SB 310 makes it far harder for Ohio to comply with the Clean Power Plan

obama clean power plan

President Obama delivers his speech announcing the final Clean Power Plan on Monday, August 3 (courtesy of Susan Walsh/Associated Press).

Last Monday, President Obama stood at the podium in the East Room of the White House to announce “the single most important step America has ever taken in the fight against global climate change” – the final Clean Power Plan (CPP). As the President noted in his remarks, this final rule amounts to “the first-ever nationwide standards to end the limitless dumping of carbon pollution from power plants” into our atmosphere. The EPA projects that, if fully implemented, carbon emissions from US power plants should be 32% lower in 2030 than in 2005.

Here in Ohio, the rule was met by a mixture of excitement from those of us who want the country to take action on climate change and outrage from those who oppose such steps. Attorney General Mike DeWine joined 11 other attorneys general in a lawsuit to derail the rule, while notorious Ohio coal firm and serial litigant Murray Energy intends to file no fewer than 5 separate suits.

Changes to the final Clean Power Plan that affect Ohio

Given all of this controversy over the CPP, it may be wise to take a step back and consider just how the rule would affect Ohio. Last year, I explored how Ohio fared in the proposed CPP and how the state’s clean energy standards put it on a solid path towards meeting its carbon reduction targets. While that analysis was relevant at the time, we need to revisit it, as the final CPP is different from the proposed version in a lot of ways. For the sake of this post, here are a few of the key changes that will affect Ohio:

  • State compliance plan date: Under the proposed CPP, states needed to submit their compliance plans to the EPA by June 30, 2016. The final rule pushes this date back to September 6, 2018, but with a caveat. States still need to submit either a final plan or an interim plan in 2016, but they can request a 2-year extension of the deadline if they meet certain criteria. This matters, as Ohio EPA Director Craig Butler has already stated that he will wait until to submit a plan until he sees how the rule fares in the federal court system, which may take years.
  • Emissions cuts to begin later: Whereas the proposed CPP required states to begin cutting carbon emissions in 2020 and continue through 2030, the final rule delays that effective date until 2022. This 2-year delay is important for Ohio as a result of SB 310, as I will explore later.
  • Changing the way that emissions reductions are measured: Originally, the EPA planned to measure emissions reductions as the change in how many pounds of carbon emissions a state produces per megawatt hour (MWh) of energy it produced (“rate-based”). But the Agency has now added a “mass-based” approach, which shows reductions in the actual tons of carbon states emit. Additionally, EPA has changed the state-by-state targets to account for the fact that the utility sector operates within 3 broader regions. As a result, Ohio’s rate-based target was strengthened from 1,338 lbs/MWh to 1,190, up to 37.4% from a 27.7%. The mass-based reduction remains at a comparable 27.85%.
  • Eliminating the energy efficiency benchmark: The proposed CPP created federal guidelines for state compliance plans that included 4 main building blocks: improved coal plant efficiency, more use of natural gas, increasing renewable energy generation, and improving demand-side energy efficiency. EPA has removed the energy efficiency building block, which has significantly reduced the CPP’s legal vulnerability. Fortunately, EPA did not scrap demand-side energy efficiency entirely. Instead, it will allow states to include it as part of their state compliance plan.

How Ohio can meet its Clean Power Plan requirements

Fortunately, Ohio is well-positioned to meet its emissions reduction targets under the CPP, as multiple analyses have shown.

In a 2013 analysis, the World Resources Institute found that, if Ohio fully implemented its renewable portfolio standard (RPS) and energy efficiency resource standard (EERS) that the state passed nearly unanimously back under SB 221, it could cut its carbon emissions by 17% through 2020.

WRI’s analysis also calculated the emissions savings from the other 2 building blocks in the CPP. It estimated that Ohio could cut its emissions by 7% by 2020 if it increased the operating capacity of its existing natural gas fleet (building block 2). The state could further cut emissions by 2% if it improved its coal plant efficiency by 2.5% (building block 1). Combined, these four actions would get Ohio to a 26% cut by 2020, before the CPP’s requirements even kick in. And if Ohio continued to implement its EERS and RPS beyond their current end date, the state would be able to meet and exceed its required carbon targets.

wri ohio emissions clean power plan

Ohio can cut its carbon emissions by up to 24% through 2020, depending on the policies it implements under the Clean Power Plan (courtesy of World Resources Institute).

SB 310 will make increase the costs of compliance

While Ohio is currently in decent shape, SB 310 will unquestionably make it more difficult and more expensive for the state to comply with the CPP.

