How states may drive — or foil — Biden’s clean energy plan

Source: By Kristi E. Swartz and Edward Klump, E&E News reporters • Posted: Sunday, February 7, 2021

Congressional gridlock is putting renewed focus on states, which may end up being the main legislative arenas to steer clean energy during the Biden administration.

State lawmakers are weighing plans to move toward 100% zero-carbon electricity and create a cleaner, more efficient power grid — both priorities of the new president. Biden has called for decarbonizing the U.S. power sector by 2035.

State policies under consideration call for overhauling utility business models, creating new rate structures, and modifying the way electric and gas companies interact.

While President Biden may motivate climate action, a trend has also formed at state capitols that could drive action on clean energy: From Phoenix to Atlanta, lawmakers are pushing topics like jobs, energy justice and revival of pandemic-wrecked economies along with bills that call for more electric vehicles as well as additional renewable technologies and battery storage.

But with the COVID-19 pandemic still hanging over the nation, legislatures are being tasked first with saving shattered state budgets, clouding the outlook for comprehensive energy bills.

“The key thing here is what can we do that doesn’t cost money, because there isn’t a lot of money to spend this year,” said Florida state Sen. Jeff Brandes, a Republican from St. Petersburg.

On the flip side, consumer and clean energy advocates argue that if lawmakers sign off on a wide-ranging clean energy plan, then at least some support should come from state coffers or taxpayers instead of raising monthly utility bills.

“You cannot put the entire state’s clean energy transition on the backs of ratepayers,” said Radina Valova, regulatory vice president for the Interstate Renewable Energy Council (IREC). “They cannot be the ones paying every single dollar.”

Additionally, some proposals could work against Biden’s agenda by aiming to limit renewables or spike fees on electric vehicles.

Other upcoming battles stem from issues unique to individual states. For example, South Carolina continues to grapple with the future of the state-owned utility, Santee Cooper, which has a key role in the state’s electricity mix. Other plans would halt electric and gas rate increases during a declared state of emergency and, in Mississippi, make the killing of a utility worker a capital crime.

While many legislatures started up in January, the outcome of lawmaker wrangling may not be known for months. Here’s how legislatures around the country are tackling four issues that could affect the power sector for years:

Clean energy

Companies are quick to take credit for clean energy goals, but several states are heading in that direction, too, via 100% clean electricity or net-zero carbon emission targets.

This year could see state legislatures explore how to implement those plans — or defend against potential changes.

For example, New Mexico’s Energy Transition Act is a 2019 measure that some critics want to alter, even as proponents say it will help slash carbon emissions. Some clean energy advocates are touting the proposed “Clean Electrification Act,” which is being pitched this year as a way to help push New Mexico energy use away from fossil fuels.

In Arizona, lawmakers could take away utility regulators’ ability to mandate a certain share of renewable resources for electricity (Climatewire, Jan. 21). Critics say such a bill would hurt renewable efforts in the state.

In Virginia, lawmakers are entertaining a suite of bills aimed at restoring authority to state utility regulators, which oversee Dominion Energy Inc. Broadly, the package targets Dominion’s profits. Dominion has said that it needs to hang on to the extra money for projects like grid modernization and that it would hurt its ability to add renewables.

But many advocates remain hopeful about state actions to address emissions in energy.

“We expect to see increased interest in clean energy and climate issues, given the election results, and the economic challenges and need to address the COVID-19 pandemic will make proposals that don’t put pressure on state budgets the most likely to move forward,” Maria Nájera, Western Resource Advocates’ government affairs director, said in a statement.

The Green New Deal — a progressive climate plan considered in Congress that would promote a shift away from fossil fuels to slash greenhouse gas emissions — also has sparked similar legislation in states and could continue to do so in 2021.

A proposal to slash Maryland’s carbon emissions 60% by 2030, for example, failed last year, but Valova at IREC said the political will is there to revive it in some form.

The “Climate Solutions Act of 2020,” as it was called, included beefing up renewables and encouraging energy efficiency (Greenwire, Feb. 20, 2020).

In other states, efforts may not target a decarbonized grid specifically but could still drive a move away from fossil fuels.

For example, Florida Democrats are restarting a push for 100% renewable energy by 2040, and in Georgia, Democratic lawmakers want the state to support a goal of 100% clean energy by 2050. Those measures likely won’t have bipartisan support, however.

Also in Florida, Brandes is re-upping his call for a 2040 Energy Task Force, which would build on a previous one then-Gov. Jeb Bush (R) created in 2000 to map out an energy plan for the Sunshine State. Brandes’ S.B. 136 broadly charges the state’s Public Service Commission with figuring out the best way to power the state in 20 years. This includes tackling thorny policy issues such as net metering for solar power, market-based competition and transitioning to a smarter grid.

“It’s time to redo it,” Brandes said, referring to the Bush-era 2020 Energy Task Force.

