Renewables: 'From Appetizer To Entrée'

On March 17, the American Council on Renewable Energy (ACORE) held its annual National Renewable Energy Policy Forum in Washington, DC, where leaders in clean energy business, policy and finance gathered to assess progress, debate new approaches, and help shape policy visions.

“Policy still matters” was the theme of this year’s event, which served to remind everyone that while 2015 was a transformational year in terms of policy wins (i.e., COP 21 agreement, Clean Power Plan, ITC/PTC extensions) much more work is needed to strengthen the conditions for clean energy’s long-term future.

Here are my top five takeaways from the forum:

1) For clean energy, the good times are rolling

This was no coal industry confab – attendees and speakers portrayed an air of positivity not typically seen for an industry that has seen its fair share of setbacks and detractors over the years. The positive vibe was perhaps best expressed by Janet McCabe, EPA Acting Assistant Administrator – Office of Air and Radiation, who on St. Patrick’s Day described the ebullient mood of the industry by deftly paraphrasing an old Irish blessing: “The wind was at our back, sun was shining warm.”

And despite some relatively minor shortcomings and potential roadblocks, 2015’s major policy wins—the Clean Power Plan, Paris agreement and Investment Tax Credit/Production Tax Credit tax extensions—were all hailed as transformational moments that would propel the industry’s continued growth.

2) Corporate renewables purchasing is becoming the operational mainstream

Panelists from Google and Amazon highlighted tremendous growth in corporate demand for renewables, which was also a theme of the ACORE pre-conference workshop.

Speakers noted that corporate renewable purchasing grew 60 percent in 2015 for a total of 3.44 gigawatts purchased, which is incredible considering corporate renewable purchasing was around 100 megawatts in 2012.

And it’s not just the numbers that show the trend is going mainstream; it’s the new players who are joining in. According to BRC, nearly two-thirds of the total energy purchased last year was from companies new to utility-scale renewable energy.

Google, Amazon and other tech companies are still the vanguard, but increasingly it’s non-tech companies like Dow Corning and Procter & Gamble that are making major investments in renewables. It’s also going beyond B2B bragging rights; P&G’s new Tide PurClean liquid detergent, to be released in May, will remind consumers on the label that it is produced with “100 percent renewable wind-power energy.”

3) Renewables going from “appetizer to entrée” presents challenges & opportunities

Speaking on a panel on the changing electricity marketplace, Jonathan Weisgall of Berkshire Hathaway Energy best encapsulated the major shift happening in electricity markets when he remarked that renewables are going from “appetizer to entrée.”

Attendees talked about how these “entrées” will get even larger if the trend around aggressive statewide renewable portfolio standards continues, as recently-passed laws in Oregon, California and Hawaii have shown.

While this shift presents great opportunities for renewables, it also underscores a need for stronger governance that will enable better interconnection between regional power grids.

Going into the forum, I expected grid energy storage to be a hotter topic, but a lot more time was spent discussing how a more efficient dispatch of renewables could prove more consequential. This point was made recently in a study from Nature Climate Change, which found that better interconnection would enable wind and solar power to provide 80 percent of US electricity without price increases or the need for electricity storage.

4) EPA’s Clean Power Plan will probably endure legal challenges

Despite the recent decision by the U.S. Supreme Court to issue a stay of the EPA’s Clean Power Plan (which calls for reductions in carbon emissions from the electricity sector by 32 percent over 2005 levels in the next 15 years), most speakers seemed cautiously optimistic the rule would survive legal tests and implementation would not be materially impacted as the case against EPA heads toward a likely hearing in the Supreme Court in Spring 2017.

Panelists noted that while EPA cannot impose any Clean Power Plan requirements on states during the stay, nothing is withholding them from continuing to develop guidance on emissions trading.

When it comes to the makeup of the Supreme Court and how that might impact Clean Power Plan’s fate, most speakers also seemed to agree that Justice Kennedy the would be favorable to EPA’s arguments for the plan, thereby downplaying the significance of how Justice Scalia’s eventual replacement might shift the balance on this particular issue.

The bottom line is that if the above holds true, we can rest assured knowing the Clean Power Plan – which represents the central U.S. policy prescription to reduce our national emissions via the Paris global climate agreement – will remain intact. And with that in place, the U.S. will avoid sending a devastating message to other major emitters such as China and India that it can’t keep its commitments on climate action.

5) New laws (or at least new interpretations) may be needed to meet Paris commitments

The U.S. commitment in the Paris Agreement last December—to cut greenhouse gas emissions 26 to 28 percent by 2025 (compared to 2005 levels)—was lauded by many speakers for its potential to embolden clean energy investment in the U.S. and abroad. But attendees ultimately seemed split on whether new U.S. laws would be needed to meet our specific Paris reduction commitments.

One sentiment was that the tax incentives for renewable energy and national fuel economy standards, as per the Clean Power Plan, wouldn’t be enough to meet Paris commitments. Instead, their view was that new regulation in the likely form of a cap-and-trade system would ultimately be needed.

On the other hand, speakers like Robert Sussman of Sussman & Associates talked at length about the possibility to meet or exceed our Paris commitments under existing law. Specifically, Sussman pointed to an existing provision under the Clean Air Act (Section 115, which can be read here) that would give a future administration a solid basis for action on climate change across many sectors of the economy, not just the power sector.

At the end of the day, everyone seems focused on defending the Clean Power Plan and improving tax incentives for more forms of renewable energy to meet climate goals, but I would not be surprised if Section 115 continues to be brought up as a potential solution for meeting Paris commitments, regardless of the outcome of the Clean Power Plan in the courts.

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