This article was republished with permission from Generation Hub.

This article was republished with permission from Generation Hub.

This article was republished with permission from Generation Hub.

The new report — “Putting the Puzzle Together:  State & Federal Policy Drivers for Growing America’s Carbon Capture & CO2-EOR Industry” — includes detailed analyses and federal and state recommendations of the State CO2-EOR Deployment Work Group, which consists of representatives from 14 states, leading private sector stakeholders and CO2-EOR experts.

Gov. Bullock and Mead launched the Work Group in 2015. The Great Plains Institute staffs and facilitates the Work Group.

The report notes that market forces and federal and state policy are driving the energy industry to reduce carbon emissions and that carbon capture with CO2-EOR compares cost-effectively with other emissions reduction options.

The report says the United States leads the world in commercialization of carbon capture and storage (CCS). “We can and should remain on the cutting edge of global leadership in carbon capture and storage research, technology demonstration, hydrocarbon recovery and related manufacturing, and engineering and other services,” according to the working group report.

Fourteen states now participate in the Work Group:

Arkansas, Colorado, Indiana, Kansas, Kentucky, Mississippi, Montana, New Mexico, Ohio, Oklahoma, Pennsylvania, Texas, Utah and Wyoming. State participation varies by state and includes governors’ staff, cabinet secretaries/deputy secretaries, utility commissioners and agency and commission staff.

The Work Group recommends a targeted package of federal incentives for CO2-EOR:

-Improving and expanding an existing tax credit for storage of captured CO2;

-Deploying a revenue neutral mechanism to stabilize the price paid for CO2–and carbon capture project revenue–by removing volatility and investment risk associated with CO2 prices linked to oil prices; and

-Offering tax-exempt private activity bonds and master limited partnership tax status to provide project financing on better terms.

States can also assist by optimizing existing taxes commonly levied by states to complement federal incentives in helping carbon capture projects achieve commercial viability, the Work Group says. 

Analysis undertaken for the Work Group shows that an optimized approach to state taxes can add the equivalent of roughly $8 per barrel of oil to the economics of a carbon capture project.

“The Work Group endorsed a targeted package of federal and state incentives for CO2-EOR that will help ensure that CO2-EOR becomes an integral part of our future energy system,” said Brad Crabtree, Great Plains Institute Vice President for Fossil Energy.

“The Work Group report is timely. Congress has a narrow window right now to pass Section 45Q tax credit reforms before year’s end,” Crabtree said, noting that the Carbon Capture, Utilization and Storage Act (S. 3179) introduced by Senator Heidi Heitkamp (D-ND) has been co-sponsored by one-fifth of the U.S. Senate.

Bipartisan companion legislation in the U.S. House, the Carbon Capture Act (H.R. 4622) introduced by Representative Mike Conaway (R-Texas), has attracted 47 co-sponsors. Governor Mead and Governor Bullock have endorsed these bills in letters to Congress.

This article was republished with permission from Generation Hub. 

The Tennessee Valley Authority (TVA) has started a scheduled refueling and maintenance outage at Sequoyah Unit 1; Southern (NYSE:SO) has seen one of its reactors in Alabama experience an unplanned outage and the Exelon (NYSE:EXC) Nine Mile Point Unit 2 in Upstate New York has also gone offline.

After generating more than 12.3 billion kilowatt hours of carbon-free energy over the past 18 months, the TVA Sequoyah Unit 1 in in Soddy Daisy, Tennessee began a scheduled refueling and maintenance outage on Saturday, Nov. 26.

An additional 700 TVA and contract employees are supplementing the site’s regular staff during the scheduled outage. Approximately 10,000 work activities are planned, including loading new fuel assemblies, performing inspections of reactor components, maintenance of plant equipment and installing unit enhancements, TVA said in a news release.

The 1,100-MW Sequoyah Unit 1 is one of seven operational TVA nuclear reactors that supply nearly one-third of all electricity used by more than 9 million people.