The two-year freeze on the RPS and EERS will deprive the state of renewable energy and energy efficiency gains that it could count towards future benchmarks. Though it pushed back the date when states have to demonstrate emissions cuts by 2 years, EPA wants to encourage states to reduce their carbon emissions before that point. Accordingly, the final CPP creates a Clean Energy Incentive Program (CEIP), which allows states to get credits for renewable energy generation and energy efficiency measures taken in 2020 and 2021 and apply these to reduction targets in subsequent years. For every 1 MWh of wind or solar that a utility brings on line, it will get a 1 MWh credit towards future emissions reductions. And for every 1 MWh saved through energy efficiency projects in low-income communities, utilities will get a 2 MWh credit.

Because SB 310 freezes Ohio’s RPS and EERS for 2015 and 2016, the RPS and EERS benchmarks will be lower during 2020 and 2021. RPS benchmarks will decline to 6.5% and 7.5% from 8.5% and 9.5%, respectively, while the efficiency requirement for 2020 will be halved to 1%. According to projections from the Public Utilities Commission of Ohio (PUCO), the state’s major electric utilities would have generated almost 25.9 million MWh of renewables in 2020 and 2021; however, thanks to SB 310, this number will fall by nearly 25% to 19.4 million MWh.

The freeze will also cut into the amount of low-income energy efficiency projects carried out in the state. From 2009-2012, Ohio’s major electric utilities realized  55,084 MWh in energy savings from low-income projects. This accounted for just under 1% of total savings. Based on estimates from the American Council for an Energy-Efficient Economy (ACEEE), Ohio was on course to save 56,410 MWh from energy efficiency in 2020 and 2021 before SB 310. Using revised energy savings from the Natural Resources Defense Council (NRDC), which account for SB 310’s effects, this number would fall to 46,866 MWh. Because these savings get double credit in the CEIP, Ohio will lose out on 19,048 MWh of emissions reduction credits (ERCs).

All told, the 2-year freeze on Ohio’s clean energy standards enacted under SB 310 will cause the state to miss out 6,476,386 MWh of ERCs. If we assume that each of those MWh would have offset a unit from a fossil fuel plant, we can estimate how many tons of carbon emission reductions the state will lose. EPA has calculated that Ohio’s power plants release 1,900 pounds of CO2 per MWh; as such, Ohio will lose ERCs worth roughly 6,152,567 short tons of CO2. Applying a social cost of carbon at $40 per ton means that this one effect of SB 310 will cost the state more than $246 million.

But that doesn’t account for any potential reductions in the RPS and EERS benchmarks. The bill’s language makes it perfectly clear that the Ohio legislature intends to “enact legislation in the future… that will reduce the mandates.” Any future reductions to these clean energy standards will make it that much harder for Ohio to comply with the Clean Power Plan.

What should Ohio’s elected officials do?

Clearly, SB 310 carries a big price tag for Ohio. The state’s elected officials should take action on three fronts to address this issue.

First, the legislature needs to pass a bill restoring Ohio’s clean energy standards as enacted under SB 221. It should not wait until the freeze comes to an end on December 31, 2016. Instead, legislators should use the final report from the Energy Mandates Study Committee, which is expected to be released this fall, as a reason to restore the standards effective January 1. Interestingly, OEPA Director Butler told Gongwer (subscription required) that, despite his reservations, he realizes restoring the standards from SB 221 would help Ohio meet its emission reductions targets. Beyond this step, however, the legislature should look to pass a follow-up bill by the end of the next session that will extend and, preferably, strengthen these standards through at least 2030.

Second, Ohio should begin exploring how it can partner with other states to form a regional carbon trading system. The final CPP explicitly allows and even encourages states to pursue this route. Several Midwestern states have been meeting under the auspices of the Great Plans Institute to discuss this option, but Ohio has conspicuously been absent. It would be in the state’s best interest to work with its neighbors in order to lower the cost of compliance.

Third, Ohio needs to double down on low-income energy efficiency. According to Policy Matters Ohio, the state currently weatherizes roughly 7,000 homes per year. This number accounts for just 1.5% of the households in the state who seek emergency assistance for their utility bills each year. Not only will ramping up low-income weatherization allow the state to get additional credits through the CEIP, it will generate tangible benefits. Every $1 million invested in weatherization leads to the creation of 75 jobs.

Ultimately, SB 310 has cost Ohio considerably, but it’s not too late to mitigate those effects. Every day that Ohio continues to languish under this bill will continue to add to those costs. It’s time to act.

