPA, 549 U.S. 497 (2007))  EPA: EPA has been exercising that authority for the past decade, and to this day continues to regulate GHG emissions from both stationary and mobile (e.g., vehicles) sources While the Trump Administration has proposed to modify many of these GHG emission standards, key legal aspects (e.g., Endangerment Finding) remain intact and Massachusetts v. EPA remains the law of the land

U.S. House is Developing a Climate Bill for Likely Passage Prior to Nov 2020

 Energy & Commerce Committee (primary jurisdiction)



• Rep. Tonko (D-NY), Chair, E&C Subcommittee on Env. & Climate Change,

“A Framework for Climate Action in the U.S. Congress” (Mar. 21, 2019)

 Other Committees Playing a Jurisdictional Role

 Agriculture (Minnesota, AG, CCUS)  Natural Resources  Science, Space & Technology

 New Select Committee on the Climate Crisis (developing a legislative record, holding hearings, driving messaging)

Back to the Future: It’s 2008/2009 Again on Capitol Hill for Climate Policy

Sources & Image Credits: https://www.sunrisemovement.org/; https://www.carbontax.org/; https://eos.org/articles/congressional-task-force-outlines-its-approach-to-climate-change

L R

Various “direct actions” conducted, with more planned (summer 2019 D Presidential debates)

Clean Energy Standards Market-Based Approaches Set Forth by the New Democrat Coalition’s Climate Change Task Force

Order of Battle for Some Major Federal Legislative Climate Policy Proposals

Sources: Thomas.gov; congress.gov (bill searches, other); author’s notes & research; Carbon Utilization Research Council

Name/Bill No. General Approach Relevance for Wyoming Personal Observations

Sunrise Movement’s Green New Deal; H.Res. 109 (91 co- sponsors); S.Res. 59 (12 co- sponsors) Not a bill; a resolution instead “[T]o achieve net-zero {GHG] emissions through a fair and just transition for all communities and workers” through a 10-year mobilization (H.Res. 109) 100% of “power demand” to be met through “clean, renewable, and zero-emission energy sources” General accelerates the Paris Agreement’s mid- century goals (and earlier goals of some states) to 2030 Discounts fossil mitigation, including CCS/CCUS, although “zero-emission” presumably is an

• pening

Motivated by IPCC 1.5C report Sponsors: AOC (House); Markey (Senate) Takes the Stanford position that 100% renewables, supported with grid-scale storage, is technically, economically and commercially feasible sooner rather than later Endorsed by several D Presidential candidates H.R. 763, “Energy Innovation & Carbon Dividend Act of 2019” Carbon tax; bill imposes a fee on carbon content of fossil fuels and products derived from them; begins at $15 in 2019, increasing by $10/year Bill includes “rebates for facilities that capture and sequester carbon dioxide” Collected fees used for administration and dividend payments to citizens Explicitly recognizes CCS/CCUS Has 26 co-sponsors Minnesota-led Clean Energy Standard Not yet introduced; being developed 100% clean energy by 2050 Ability to generate credits from CCUS systems on non-electric sector sources, but must be partnered with a specific EGU (enables the electric sector to meet the 100% goal and still retain some use of fossil fuels); for non-EGU CCUS, “partner” natural gas units will earn more credits than “partner” coal units for the same amount of CO2 captured

A Capitol Hill Consideration for Wyoming vis-à-vis Climate Policy

Image credit: https://steemit.com/investments/@garyhay101/the-train-is-leaving-the-station-to-cryptoland-all-aboard

Some Monday Morning Quarterbacking: A decade ago, the Waxman- Markey bill included billions

• f dollars in bonus

allowances (read: “subsidies”) for CCS/CCUS &

• ther goodies for coal states

Where would CCS/CCUS be today had Waxman-Markey become law then? One of these days, there will be no more trains to catch

Many States Have Separate Climate-Related Policies

GHG Emission Standards for Power Plants

Source: Center for Climate and Energy Solutions (Feb. 2019 data)

GHG Emission Targets

Many States Have Separate Climate-Related Policies

Renewable/Clean Energy Electricity Portfolio Standards

Source: Center for Climate and Energy Solutions (Feb. 2019 data)

Low Carbon & Alternative Fuel Standards

Status of Selected New State Climate Laws & Bills

Sources: State legislative searches

Status of Selected State Climate Laws, Bills, Other

Sources: State legislative searches

Current State of Play of U.S. Energy Markets, As Influenced by Climate Policies

An Energy Transition is Underway

 General Trends for Electricity Generation

• Policies being put in place in some States to de-carbonize in the 2035-2050 window
• It feels as if natural gas is where coal was about 20 years ago or so; California, for example, is

exploring how to back-out gas in lieu of grid-scale storage

• Yesterday, Florida Power & Light announced its planning to build a 409 MW storage system then retire gas

plants

• The role of CCS/CCUS is in play

 General Trends for Transportation Fuels

• Vehicles -- Push is on for electricity as a transportation fuel, driven in part by decarbonization

considerations; some countries in Europe have enacted future bans on the internal combustion engine; could electrification provide a business opportunity for zero-carbon coal?

