The 2014 Midterm Election Results: Implications for Energy and Environment Policies

The 2014 midterm elections will have implications on a variety of issues across the country and throughout all levels of government. Many people will be analyzing the events and decisions that occurred during the campaign season. But looking forward, numerous energy and environmental issues will be decided during the next two years by the newly elected and re-elected politicians. Here is a brief outlook of possible energy and environment issues to be debated in Congress, state capitols, and public utility commissions.

Congress

Republicans will continue their control over the House of Representatives and also become the majority party in the Senate, as a result of gaining at least seven seats. Federal lawmakers will debate at least three energy issues as a result of this change in power.

First, there are now 61 senators in favor of the Keystone XL pipeline. Approving the pipeline is likely one of the GOP’s first agenda items when the new Congress begins its session.

Second, climate change deniers will control key Senate committees allowing deniers to be in positions that effect agencies and budgets. Lee Fang at Republic Report broke down how the Senate committees would likely change:

• Sen. Jim Inhofe (R-OK) controlling the Environment and Public Works Committee, which oversees the Environmental Protection Agency.
• Sen. Ted Cruz (R-TX) chairing the Subcommittee on Science and Space, which oversees the National Science Foundation and the White House office of Science and Technology Policy.
• Sen. Ron Johnson (R-WI) controlling Homeland Security and Governmental Reform Committee where he would “likely use his perch to harass scientists.”
• Sen. Mike Enzi (R-WY) chairing the Budget Committee and could reduce funding for agencies “attempting to regulate carbon pollution.” 

Third, two vital clean-energy policies are potentially in jeopardy: the Production Tax Credit (PTC) and the Investment Tax Credit (ITC). 

The PTC is used to incentivize the development of wind energy, but Congress failed to extend the PTC at the end of 2013. In 2014, a PTC extension could be approved as part of a broad tax extenders package during the lame-duck session.  The Senate Finance Committee has already passed a bill that extends the PTC for projects that start construction prior to the end of 2015. However, because Republicans know they control both chambers of Congress starting January 3, 2015, the GOP will likely delay any extenders package thereby creating uncertainty for the PTC. In fact, Rep. Boehner and Sen. McConnell write in The Wall Street Journal that the tax code will be one of their priorities next year.

The ITC provides a 30% tax credit for the cost of solar systems and has helped to drive growth in the solar energy industry. While it does not expire until the end of 2016 (when it would be reduced from 30% to 10%), Republicans will still control Congress and thus, determine if it gets extended.

Deutsche Bank recently released a report concluding that solar will reach grid parity (meaning it will be more cost effective than traditional electricity sources) in 47 states by 2016. But if the ITC were to drop to 10%, solar would only have grid parity in 36 states. This is why energy interests aligned with the Koch Brothers want to squash pro-solar policies like the ITC. 

Solar Energy Industries Association (SEIA) President Rhone Resch announced a national campaign to extend the ITC beginning when the new Congress is sworn in on January 3, 2015. Resch said it will be an uphill battle fight but “as sure as World War I started in 1914, if the Koch Brothers and their allies come after solar, 2014 will be the beginning of World War III.”

Governors and State Legislatures

More than two-thirds of the states held gubernatorial elections in 2014, which made the midterms important for state-level politics, specifically energy and environment policies. This is because the gridlock in Washington D.C. has made state capitols the place to enact, weaken, or even repeal energy and environment laws.

Furthermore, President Obama’s Clean Power Plan, which is to reduce carbon dioxide emissions by 30 percent by 2030, gives states flexibility in creating plans to reach their individual state targets. This will turn state legislatures into battlegrounds over the next two years. But, this is not the only topic that will be debated in state capitols across the country. There are other renewable energy policies and environmental laws that will be under attack from traditional energy interests at the state level during the next two years.

