Can States Procure Clean Energy through an RFP Process?

Posted on April 1, 2015 by Mark R. Sussman

In February 2015, the states of Connecticut, Massachusetts and Rhode Island announced their intent to seek new large-scale clean-energy projects through a multi-state procurement process.  According to the draft Request for Proposal (RFP) the “essential purpose” of this procurement is to “identify any projects that offer the potential for the Procuring States to meet their clean energy goals in a cost-effective manner that brings additional regional benefits.”  The draft RFP seeks bids for the delivery of Class I renewable energy projects (i.e. solar, wind, biomass, fuel cells in Connecticut, and some hydroelectric) through power purchase agreements, combined power purchase agreements and transmission upgrades, or transmission projects with clean energy delivery commitments.  Because each state has different procurement laws and different definitions of “renewable energy”, the draft RFP notes that contracts for any selected projects must be negotiated with the relevant electric distribution companies (EDC) and approved in accordance with applicable state and federal laws.

To encourage the generation of renewable energy, many states have adopted Renewable Portfolio Standards (RPS) to require electric distribution companies and retail electric suppliers to include an increasing percentage of renewable energy in their mix of generation resources.  Unfortunately, the RPS alone seems insufficient to encourage the development of enough renewable energy resources to address the renewable energy and climate change policies of the states.  Therefore, the three New England states, as well as others, are experimenting with different methods to incentivize renewable energy generation.  Given the substantial capital requirements for constructing new electric generating facilities and the need for an assured revenue stream, long-term power purchase agreements are increasingly being used to encourage the construction of new energy resources.  The RFP to be issued by the three New England states seeks to attract new large scale renewable energy projects by offering successful bidders long-term energy contracts.

One question raised by this new approach to encourage the construction of reasonably-priced renewable energy resources is whether federal law preempts the states from contracting for large wholesale electric generation, despite independent state policies designed to encourage the development of more renewable energy resources.  This issue has been raised in several recent federal lawsuits.  

Last year, both the Fourth and Third Circuit Courts of Appeals concluded that state programs awarding long term contracts to new electric generating facilities were preempted by the Federal Power Act.  In PPL EnergyPlus, LLC v. Nazarian, 753 F.3d 467 (4th Cir. 2014), the Fourth Circuit held that a fixed, twenty-year energy contract for a new Maryland generating facility was preempted by federal law. Using an RFP process, Maryland selected a company to build a power plant and sell its energy and capacity on the federal interstate wholesale market.  Under the approved contract, the winning project was eligible for payments from the local EDC that amounted to the difference between the price paid in the interstate market and the amount approved in its EDC contract.  The Fourth Circuit concluded that the Maryland law was field preempted because it functionally sets the rate that the generator receives for sales in the interstate energy market, an area within the exclusive jurisdiction of FERC. 

Similarly, the Third Circuit, in PPL EnergyPlus, LLC v. Solomon, 766 F.3d 241 (3d Cir. 2014), held that federal law preempted a New Jersey statute under which the state solicited and awarded bids for new electric generating capacity using long-term energy capacity agreements.  The Third Circuit, however, acknowledged that states have a role to play in energy markets, and stated that not every state program that has an effect on interstate electric rates will be preempted.  The court explained that states may utilize measures that subsidize generators without being preempted, as long as such subsidies do not essentially set wholesale prices.   

In 2013, Connecticut solicited proposals for large scale renewable energy through an RFP process.  That solicitation resulted in the selection of a 250 MW wind project in Maine and a 20 MW solar project in Connecticut.  Both projects were awarded long term power purchase agreements for the energy produced by these projects.  A disappointed bidder, Allco Finance Limited, filed suit alleging preemption, following Nazarian and Solomon.  On December 10, 2014, the district court dismissed the case, finding that a disappointed bidder lacks standing. Allco Finance, Ltd. v. Klee. Nevertheless, the court ruled on the merits.  The district court concluded that the state RFP process was not preempted, rejecting Allco’s argument that the state-approved contracts set the wholesale price for energy produced by the successful bidders.  The court ruled that the effect of the Connecticut program on the interstate market was at most indirect and would cause no market distortion.  Allco has appealed the district court’s decision to the Second Circuit.

The use of an RFP process to encourage the development of renewable energy projects through the award of long term energy contracts is an effective way to procure lower cost renewable generation.  The Connecticut Z-REC program, which awards long term Renewable Energy Credit (“REC”) contracts, has proven to be successful in driving down the cost of solar renewable energy credits from small (less than 1 MW) solar projects.  In light of the federal preemption obstacles in awarding long-term wholesale electricity contracts, another approach may be to support large scale renewables by procuring long term contracts for RECs and allowing the energy price to be set by the interstate markets.  Since a REC represents the renewable attribute of electricity, and not the energy itself, such procurement should avoid the preemption issues identified by the Third and Fourth Circuits.  This may provide a path forward for states to pursue their clean energy goals by incentivizing larger scale renewable resources. 

Working with Utilities to Bring More Clean Energy into the Grid

Posted on March 10, 2014 by Peter Lehner

Environmentalists and utility companies don’t always see eye to eye. But when we do find common ground, big changes can happen. Earlier this month, NRDC and the Edison Electric Institute, which represents all the nation’s investor-owned utility companies, serving 220 million Americans, announced an agreement to work together to bring more clean energy and efficiency into the electric grid.

Moving toward a cleaner, more efficient electric grid is less a question of technology than of policy. Outdated utility regulations can pit utility companies and clean energy against each other. Under the traditional regulatory scheme, utilities have to sell increasing amounts of electricity in order to recover their costs. So when customers start putting up solar panels on their roofs, the utility “loses.” Or when customers weatherize their homes and don’t need as much heat to stay warm, the utility “loses.”

This outdated regulatory model is slowing the growth of clean energy and efficiency, and jeopardizing the development of the grid that utilities and customers would all like to have: an enhanced grid that provides clean, reliable, affordable electricity with less carbon and toxic air pollution. In order to speed up the deployment of clean energy and efficiency across the country, and bring our grid into the modern era, utility companies and customers need to be rewarded for doing the right thing.

NRDC and the EEI have come to a path-breaking agreement on key policy changes that will make our electric grid cleaner and more robust. The most significant change is a shift in thinking. Instead of being in the business of selling electricity, a commodity, utilities should be in the business of providing better quality electricity services. This means more efficient electricity, from diverse clean sources like wind and sun, supplied by a robust, modern grid that can take advantage of clean energy, whether it’s generated from someone’s roof or from a power plant. Both utilities and clean energy providers will be winners if this is done right.

Having the support of utilities is a major step forward in pushing for reform. When utilities are rewarded for making our grid better--cleaner and more efficient--instead of merely for selling more electricity, we’ll see improvements much faster. More clean energy, more efficiency, more reliability, more options for consumers. Working together, with a host of diverse partners, NRDC and EEI can help convince state utility commissions to update their regulatory policies and help usher in a new era of clean, reliable, affordable electricity.

Wisconsin DNR Seeks Additional Authority to Protect Against Adverse Impacts of Wind Projects

Posted on December 7, 2010 by Linda Bochert

 

WDNR has issued “Siting Guidelines” available here to help wind project developers site projects in ways that minimize impacts and will be revising its current “Bird and Bat Study Guidelines” to provide more comprehensive information.

 

The WDNR report was submitted in response to 2009 Wisconsin Act 40, which required the agency to determine if its “statutory authority is sufficient to adequately protect wildlife and the environment from any adverse effect from the siting, construction, or operation of wind energy systems.”

WDNR’s legislative agenda is in development. Whether the legislature will take up these recommendations is currently unknown. While WDNR's interest in more comprehensive authority is consistent with its view of its responsibilities, the risk for project proponents and developers is that it will create new grounds for project opponents to rely on to challenge siting decisions. For many the goal of alternative energy sources -- solar, wind, biomass -- is still only desirable when it isn't in their backyard.