The panel would look at three main items that Brandes said are key to meeting the state’s rising electricity demand in a more efficient way: transportation electrification, solar energy and battery technology. Florida’s population stands to grow by 25% in the next decade, according to the state’s Chamber of Commerce, driving up electricity demand while utilities are going through a clean energy transition.

Brandes is known for brokering bipartisan renewable energy policies that are the result of compromises with the state’s politically powerful electric companies and clean energy advocates.

But Florida’s past policies have slowed the development of distributed generation, particularly rooftop solar. Brandes is backing a bill, S.B. 208, aiming to boost use of the technology. It would allow businesses with rooftop solar to be able to sell excess electricity to neighboring establishments on the same property and not be considered a utility.

Rooftop solar also could be a focus in South Carolina, where property tax breaks will likely come before the Legislature just two years after it passed a comprehensive energy bill (Energywire, March 15, 2019).

Another, less conventional type of clean energy also is making its way into state policymaking and setting up fights in the coming year: renewable natural gas.

Supporters say the fuel is needed for states that set 100% renewable energy goals. Environmentalists want natural gas removed altogether, including overhauling building codes to require electrification in new construction.

Natural gas is commonly used for heating and cooking in buildings in Northeastern states. Shifting away from that means new business models and challenges for those gas utilities.

“States that have natural gas face those existential crises for those utilities,” Valova said.

What’s more, lawmakers in California, Colorado, Massachusetts and Missouri have passed or are considering policies that support renewable natural gas, a form of naturally occurring methane derived from organic waste sources such as dairy farms and sewage treatment plants.

At the same time, some bills could limit renewables.

In Texas, H.B. 433 would impose a tax on the generation of electricity from certain resources that aren’t natural gas. That could raise energy costs, so some experts see it as unlikely to succeed. Legislation in the upcoming session also may determine if a tax abatement program remains an option for certain proposed projects.

Other Texas proposals, such as H.B. 623 and H.B. 783, could lead to restrictions that prevent development of a Chinese-backed wind farm proposed near the Mexico border. That project has drawn widespread opposition for a host of reasons, from national security and military training to wildlife and tourism (Energywire, Aug. 27, 2020).

Electric vehicles

Electric vehicle legislation is expected to increase in various states amid a seismic transportation industry shift.

The Texas Electric Transportation Resources Alliance is working on legislation that would look at fees; clarify the legal status of public EV charging facilities as not being classified as retail electric providers; set up a planning process for a wider charging network; refine a state EV incentive program; and examine a potential battery recycling program, according to Tom “Smitty” Smith, the group’s executive director. It’s intended as a foundational approach to help the industry grow in Texas.

Another Texas proposal is H.B. 427, which would place an additional fee on the registration of electric and hybrid vehicles.

Fees are needed to support state coffers, EV critics in the United States say, because electric cars that don’t use gasoline still contribute wear and tear on the roads. EV advocates, however, have sought fair treatment for a technology that helps to cut tailpipe emissions. Some EV advocates argue that fees aren’t needed because those vehicles are lighter and typically are used for shorter trips, limiting the amount of wear and tear on state highways.

In Florida, Brandes, an EV driver, has proposed via S.B. 140 adding a registration fee to electric vehicles. It may cost an EV owner less than the state’s gasoline tax, which Florida collects from wholesalers. Brandes says EVs should start providing some state funds.

“And I’m an EV driver, so I’m eating my own cooking,” he said.

Electric vehicles account for a small fraction of automobiles driven on Florida’s roads today, but Brandes said he and others are hoping to see that figure grow exponentially.

“We need to prepare the state for that rapid transition,” he said.

Drive Electric Florida, an organization that advocates for transportation electrification and EV adoption, said it is open to a discussion about fees as long as they aren’t punitive. EVs make up less than half of a percent of vehicles on Florida roads, so it should not be solely up to those drivers to backfill gaps in the state’s transportation budget, said Matt Alford, the group’s executive director.

Alford called Brandes’ proposal a “thoughtful” approach and said Drive Electric Florida would welcome further discussion. He also noted the state’s economic constraints but was optimistic that EV policies will move this year, given the support Gov. Ron DeSantis (R) has provided the industry.

“The governor certainly has been a good partner and a friend of the EV industry,” Alford said.

Florida lawmakers are also poised to expand on a law that called for a statewide master plan for electric vehicle charging stations (Energywire, March 31, 2020). The measure ties together transportation electrification to make Florida more resilient to hurricanes.

A key part of the law calls on the state’s energy office, the Florida Department of Transportation and the Public Service Commission to recommend additional legislation on EVs.

In a December webcast, Nick Nigro, founder of Atlas Public Policy, said state and local governments have critical roles to play in EV policies. He said states should join forces and send signals to Washington that greater federal leadership is needed.