Meanwhile, Southern’s Alabama Power utility saw Farley Unit 1 in Houston County, Alabama experience an unplanned outage on Nov. 27.

“At 0026 [CST] on November 27, 2016, Farley Unit 1 was manually tripped from 100% reactor power due to voltage swings suspected to be caused by the Auto Voltage Regulator. All control rods fully inserted and Auxiliary Feedwater (AFW) auto-started as expected,” according to an event notification report filed with NRC.

The cause of the main generator voltage oscillations is under investigation.

The trip was uncomplicated at the roughly 875-MW Farley 1. All safety equipment is available, if needed. Unit 2 was unaffected by the event and remains at 100% power.

Nine Mile Point 2 was listed at zero power early Nov. 28 after being listed at 100% power as recently as Nov. 23. Nine Mile Point Unit 1 was still listed at 100% power on Nov. 28. Unit 2 is the larger of the two reactors at the Oswego County, New York site, listed at more than 1,100 MW.

Nine Mile Point Nuclear Station Unit 2 was manually shut down Nov. 24 at 1:36 p.m. for technicians to repair one of the unit’s two reactor recirculation pumps. The recirculation pumps send water back through the reactor and are used to help regulate power. Technicians are working to repair and test the pump prior to returning the unit to service, Exelon said in a Nov. 24 news release.

This article was republished with permission from Generation Hub. 

McCarthy used her speech and subsequent question-and-answer period to offer a spirited defense of EPA policy during the Obama administration.

The speech, which was webcast, was interrupted a couple of times by protestors. McCarthy did not spend time on whether the EPA Clean Power Plan to reduce power sector carbon dioxide (CO2) emissions will be upheld in court.

Since Republican Donald Trump defeated Democrat Hillary Clinton in the presidential election, many analysts have predicted that the Trump administration will ultimately gut the carbon plan — even if it survives the current legal challenge.

McCarthy, however, stressed positive trends.

She said that more than a dozen states are already on track to comply with the Clean Power Plan target of cutting power sector CO2 emissions 32% by 2030. Even more states, including some challenging the rule, are already on track to meet 2022 CO2 reduction targets, McCarthy said.

The train toward clean energy has already left the station, McCarthy said.

President Obama showed environmental leadership by deciding to invest in clean energy during the middle of a recession, McCarthy said.

“I’ve heard some people talk about the Clean Power Plan like it is the driving force … toward clean energy,” said the EPA administrator. “They give us too much credit.”

The clean energy business is growing several times faster than rest of the economy, McCarthy said. CO2 emission reductions are also well ahead of the CPP 2030 target, McCarthy said.

Non-emitting power sources, mostly solar and wind, account for a growing share of the new electric capacity being built in the United States, McCarthy said.

Unfortunately it’s tough to express the benefits of the Clean Power Plan in a 140-character tweet. “I’ve tried it. I know,” McCarthy said.

“EPA is here because the American people demanded it,” McCarthy said. Because of EPA, pollution is not as bad “as it was in the good old days.”

The departing EPA chief said there is no bigger threat to American strength and prosperity than climate change. Under the Obama administration, the United States has assumed an international leadership role, McCarthy said. Many nations now wonder if the United States will abandon its commitment to controlling greenhouse gas emissions, she added.

“We can and we must choose both” strong economy and environment, McCarthy said.

The EPA has overseen electric power plant rules that reduce mercury emissions from power plants. “We have [also] clarified the jurisdictional boundaries of the Clean Air Act” and passed important new rules on the handling of coal ash.

When asked about non-CO2-related rules that have a big impact, McCarthy said the cross-state air pollution rule “was really important to me in the New England area,” McCarthy said of “I know there is a lot of anxiety these days. But I am very optimistic for the future,” McCarthy said.