 

 

In response to a legislative directive, the Wisconsin Department of Natural Resources (WDNR) in November submitted a report to the Wisconsin Legislature making four recommendations to enhance its authority to protect wildlife and natural resources from wind project impacts:

 

  1. require WDNR to prepare a formal “biological opinion” and require the Public Service Commission of Wisconsin (PSCW) to consider that opinion before PSCW approves a wind project; this opinion would 1) describe the potential impacts of the project to wildlife and natural resources; 2) identify potential conflicts with wildlife protection laws; 3) reach a conclusion as to whether the project has the potential to cause a significant adverse impact to habitat and fish and wildlife resources; and 4) reach a conclusion as to whether mitigation measures can be implemented to substantially reduce those impacts below the level of significance;
  2. require a wind project developer to obtain Incidental Take Permits or Authorizations under the Wisconsin Endangered Species Law (Wis. Stat. s. 29.604) before constructing a wind project; currently, developers are encouraged but not required to obtain such authorizations;
  3. expand the Wisconsin Endangered Species Law to protect endangered and threatened species habitat, to mirror the federal Endangered Species Act; currently, Wisconsin law only protects habitat if a direct take of a species will occur and an Incidental Take Permit or Authorization is required; and
  4. require easements for wind facilities to authorize access to those properties for the conduct of biological studies by developers, WDNR personnel and/or authorized agents.

 

These recommendations reflect WDNR’s view that its standard regulatory authorities over wetland and waterway impacts don’t reach the agency’s growing concerns about protecting wildlife and habitat from turbine siting and operation. Current WDNR authority addresses impacts to waterways and wetlands from project construction, and obligates developers to implement construction site erosion control. Threatened and endangered species are protected from intentional and incidental “takes”. WDNR has implemented this authority through consultation and use of general Incidental Take Permits and Authorizations. Violations of general wildlife protection laws (Wis. Stat. ss. 23.095(1g), 29.011(1) and 29.039) are subject to enforcement, but are limited to intentional taking by unlawful activities, and WDNR does not consider them generally applicable to construction or operation of state or locally approved wind projects.

Managing the Legal Risks of Green Buildings

Posted on August 23, 2010 by Joseph Manko

As with “green washing” of products, which are subject to existing product liability law, there is an emerging area of law regarding liability for claims that a building marketed as “green” or alleged to achieve the desired platinum, gold, silver or standard Leadership in Energy and Environmental Design (LEED) certification has failed to do so.

As the LEED requirements and techniques for sustainable development become better understood and more widely adapted, more and more developers are seeking to build “green.” To the extent that the construction costs permit a manageable return on investment (ROI) and the specifications and requirements for such development are clearly spelled out in the various contractual documents, including especially the agreement with architects, we will likely see more and more claims that the resultant buildings are “green.”

Although some theories of liability will track areas in construction law, e.g., deficiencies in design, construction or installation, green buildings claims will face an additional layer of risk. Without such statutory coverage, cf strict product liability, today’s bases for liability may include breach of contract, tort, fraud and false advertising claims.

For example, in the Maryland case of Shaw Development v. Southern Builders, which was settled without an opinion, the loss of a tax credit based upon compliance with a LEED Silver certification level led to a claim of liability.

The best way to mitigate these risks is to ensure that all contractual documents are clear and consistent, project management is assured, information disclosures are accurate, and finally that insurance coverage, where available, is provided. With regard to documents, AIA form contract B214-2007 has been developed to provide some model contractual language; more than forty insurance carriers are now underwriting green building liability; and in many law firms, some of their attorneys and other technical people have become LEED accredited.

This is an area that will continue to develop as more and more green buildings are constructed. For more in-depth information on potential liability and tips to mitigate claims, see the Harvard Law School Environmental Law & Policy Clinic White Paper, “The Green Building Revolution: Addressing and Managing Legal Risks and Liabilities”.

Managing the Legal Risks of Green Buildings

Posted on August 23, 2010 by Joseph Manko

As with “green washing” of products, which are subject to existing product liability law, there is an emerging area of law regarding liability for claims that a building marketed as “green” or alleged to achieve the desired platinum, gold, silver or standard Leadership in Energy and Environmental Design (LEED) certification has failed to do so.

As the LEED requirements and techniques for sustainable development become better understood and more widely adapted, more and more developers are seeking to build “green.” To the extent that the construction costs permit a manageable return on investment (ROI) and the specifications and requirements for such development are clearly spelled out in the various contractual documents, including especially the agreement with architects, we will likely see more and more claims that the resultant buildings are “green.”

Although some theories of liability will track areas in construction law, e.g., deficiencies in design, construction or installation, green buildings claims will face an additional layer of risk. Without such statutory coverage, cf strict product liability, today’s bases for liability may include breach of contract, tort, fraud and false advertising claims.

For example, in the Maryland case of Shaw Development v. Southern Builders, which was settled without an opinion, the loss of a tax credit based upon compliance with a LEED Silver certification level led to a claim of liability.

The best way to mitigate these risks is to ensure that all contractual documents are clear and consistent, project management is assured, information disclosures are accurate, and finally that insurance coverage, where available, is provided. With regard to documents, AIA form contract B214-2007 has been developed to provide some model contractual language; more than forty insurance carriers are now underwriting green building liability; and in many law firms, some of their attorneys and other technical people have become LEED accredited.

This is an area that will continue to develop as more and more green buildings are constructed. For more in-depth information on potential liability and tips to mitigate claims, see the Harvard Law School Environmental Law & Policy Clinic White Paper, “The Green Building Revolution: Addressing and Managing Legal Risks and Liabilities”.

Opposition to Wind Farm Siting Based on Adverse Health Effect from Infrasound?

Posted on February 9, 2010 by Roger Ferland
One of the big hurdles for further development of wind power in the U.S. is landowner objections to placement of turbines near their homes.  The rationale du jour for such objections is that the sound produced by turbines causes a broad range of health effects.  In particular, objectors point to infrasound, which is sound generally below the level of human perception.  A recent case in Wisconsin was one of the first in the country to test the objectors' theories.  When a Wisconsin utility applied for permission to build 90-turbine development north of Madison, objectors argued for extremely low limits for wind turbine sound and a mile-and-a-quarter setback, limits which would have made the project impossible. 
 
The principal proponent of the theory that wind turbine sound causes physiological harm is a New York pediatrician, Nina Pierpont.  Dr. Pierpont has written and self-published a book, entitled "Wind Turbine Syndrome: A Report on a Natural Experiment," which chronicles complaints by 10 families around the world who have lived near wind turbines.  As presented by Dr. Pierpont, the symptoms include everything from headaches to nausea,  tachycardia, irritability and panic episodes associated with sensations of movement or quivering inside the body.  Dr. Pierpont argues that infrasound works in two principal ways to cause these symptoms:  first by exciting the human vestibular (balance) system; and second vibrating the diaphragm and organs, thereby passing on confusing messages to the body. 
 
Dr. Pierpont draws upon and supports the work of noise control engineers George Kamperman and Richard James, who, in various proceedings in the U.S. and abroad, advocate very low thresholds for sound from turbines (35 dBA, which is approximately the level of a quiet bedroom).  In the Wisconsin case, objectors hired Mr. James to provide expert testimony, which he did, relying heavily on Dr. Pierpont's theories.
 
Quarles & Brady retained two experts to address sound issues on behalf of the utility.  Dr. Geoff Leventhall is an acoustician, consultant and professor from the U.K. who has been involved in studying infrasound for nearly 50 years.  Dr. Leventhall testified that neither of Dr. Pierpont's theories make sense.  In fact, he testified, the author of the study Dr. Pierpont relies upon for her vestibular disturbance theory specifically disclaimed that his work supported her conclusions.  As for Dr. Pierpont's theory that infrasound vibrates the diaphragm and organs, Dr. Leventhall testified that simple math dooms her argument.  Sound from turbines results in movement of the diaphragm of less than 10 microns (one tenth the thickness of a human hair), while during normal breathing, the diaphragm moves several centimeters.  Dr. Leventhall also pointed out that Dr. Pierpont's analysis completely ignores another, much stronger, source of internal infrasound--the heart.
 
Quarles & Brady also retained Dr. Mark Roberts, a Chicago-based epidemiologist, biostatistician and physician.  Dr. Roberts testified that "wind turbine syndrome" is not a medical diagnosis supported by peer reviewed, published, scientific literature.  He completed a review of the literature, and found no support for the claim that wind turbine sound causes physiological harm. Dr. Roberts also identified several flaws in Dr. Pierpont's methodology, limiting the usefulness of her research, including selection bias and a failure to adhere to accepted epidemiological principles in developing her theories.  Summarizing Dr. Pierpont's work, Dr. Roberts concluded that it consisted of  "opinions that are unsubstantiated," and as he pointed out, "everyone has opinions."  Dr. Roberts warned against allowing such "science" to shape public policy.
 