“The states have been active in EVs for the last several years, but collectively, you know, it’s not enough,” Nigro said during a virtual forum on Arizona transportation electrification.

At the same event, Benjamin Sharpe with the International Council on Clean Transportation said Arizona had a chance to join California and other states that are more aggressive around advancing electric driving.

“The biggest growth markets in electric vehicles are going to be in the places that have the strongest policy support,” Sharpe said.

Along with fees, tax credits are a focus in some states. In Georgia, lawmakers could revive a proposal for a $2,500 EV tax credit, but one Southeastern EV policy expert said other issues are taking priority.

“There’s a lot of momentum in this sector,” said Anne Blair, director of energy-efficient transportation for the Southeast Energy Efficiency Alliance.

Many EV startups are selling to customers directly, following the lead of pioneer Tesla Inc. (Energywire, July 17, 2020). Not all EV makers can do so in two key Southeastern states — Georgia and North Carolina — something that is a barrier to EV expansion across the region, according to Blair.

“There’s really been no motivating policy to get more cars on the road,” she said.

Energy storage

The coming year may be an important one for batteries on the power grid, with state legislators poised to review everything from energy storage targets to infrastructure planning.

The U.S. Energy Storage Association (ESA) is hoping such moves continue momentum toward a national goal of 100 gigawatts of new energy storage by 2030, which could be batteries, pumped hydro and other technologies. For comparison, the American Clean Power Association said the United States had over 122 GW of installed wind energy capacity at the end of the fourth quarter.

Storage has shifted in the last five or six years from being a promise of the future to something that’s here and happening, according to Jason Burwen, who recently became interim CEO at ESA.

Burwen noted the declining cost of battery storage and increased trust from utilities. And he said some state-level policymakers have removed hurdles to help storage connect to the grid and be compensated for its flexibility.

“We expect that more states are going to keep making advances, whether in legislation or in regulations to remove barriers and to promote the use of energy storage for reducing costs to their customers or adding needed resilience [and] reliability to their system and integrating a diverse and perhaps changing supply mix,” he said.

Burwen said storage deployment targets can be the most catalytic policies, noting ones in California, Oregon, Nevada, New York, Massachusetts, New Jersey and Virginia.

“They set a long-term signal for where the state is going,” he said. A potential target in Arizona is working through a regulatory process, though it’s not final — and it could be affected by legislation.

Connecticut has looked at a potential energy storage target, and Burwen said the state could add one. Storage targets also may see attention in places such as Maine, Illinois and Colorado, he said.

Legislation also could involve tax reform associated with energy storage projects, and Burwen said that could help ensure that localities benefit from tax revenue derived from developments. Tax reform is being, or may be, considered in places such as Virginia, Colorado, Vermont, Arizona and Michigan, according to Burwen.

Still other legislation could involve utility resource or infrastructure planning reform, including around interconnections.

Questions also linger about safety following a battery fire in Arizona in 2019 (Energywire, July 29, 2020). Burwen said ESA takes safety seriously and supports training for people such as first responders to get up to speed on storage.

The Public Utility Commission of Texas didn’t include energy storage in a list of legislative recommendations for 2021, but the agency acknowledged its growth in a report to state lawmakers and said “its integration must be thoughtfully managed.”

Jobs and infrastructure

In providing a 2021 outlook for the power sector, Deloitte LLP said the new administration could accelerate change, stating that an “agreement on an infrastructural stimulus could serve as a vehicle to advance the energy transition, as could executive authority over emissions.”

But states often are the arena for many key decisions on infrastructure such as power lines and generation projects. State leaders also are looking for ways to boost jobs.

In Texas, the process for evaluating new power transmission lines is expected to be discussed to help relieve congestion, according to Michael Jewell, an attorney in the state with Jewell & Associates who has a number of clean energy clients. Such legislation could help jump-start electric infrastructure projects and benefit renewable energy companies and their customers.

“Your Fortune 500 companies that are investing in renewables to meet their clean energy goals and their carbon reduction goals, those guys are being directly impacted by this,” Jewell said.

With jobs, a state to watch is Illinois, where lawmakers are working on clean energy legislation that stemmed from Democratic Gov. J.B. Pritzker’s proposal to reach 100% renewable power by 2050 (Energywire, Aug. 24, 2020).

The bill takes the effort to create jobs one step further by making environmental justice a focus when it comes to creating clean energy jobs.

The measure also ties in jobs and a “just transition” for workers in the fossil fuel industry. Just transition is a framework that stems from the 1970s labor movement that has morphed into a leftist umbrella term for giving economic relief for displaced fossil fuel workers.

There was a similar push in Maryland’s wide-ranging climate bill that failed to pass last year. The proposal also created a work group focused on identifying communities affected most by climate change and one that looks at jobs.

“The equity theme there has multiple layers beyond what we’re seeing in traditional packages,” Valova at IREC said.