Tim Kovach, Executive Committee Member

Ohio’s ‘freeze’ on renewable energy is already costing the state big time

blue creek wind farm

The Blue Creek Wind Farm in Van Wert County (courtesy of The Dayton Daily News).

One month ago (well, one month and 4 days, but who’s counting?), Ohio became the first state in the country to freeze its clean energy standards, when Governor Kasich signed SB 310 into law. At the same time, the Governor signed HB 483, the Mid-Biennial Review of the budget, into which the Ohio GOP slipped a new setback requirement for wind turbines.

The American Wind Energy Association, along with other opponents of these bills, warned lawmakers about their potential impacts on the state’s budding clean energy industry. In a press release issued shortly after the Governor signed both bills into law, AWEA said:

Gov. John Kasich and the Legislature today abandoned $2.5 billion in current wind energy projects, which now face cancellation along with jobs, leases, payments to local governments, and orders for factories, over a needlessly restrictive setback requirement that Kasich signed into law today.

In a press conference yesterday, Governor Kasich tried to defend his record on clean energy and environmental issues. He once again claimed that he played an essential role in “moderating” SB 310, ensuring that the bill only froze the standards, rather than rolling them back altogether. He also defended the increased setback rule for the first time publicly, telling a group of business leaders in Bellview,

“Private property rights are important. People choose to live somewhere. You just don’t go in there and disrupt their life.”

Now, the Dispatch piece does not explain if the Governor feels the same way about oil and gas wells, for which the Ohio Revised Code only mandates a 100- to 150-foot setback rule; given his history with the fossil fuel industry, I’m going to guess not. But based on the Governor’s comments, it would seem like SB 310 and HB 438 should have minimal impacts.

Senator Bill Seitz (R-Cincinnati), who never met a hyperbolic statement he didn’t like, echoed the Governor’s views. In an article on Gongwer (paywalled) from May, he said,

Today is just the latest in a long line of sky-is-falling hyperbole coming out of their camp. If you’re serious about it, you’d be in there talking to the people that are actually going to vote instead of on the airwaves and jumping up and down at hastily contrived press conferences.

So, one month later, let’s take a look at the clean energy landscape in Ohio. Were those of us opposed to SB 310 and HB 483 really just fear mongering to get our way, as the Ohio GOP has claimed? Would that this were true. In recent days, two major renewable energy companies have stated that they are delaying utility-scale wind installations, and they may end up scrapping the projects altogether.

On Friday, the Lima News reported that Iberdrola Renewables, the company that built the Blue Creek Wind Farm in western Ohio, has suspended work on both its Hog Creek and Leipsic Wind Farms. Hog Creek, which has already been approved by the Ohio Power Siting Board, would include 35 turbines, generating approximately 67 megawatts (MW) of electricity. Iberdrola is awaiting final approval for the Leipsic installation, which would have 75 turbines turning out 150 MW of power.

The next day, Everpower Renewables said that one of its projects, the Buckeye Wind Farm in Champaign County, may never get off the ground, despite the fact that the company has already invested millions in it. The project, which includes two phases, would see the company build roughly 100 turbines, producing enough electricity (200 MW) to power 50,000 houses. Buckeye would also generate $1.2 million in annual tax revenues, create more than 100 construction jobs, and offset 308,000 tons of CO2 each year. Yet, due to a lengthy legal battle and the knock on effects of these two bills, Everpower may have to abandon Buckeye entirely.

While it may seem unlikely that the bills would affect projects that have already been approved (particularly given the fact that the wind siting amendment in HB 483 grandfathered in such projects), that no longer appears to be the case. The way the law is written, the new, more restrictive siting requirements would kick in if any changes were made to a project’s scope of work. These changes could include utilizing a newer wind turbine model.

According to AWEA, Ohio ranked 26th in the country last year for wind power, generating 432 MW. These two bills could effectively derail projects that would generate a combined 417 MW, or 96.5% of this total. So much for the supposed hyperbole from SB 310 opponents. It may be easy to decry the other side as nothing more than another Cassandra, but we should remember one thing – Cassandra was right.

Tim Kovach, Northeast Ohio Sierra Club Executive Committee Member

How much will SB 310 cost you?

By Tim Kovach

Ohio Partners for Affordable Energy and Ohio Advanced Energy Economy released a new report that demonstrates how SB 310 will raise electricity rates in Ohio. Find out how much more you will have to pay from 2015-2016 if the legislature freezes Ohio’s energy efficiency and renewable energy standards.