Both Dr. Leventhall and Dr. Roberts agreed that sound from wind turbines may annoy neighbors or disturb their sleep.  Dr. Roberts summarized such concerns as follows:  "The underlying complaint of annoyance is, in and of itself, not a disease or a specific manifestation of a specific exposure, but instead a universal human response to a condition or situation that is not positively appreciated by the human receptor."
 
Ultimately, while the Wisconsin Public Service Commission recognized that no development is without cost to those who live nearby, it adopted the utility's suggestion of a 50 dBA sound threshold, with a lower 45 dBA threshold during summer nighttime hours, when neighbors are likely to have their windows open.  These thresholds allow the utility to move forward with the project, while, in the Commission's view, striking an appropriate balance between neighbors' interests and those of the utility.

"MEGA" SHALE AND TIGHT SANDS GAS - A GAME CHANGER

Posted on January 19, 2010 by R. Kinnan Golemon

In the past several decades, due in large measure to the persistence of innovative independent oil and gas operators, advancements in drilling and completion technology and the increased demand for natural gas during the expanding economic times that existed prior to year-end 2008, a paradigm shift occurred in the domestic natural gas market that will have significant impact in areas of the U.S. that, heretofore, were not significant producers of the commodity. Prior to this development, supply tightness and price volatility were characteristic features of the natural gas market. Now, due to these " Mega" shale and tight sands gas plays, there will be increased environmental scrutiny of this sector's activities, in addition to the dampening of price swings.

 

            The U.S. gas supply currently is predicted to be at least 150 years at use levels similar to those existing in 2008. Only a few short years ago, forecasters were predicting the need for massive imports of liquefied natural gas to meet predicted near term demand. This change in conditions has very significant implications politically and certainly presents interesting opportunities on a variety of fronts for environmental attorneys.

 

            One particularly interesting aspect of these newly found natural gas reserves is the fact that a significant portion of this exploration, production, processing and transmission activity will be occurring in areas of the U.S. that have had limited exposure to such activity. The last ten (10) years of rapid expansion of natural gas activity in the Barnett Shale area of Texas, i.e., North Central Texas and the Dallas-Ft. Worth metroplex, is a forerunner for what is likely to occur as the resource development expands to other known shale deposits.

 

 

            Needless to say, there is opportunity for tremendous growth in local tax base, ample employment opportunities for certain skill sets, increased income to property owners, and, most certainly, a variety of allegations of environmental harm from anti-drilling opposition. Much of the latter in the very recent past in the Barnett Shale area has been directed at perceived increases in emissions of air contaminants, e.g., VOCs and "toxic" constituents. To date, snapshot air quality sampling has not confirmed any problem. (see January 12, 2010, Texas Environmental Quality Press Release – Oil and Gas Air Tests in Ft. Worth find "No Cause for Concern".) However, on the same date, the Mayor of Dish, a rural community of less than 200 residents, was appearing before another state agency, the Texas Railroad Commission, seeking a cessation to all natural gas drilling, production, processing and transmission activity with the contention that this community was besieged by toxins and odors emanating from nearby natural gas activity. (Additional TCEQ air sampling results from recent tests in that rural setting are due to be released this month.) 

  

           Numerous other environmental related contentions relative to the development of the Barnett Shale reserve have generally been directed at the well completion phase where large volumes of fresh water with additives are utilized in hydraulic fracing (pressurized mixture for breaking apart the formation rock to allow for the natural gas to flow), the disposal of wastewater and the specifics of the proprietary formulas for the additives. In addition, there are a variety of claims relative to general safety, increased truck traffic and disturbances of property for the placing of associated gathering and transmission lines.           

 

            This paradigm shift in the natural gas reserve potential should afford many in our profession an excellent opportunity to provide sound advice and counsel utilizing the experiences we have gained in addressing similar issues in the past.

"MEGA" SHALE AND TIGHT SANDS GAS - A GAME CHANGER

Posted on January 19, 2010 by R. Kinnan Golemon

In the past several decades, due in large measure to the persistence of innovative independent oil and gas operators, advancements in drilling and completion technology and the increased demand for natural gas during the expanding economic times that existed prior to year-end 2008, a paradigm shift occurred in the domestic natural gas market that will have significant impact in areas of the U.S. that, heretofore, were not significant producers of the commodity. Prior to this development, supply tightness and price volatility were characteristic features of the natural gas market. Now, due to these " Mega" shale and tight sands gas plays, there will be increased environmental scrutiny of this sector's activities, in addition to the dampening of price swings.

 

            The U.S. gas supply currently is predicted to be at least 150 years at use levels similar to those existing in 2008. Only a few short years ago, forecasters were predicting the need for massive imports of liquefied natural gas to meet predicted near term demand. This change in conditions has very significant implications politically and certainly presents interesting opportunities on a variety of fronts for environmental attorneys.

 

            One particularly interesting aspect of these newly found natural gas reserves is the fact that a significant portion of this exploration, production, processing and transmission activity will be occurring in areas of the U.S. that have had limited exposure to such activity. The last ten (10) years of rapid expansion of natural gas activity in the Barnett Shale area of Texas, i.e., North Central Texas and the Dallas-Ft. Worth metroplex, is a forerunner for what is likely to occur as the resource development expands to other known shale deposits.

 

 

            Needless to say, there is opportunity for tremendous growth in local tax base, ample employment opportunities for certain skill sets, increased income to property owners, and, most certainly, a variety of allegations of environmental harm from anti-drilling opposition. Much of the latter in the very recent past in the Barnett Shale area has been directed at perceived increases in emissions of air contaminants, e.g., VOCs and "toxic" constituents. To date, snapshot air quality sampling has not confirmed any problem. (see January 12, 2010, Texas Environmental Quality Press Release – Oil and Gas Air Tests in Ft. Worth find "No Cause for Concern".) However, on the same date, the Mayor of Dish, a rural community of less than 200 residents, was appearing before another state agency, the Texas Railroad Commission, seeking a cessation to all natural gas drilling, production, processing and transmission activity with the contention that this community was besieged by toxins and odors emanating from nearby natural gas activity. (Additional TCEQ air sampling results from recent tests in that rural setting are due to be released this month.) 

  

           Numerous other environmental related contentions relative to the development of the Barnett Shale reserve have generally been directed at the well completion phase where large volumes of fresh water with additives are utilized in hydraulic fracing (pressurized mixture for breaking apart the formation rock to allow for the natural gas to flow), the disposal of wastewater and the specifics of the proprietary formulas for the additives. In addition, there are a variety of claims relative to general safety, increased truck traffic and disturbances of property for the placing of associated gathering and transmission lines.           

 

            This paradigm shift in the natural gas reserve potential should afford many in our profession an excellent opportunity to provide sound advice and counsel utilizing the experiences we have gained in addressing similar issues in the past.

"Fast-Tracking" of Solar Development Not a Bypass of Environmental Review

Posted on November 20, 2009 by Linda Bullen

On June 29, 2009, Department of the Interior (DOI) Secretary Ken Salazar announced several initiatives to aid development of solar energy facilities on federal lands in the Western U.S. Working with Western leaders, the DOI initiative would:

 

  • Designate prime zones for utility-scale solar development
  • Open new Bureau of Land Management (BLM) offices to facilitate permit processing
  • Expedite project proposals. 

Twenty-four tracts of BLM land were designated as Solar Energy Study Areas, upon which projects of 10 megawatts or greater would, under this initiative, be eligible for priority processing. This “priority processing” is commonly referred to as “fast-tracking.” In early November 2009, Secretary Salazar announced the fast-tracking of six renewable energy facilities located on federal land in the State of California. 

 

Fast-tracking is not intended to circumvent any environmental or other process, but rather to facilitate the identified projects identified by the federal agencies involved (most commonly the BLM), giving priority to those that are marked as fast-tracked projects. Nevertheless, several fast-tracked projects, and fast-tracking in general, has come under criticism by some members of the environmental community and others.

 

This criticism is misplaced to the extent that it suggests that fast-tracked projects are not subject to the same rigorous scrutiny as non-fast-tracked projects. Every utility-scale project on federally-owned land is subject to review under the National Environmental Policy Act (“NEPA”). NEPA mandates thorough review of all environmental aspects of any utility-scale energy project on federal land. 