Progress will continue. “If you have worked at the state level and the local level, you cannot run away from people,” McCarthy said. Otherwise, you won’t be around long. “There are thousands of mayors who have signed climate pledges,” McCarthy said.

Renewable energy sources are cheaper than they have ever been before. “People want it,” and it doesn’t matter if people want clean energy for environmental or economic reasons, McCarthy said.

On another issue, McCarthy expects EPA to release a scientific report on hydraulic fracturing before the Obama administration leaves office.

McCarthy said EPA “has not been contacted” by the Trump transition team yet, but is committed to a smooth transfer of power. As for advice to her successor: “Listen to the great staff at EPA.” 

When asked by GenerationHub at the TransForum East conference in Washington, D.C., Holmstead declined to comment on the matter.

A fellow Bracewell official, lobbyist Frank Maisano, had told the same conference on Nov. 15 not to be surprised if Holmstead ends up being EPA chief in 2017 under President-elect Donald Trump.

Maisano had said that he did not expect to see a “climate denier” be appointed to head EPA. The Bracewell lobbyist also said that he doubted Competitive Enterprise Institute (CEI) official Myron Ebell would be the Trump successor to Obama EPA chief Gina McCarthy. Ebell is leading the Trump transition effort for EPA.

“You are more likely to hear from the EPA administrator tomorrow morning … the next EPA administrator,” Maisano said, referring to Holmstead, who was scheduled to speak to TransForum East about the EPA Clean Power Plan. TransForum East is a conference organized by PennWell’s TransmissionHub.

“I told Frank … that he is free to speculate and I am not going to do that [speculate],” Holmstead said when informed of the Maisano remarks.

The possibility of Holmstead becoming EPA administrator is being taken seriously by major media outlets. Both Reuters and The New York Times have published articles listing Holmstead as being on the Trump team’s short list for EPA chief. 

Holmstead leads the Environmental Strategies Group (ESG) at Bracewell. Holmstead headed the EPA’s Office of Air and Radiation from 2001 — 2005.

During his tenure, he was the architect of several of the agency’s most important initiatives, including the Clean Air Interstate Rule, the Clean Air Diesel Rule, the Mercury Rule for power plants and the revision of the New Source Review program. He also oversaw the development of the Bush Administration’s Clear Skies Legislation.

Between 1989 and 1993, Holmstead served on the White House Staff as Associate Counsel to former President George H.W. Bush.  In that capacity, he was involved in the passage of the Clean Air Act Amendments of 1990.

This article was republished with permission from Generation Hub.

The law firm issued another post-election analysis on Nov. 11 titled “How will a Trump Administration Re-set U.S. Climate Policies?” The firm had already outlined some congressional changes affecting energy and environment after the Nov. 8 election.

Both of the Environmental Protection Agency (EPA) major power sector rules–the Carbon Pollution Standards for new power plants and the Clean Power Plan Rule for existing power plants–are currently subject to litigation, the law firm noted.

“A Trump Administration likely will not have an interest in defending the rules and consequently will take legal steps to reconsider and revise or even repeal the rules. However, the effectiveness of such actions is unclear given that other parties that intervened on the side of the government will seek to continue to defend the rules in court,” Van Ness Feldman said.

If the courts uphold the rules before they are revoked, the Trump EPA may need to modify them.

“For the Carbon Pollution Standards rule, a Trump EPA might rewrite the emission standard for new coal-fired power plants so that the standard is no longer set at a stringent CO2 emission performance level that is based on the use of carbon capture and sequestration (CCS), but instead is based on the use of advanced, highly efficient coal generation technology,” said Van Ness Feldman.

“Similarly, a Trump EPA might take a number of approaches in revisiting the Clean Power Plan rule. For example, the Trump EPA could reverse the agency’s current statutory interpretation of its authority under Section 111(d) and conclude that Section 111(d) bars the EPA from promulgating an emission guideline for a source category already subject to regulation for its air toxic emissions under Section 112 of the Clean Air Act,” the law firm said.

