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House Gives Obama Administration Victory With First U.S. Legislation To Address Global Warming
Chris Holly and Eric Lindeman
In a landmark policy triumph for the Obama administration, the House passed broad energy legislation June 26 establishing historic measures intended to check climate change through limits on greenhouse gas emissions and to encourage investment in clean energy.
Approved by a vote of 219 to 212, the bill (H.R. 2454) only barely survived differences among the Democratic majority. Its passage followed months of hearings and debate by the House Energy and Commerce Committee, which cleared the bill May 21 after a week of markup, and was the result of unusually visible last-minute bargaining among the House leadership and members.
H.R. 2454 is aimed at reducing greenhouse gas (GHG) emissions through energy efficiency standards, quotas for renewable energy production, and a GHG emission “cap and trade” system.
Democrats and supporters of the bill called it a jobs bill that will turn the nation toward cleaner energy generation. Republicans vehemently argued that it will increase energy prices for Americans at a time of economic downturn and send jobs overseas. They termed the measure’s cap and trade system for GHG emissions a “cap and tax” plan.
Although the energy-climate change legislation is a major victory for the administration and for House Speaker Nancy Pelosi (D-Calif.), who had vowed action on a bill by the July 4 recess, its passage in the Senate is still problematic. Senate Environment and Public Works Committee Chair Barbara Boxer (D-Calif.) is hoping to take up her own bill by the end of July and has said she will try to strengthen environmental standards.
House Majority Leader Steny Hoyer (D-Md.) described the bill as “a compromise that can pass this House, pass that Senate, be signed by the President and become law and make progress.” In the end, however, Sen. Majority Leader Harry Reid (D-Nev.) cautioned, “The bill is not perfect,” calling it a “good product” for the Senate to shape.
A Senate energy and climate change measure that can survive an almost certain Republican filibuster—which requires 60 votes to stop—will likely have to be weaker than H.R. 2454.
The House legislation caps emissions of carbon dioxide (CO2) and other heat-trapping gases at 2005 levels beginning in 2012. It reduces emissions by 17 percent below that baseline by 2020 and 83 percent by 2050, and sets up a market-based emissions program for utilities, manufacturing industries, and other GHG-emitters, which must surrender an emission allowance for each ton of GHG released into the atmosphere.
But to avoid disrupting the economy in the early years of the cap and trade program, most of the emissions allowances will be distributed at no charge to electric distribution companies, vulnerable industries, low-income consumers and states. That compromise was intended to prevent energy rate shocks and to ensure that energy-intensive and trade-exposed U.S. manufacturers are not competitively disadvantaged to foreign companies not bound by emission constraints.
The bill also provides allowances for funding initial investments in carbon capture and storage (CCS) technology—a provision aimed at ensuring that coal continues to be a major source of U.S. energy. But when a specified capacity of CCS-equipped generation is operating, probably about 2015, new power plants would be required to cut CO2 emissions by at least 50 percent and in later years, by 65 percent.
H.R. 2454 establishes stringent energy efficiency standards for homes, commercial and federal buildings, appliances and other electrical equipment, provisions Democrats said would slash demand for electricity and help reduce emissions and consumer costs. And it pushes many electric utilities to eliminate older, polluting generation by requiring them to use renewable energy sources to produce at least 12 percent of their capacity and to demonstrate up to 8 percent savings from energy efficiency, by 2020.
With only 44 Democrats opposing the bill and eight Republicans crossing over to back it, the vote adhered closely to party lines and to regions—opposition was predominant in the Midwest and South, where coal is produced and electric utilities rely on coal-fired generation. In the Senate, those bipartisan and regional lines are even more pronounced.
Many supporters of a climate change measure in the House were only begrudgingly satisfied with the outcome, maintaining that too many opportunities for stricter controls on polluting industries and practices were squandered to achieve final passage of the bill authored and marshaled through by Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and energy and environment subcommittee Chairman Rep. Ed Markey (D-Mass.).
The House legislation ended up with a handful of significant concessions to placate representatives and their constituents in agricultural states, coal producing and dependent states, the hydro and nuclear power industries, and even two cabinet-level government agencies.
In the week leading up to the bill’s passage, Waxman made a major concession to Agriculture Committee Chairman Collin Peterson (D-Minn.), agreeing to an amendment that gives the U.S. Agriculture Department (USDA) authority over farm-related emissions offsets—reductions achieved in sectors not directly covered by the caps—rather than the Environmental Protection Agency. EPA retains authority over U.S. non-farm offsets and all international offsets.