 

The NEPA process does not allow for “short cuts” or circumvention of any part of the process on projects upon which NEPA applies. Accordingly, fast-tracking of renewable projects does not result in a less meticulous or careful environmental review, just an expedited one. Efficiency does not equate to inadequacy, and such criticisms are misplaced.

Interior Secretary Salazar Demonstrates True Commitment to Renewable Energy

Posted on June 15, 2009 by Linda Bullen

On May 2, 2009, Secretary of the Department of the Interior, Ken Salazar held a public meeting just outside Las Vegas, in the Red Rock Canyon National Recreation Area, to announce the opening of four new BLM offices to handle renewable energy permitting. The offices will be located in Nevada, Arizona, California and Wyoming, and have been designed to address the backlog of pending renewable energy project applications. The DOI estimates that 200 solar applications and over 25 wind projects are pending with the BLM in the western states.

 

            I was one of the 25 or so attendees lucky enough to have the honor and privilege to be invited to a meeting with Secretary Salazar prior to the public meeting where this announcement was made. This earlier meeting was attended by developers of solar, wind and geothermal projects and others in the renewable energy industry. I was impressed by Secretary Salazar’s level of knowledge about both renewable projects and the BLM permitting process, as demonstrated by his comments and questions. Secretary Salazar also announced that $305 million in American Recovery and Reinvestment Act(ARRA) monies will be used for BLM projects to restore landscapes, spur renewable energy development on public lands, and create jobs. I left the meeting with confidence in the Secretary’s commitment to renewable energy and to the implementation of changes, policies and programs that will convert renewable energy from a noble goal to a reality.

 

Linda M. Bullen

Interior Secretary Salazar Demonstrates True Commitment to Renewable Energy

Posted on June 15, 2009 by Linda Bullen

On May 2, 2009, Secretary of the Department of the Interior, Ken Salazar held a public meeting just outside Las Vegas, in the Red Rock Canyon National Recreation Area, to announce the opening of four new BLM offices to handle renewable energy permitting. The offices will be located in Nevada, Arizona, California and Wyoming, and have been designed to address the backlog of pending renewable energy project applications. The DOI estimates that 200 solar applications and over 25 wind projects are pending with the BLM in the western states.

 

            I was one of the 25 or so attendees lucky enough to have the honor and privilege to be invited to a meeting with Secretary Salazar prior to the public meeting where this announcement was made. This earlier meeting was attended by developers of solar, wind and geothermal projects and others in the renewable energy industry. I was impressed by Secretary Salazar’s level of knowledge about both renewable projects and the BLM permitting process, as demonstrated by his comments and questions. Secretary Salazar also announced that $305 million in American Recovery and Reinvestment Act(ARRA) monies will be used for BLM projects to restore landscapes, spur renewable energy development on public lands, and create jobs. I left the meeting with confidence in the Secretary’s commitment to renewable energy and to the implementation of changes, policies and programs that will convert renewable energy from a noble goal to a reality.

 

Linda M. Bullen

CLIMATE CHANGE AND THE SITING OF NEW OCEAN ENERGY AND TRANSMISSION PROJECTS: URGENT PROCESS CONCERNS

Posted on April 8, 2009 by Jeff Thaler

Wind energy is a centerpiece of the Obama Administration’s renewable energy resources program, and coastal wind development offers enormous potential yet faces severe challenges. On April 2, 2009 Secretary of the Interior Ken Salazar spoke of major findings from a report he had commissioned from Interior scientists.  Secretary Salazar said, “More than three-fourths of the nation’s electricity demand comes from coastal states and the wind potential off the coast of the lower 48 states actually exceeds our entire U.S. electricity demand.” 

While the National Renewal Energy Laboratory has identified more than 1,000 gigawatts of wind potential off the Atlantic Coast and more than 900 gigawatts of wind potential off the Pacific Coast, the Interior Report finds the Atlantic Coast to have greater feasible potential for wind energy due to its relatively shallow ocean depths and proximity to population centers.  By contrast, the deeper waters of the West Coast are less ideal for wind power, while Alaska’s high wind and shallow waters create an excellent potential power source-- but it sits too far from the lower 48 states’ consumers.

 

However, two major obstacles loom for the major renewable energy goals of Secretary Salazar and President Obama:  insufficient electrical transmission grid capacity to bring the power to market, and “environmental sensitivities” such as visual impact complaints.  Each obstacle presents different issues, yet each obstacle can – and MUST – be swiftly solved.

                With respect to transmission siting issues, there are several battles raging in the Courts and Congress at this time.  On February 18, 2009 the Fourth Circuit of the United States Court of Appeals ruled in the case of Piedmont Environmental Council v. FERC, No. 07-1651, 2009 U.S. App. LEXIS 2944 (4th Cir. Feb. 18, 2009), rejecting arguments by the Federal Energy Regulatory Commission (FERC) that the 2005 Policy Act had permitted FERC to order “National Interest” Transmission Projects to go forward even if State Utility Commissions had not approved those projects.  In this case, the New York and Minnesota Utilities Commissions had denied such projects, but those denials were overruled by FERC.  By a 2-1 decision, the 4th Circuit ruled against FERC. 

However, several weeks later, two leading United States Senators-- Senate Majority Leader Harry Reid (D-Nev.) and Senator Jeff Bingaman (D-N.M.)-- each proposed legislation expanding FERC’s authority over the siting of new transmission lines.  Both Senate bills would require all permit decisions and related environmental reviews under applicable federal laws to be completed “not later than 1 year” from the date FERC deems an application to be complete.  Both bills also would provide FERC with siting authority over new interstate transmission lines; FERC would serve as lead agency to coordinate any federal authorizations and environmental reviews; and state and regional permitting entities would be required to develop “interconnection-wide green transmission plans” to be submitted within 1 year to FERC for approval, or else FERC would complete the plan itself.  State Utility Commissioners have testified against these legislative proposals, not surprisingly.

With respect to the environmental “sensitivities” advocated by opponents to many different on- shore and some off-shore wind project proposals in recent years, the two primary issues have been visual impact and wildlife (including marine mammals for off-shore) impacts.  However, frequently missing from the list is the fundamental overriding environmental concern –global warming or climate change.  Very recent scientific work shows that the Noble-Prize winning Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report issued in 2007 is already out-of-date.  For example, carbon dioxide is being emitted into the atmosphere faster than the IPCC had forecast just two years ago.  Moreover, recent studies find that the Arctic and Antarctic regions are warming faster than previously thought, and further find larger-than-expected pools of carbon in Arctic permafrost, which when released will accelerate levels of greenhouse gases in the atmosphere.  Moreover, since the 2007 IPCC report was issued, unexpectedly rapid melting of the vast Greenland Ice Sheet indicates that sea levels around the world could rise roughly 3 to 6 ½ feet by the end of the Century – almost triple that of the 2007 projections. 

Ocean and terrestrial plant and wildlife habitats already are being damaged by climate change, with the result that many of the birds, mammals, plants, trees and fish which are the subject of concern for some groups opposing wind projects will – in the absence of immediate and rapid facilitation of the siting and construction of clean energy projects – either be driven extinct or forced to move hundreds of miles northward in the United States or into Canada in order to survive during the lifetimes of our children and grandchildren.  Likewise, the environmental “concern” of scenic impact from wind turbines will – again in the absence of rapid facilitation of the siting and development of clean energy projects – be adversely impacted by accelerating climate changes that include greater presence of pests capable of destroying forest species and certain plant life.

                In Maine, an Ocean Energy Task Force has been hard at work over the past five months to meet the Governor’s Executive Order to increase our energy independence and security, reduce our substantial reliance upon fossil fuels, and substantially reduce our greenhouse gas emissions by, in part, developing a strategy to identify and recommend solutions to overcome “potential economic, technical, regulatory, and other obstacles to vigorous and expeditious development of grid-scale wind energy generation facilities in Maine’s coastal waters and adjacent federal waters.”  Tidal and wave power options are also being considered.  Sometime this month the Task Force will preliminarily forward to the Maine Legislature proposed legislation that would create a “General Permit” for off- shore wind energy demonstration projects at certain designated sites along the coast of Maine.

In conclusion, global warming, ocean energy, and our electrical grid system are each critical components to the urgent environmental and economic mandates requiring us to engage in a race, akin the 1960s’ race to the moon, to achieve what previously many may have thought to be unachievable – independence from foreign sources of fuel, independence from use of fossil fuels, and a deceleration of global warmer changes upon our hometowns, states, country and world.

Oregon as Center of Green Energy?