Renewable Energy Standards

Kansas’ Republican Governor Sam Brownback defeated Democratic challenger Paul Davis. While this specific gubernatorial election can be characterized as a referendum on Brownback’s aggressive tax cutting, the state’s renewable energy standard is also at stake over the next few years. Ari Phillips at ClimateProgress wrote, “the Koch brothers have devoted a significant amount of time and money into repealing the standard and as of late, Brownback has wavered in his support.” Brownback was once in favor of the state’s renewable energy standard but has now singled that he would like to “phase out” the law. Davis said he would veto any bill that repeals the standard. The introduction of a bill designed to repeal the standard seems inevitable in 2015.

Michigan’s Republican incumbent governor, Rick Snyder, defeated Democratic challenger Mark Schauer. Michigan utilities are on track to meet the 10% renewable energy standard by 2015, and Snyder has set a broad energy vision and is looking to have specific legislation in place in 2015. Snyder is looking to have legislation include renewable energy goals to be achieved by 2025. Snyder has also said he wants to reduce the state’s reliance on coal while boosting energy efficiency.

New Mexico’s Republican incumbent governor, Susana Martinez, won a second term and defeated Democratic challenger Gary King. Oil, gas, and other energy-related industries were Martinez’s largest financial backers according to The Santa Fe New Mexican. Martinez is also one of the governors who signed a letter sent to President Obama in September saying the EPA has overstepped its authority with the Clean Power Plan. King was in favor of the Clean Power Plan in addition to enhancing the 20% renewable energy standard to encourage the development of more renewable energy. Martinez will likely ignore any pathways to expand clean energy in the state.

Ohio’s Republican incumbent governor, John Kasich, defeated Democrat Edward FitzGerald. Kasich signed ALEC-influenced Senate Bill 310 in June making Ohio the first state in the country to freeze its renewable energy and energy-efficiency standards. A legislative committee has been established to review the standards and make recommendations. Only three members of this committee voted against SB 310. The remaining nine members voted in favor of the freeze, including ALEC members Sen. Balderson, Faber, and Seitz. The defeat of FitzGerald makes it now more of an uphill battle to reinstate the renewable energy and energy efficiency laws. 

Message to Dems: Natural Gas Won’t Save the Climate

Last week, a study published in the journal Nature found that the increase in global natural gas consumption “is not necessarily an effective substitute for climate change mitigation policy.” The study’s conclusion undercuts climate change policies that use natural gas as a key tool in an effort to decrease greenhouse gas emissions.

Five models that integrate energy, economy, and climate systems were used in the study, which concluded that Earth’s global average surface temperature would increase above 2°C (over preindustrial levels) by 2050, which is the agreed upon limit to avoid the risk of runaway climate change. The Earth has warmed 0.85°C from preindustrial times to 2012, according to the Intergovernmental Panel on Climate Change (IPCC), the international body tasked with assessing climate science.

The Pacific Northwest National Laboratory's study, “Limited impact on decadal-scale climate change from increased use of natural gas,” found that the increase in natural gas consumption around the world would decrease the amount of coal being consumed. But, the increased market for natural gas will also weaken the market penetration of additional zero-carbon sources like wind, solar, and nuclear energy. Therefore, despite natural gas infrastructure replacing the use of coal, the increased use of natural gas will still push the world towards climate devastation.

Another study from Stanford University drew similar conclusions last year. The Stanford study, “Changing the Game? Emissions and Market Implications of New Natural Gas Supplies” found that natural gas would displace renewables and nuclear, which would ultimately increase U.S. carbon dioxide emissions through 2050.

However, the Pacific Northwest National Laboratory study in Nature comes at an interesting time for the Obama administration. When speaking at a Barclays Capital energy forum on September 2, EPA Administrator Gina McCarthy said the Environmental Protection Agency (EPA) would issue a methane strategy that could include regulations on oil and gas wells this fall. Over a 100-year timeframe, methane is a greenhouse gas that is about 34 times as potent as change-driving carbon dioxide; over 20 years, it’s 86 times as potent.