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*Calculators use estimated additional cost of electricity for residential and commercial users in Ohio from the OAEE/OPAE report. The report uses Public Utilities Commission of Ohio data, which is based on 750 kWh per month for residential customers and 300,000 kWh per month for commercial customers.

How one unknown provision could destroy Ohio’s clean energy industry

Ohio Statehouse (courtesy of Wikimedia Commons)

By Tim Kovach

Tom Knox at Columbus Business First just outlined a little-known but incredibly significant part of SB 310 that will have wide-ranging implications for the future of Ohio’s clean energy industry.

From the post:

The bill would allow utilities under a renewable-energy contract to be released from the agreement “if there is a change in the renewable energy resources requirements,” according to the latest version of Senate Bill 310, passed by the Ohio Senate last week and being heard Tuesday in the House Public Utilities Committee.

If American Electric Power Company Inc. (NYSE:AEP), for example, signed a 20-year purchase agreement with a wind turbine company to provide some power for its customers, any future change in renewable energy requirements would allow AEP to void its contract.

While it would not affect existing renewable energy contracts, such as FirstEnergy Solutions’ deal to purchase power from the Blue Creek Wind Farm, it would apply to any new renewable energy contracts signed by one of the four investor-owned utilities after SB 310 becomes law. As Knox notes,

Without a two-decade guarantee of revenue, financial backers of wind projects would be hard-pressed to put up money.

“That is the ultimate done deal, it’s over, kiss all wind renewables gone,” said Jereme Kent, general manager of Findlay-based wind company One Energy LLC. “Even if wind was half the price, you could not sign a contract with that provision.”

With all of the attention surrounding the other God awful provisions in SB 310, including the two-year freeze and the elimination of the requirement that 50% of renewable energy is produced in Ohio, this small clause, buried on line 950 of the legislation (PDF), has been overlooked. Here’s the actual text in question:

Sec. 4928.642.  Every contract to procure renewable energy resources or renewable energy credits entered into by an electric distribution utility or an electric services company on or after the effective date of S.B. 310 of the 130th general assembly shall contain a change-of-law provision. Such a provision shall provide that the parties to the contract are released from their obligations under the contract if there is a change in the renewable energy resource requirements, governed by section 4928.64 of the Revised Code.

Without question, these 80 words inject so much uncertainty and chaos into Ohio’s burgeoning renewable energy industry that they may effectively strangle it in its crib. It’s hard to see any utility-scale renewable energy project getting financing when the utility can simply renege on its deal if any changes are made to SB 310 going forward.

Interestingly, this section was not included in the original form of SB 310 (PDF), as it was introduced to the Senate in March. Rather, someone slipped it in behind closed doors when the GOP leadership rewrote the bill last week.

Given the hands on-role that Governor Kasich played in changing the bill, I can’t help but wonder whether or not he was involved in inserting this section or was aware of it before the bill reached the Senate floor. Either way, the existing of this provision and the Governor’s apparent indifference (if not approval) for it clearly belies his supposed support for the 25,000 clean energy jobs in this state.

In his official statement with Senate President Faber last Thursday, the Governor claimed that SB 221’s standards “are now emerging as a challenge to job creation and Ohio’s economic recovery.” That could not be farther from the truth. The real challenge to job creation and economic growth is SB 310 itself.

The stakes just got even higher in this fight. You can no longer pretend to back clean energy and the jobs and economic development it creates if you support SB 310.

Outrageous: Ohio State Senator Compares Clean Energy to the Bataan Death March

state senator bill seitz

Source: The Columbus Dispatch

When the Ohio GOP leadership introduced SB 310 last month, they intentionally tried to sideline Senator Bill Seitz (R-Cincinnati) from the process. We know that Sen. Seitz has a tendency to put his foot in his mouth. He has previously likened the clean energy standards to “Joseph Stalin’s five-year plan,” and he routinely labels his opponents as “enviro-socialist rent-seekers.” But this time he outdid even himself.

Last Wednesday, April 9, Sen. Seitz turned a Senate Public Utilities Committee hearing on SB 310 into a three-ring circus. First, during the middle of testimony from Aaron Jewell, a US Army veteran who fought in Iraq, Sen. Seitz reportedly got up, pulled out a pack of cigarettes, and walked out of the room to take a smoke break.

He came back into the session halfway through the testimony of Dan Sawmiller, a Senior Campaign Representative for the Ohio Beyond Coal Campaign with the Sierra Club. Mr. Sawmiller also served with the Ohio National Guard from 2000-2008, during which time he worked as a combat engineer in Iraq.