Posted on February 23, 2009 by Richard Glick

 By: Rick Glick and David Blasher of Davis Wright Tremaine, LLP

Many postings on this site have featured local and regional climate change policy initiatives. Oregon is no exception, but at the center of Governor Ted Kulongoski’s climate change strategy is making the state a hub of green technology development. Thus, the Governor seeks to combine greenhouse gas reductions with economic recovery. To that end, the state has used tax and other incentives to lure foreign clean technology investment to the state. Early signs are positive. The German solar cell company Solar World has recently taken over a stilled chip fabrication plant in the Portland suburbs and Sanyo is opening a solar cell facility in Salem. Vestas American Wind Technology, the largest manufacturer of wind turbines in the world, has announced plans to construct a 400,000 to 600,000 headquarters building near downtown Portland. As Governor Kulongoski declared in his 2009 State of the State address, “There is a green revolution stirring in America, and Oregon is the beating heart of that revolution.” 

 

To this end, the Governor is jockeying Oregon into a favorable position with President Obama's agenda of creating jobs that foster and incorporate sustainable energy projects. In order to maximize funds that Oregon will receive from the federal stimulus package, the Governor has established a state council called the Oregon Way Advisory Group. The Group is comprised of private business leaders and public officials who have an interest in developing sustainable energy proposals that will highlight Oregon’s green expertise. The Governor believes that by developing innovative projects to encourage job creation in green technologies, Oregon will have a leg up in the race for stimulus cash. “This approach will ensure that Oregon remains a leader in the green revolution,” the Governor said.

 

The Governor has proposed a legislative package for the current session that will address green energy and climate issues. Central among the Governor’s endeavors is an expansion of the Business Energy Tax Credit in order to attract new green industries to Oregon. The new green bills in the legislature include the following:

 

·        SB 80 will establish a cap-and-trade system to reduce greenhouse emissions by encouraging innovation and efficiency among Oregon’s industries. 

 

·        SB 79 is designed to increase energy efficiency in buildings by giving performance certificates to business to enable them to monitor efficiency in new and remodeled buildings. The ambitious goal is to reach zero net emissions by 2030, and in so doing, set Oregon as a leader in creating green building techniques.

 

·        SB 168 encourages energy independence of the state government by allowing energy efficiency projects on state lands and buildings, thus helping the state government to operate entirely on renewable power.

 

·        SB 201 is designed to provide an additional $4 million to weatherize and retrofit the homes of 400 low-income families each year, cutting energy costs for families by an average of $314 a year.   

 

·        SB 603 would stop Oregon from building any new dirty coal power plants and would require new power sources to be at least as clean as natural gas plants. 

 

·        HB 2120 will reflect the priority of providing more transportation choices for Oregonians in order to reduce emissions and traffic, to improve health, and to cut gas costs. 

 

·        HB 2121 will encourage the development of solar energy by directing the PUC to integrate up to 17 megawatts of solar energy into Oregon's electricity mix. Oregon launched the nation’s first solar highway at the I-5/I-205 interchange last year. Using Oregon manufacturers for the solar panels and emerging small Oregon businesses to install the solar system will supply jobs and renewable energy today and into the future.

 

·        HB 2180 would create an Oregon Renewable Energy Fund to provide grants to smaller community renewable energy projects. This bill also seeks to expand the Business Energy Tax Credit to provide a fifty percent tax credit for large-scale energy efficiency investments by businesses. The bill will also encourage sustainable bioenergy such as biofuels that do not compete with good supplies. Finally, HB 2180 will give the Oregon Department of Energy the flexibility to adjust tax credit incentives to encourage the development of the next generation of low and zero emission vehicles.

 

·        HB 2181 will give local governments bonding authority to provide loans to residential and business energy efficiency projects.

 

·        HB 2186 authorizes the citizen-comprised Environmental Quality Commission to develop reduction strategies including a low carbon fuel standard and restrictions on the unnecessary idling of trucks and commercial vehicles.

 

Governor Kulongoski views the current economic crisis as an opportunity to embrace sustainable energy projects that will make Oregon a leader in the future of green industries. As the Governor put it, “My message should be unmistakable – and it is the same message I conveyed to business and government leaders in Japan and China: Oregon is open for business. Especially green business.”

What to Watch in 2009: Carbon Credits Are a Hot "Commodity"

Posted on December 16, 2008 by Michèle Corash

2009 promises a fascinating year, in which carbon emissions – the newest environmental commodity – will continue to influence both world markets and world politics. The performance of the carbon market, and the emergence of new regulatory schemes to cap carbon, particularly in the U.S., is sure to be closely watched by many politicians, environmentalists, and players in the burgeoning carbon trading industry. While the carbon market’s outlook is healthy, how the U.S. enters it – whether it can find the political will for a national cap-and-trade system, and ensure that carbon emissions receive favorable domestic tax treatment – could mean the difference between the limelight or a bit part for the global carbon show.

 

Carbon emissions markets: strong value, strong growth

 

Despite the global economic tumult, recent reports by carbon market watchers such as New Carbon Finance[1] predict that the total value of carbon market trades will reach $116 billion by the end of 2008. This reflects a rise in both the volume of carbon emissions transacted (expected to grow 31% in 2008), and the value of carbon emission credits (projected to rise by 80% this year). What’s more, the carbon market compares well to other commodity markets: private investments in carbon funds represented 3.2% of all private commodity investments at the end of 2007.

 

The continued growth in value is linked to high prices for the two basic types of carbon commodities: European Union Allowances (EUAs), and Certified Emission Reductions (CERs). EUAs are the basic carbon emission unit currently traded in the European Union’s Emissions Trading System (EU ETS). EUAs account for 79% of all carbon trades, and their value has averaged $34 per ton through 2008.[2] For their part, CER trades represent 17% of the transacted value in the carbon market through October 2008.   

 

Momentum building in the United States for federal cap and trade

 

The widely anticipated initiation of a federal cap and trade system in the U.S., as has been openly called for by the incoming Obama administration, as well as many business and industry leaders, is expected to increase the volume and value of the carbon market exponentially. With the entry of the U.S., the global market could top $3 trillion by 2020. The strength of cap-and-trade, though, lies in its design, and the features built into a U.S. program in the coming months will be driven as much by recession-era politics as by tested economics and sound science.

 

Nevertheless, Obama’s environmental appointments are already writing “cap and trade” on the wall. Lisa Jackson, picked by President-elect Obama to head the Environmental Protection Agency, is board vice-president of the Regional Greenhouse Gas Initiative,[3] a consortium of ten states whose mandatory cap and trade system will hold its second allowances auction[4] on December 17, 2008. Within the White House itself, Carol Browner, an advocate of regulating carbon emissions who headed the EPA during the Clinton administration, is returning to a top federal environmental job with her appointment as Obama’s “climate czar.” 

 

Meanwhile, it may be up to Steven Chu,[5] Nobel prize-winning director of the Lawrence Berkeley National Laboratory and energy secretary nominee, to build bridges between climate scientists and those (including a sizable minority of members of Congress) who still believe that climate change is mostly a theory. Chu is being hailed[6] as a scientist, rather than a political appointee, in a position that could deeply affect the U.S.’s transition to a less carbon-intensive economy. Chu may use his position to subsidize more practically-applicable research into alternative energy forms. But at least as important will be his role in the politics of addressing climate change, where skepticism, fear of adverse economic impacts, and firmly rooted consumption habits are major challenges.

 

Where there is potential for profit, there is also potential for taxes

 

Without a carbon cap and trade program in place, questions still revolve around the nature of this new “commodity” and how it will be treated under the law. Considering the only certainties are death and taxes, it is safe to assume that even carbon credits will receive a visit from the tax man. So far, no statutory provisions or IRS authority have yet issued on the federal income tax treatment of the carbon credits. Gain or loss from the sale of the carbon credits, and amounts spent to acquire the carbon credits, is as yet undefined for federal income tax purposes.

Some predictions are possible, though. Under the sulfur dioxide emissions trading program[7] of the 1990 Clean Air Act, the IRS ruled[8] that the allocation of sulfur dioxide emissions credits do not result in gross income to electric utilities when issued. More recently, the IRS addressed the federal income tax treatment of gain from the sale of excess foreign carbon credits granted under the EU ETS. A June 2008 ruling held that because they were intangible property used in the foreign corporation's trade or business, gain from the sale of surplus carbon credits did not constitute “foreign personal holding company income” for purposes of the “controlled foreign corporation” rules of the Internal Revenue Code [9].  Apart from the caveat that the features of a federal program in the U.S. may differ from the EU ETS, this strongly suggests that carbon credits under a cap and trade program may be treated as intangible assets, giving rise to capital gain or loss rather than ordinary income or loss. If the projected trillion dollar market is realized, then the potential tax revenue will be, needless to say, worth watching.