The change, which gained the support of a number of Democrats who had been opposed to the bill, was criticized by environmentalists who say that USDA lacks the expertise to ensure that farm-related offsets represent real, verifiable emissions reductions.
More than three hours of debate on the climate change measure underscored the sharp partisan divide in Congress. While Markey called it “the most important energy and environmental legislation in the history of our country,” Republican Dana Rohrabacher (Calif.) warned, “If this bill passes, our jobs will go to China and the economy will go to hell.”
But Democrats, echoing a theme Obama sounded throughout his campaign, countered that pricing carbon by capping emissions would send a strong signal to investors and entrepreneurs to unleash billions of dollars in new investment in wind and solar energy technologies and create millions of new jobs in new manufacturing plants built to produce parts for the clean energy industry.
“This legislation is an enormous jobs bill for America,” Waxman said. “It will promote enormous investment and growth for decades ahead—creating millions of jobs for the new energy economy of the 21st century.”
With the United States still laboring under a crippling recession, the vote was difficult for Democrats from hard-hit agricultural and manufacturing states. But Democratic leaders said members who had been undecided began to shift in favor of the measure when analyses released last week by the Congressional Budget Office and EPA concluded that the legislation would impose only modest annual costs to U.S. households by 2020. CBO found that average househouse costs would increase $175 annually under the bill, and EPA estimated $80 to $110.
In the days leading up to last week’s debate, the White House—which saw the vote as a crucial test of Obama’s leadership—mounted an aggressive lobbying campaign in which Cabinet members and senior White House officials personally lobbied wavering Democrats. Obama weighed in forcefully in a statement to reporters the day before the vote.
“I can’t stress enough the importance of this vote,” the President said. “I know this is going to be a close vote, in part because of the misinformation that’s out there that suggests there’s somehow a contradiction between investing in clean energy and our economic growth. But my call to those members of Congress who are still on the fence, as well as to the American people, is this: We cannot be afraid of the future, and we can’t be prisoners of the past.”
Ironically, much of the heaviest lobbying Friday was focused on progressive Democrats who complained that the bill’s near-term emissions cap is insufficiently stringent to address scientists’ global warming concerns.
Thirty Democrats, most of them progressives, registered their objections by opposing a floor resolution that set the rules for debate on the legislation. The resolution squeaked through by a vote of 217-205, but some of the Democrats who voted “no” rejoined the fold to support the Waxman-Markey bill.
Waxman called the vote a "decisive and historic action" that will give the United States a leadership role in energy efficiency and renewable energy technologies. While important for the Obama administration's domestic policy, the vote also demonstrates American determination to act global warming, which may be key in negotiations of a new global climate change treaty, set for Copenhagen in December.
"This really point to the fact that the United States is very serious on climate," said German Chancellor Angela Merkel, an advocate of stringent measures to address climate change. In Washington last week to meet with President Obama, she said endorsed the U.S. legislation, despite its failing to meet European hopes on GHG emission limits.
New Jersey Wind Power Developers Get Interior's First OCS Leases
Jonathan Rickman
Three New Jersey-based wind power developers can now begin building meteorological testing facilities offshore from New Jersey and Delaware after receiving the first five renewable energy leases for the Outer Continental Shelf—what Interior Secretary Ken Salazar called “the first major step” toward harnessing the Atlantic Ocean’s abundant winds.
Fishermen’s Energy LLC, Bluewater Wind LLC, and Deepwater Wind LLC were issued limited exploratory permits June 23 to assess the potential for commercial-scale wind power at four sites offshore New Jersey and an additional project offshore Delaware.
Salazar, joined by New Jersey Gov. Jon Corzine (D) for a boardwalk announcement in Atlantic City, said, “These permits will allow each company to go out and measure the wind strength by putting in the facilities that are necessary for them then to move forward with their commercial-scale wind energy projects.” He added that each project has the potential to produce up to 350 megawatts of renewable wind energy.
The Obama administration has made offshore wind, solar and ocean energy development an important part of its renewable energy initiative, hoping to clear away many of the regulatory and legal uncertainties that have stymied development of offshore wind and wave, tidal and ocean current projects on the U.S. Outer Continental Shelf (OCS).
