Volume 7, Issue 3
Welcome
Welcome to the third issue of Currents for 2023.
We have a couple of upcoming meetings that our legal professional readers may find of interest.
We hope you enjoy this issue and, as always, thank you for reading.
“He didn’t provide new details of how the U.S. electric grid could be carbon-free by 2035, a top goal for the administration.”
Why this is important: The Biden administration has set a goal of the electrical system being carbon free by 2035. That goal is largely impossible, but merely starting down that path will require tremendous effort. A state like West Virginia, as with much of the eastern U.S., does not have sufficient wind or solar resources to replace its fossil fuel generation. Therefore, extensive long-range transmission from the sunnier Southwest and windier Midwest is needed, but not planned, much less constructed. Large scale batteries will be needed in tremendous numbers that no one is in a position to promise at the present. And, that is before the electrification of the U.S. transportation sector, which will greatly increase electricity demand. It will take a great deal of money, and much more action than talk, to convert America to a carbon-free electrical grid. --- David L. Yaussy
“And the development or expansion of pipelines from the region would bolster the Pennsylvania economy and help customers in other states struggling with high energy costs.”
Why this is important: Natural gas from Pennsylvania and West Virginia can help provide energy independence for the United States, lower energy costs for New England, and reduce European nations’ dependence on Russian supply of fossil fuels. The geopolitical influence of energy independence for any nation cannot be understated. There is little downside to utilizing the natural gas and oil from below the surface in Pennsylvania and West Virginia. --- James D. Elliott
“The Senate Energy, Industry and Mining Committee approved SB 609, which would require a West Virginia utility company to obtain approval of the state Public Energy Authority to decommission or demolish an existing power plant.”
Why this is important: The article details efforts at the West Virginia Legislature designed to support the state’s coal industry.
Since the article was published, Senate Bill 609, which requires that the Public Energy Authority (“PEA”) approve the “deconstruction” or decommissioning of electric power plants, has completed the legislative process. The bill, however, may create some regulatory redundancy in that the Public Service Commission (“PSC”) arguably already has the authority to consider and approve utility requests to close power plants that are paid for by West Virginia ratepayers. In fact, House Bill 3308, which also has been passed by the Legislature, clarifies expressly that a utility cannot close or retire an electric power plant “without the prior consent and approval of the commission.” It appears therefore that the Legislature has created a duplicative regulatory process for considering the closure of utility power plants that are currently operating. As noted in the article, however, Senate Bill 609 also provides that the PEA could potentially address plants that are not currently operating, which would seem to be outside of the PSC’s control.
Other legislative action mentioned in the article includes support for development of new coal technologies and a bill aimed at providing severance tax exemptions for the sale of in-state steam coal to in-state power plants. As the article details, the latter raises both Constitutional and revenue deficiency concerns, and that bill appears not to have advanced further, but comparable coal tax credit legislation is proceeding. --- Derrick Price Williamson
“It's the equivalent of about two new coal power plants per week.”
Why this is important: China is building new coal-fired electrical generation plants six times faster than the rest of the world. The move is driven by high natural gas prices from Russia’s illegal invasion of Ukraine, summer heat waves leading to more electrical demand for air conditioning and drought that has dramatically cut back hydro electrical generation. China claims it will still cut CO2 emissions and peak emissions by 2030. --- Mark E. Heath
“Pennsylvania's energy assets can play a key role.”
Why this is important: Inexpensive Marcellus Shale gas produced from the Appalachian basin has great market potential to replace Russian gas in European markets and lure foreign manufacturers to construct facilities in the United States. However, multiple layers of regulatory requirements and runaway environmental challenges to the construction of pipelines and other infrastructure necessary to deliver that gas to market have stifled the economic benefits available from that resource. It is time to eliminate duplicative permitting requirements and more clearly define the statutory elements of environmental challenges in order to harness the benefits of increased domestic investment while meeting the energy needs of our European allies. --- William M. Herlihy
“Current code defines managed timberland as 10 contiguous acres devoted primarily to forest use with sufficient numbers of commercially usable tree species – with further details.”