With the specter of a multi-trillion dollar market, an ideological reversal in Washington, and the expiration of the Kyoto Protocol on the horizon, this new carbon commodity inevitably will become ensnared in the continuing debates over economic recovery. Regardless of the science, greenhouse gases will undoubtedly have an impact on 2009. 

 

This article was written by William Sloan and Rachel Peterson of Morrison & Foerster LLP's Cleantech practice group.

 


[1] Research by New Carbon Finance, at http://www.newcarbonfinance.com/.

[2] One EUA represents one ton of carbon dioxide-equivalent emissions; each of the 12,000 facilities that fall within the cap and trade system has been assigned an emissions cap, and must submit that number of allowances by the end of 2012. At the market’s most basic level, facilities whose emissions exceed the cap are trying to buy EUAs, and those whose emissions fall below it have EUAs to sell.

[8] Revenue Ruling 92-16, 1992-1 C.B. 13; see also Revenue Procedure 92-91, 1992-2 C.B. 503.

[9] Private Letter Ruling 200825009 (June 20, 2008).

 

THE ROLE OF RENEWABLE ENERGY IN THE REDUCTION OF GREENHOUSE GASES

Posted on December 5, 2008 by Linda Bullen

Despite some early skepticism, the concept that carbon dioxide and other greenhouse gases contribute to global warming is now a widespread, if not universally accepted, belief. This link was acknowledged by the U.S. Supreme Court in Massachusetts v. Environmental Protection Agency, 127 S.Ct. 1438, 1446 (2007). With the recognition of this relationship has come an increased awareness of the role that traditional energy production facilities have played in global warming, which, in turn, has resulted in an increased interest in the development of renewable energy. 

 

            Renewable energy is energy which, by definition, is naturally replenished. The most commonly recognized forms of renewable energy are sunlight, wind, geothermal, water and biofuel/biomass sources. While lawmakers throughout the U.S. have passed legislation requiring that a percentage of electricity must be derived from renewable resources, the state of Nevada has been a leader in mandating that renewable energy be a made a significant part of electric provider's portfolios. In 1997, Nevada’s legislature passed into law in the state’s first “Renewable Portfolio Standard” which required that electric providers in the state acquire renewable electric generation or purchase renewable energy credits so that each utility had 1 percent of total consumption in renewables. In 2001, the standard was modified to require that, by the year 2013, 15 percent of electricity be derived from renewables.

 

            While renewable energy facilities are generally environmentally preferable to their fossil-fuel counterparts, they are not without their impacts to both the human and natural environments. For example, renewable energy sources are often less concentrated than fossil fuels, thereby requiring a significantly larger geographic footprint for renewable energy facilities. In addition, certain types of renewables have significant visual impact, and some renewable projects utilize other, sometimes precious, resources such as water.

 

            These impacts are, in the case of most large scale electrical generation projects, analyzed in the course of the environmental review process mandated by the National Environmental Policy Act (“NEPA”). NEPA requires not only analysis of the environmental impacts of proposed projects when such projects have a federal nexus and are deemed to have a significant impact on the environment, but also requires mitigation of such impacts or rejection of projects where the environmental impact is significant and cannot be adequately mitigated. 

 

            Development of renewable energy projects requires careful examination of science, law and public policy to ensure compliance with all applicable legal requirements and protection of the environment. The process is lengthy, costly, and at times contentious, but each completed project brings us closer to meeting the nation's energy needs without contributing to global warming.

Wind Power Project Permitting: Demonstrating a Need for Clean Power and Evaluating the Economic and Wildlife Impacts of Wind Farms

Posted on November 30, 2008 by Jeff Thaler

Al Gore wins the Nobel Peace Prize. “Climate Change” and “Global Warming” are now topics of daily news articles, web debates, and dinnertime conversations. Many states are not waiting for the federal government, and instead are undertaking initiatives to reduce greenhouse gas emissions. The most efficient and available clean energy source across the U.S. at this time – wind power – is drawing the attention not only of American energy companies and developers, but also from those around the world who seek to build wind farms in the U.S. Yet proposed wind projects, including one represented by this article’s author, still often face fierce local opposition from certain environmental groups claiming unreasonable biological, economic, or scenic impacts.            As with climate change, there has been a growing volume of objective empirical data over the past few years assessing not only the need for clean renewable energy, but also the economic and environmental benefits of such energy sources as wind power. This article can only briefly touch on some of the results, and guide the way for the reader to find additional detailed information and reports.

Model Wind Power Framework and the Need for Wind Power in 

Maine and New England

           In May 2007 Maine Governor John Baldacci created a Task Force on Wind Power Development in Maine to completely review and overhaul the regulatory process for review of proposed wind power projects. Although Maine has one of the largest on-and-off-shore wind resources in United States, it has very little installed wind capacity—only one wind farm with 42 MW of installed capacity from 28 turbines.[1]  The Task Force and interested parties have been compiling data and studies from across the country about all aspects of wind power development, and conducting hearings on the topics.[2]  Several consulting firms were retained by some environmental groups to prepare and recently present a model wind power framework for Maine and New England, including analysis of such data as regional renewable energy demand targets, on- and off-shore wind potential, a regional supply curve, and the likely or necessary quantities and locations of future wind power development over the next 20 years.[3]

            Presently, wind projects proposed in Maine’s rural areas (the “unorganized territories”) must demonstrate a need for the project in the community, area, and state.  Since the July 2006 developer hearing presentations coordinated by the author, proof of such need generally has focused upon not only the traditional benefits of tax payments and jobs, but also such factors as: (a) decreasing the state’s over-reliance on fossil fuels, thus reducing the cost and price volatility of electricity; (b) assisting the state in meeting its environmental targets to increase its renewable energy portfolio and reduce greenhouse gas emissions; and (c) providing health benefits to local and state residents by decreasing air pollution. Maine has the largest renewable portfolio standard in the country, and a recent law requiring an additional 10 percent of its energy to be generated from renewable energy sources by 2017.

Climate Change and Greenhouse Gas Initiatives

           Like many states, Maine has a Climate Action Plan. Maine has also implemented a greenhouse gas initiative by legislation and by entry into the Northeast’s Regional Greenhouse Gas Initiative (RGGI), which involves all states from Maine south to Maryland with the exception of Pennsylvania. The RGGI is a market-based cap and trade program designed to reduce carbon dioxide emissions from electric power plants. It will be fully launched on January 1, 2009, affecting electric plants generating more than 25 megawatts that were on-line before 1/1/05 and whose fuel inputs are 50 percent or more from coal, natural gas, or oil; for post-1/1/05 plants, RGGI applies if fossil fuel makes up 5 percent or more of the annual heat input. The RGGI goal is that by 2018, each state’s emissions budget will be 10 percent below its initial CO2 emissions. Reduced emissions

(through using clean, renewable energy like wind) help states meet their RGGI goals.[4]

            On a more global basis, Al Gore’s 2007 co-Nobel Laureate was the Intergovernmental Panel on Climate Change (IPCC), which has been busy issuing a number of detailed reports for several years. In November 2007 the IPCC issued its “Synthesis Report,” intended to create for policymakers a single unified picture of the science, impacts, and mitigation of climate change. The report reaffirms that global warming is a scientific fact; that it is largely caused by human activities; that without immediate intervention measures over this century, there will be many serious changes including more droughts and intense storms, sea level rise, and habitat loss; and that developing many more clean, renewable energy sources is a necessary step in the effort to avoid ecological catastrophes for our children’s and grandchildren’s generations.[5]

                                     

Climate Change Impacts on Maine and the Northeast

            Application of the IPCC’s research to Maine and the Northeast was recently completed in the form of The Northeast Climate Impacts Assessment (NECIA), a collaborative effort between the Union of Concerned Scientists (UCS) and a team of independent experts.[6]  Their peer-reviewed studies and predictions focused both on the region itself as a whole and on the individual Northeastern States, and warned of dramatic and damaging changes to our weather patterns, coastlines, forests, wildlife, public health, and lifestyles. As Maine’s DEP Commissioner said in response to the report: “Global warming is the largest threat facing our environment today. The ecological and human health impacts are potentially devastating to Maine’s character and quality of life.” The same could be said for the region, the country, and the world.