But it took Interior until late April to issue rules for offshore leasing, setting out requirements for environmental review and protection, safe installation and operations, facility decommissioning, and government fees. Although offshore energy is more advanced in Europe, with numerous facilities already operating off the coasts of Britain, Denmark and elsewhere, offshore leasing regulations had languished for years at Interior under the Bush administration.
Corzine described the newly permitted OCS wind projects as a “win-win” for New Jersey, stressing the creation of “green-collar jobs” combined with the potential to significantly reduce statewide carbon emissions. He added, “We’re working very hard with [the state’s] economic development authority to make sure that the production of the equipment that will be used will also be produced here in New Jersey.”
Corzine said New Jersey will extend $4 million grants to advance each of the permitted projects and help the state reach its goals of developing 3,000 MW of wind energy by 2020 and generating 30 percent of the state’s energy from renewable sources by 2020. He said one or more of the exploratory projects is expected to come online by as early as 2013. “Hopefully that information will generate the kind of support for the permitting that [Interior] needs to have to move forward.”
The new regulatory framework for offshore renewable energy development, set to take effect at the end of June, allows for two types of leases—five years for testing and data-gathering and 25 years for commercial operation.
But wind power developers will not be required to obtain a testing lease first, if they believe they have all the necessary data to pursue production, Interior spokesperson Frank Quimby explained. He said, for example, that Interior expects to rule on the controversial Cape Wind project off the coast of Massachusetts in the “relatively near future.”
That project is the furthest along toward approvals from various federal and state agencies to produce 420 MW of wind power six miles offshore Cape Cod in Nantucket Sound. It is currently undergoing an historical preservation impact review.
The five exploratory leases just issued will allow developers to build meteorological towers for evaluating commercial-scale wind farm potential. Many of the projects have been in the pipeline for some time.
Deepwater received exploratory leases which it hopes will lead to development of two projects set for offshore New Jersey, including the planned 350-MW Garden State Offshore Energy project—a joint venture between Deepwater and the renewable energy unit of Public Service Enterprise Group, New Jersey’s dominant utility. That project, located about 18 miles offshore Avalon, N.J., has already been awarded a $4 million grant by the State of New Jersey.
Bluewater, a subsidiary of Australian investment firm Babcock & Brown, also received exploratory leases that it hopes will advance the Offshore Wind Park, offshore Delaware, with the potential to generate between 238 MW and 350 MW, and a 348-MW, 116-turbine wind farm about 15 miles offshore Atlantic City.
In addition, Fisherman’s Energy, a fisherman’s cooperative, was issued an exploratory lease to build a testing tower six nine miles off the New Jersey coast.
Interior said it will issue two kinds of leases—a five-year lease for testing and data-gathering activities and a 25-year lease allowing commercial operations. The rules also spell out methods for sharing 27.5 percent of the revenues from offshore projects with adjacent coastal states, operating fees for government leases, with different formulas for offshore wind and ocean energy projects. Operating fees for offshore wind farms will be based on installed capacity, annual hours of operation, capacity factor and power prices. Ocean energy projects will have operating fees set on a case-by-case basis.
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Collaboration Key to Progress For Nova Scotia Tidal Project
Eric Lindeman
Nova Scotia could someday in the not-so-distant future be a world leader in tidal-generated electricity if provincial leaders continue their methodical development of the Bay of Fundy’s massive potential for sustainable, predictable energy production.
And Peter Underwood, Nova Scotia’s deputy minister of Natural Resources, is one of the key figures in guiding government, industries and communities along the collaborative path that has led to establishment of FORCE, the Fundy Ocean Resource Centre for Energy, a government-private organization that will operate a tidal energy test facility in Canada’s Bay of Fundy.
Underwood’s first love is the ocean, particularly the coastal areas of the Canadian Maritime provinces and the Northeast United States. He holds a graduate degree in Marine Environmental Studies and also a law degree specializing in the Law of the Sea. He has served the Nova Scotia government for more than 20 years, also heading the departments of environment, agriculture, and fisheries.
Underwood’s current position with the Ministry of Natural Resources involves oversight of hundreds of employees and leading government policy on Crown lands, resource management and sustainable development.
“I’ve always been involved in agriculture, natural resources, environment—areas with themes or undercurrents of sustainability,” Underwood said June 16 in an interview during the EnergyOcean 2009 conference in Rockland, Maine. “But I got sidetracked from the ocean side of things. What I do in my current job, as a regulator, is forestry, mining and parks, none of which has anything to do with tidal power.