Why this is important: The West Virginia Legislature has awakened to the effect that some carbon credits may have on the state forestry industry. While HB 3294, referenced in this article, has died, as of this writing a Senate bill imposing a moratorium on carbon credit contracts was still alive. Legislators are concerned that carbon credit programs, which reward landowners for growing wood, and thereby sequestering carbon, may negatively affect the wood products industry. Without timber to cut, lumber and plywood manufacturing facilities, furniture and barrel makers, and others could run out of raw materials. In addition, it’s not clear whether the credits are taxed, which means the state could be trading taxable industries for programs that limit economic growth. --- David L. Yaussy
“Nearly all of the world’s new electricity supply over the next few years will come from renewable and nuclear energy, pushing out fossil fuels and curbing climate pollution from electricity, according to a new analysis by the International Energy Agency.”
Why this is important: The International Energy Agency ("IEA") recently provided analysis forecasting that more than 90 percent of new global electricity demand will be met by carbon pollution-free sources by 2025, with most of the new generation coming from renewables, including solar, wind, and hydropower. The IEA forecasts that renewable energy will account for 35 percent of the world's electricity generation by 2025, while coal, gas, and nuclear will account for approximately 33 percent, 20 percent, and 10 percent, respectively.
As a result of renewable generation becoming the prevalent form of generation in the coming years, the article states that carbon dioxide emissions from the power sector could finally start to plateau or fall after peaking in 2022. In conjunction with this growth, however, the article notes that renewables have also become increasingly reliant on the weather. Extreme weather has caused renewable generation to ebb and flow, creating pressure on power grids to become more resilient as quickly as possible as renewable sources become a larger portion of the world's electricity generation. The article, however, neglects to address the reality that this transition to carbon pollution-free sources and the impact of a less reliant grid will result in significant costs for energy consumers. --- Steven W. Lee
“Monday’s voice vote in Gov Org was not unanimous, with several voting against it."
Why this is important: A new West Virginia state agency designed to promote energy development projects in the coalfields is on its way to the House floor after clearing the Government Organization Committee Monday afternoon. The Coalfields Energy Research and Economic Development Authority establishes the authority as a public corporation charged with an array of goals, including: 1) promote and develop the state’s energy workforce and energy technology research; 2) promote and develop energy projects, storage and manufacturing; and 3) work with industries, other agencies and nonprofits to advance energy projects, storage and manufacturing. A five-member board: four appointed by the Governor, one by the Economic Development secretary will run the board. And, it can apply for and award grants, enter into contracts and receive grants and donations of money and property. ---
Mark E. Heath
“Scores of governments, including the U.S. government, have begun incentivizing SMRs by making them more attractive for lenders and utilities.”
Why this is important: The continued global drive for development of lower emission and carbon-neutral generation resources is coupled with significant cost and reliability questions. One solution that is finally gaining traction is the potential for small modular nuclear reactors (“SMRs”), reversing the recent trend of declining nuclear capacity. These SMR resources could provide fully carbon-neutral generation that could operate in conjunction with other renewable resources to supply reliable baseload-level capacity that non-nuclear options struggle to provide. This promising potential is not without obstacles, however, including the normal (though significantly lessened) up-front capital investment requirement for nuclear utility-scale generation and ongoing questions related to disposal of nuclear waste. --- Barry A. Naum
“More than a third of the new solar will be in Texas and California.”
Why this is important: Solar is projected to make up more than half of the new grid power that will be installed in 2023, while almost all the power generation removed from the grid will be fossil-fueled. Something is needed to provide power while the sun is not shining, and to date grid-scale batteries are not nearly abundant enough to store enough energy to make solar feasible as a 24/7 power supply. This suggests that a day of reckoning is approaching if intermittent renewables keep replacing baseload fossil fuel and nuclear plants. --- David L. Yaussy
“’We need pipelines to facilitate more production, and the lack of pipelines is holding back production,’ he said.”
Why this is important: Pennsylvania’s new governor seems inclined to work with the oil and natural gas industry to speed up permitting for the industry and allow the Commonwealth to better utilize the abundant natural resources in an environmentally sound manner. A primary barrier to taking advantage of the oil and natural gas located beneath the surface in Pennsylvania is the lack of pipelines. The new administration seems willing to work with industry to improve the permitting process and reduce delays.
Here is a round-up of the latest statistics concerning the energy industry.
PETROLEUM
NATURAL GAS
COAL
RENEWABLES