            The NECIA report on impacts on Maine’s forests, wildlife, and economy[7]

mirrors predictions made nine years earlier by the Environmental Protection Agency’s “Climate Change and Maine”.[8]  Sea level rise, changes in forest, bird, and pest species, and resultant economic dislocations to the forest products and other business sectors were predicted in 1998 and again in 2007—only now, the pace of climate change has been moving more rapidly than anyone expected.

Economic Impacts of Wind Farms

Although some opponents of wind power claim that turbine visibility will harm local tourism and property values, recent studies show neutral to positive impacts on tourism and no adverse effects on real estate markets. For example, a 2004-5 federal government report reviewed more than a dozen wind projects across the United States, from New England to the West Coast, and found that wind power has a positive effect on rural economies.[9] 

Likewise, many studies focusing on property values have shown no adverse effects on property values from wind farm development. For example:

  •  
    • A January 2007 report by a certified real estate appraisal firm focusing on property sales from 1998 to 2006 near two utility-sized Wisconsin wind farms found they caused no measurable differences to home values.[10]
    • An April 2006 Bard College study of a 20-turbine wind project in Madison County, New York analyzed 280 single-family residential sales from 1996 to 2005 within five miles of the turbines. There were “no measurable effects of windfarm visibility on property transaction values…even when concentrating on homes within a mile of the facility.”[11]

A 2003 study by the Renewable Energy Policy Project of 25,000 property sales within view of ten wind farms in seven states, including states in New England, concluded that “the statistical analysis does not support a contention that sales within the view shed of wind developments suffer or perform poorer than in a comparable region. For the great majority of projects in all three of the cases studied, the property values in the view shed actually go up faster than values in the comparable region.”[12]

Key Wildlife Impacts of Wind Farms

            In order to address concerns of regulatory agencies and wind power critics, many studies have been conducted on actual and potential impacts of wind farms on wildlife  (particularly migratory birds) and, more recently, bats. A summary of known avian collisions with wind turbines outside of California (which had older, more poorly-designed turbines) indicates a fatality rate of 1.83 per turbine per year.[13]   More recently, a study at the Maple Ridge Wind Farm in New York estimated fatalities of between 3-9 birds/turbine/season (season being about 125-152 days). [14]

            To compare approximately 2-4 birds/turbine/year with fatality events reported at other types of tall structures, such as tall communication towers and buildings, one can look at the following table to see that mortality at wind energy projects is many orders

of magnitude lower than mortality from these and other sources:[15]


Structure/Cause

Total Bird Fatalities

Vehicles

60-80 million

Buildings and windows

98-980 million

Power lines

10,000 – 174 million

Communications Towers

4-50 million

Agricultural Pesticides

67 million

Housecats

100 million

Wind Generation Facilities

10,000 – 40,000

There have been few studies on bat mortality. Most have focused on Virginia and West Virginia where there are more caves as well as largely deciduous forest habitats. Outside of a study at Searsburg, Vermont (P. Kerlinger 2002), which failed to document any bird or bat mortality, there are currently no published studies of bat mortality for wind power facilities in New England. For facilities located on temperate forest ridges in the Southeast and Mid-Atlantic, fatality rates range from 15.3 to 41.1 bats per megawatt (MW) of installed power, per year.[16]    Bat fatalities appeared to be greater at turbines nearer to wetlands (Jain et al 2007). Wind turbines on higher, more windy and sub-alpine ridgelines are expected to have far fewer bat fatalities.

The primary reason for very low rates of bird and bat mortality is that they migrate at altitudes wellabove the rotor-swept area. All post-2004, published (59) and unpublished (72) studies to date have consistently documented that birds and bats fly well above (i.e., 1000 to 2000 feet above) the turbine blades during migration periods.

Conclusions

Not only environmental lawyers, but all concerned decision-makers and citizens must confront the largest threat to our public’s environment, health, and property in decade: climate change from global warming due to greenhouse gas emissions. This century’s realities require prompt and decisive action on many fronts, only one of which is the expedited permitting and construction of clean, renewable, and indigenous sources of power for our homes and businesses. It is critical that we help advocate not only for individual projects, but also for modernized policy- and decision-making that balances traditional environmental wildlife concerns with the new threats to wildlife, forest,  coastal habitats, and our way of life. The need is urgent. The time is now.


[1] As of December 2007 there are three proposed wind farms that have received some regulatory review, totaling 243 MW. Studies suggest there is significantly more wind capacity developable in Maine, and of course many more times that across the United States.

[2]   The Task Force web site has a wealth of information, including a number of presentations, and is at: http://www.maine.gov/doc/mfs/windpower/summaries.shtml

[3] The October 30, 2007 presentation can be found at: http://www.maine.gov/doc/mfs/windpower/meeting_summaries/103007_summary_files/Grace_Wind_Task_Force_103007.pdf

[4] A recent presentation by Maine DEP Commissioner David Littell summarizing wind power and its

greenhouse gas and air quality benefits is at: ttp://www.maine.gov/doc/lurc/minutes/080107/Littellpresentation.pdf

[5] The general IPCC website is at:     http:www.ipcc.ch/   A summary of the Synthesis Report can be found at: http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf     

[6]   For the NECIA report see:  

http://www.climatechoices.org/assets/documents/climatechoices/confronting-climate-change-in-the-u-s-northeast.pdf    For the NECIA link to specific reports in individual states, go to:   http://www.climatechoices.org/ne/resources_ne/nereport.html

[7] http://www.climatechoices.org/assets/documents/climatechoices/maine_necia.pdf   

[8] http://www.earthscape.org/r1/r1/epa06/MAINE.PDF

[9] “Analysis: Economic Impacts of Wind Applications in Rural Communities”, National Renewable Energy Laboratory and M. Pedden

[10] Poletti and Associates, Inc. Real Estate Study

[11] http://www.aceny.org/pdfs/misc/effects_windmill_vis_on_prop_values_hoen2006.pdf.

12http://www.crest.org/articles/static/1/binaries/wind_online_final.pdf)

 

[13] Erickson, W.P. et al, “Avian Collisions with Wind Turbines”, 2001.

[14] This study, by Jain et al., can be found at:

www.mapleridgewind.com/documents/06-25-07_MapleRidgeAnnualReport2006.pdf

[15] National Research Council, 2007, “Environmental Impacts of Wind Energy”, based upon Mid-Atlantic Highlands region, http://books.nap.edu/catalog.php?record_id=11935#toc; also see generally Erickson et al. 2001; Klem 1991; Pimental and Acquay 1992; Coleman and Temple 1993;

[16] Kunz et al. Frontiers in Ecology and the Environment Issue 6, Vol. 5: August 2007.

Offshore Wind Farm in the Mid-Atlantic - Will Delaware Be the First State of Offshore Wind?

Posted on September 29, 2008 by Robert Whetzel

The nation’s first offshore wind farm may soon be built off the coast of Delaware. Although climate change and clean energy issues were part of the debate over this project, the Delaware wind farm project finds its origins in energy reliability and price stability legislation. 

In 2006, consumer energy prices in Delaware increased dramatically, following the State’s deregulation of electricity generation. As part of the deregulation process, a three year freeze had been placed on energy rate increases in Delaware. When the freeze expired, energy prices across the United States were spiraling upward and rates in Delaware were adjusted to market prices. The result was a significant increase in consumer electricity prices, with the attendant public outcry and legislative demand for reform.

 

 In an attempt to stabilize prices, the Delaware General Assembly enacted the Electric Utility Retail Customer Supply Act of 2006. The Act established a bidding process for long-term purchase power agreements, and directed Delmarva Power & Light Company (“Delmarva Power”), the State’s largest electricity service territory provider, to solicit bids for such an agreement. The legislation also mandated an integrated resource planning process in order to ensure the availability of sufficient and reliable resources over time to meet customers' needs at a minimal cost. 