“But we also manage Crown lands, and we issue titles to use Crown lands. So my longstanding interest in, or perhaps obsession with, oceans came to the surface with the new tidal current technology.”
In Nova Scotia, Underwood explained, electricity generation, which is 80 percent coal-fired, accounts for 46 percent of all greenhouse gas emissions. Transportation accounts for 28 percent. The province passed legislation in 2007 that commits to cutting emissions to 10 percent below 1990 levels by 2020—that’s about one-third less than the ‘business-as-usual’ case, he said.
To accomplish that goal, the law sets renewable electricity targets at 20 percent by 2013 and 25 percent by 2025. “Wind power will be the biggest generator,” he predicted, “but Bay of Fundy tides are an opportunity to help meet or even surpass the target.”
How did the test facility project come about?
There was talk about a tidal energy test project four years ago. Very early on, I brought together a group of interests—fishing industries, aboriginal groups, various regulators, federal and provincial fisheries, all the players that needed to coalesce around this to make it happen, before we were really talking about any applications to use a test facility.
The U.K. was ahead of us at the Orkney Islands, which was the first grid-connected facility. A delegation went over to the U.K. nearly three years ago. Our first activity here really was to establish a facility for testing and permitting. In the last three years, we’ve gone from concept to RFP, establishment of an entity to run the facility, and granting of permissions to test machines. Now we’re planning for actual deployment of the machines.
The acceptance that climate change is real has led to the convergence of wonderful opportunities and a pretty strong political imperative to deal with climate change. This opportunity fits very nicely in terms of the province’s goals for climate change and renewable energy. It’s very exciting, and I enjoy all the people involved. Nova Scotia is a small province, but we do have the mother lode of tidal energy potential, and everybody wants this to work. Sometimes with complex projects, there’s a lot of tension and debate. The complexion of, the mood around this project, is one of collaboration.
As a government regulator in a broad, new energy undertaking, how do you see collaboration, with public and government support, shaping development?
We have a responsibility as regulators to make sure this is done properly. But the question is, how do you do it properly? The fishermen, for example, say ‘this will have an impact on us, but we’re prepared to work together.’ We want everyone to be involved from the start. So for a QA [quality assurance] policy or regulatory person to have a clean slate, that allows us to do something where everybody learns and progresses together.
Because of the incremental nature of tidal development, everybody has questions. Technology developers are allowed to test in a challenging environment, the regulators to understand what impacts these devices have as they are being tested, government to engage in policy questions of how are we going to allocate and manage this public resource. Everybody is going to be learning as we go along.
It’s very different from other major projects we’ve been involved in. It allows us to engage the communities, test the machines, discuss the government structure for managing and allocating this resource. And on this project, business, environmental groups, governments all have the same objectives in mind. You do have Nimby [not in my back yard] issues and things to be reconciled, but people are working to do that, not working to have moritoriums. It’s a much more pleasant environment to deal with.
Can explain what you mean by the ‘incremental nature’ of this project?
The primary project now is the test facility concept. The idea is to provide a three-berth, plug-and-play facility. We offer eligible developers the opportunity to test their equipment without the huge costs up front. The transaction costs and consent process is already completed.
The first step is to find a good site. We started with an RFP for someone to design and construct the site, then for equipment developers interested in occupying one of the three berths. So now we have a legal entity made up of government and corporate people, FORCE, and we have an RFP for someone to put machines in the water.
We have OpenHydro [Irish technology] in partnership with Nova Scotia Power; Marine Current Turbines [British technology] in partnership with Minas Basin Pulp and Power; and Clean Current [Canadian technology] on their own.
Minas Basin was awarded project leadership for building the common infrastructure, and the group spent a year and more than $1 million finding a suitable site for Nova Scotia’s first demonstration turbines. It’s located near Black Rock in the Minas Passage of the Bay of Fundy and has depths of up to 45 meters at low tide. The floor is sediment-free bedrock. Currents are straight-flowing and water speeds are up to 10 meters per second on ebb and flow.
Developers can establish real credibility if their devices perform well under the force of the Fundy currents. Will the technology coalesce around a particular configuration? We’ll probably have different technologies for different sites to accommodate different parameters, more or less flow, for example. It’s still very dynamic situation in terms of technology. We like to say, ‘If they can make it here, they can make it anywhere.’
Are you working with the U.S. in any ways relevant to this project?