But even if the oil and gas industry were to make a concerted effort to reduce methane leakage, decreasing those rates would still not make natural gas a “bridge” fuel to climate-safe economy, according to the study in Nature.

New Science Unlikely to Change Administration’s Climate Policy

Despite the forthcoming strategy on methane, the natural gas industry’s support from the White House shows no signs of disappearing. Administrator McCarthy, Secretary Moniz, and President Obama all continue to echo the ‘All of the above’ talking points and continue to praise the industry, claiming natural gas can be used as a “bridge fuel.” With the construction of new natural gas power plants each year (and because the average age of a natural gas power plant is only 14 years), the U.S. will be locked into using natural gas for decades to come. Even the Administration’s central pillar in reducing greenhouse gas emissions, the Clean Power Plan, projects natural gas will be the leading fuel for power generation in 2030.

To make matters worse, the Obama Administration recently approved a fourth facility to export liquefied natural gas (LNG). Dominion Resources’ Cove Point facility, south of Baltimore, Maryland, is expected to export as many as 1.8 billion cubic feet of natural gas per day (Bcf/d). The other three projects approved (Cameron Parish, Louisiana; Hackberry, Louisiana; and Quintana Island on the Texas Gulf Coast) are projected to export a combined total of 5.9 Bcf/d. And, at least 14 more projects totaling 17.4 Bcf/d are waiting for approval from the Federal Energy Regulatory Commission (FERC).

Duke Energy Invests in Solar Power: But Only Duke Energy Can Sell The Sun’s Energy

With the 2012 merger of Duke Energy and Progress Energy, the largest electric utility in the United States was created: Duke Energy Corporation (Duke). Now with more than 7 million customers, 57,000 megawatts (MW) of owned generating capacity, and over 205,000,000 megawatt hours (MWh) of retail electric sales, Duke was able to make nearly $3 billion in profits last year. Even though Duke is the largest U.S. utility it was ranked 19^th out of 32 investor-owned utility companies for total renewable energy sales by the non-profit organization Ceres. 

But recently, Duke announced it will expand its solar generating capacity in North Carolina by acquiring, constructing, and signing power-purchase agreements for solar projects totaling 278 MW. 

Currently, Duke Energy’s 2014 power generation portfolio in both the regulated and unregulated markets is significantly dominated with coal and natural gas.

Duke does own solar in its regulated portfolio, but only 4 MW - which turns out to be 0.00008% of the combined 49,452 MW.

The solar capacity owned in Duke Energy’s commercial portfolio is 111 MW of the combined 7,839 MW.

Almost half of Duke's 115 MW of solar is generated in North Carolina, while the remaining facilities are located in Arizona, California, and Florida. Some of this solar was required to be purchased due to an arcane, complex federal law called the Public Utility Regulatory Policies Act of 1978 (PURPA).

Adding 278 MW in North Carolina seems like a good commitment on the surface. However, this is not the case. The utility company has been and continues to restrict the growth of solar energy in the Tar Heel State.  

Koch-Backed American Energy Alliance Releases Misleading Poll

Today, the American Energy Alliance (AEA) released a poll regarding the EPA’s plan to cut carbon emissions, and federal tax credits for clean energy like the wind Production Tax Credit.

The poll was an effort to show that Americans disapprove of EPA’s Clean Power Plan and the federal tax credit for wind energy. AEA president Thomas Pyle said in the press release, “The survey makes clear that Americans are growing weary of the blatant cronyism that runs rampant through our political system, and the failed federal policies that stifle innovation and increase the cost of the reliable energy we need to move America forward.”

Ironically, results from the poll show that a majority of respondents favor the tax credit to increase wind energy. They also support states that require a certain amount of their electricity to come from renewable sources. 

Although the poll is presented as objective, the validity of the poll is questionable because a close look at AEA’s connections and supporters shows they are far from objective. 

