Clean energy standards get boost in Congress

Source: By Nick Sobczyk, E&E News reporter • Posted: Thursday, March 11, 2021

A clean energy standard paired with federal investment could help clear hurdles for utilities to decarbonize the power grid, Xcel Energy CEO Ben Fowke told the Senate Environment and Public Works Committee yesterday.

It’s “right way to go” if the policy is designed to recognize the near-term need for natural gas generation and the value of nuclear, said Fowke, who is also chairman of the Edison Electric Institute.

“Xcel has supported some of the proposed legislation out there, and I don’t think my industry is far behind in general on supporting that approach,” Fowke said.

Clean energy standards have drawn attention from lawmakers in recent years, in part as an alternative to carbon pricing, which some view as politically unviable or too friendly to fossil fuels.

With increasing support from utilities, the policy could be a key part of the conversation surrounding President Biden’s “Build Back Better” agenda, as Congress turns its attention to infrastructure and climate change after passing a $1.9 trillion COVID-19 relief package.

“A clean energy standard is going to be absolutely essential to ensure that we create the right metrics to guarantee that we meet the high standards which are going to be necessary in order to match the magnitude of the problem,” Sen. Ed Markey (D-Mass.) said during the EPW hearing yesterday.

Chairman Tom Carper (D-Del.) noted that 30 states have some kind of renewable or clean electricity standard, and many are shooting to go carbon free.

“Forty percent of American households are now served by utilities that have pledged to completely decarbonized by 2050,” Carper said. “This is encouraging progress.”

But Carper also cautioned against partisan approaches to climate change, even as many of the Republicans on the panel rejected the kind of aggressive policies that would likely be needed to fully decarbonize.

“The one way that we can get to a truly clean and safe electricity sector is if we come together and chart a lasting bipartisan path forward,” Carper said.

The hearing came as Carper looks to move a surface transportation bill out of committee by Memorial Day and pass it into law by the end of September, when the current authorization for highway and road programs expires.

While that legislation likely would not deal directly with the power sector, it could be wrapped into the larger conversation about infrastructure development and climate change on Capitol Hill.

Several members of the EPW Committee said yesterday that they see investments in the grid and clean energy as a crucial component of “Build Back Better.”

But Fowke and Sandra Snyder of the Interstate Natural Gas Association of America both warned that natural gas needs to be part of the power mix.

Progressives have long called to phase out all fossil fuels, and top House Democrats have introduced clean energy standard legislation that would largely phase gas out of the power mix by 2030 (E&E Daily, March 3).

“For the next two decades, at least, natural gas and nuclear do not stand in the way of energy’s clean transformation,” Fowke said. “I believe they enable it.”

‘A lot of building’

Republicans, meanwhile, are poised to oppose a clean energy standard or other climate policies that they argue could raise costs to consumers, do away with fossil fuel generation or hurt reliability.

West Virginia Sen. Shelley Moore Capito, for instance, noted the widespread blackouts in California in 2019 and blasted the state’s move to shutter natural gas and nuclear power plants.

“For now, it looks like things will continue to go in that direction in California, and I suggest that we can do it a better way for the rest of the country,” Capito said.

But there were inklings of bipartisan agreement yesterday, particularly on issues surrounding carbon capture and permitting.

Sen. Sheldon Whitehouse (D-R.I.), for instance, said he is working on an expansion of tax credits for direct air capture — technologies that suck carbon from the atmosphere — an issue that has in the past drawn interest from Republicans.

Whitehouse added that he is also looking for a way to compensate nuclear plants for their carbon-free power, potentially with an incentive similar to the 45Q tax credit for carbon capture.

“We’ve been trying to figure out a way to perhaps get existing safely operating nuclear plants into a 45Q-type compensation for the carbon free nature of their power so they don’t artificially compete unsuccessfully against new natural gas facilities,” Whitehouse said.

In past surface transportation bills, Congress has agreed on provisions to speed environmental permitting, and several Republicans made that a focus yesterday.

For the power sector, it could be crucial to decarbonization because it currently takes years to site the kinds of transmission projects that will be necessary to carry renewable electricity around the country, Fowke told the panel.

“We knew that we needed to have more transmission as we started our clean energy journey at the beginning of the 2000s,” Fowke said. “We just completed that transmission a few years ago, so it took 15 years to get it built, and that’s interregional.”

Whitehouse said he sees that as a component of “Build Back Better.” “We’re going to be doing a lot of building,” Whitehouse said.

Given the blackouts in Texas and the Southwest last month, grid resilience could also be a narrow area of bipartisanship as lawmakers move forward on infrastructure.

It’s a crucial component to preparing for climate change, Frank Rusco, director of natural resources and environment at the Government Accountability Office, told the panel.

GAO released a report yesterday that found the Department of Energy and Federal Energy Regulatory Commission could do more to tackle the growing threats that climate change poses to the grid (Greenwire, March 10).

In total, GAO found, outage costs to consumers could hit nearly $500 billion annually by the end of this century.

“Even though there remains uncertainty about the precise effects of climate change in every sector, acting sooner rather than later, or prudently learning along the way, is the appropriate path toward climate adaptation,” Rusco said.