 

The Delaware legislation required Delmarva Power to issue a request for proposals ("RFP") for the construction of new generation resources within Delaware along with a proposed output contract for a term of no less than 10 years and no more than 25 years. The Delaware Public Service Commission (the “PSC”) and the Delaware Energy Office were tasked with ensuring that the RFP elicited and recognized the value of proposals that: (a) utilized new or innovative baseload technologies; (b) provided long-term environmental benefits to the state; (c) had existing fuel and transmission infrastructure; (d) promoted fuel diversity; (e) supported or improved reliability; and (f) utilized existing brownfield or industrial sites. The PSC, the Director of the Office of Management and Budget, the Controller General, and the Energy Office (the "State Agencies") were tasked with evaluating the bids and determining whether to approve one or more of them. 

Three bids were submitted in response to the RFP: one for an offshore wind farm, one for a combined cycle gas turbine, and one for a coal-fired integrated gasification combined cycle ("IGCC") unit. After evaluation of the bids, both Delmarva Power and an independent consultant concluded that none of the bids met the evaluation criteria because, among other things, each of them proposed prices that were projected to be above market when the new generation facilities went on-line. The State Agencies, however, fashioned a hybrid energy supply approach, and directed Delmarva Power to negotiate for a long-term agreement for wind power with Bluewater Wind, LLC (“Bluewater”) and, concurrently, for an agreement with another generator to provide back-up power. These negotiations were to take place under the oversight of an independent third-party, who would be responsible for reporting to the State Agencies on the parties’ efforts to negotiate the agreements. 

Delmarva Power and the bidders were unable to negotiate concurrent agreements for the wind farm and the “backup” generation source. The State Agencies next directed Delmarva Power and Bluewater to negotiate a final agreement for the wind farm. When the deadline for a this agreement was reached in December 2007, the parties had not agreed upon many important terms, relating to the capacity, price, and risk for the project. After reviewing the status of negotiations, the PSC staff recommended approval of the proposed terms with the condition that the cost of the wind farm be spread over all of Delmarva Power’s customer base. The PSC staff also recommended that legislation be pursued that allocated the costs of the wind farm across all energy consumers in Delaware. At that point, the State Agencies tabled the matter because there was not a consensus to approve the agreement. 

The Delaware legislature then became involved in considering the wind farm power agreement, and conducted legislative hearings regarding the agreement and alternative energy technology and market trends. A legislative committee ultimately concluded that, while wind generation should be a significant component of the State’s electricity supply portfolio, Delaware citizens should not assume the large risk or pay the large premium contemplated in the (then) proposed wind farm agreement. This conclusion was not without opposition in the legislature.

During May and June, 2008, renewed negotiations took place between Delmarva Power and Bluewater, under the ever-present threat of further regulatory or legislative action. Ultimately an agreement was reached for the purchase of power and renewable energy credits (“RECs”) from the wind farm by Delmarva Power. This agreement coincided with legislation in the State that enabled the cost of the wind farm to be spread across all of Delmarva Power’s customer base, not just residential consumers and small businesses, and that substantially increased the value attached to the RECs for the wind farm. Under the agreement, Delmarva Power will purchase energy from the wind farm equal to the amount generated by a 200 MW nameplate facility (approximately 50 percent less than in the proposed December 2007 agreement.) The wind farm, however, may produce three times this capacity (i.e., up to 600 MW), and may secure additional customers for its power. The final agreement also provides termination rights to Bluewater, including termination based upon the content of final regulations to be promulgated by the Department of the Interior with respect to the permitting and siting of offshore wind farms. 

The Department of the Interior proposed regulations on July 9, 2008, and comments were due by September 8, 2008. The American Wind Energy Association, of which Bluewater is a member, submitted comments arguing against a provision that would require developers to pay 2 percent of their operating revenue to the government. Bluewater has stated that such a provision will not be a “deal killer” for the Delaware project, but has also recognized as problematic the impending expiration of federal renewable energy subsidies.

Wind Power Project Permitting: Demonstrating a Need for Clean Power and Evaluating the Economic and Wildlife Impacts of Wind Farms

Posted on November 30, 2007 by Jeff Thaler

Structure/Cause

Total Bird Fatalities

Vehicles

60-80 million

Buildings and windows

98-980 million

Power lines

10,000 – 174 million

Communications Towers

4-50 million

Agricultural Pesticides

67 million

Housecats

100 million

Wind Generation Facilities

10,000 – 40,000

There have been few studies on bat mortality. Most have focused on Virginia and West Virginia where there are more caves as well as largely deciduous forest habitats. Outside of a study at Searsburg, Vermont (P. Kerlinger 2002), which failed to document any bird or bat mortality, there are currently no published studies of bat mortality for wind power facilities in New England. For facilities located on temperate forest ridges in the Southeast and Mid-Atlantic, fatality rates range from 15.3 to 41.1 bats per megawatt (MW) of installed power, per year.[16]    Bat fatalities appeared to be greater at turbines nearer to wetlands (Jain et al 2007). Wind turbines on higher, more windy and sub-alpine ridgelines are expected to have far fewer bat fatalities.

The primary reason for very low rates of bird and bat mortality is that they migrate at altitudes wellabove the rotor-swept area. All post-2004, published (59) and unpublished (72) studies to date have consistently documented that birds and bats fly well above (i.e., 1000 to 2000 feet above) the turbine blades during migration periods.

Conclusions

Not only environmental lawyers, but all concerned decision-makers and citizens must confront the largest threat to our public’s environment, health, and property in decade: climate change from global warming due to greenhouse gas emissions. This century’s realities require prompt and decisive action on many fronts, only one of which is the expedited permitting and construction of clean, renewable, and indigenous sources of power for our homes and businesses. It is critical that we help advocate not only for individual projects, but also for modernized policy- and decision-making that balances traditional environmental wildlife concerns with the new threats to wildlife, forest,  coastal habitats, and our way of life. The need is urgent. The time is now.



[1] As of December 2007 there are three proposed wind farms that have received some regulatory review, totaling 243 MW. Studies suggest there is significantly more wind capacity developable in Maine, and of course many more times that across the United States.

[2]   The Task Force web site has a wealth of information, including a number of presentations, and is at: http://www.maine.gov/doc/mfs/windpower/summaries.shtml

[3] The October 30, 2007 presentation can be found at: http://www.maine.gov/doc/mfs/windpower/meeting_summaries/103007_summary_files/Grace_Wind_Task_Force_103007.pdf

[4] A recent presentation by Maine DEP Commissioner David Littell summarizing wind power and its

greenhouse gas and air quality benefits is at: ttp://www.maine.gov/doc/lurc/minutes/080107/Littellpresentation.pdf

[5] The general IPCC website is at:     http:www.ipcc.ch/   A summary of the Synthesis Report can be found at: http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf     

[6]   For the NECIA report see:  

http://www.climatechoices.org/assets/documents/climatechoices/confronting-climate-change-in-the-u-s-northeast.pdf    For the NECIA link to specific reports in individual states, go to:   http://www.climatechoices.org/ne/resources_ne/nereport.html

[7] http://www.climatechoices.org/assets/documents/climatechoices/maine_necia.pdf   

[8] http://www.earthscape.org/r1/r1/epa06/MAINE.PDF

[9] “Analysis: Economic Impacts of Wind Applications in Rural Communities”, National Renewable Energy Laboratory and M. Pedden

[10] Poletti and Associates, Inc. Real Estate Study

[11] http://www.aceny.org/pdfs/misc/effects_windmill_vis_on_prop_values_hoen2006.pdf.

12http://www.crest.org/articles/static/1/binaries/wind_online_final.pdf)

 

[13] Erickson, W.P. et al, “Avian Collisions with Wind Turbines”, 2001.

[14] This study, by Jain et al., can be found at:

www.mapleridgewind.com/documents/06-25-07_MapleRidgeAnnualReport2006.pdf

[15] National Research Council, 2007, “Environmental Impacts of Wind Energy”, based upon Mid-Atlantic Highlands region, http://books.nap.edu/catalog.php?record_id=11935#toc; also see generally Erickson et al. 2001; Klem 1991; Pimental and Acquay 1992; Coleman and Temple 1993;

[16] Kunz et al. Frontiers in Ecology and the Environment Issue 6, Vol. 5: August 2007.

[15] National Research Council, 2007, “Environmental Impacts of Wind Energy”, based upon Mid-Atlantic Highlands region, http://books.nap.edu/catalog.php?record_id=11935#toc; also see generally Erickson et al. 2001; Klem 1991; Pimental and Acquay 1992; Coleman and Temple 1993;

[16] Kunz et al. Frontiers in Ecology and the Environment Issue 6, Vol. 5: August 2007.