AEA is the advocacy arm of the Institute for Energy Research (IER), a pro-fossil fuel and anti-clean energy think tank that has received funding from ExxonMobil and the Koch Brothers. Documents obtained by Republic Report last month revealed, for the first time, that IER was founded by Charles Koch, CEO of Koch Industries. Reports revealed that IER and AEA have received grants from Koch family foundations, and its leadership includes several individuals who have at times worked for Koch or Koch-related interests. But, as Lee Fang writes, “[T]his is the first time it has been revealed that Charles personally founded the organization.” 

AEA is organized as a 501(c)(4) non-profit and is run by Thomas Pyle, who previously lobbied on behalf of the National Petrochemical and Refiners Association and Koch Industries. 

The organization hired MWR Strategies to conduct the survey. Data from OpenSecrets.org shows that MWR Strategies has been retained by Koch Industries; Southern Company, which is the second largest utility company in the country; Dow Chemical; Competitive Power Ventures; GDF Suez, which is Europe’s largest liquefied natural gas importer; Public Service Enterprise Group; and Tampa Electric Company; for a combined lobbying revenue of $320,000 in 2014.

MWR Strategies has collected a total of $1,120,000 from Koch Industries and Southern Company since 2007. American Electric Power, the country’s largest generating utility, also retained MWR Strategies between at least 2004 and 2012, spending $570,000 for the company’s services.

American Electric Power and Southern Company are both members of the American Coalition for Clean Coal Electricity (ACCCE), and the American Legislative Exchange Council (ALEC). These front groups are used to drum up opposition to the EPA’s power plant standards, as well as pro-renewable energy policies such as the Production Tax Credit.

Koch Industries uses their web of front groups and think tanks including IER and AEA, as well as ALEC to also fight EPA standards and restrict renewable energy development.

Dharnai’s Grid-ready Microgrid: A Solution for Energy-starved India?

The story of the rise and fall of Bihar may seem unbelievable. Through the ages, the region was once the seat of power of mighty kingdoms, a source of intellectual thought, and leading industrial growth.

In the recent past, decades of corruption, lack of law and order and dwindling investment have allowed the state’s infrastructure to collapse. It’s not that the village of Dharnai in Makhdumdpur block of Jehanabad district in Bihar never had electricity. Until thirty years ago, the village had transformers and proper transmission lines providing access to electricity to every home.

Today one can see this past legacy in the form of a few remaining rusted poles and bits of metal junk that people did not manage to sell off for money. A few non-functional solar street lights still standing in the village that were installed by the government 4-5 years ago tell a different story — one of a public good that had no effective management system in place.

My journeys in search of solar technologies deployed in energy-starved India have taken me from Ladakh to Kerala and from Rajasthan to the Sundarban forests in West Bengal. I have seen all manner of business models and technologies. My most recent trip took me back to my own ancestral village of Jakkan, 100 kilometers west of Jodhpur in Rajasthan. There amidst the sand dunes, my relatives talked of how much easier their lives had gotten due to near-permanent electricity access having finally arrived at their doorsteps — a full 30 years after they had hoped and paid for it. Meanwhile, Lord Surya’s promise had managed to provide little bits of electricity through off-grid solar products in the form of solar home lighting systems and lanterns.

Discourses on energy access have coalesced around “incremental” and “genuine” energy access. The former supposedly delivered by smaller off-grid products and the latter through the promise of microgrids powered by a variety renewable energy technologies. It is assumed that microgrids provide the near complete level of energy security that a community can hope for in the absence of a reliable grid network — and depending on the size of the microgrid, this may be true.

Furthermore, grid-ready microgrids (those that could be plugged into a nearby centralized grid network at a future date) would allow for increases in supply of electricity as the demand of the community rises. Policies clarifying the long-term fate of microgrids as the government embarks on its national electrification mission could allow more entrepreneurs to enter the market for expanding energy access rather than simply leaving it to the already struggling public sector utilities.