Mr. Sawmiller served with 485 other guardsmen and women to clear some of the most dangerous parts of Baghdad of improvised explosive devices, in order to make way for the movement of additional troops and supplies. At least one of his fellow servicemen did not make it home.

During his testimony, he detailed the work he did in Iraq. “I explained how my combat experiences drove my passion to work on energy efficiency and national security issues,” he said. “This drove me to work with the Sierra Club.”

But rather than showing respect and gratitude for his service and simply debating the facts of the clean energy law, Mr. Sawmiller explained that Sen. Seitz made outlandish comments that are offensive to those who have served in our military.

“The Senator referred to the current law as being on the Bataan death march for clean energy,’” he explained. “The more I think about what was said, the more offended I get as a combat veteran.”

Let that sink in for a minute. According to an elected representative of the people of Ohio, a policy that has lowered electricity bills, stimulated economic growth, reduced greenhouse gas emissions, and helped spark a clean energy sector that employs more than 25,000 people is on par with an internationally recognized war crime that killed 10,000 American and Filipino soldiers. Not only is such a statement utterly absurd, it insults the memory of the men who died (and those who survived) either on that march from Bataan or in the nightmarish prison camps that followed.

Oh, and there’s the fact that April 9 marked the 72nd anniversary of the surrender at the Bataan Peninsula and the first day of this horrific six-day march.

While Sen. Seitz may dismiss the connection, there is a reason why the United States military has invested hundreds of millions of dollars into renewable energy and energy efficiency – it saves money and, more importantly, lives.

Fossil fuel boosters love to claim that hydraulic fracturing will allow the US to drill its way to energy independence. But, as Brad Plumer explains,

Even if, one day, the United States produces enough oil to satisfy its own needs, it still won’t be entirely “independent” from the rest of the world. That is, the US economy will still be vulnerable to supply shortages or turmoil in the Middle East (for instance). There’s a reason for that. Oil is relatively easy to trade on the global markets.

Because oil is fungible international commodity, the US military will continue to maintain a vital interest in it. In a 2010 article, Roger J. Stern estimated that the US spent at least $6.8 trillion to secure oil reserves from 1976-2007. He calculated that the military costs of securing oil supplies from the Persian Gulf “exceeds the value of Gulf petroleum exports in all years except 1990 and the value of US petroleum imports from the region by roughly an order of magnitude.”

In other words, the US government is spending substantially more money to secure Middle Eastern oil reserves than the oil itself is worth. Stern concluded that, rather than trying to increase the supply of oil, we should curb demand by investing in energy efficiency, as this strategy “would address the core problem.”

Our reliance on fossil fuels has a direct impact upon the performance and flexibility of the armed forces. At least 70% of all tonnage on the battlefield is fuel, leaving the military highly vulnerable to energy market volatility. According to the Department of Defense, the military spent $13.2 billion on fuel for its operations in 2010. Due to the difficulty of delivering fuel to forward operating bases, fuel costs can often exceed $400 per gallon.

This dependence on fossil fuels also creates operational challenges. Infantry soldiers in Afghanistan carry 26 pounds of batteries on missions to power their equipment. This weight hinders their mobility and increases the physical strain on their bodies. That’s why Tremont Electric, a Cleveland-based clean energy company, is working with military contractors to integrate their kinetic energy device, the nPower Peg, into body armor.

And just as Napoleon once said that an army marches on its stomach, today’s military runs on its fuel and water convoys. These convoys are highly vulnerable, however, and became a favorite target for militants in Afghanistan and Iraq. The DoD reports that at least 3,000 US soldiers and military contractors were wounded or killed in raids on such convoys from 2003-2007. This breaks down to roughly one casualty for every 24 convoy trips.

Veterans like Dan Sawmiller and Aaron Jewell are well aware of this intimate connection between energy security and national security, as they saw it every day on the streets of Baghdad. But Sen. Seitz has chosen to demean their service and ignore their voices, because he serves the interests of ALEC and its funders in the fossil fuel industry.

“Clean energy has proven to be a great deal for Ohio’s homeowners and businesses,” Mr. Sawmiller said. In a letter sent yesterday to Senate President Keith Faber (R-Celina), he called on the GOP leadership “to demand respect for the sacrifices that Ohio’s soldiers have made for generations” asking for a more dignified way to debate legislation.

If you are also tired of the Bill Seitz’s continued insults and bloviating, take a stand. Call Sen. Seitz’s office at (614) 466-8068 or send him an email demanding that he apologize to our veterans and stop his mindless attacks on Ohio’s clean energy standards.

Tim Kovach, Northeast Ohio Sierra Club Executive Committee member