• Aviation – Pilot phase of the ICAO “Carbon Offsetting & Reduction Scheme for International

Aviation” begins next year (2021)

• Maritime – Last year IMO adopted a strategy that largely aligns the shipping industry with the Paris

Agreement

 General Trends for Industrials, Steel, Cement, Other

• Taking a hard look at CCS/CCUS; also considering other technologies (e.g., H2 in lieu of coking coal

for steel)

Source: https://www.icao.int/environmental-protection/CORSIA/Pages/default.aspx; http://www.imo.org/en/MediaCentre/HotTopics/GHG/Pages/default.aspx

Wyoming CarbonSAFE Project: Update & Current Status

• Projects… will address key research gaps in the path toward

the deployment of carbon capture and storage (CCS) technologies, including the development of commercial-scale (50+ million metric tons CO2) geologic storage sites for CO2 from industrial sources…

• Projects under CarbonSAFE aim to develop integrated CCS

complexes that are constructed and permitted for operation in the 2025 timeframe

• Four competitive, down-select grant rounds, subject to future

congressional funding & programmatic support

• Phase 1 Integrated CCS Pre-Feasibility
• Phase 2 Storage Complex Feasibility
• Phase 3 Site Characterization
• Phase 4 Permitting and Construction

U.S. Department of Energy’s Carbon Storage Assurance Facility Enterprise (CarbonSAFE) Initiative

Phases 3 & 4 have not been formally announced for competitive bid

CarbonSAFE Isn’t Just About the Geology

Image Credits: https://www.score.org/event/one-page-business-plans-simple-highly-effective; http://coastlineartgallery.blogspot.com/2014/10/art-and-law.html; https://www.publicoutreachnz.com/

CO2-EOR CO2-Products

Wyoming CarbonSAFE’s Phase 2 Project

Phase 2 Project Partners

Possible Strategies for Wyoming Policymakers in a Low-Carbon Policy Environment

To Be Effective At Scale, Any Policy Strategy Must Operate Beyond Our Borders ….

Source: EIA, State Energy Data System (July 31, 2017) (available at https://www.eia.gov/todayinenergy/detail.php?id=32272)

A Possible Tiered Policy Approach

 Inside Our Borders, Inward Facing:

• Don’t give up the fight for coal, but take a hard-look at what is happening around us
• Take a look at the challenges facing oil and natural gas, too
• Expand sustained support for ongoing low-carbon projects (e.g., CarbonSAFE, Carbon Engineering, flameless oxy-

combustion, other) & infrastructure (e.g., ITC)

• Pursue potential new opportunities (e.g., grid-scale storage) that could have commercial relevance and economic

benefit for Wyoming: diversification is imperative

• Wyoming must maintain its leadership in low-carbon research
• Reconsider the liability discussions from a decade ago

 Inside Our Borders, Outward Facing:

• Convene & take stock of all energy resources, both fossil & renewable; and look over the horizon to consider what

might also be possible (e.g., grid-scale storage; REE’s for renewable energy systems; uranium for a revived nuclear industry)

• Assess energy resources by common metrics (e.g., capacity, export markets, economics) then, where feasible and

helpful, benchmark them based on carbon intensity or other low-carbon attributes (current and possible)

• Analyze what other States are doing (e.g., Illinois, South Carolina) vis-à-vis low-carbon policies
• Develop specific low-carbon policy strategies that work for Wyoming

 New regulatory models (WPSC, WOGCC, WDEQ, other)  Definitions of “clean” that include CCS/CCUS, high-efficiency  Resource pricing metrics that take into account other attributes (e.g., reliability)  Model State statutes & regulations  Social License

• Prepare the “pitch” book, then take it on the road
• The new UW interdisciplinary policy initiative should be helpful in these endeavors

A Possible Tiered Policy Approach

 Regionally (Pacific NW + Rocky Mountains) + States/Markets Utilizing Wyoming Energy:

• Examine the “Colorado” Approach”: decarbonizing domestically but signaling it still needs fossil energy
• Building off of CarbonSAFE and other initiatives, develop – and thereafter export – business, finance & regulatory

models for CCS/CCUS and other low-carbon projects and technologies

 Nationally:

• Engage on the House climate bill negotiations, as it might be the last train to leave the station

 Internationally:

• The Paris Agreement’s “Rulebook” is set to be completed at COP25 in Chile in December 2019
• A key remaining unknown is the fate of the Article 6 Market Mechanisms; Article 6 has the potential to help

CCS/CCUS

• Wyoming should consider engaging with the Global CCS Institute (GCCSI), World Coal Association (WCA),

International Emissions Trading Association (IETA), IEAGHG and others this year to help push Article 6 over the finish line

• As the Energy Capital of the World, Wyoming should perhaps consider a formal role with WCA, other

international-facing organizations

The Existing Coal Fleet: An Initial Opportunity for a Wyoming Policy Approach?

Source: “The Coal Cost Crossover: Existing Economic Viability of Existing Coal Compared to New Local Wind and Solar Resources” (Energy Innovation, March 2019) (available at https://energyinnovation.org/wp-content/uploads/2019/03/Coal- Cost-Crossover_Energy-Innovation_VCE_FINAL.pdf)

Q&A

For More Information: Kipp Coddington Director, Energy Policy & Economics School of Energy Resources University of Wyoming Laramie, WY kcodding@uwyo.edu Ph: (307) 766-6731 Cell: (703) 628-3950