The Minas Channel is way up the Bay of Fundy, into the internal waters of Canada, but there is a long history of collaboration between the U.S. and Canada in the wider Gulf of Maine region. The Wood’s Hole Oceanographic Institute and the Bedford Institute of Oceanography, two of the largest in the world, have been researching this region for decades. We do a lot of collaboration in fisheries research. This conference is a good example of building those relationships. The Gulf of Maine Council on the Marine Environment is celebrating its 20th anniversary this year. Since its inception, the council has provided a forum for Canada-U.S. cooperation on matters of joint interest in the Gulf of Maine Region.
There always has been very a collaborative environment with the U.S. and Canada—regulators sharing their experiences with industry in a very new area. We’re connected by the Gulf of Maine. Anybody involved in research understands that in a fluid environment, a border is insignificant. Fish don’t care. In many ways, we have more in common with the Northeast U.S. than with Upper Canada. Our economies are linked. The U.S. has been the biggest market for many of our natural resources for hundreds of years: $800 million of fish, $700-800 million of paper and wood. The Northeastern seaboard of the U.S. is our largest market.
What are your estimates of the tidal power capacity of the Bay of Fundy?
We did study on potential of power from turbines, and it came out about 300 megawatts. Here at the conference, we heard researchers from Acadia University estimate it could be as high as 6 to 7 gigawatts. But it’s going to depend on sites. Potential may range from 300 megawatts to 7 gigawatts, but how much can you extract without impacting water flow, for instance? If you have too many wind turbines, they start to damage each other. This is one of the questions that the test facility will enable us to answer.
What the extractable range is, is under discussion. Our peak capacity in Nova Scotia is 2,500 to 2,600 megawatts. That’s peak demand. Today, in Nova Scotia, we’ll probably consume 1,500 megawatts. Right now, we get about 20 megawatts of tidal power from an older barrage technology.
Could Nova Scotia become a tidal power exporter?
Part of the policy discussion is, how do we maximize the benefit this public resource to the people of Nova Scotia, find the balance between community involvement and engagement, versus exporting power?
Our incremental approach allows us to explore these questions while moving the technologies along. It’s a work in progress. The fact is, this is not only the mother lode of tidal potential, it’s also very close to the grid, for example, ISO New England. Hudson Bay has huge tides, too, but not the proximity to population and grid.
One of the real beauties of tidal energy, rather than wind or wave, is that it’s predictable. Grid managers will know how much power is going to be produced and when.
What’s the project going to cost and are there any timelines?
Total project cost for test site and equipment, cabling and substation, infrastructure, will be about $75 million from federal, provincial and some private sources. The provincial share is, I think, about $7 million.
The operating entity has been set up, partnerships developed, the bidders in response to the RFP identified. The application that is the basis for the environmental assessment report for the site just went in. There was a lot of collaboration among regulators in preparing report—the federal and provincial departments of Environment and the federal Department of Fisheries and Oceans. Then there is a 90-day turnaround time on the report, but the proponents said today that, because of the thoroughness and the collaboration, it might be sooner.
We expect the first device to be installed in the water by late October. OpenHydro will be going in. They’re fabricating the base in Nova Scotia and the turbine unit now in Ireland. Over the summer, they’ll put it together. And they’re working on the deployment barge. Everything is lining up nicely.
It’s a three-year test program, and the next phase is to do some arrays, which the site is designed to accommodate. The site is several kilometers square, with depths varying from 30 to 45 meters at low tide. That’s well below being a navigational issue. Then we begin to look at commercial arrays and deployment.
In terms of title flows, the Minas Channel is the place for commercial deployment. It’s in a relatively small part of the Bay of Fundy system. That’s not to say they won’t find other potential areas. If you are a subscriber click here to view full story. Not a subscriber? You can purchase this story by clicking here.
Boeing, Airbus Officials Say Jet Biofuels Close
Eric Lindeman
Biofuels such as jatropha and algae could be used as a 100 percent replacement fuel for commercial jets in three to five years, according to Boeing and Airbus officials, who added that the American Society for Testing and Materials is expected to approve the fuels next year.
Recent flight tests by Boeing showed “better than expected” results, the company’s director for environmental strategy, Billy Glover, said in published reports June 18 during the Paris Air show. “It works—no problem,” he said. “We don’t have to make any changes to airplanes or engines.” If you are a subscriber click here to view full story. Not a subscriber? You can purchase this story by clicking here.
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