“This new interpretation could effectively foreclose use of Section 111(d) not only to set GHG standards for the power sector but also to set GHG standards for the many other industrial source categories already subject to toxic emission standards,” the law firm said.

Alternatively, the EPA could revisit the “Best System of Emission Reduction” methodology it used to establish emission guidelines under the Clean Power Plan Rule. Under this pathway, the Trump EPA would abandon the “generation-shifting” approach that was used to set performance standards based on renewable energy and other measures that can be implemented beyond the fence-line of an affected power plant, said the Van Ness Feldman analysis.

Instead, the performance standards would be set at a level that assumes only those reductions achievable through measures that can be implemented at a plant.

“On the domestic side, a Trump Administration will face a relatively high hurdle in avoiding any GHG [greenhouse gas] regulation altogether,” because of the Supreme Court’s decision in Massachusetts versus EPA, Van Ness said in its analysis.

The Trump EPA could avoid such Clean Air Act regulation altogether “only if the EPA made a new scientific determination that GHGs do not endanger public health or welfare–and only if the agency could defend that determination in the courts. The Obama EPA made various types of endangerment findings in support of different rules to regulate GHG emissions,” the law firm said.

A more likely scenario might be for the Trump administration to issue a new CO2 regulatory program that might be more doable for the electric power and transportation sectors, according to Van Ness Feldman.

This article was republished with permission from Generation Hub.

The Federal Claims Court opinion was publicly released Oct. 31.

Plaintiffs are the owners of six wind power facilities in the Alta Wind Energy Center near Los Angeles, California. Alta Wind filed suit in June 2013, alleging that the federal government underpaid them by more than $206m it made a grant to them pursuant to Section 1603 of the Recovery Act.

Congress passed the ARRA in the wake of the 2008 financial crisis to stimulate the U.S. economy. As part of this strategy, Section 1603 created a system whereby certain renewable energy facility owners became entitled to cash grants.

Section 1603 created a system whereby certain renewable energy facility owners became entitled to cash grants. But owners of “specified energy property” like the plaintiffs became entitled to grants equal to 30% of “the basis of such property.”

“And therein lies the dispute,” the court said in its opinion.

Plaintiffs argue that “basis” means the purchase prices of their wind facilities, minus small allocations for ineligible property such as land and energy transmission lines.

The government maintains that “basis really should be calculated from the value of each wind farm’s grant-eligible constituent parts and their respective development and construction costs, citing a myriad of factors that allegedly made the purchase prices an unfair measure of each wind farm’s value,” the court noted.

There was a nine-day court trial in the matter during May of this year. The trial featured testimony from nine witnesses for Alta and two for the government.

The court excluded testimony from an expert witness proposed by the government. The court concluded that the proposed expert witness had chosen to “conceal articles” that he had written while in academia relating to “Marxist and socialist thought.”

“The Government did not identify any other experts on its pretrial list of witnesses, and therefore had no expert testimony to rebut Plaintiffs’ experts,” the court said. “Therefore, the Government’s counterclaims fail for lack of evidence,” the court  went on to say.

“Therefore, the Government underpaid Plaintiffs when it awarded them Section 1603 grants, and Plaintiffs are entitled to damages in amounts equal to the difference between the grants they received and the grants they were owed,” the court held.

The Alta Wind Energy Center is the largest wind center in North America, and possibly in the world, the court noted in its decision. It is located in the wind-rich Tehachapi Region, which is hilly area west of the Mojave Desert about ninety miles north of Los Angeles.

Companies have been developing wind power facilities in the Tehachapi region since the early 1980s. By 2009, five percent of all wind power generation in the United States came from the Tehachapi Region, the court said.

The Alta Wind projects at the center of this lawsuit were developed in two stages.

In the first stage, Oak Creek Energy Systems began the development process and partnered with Allco Wind Energy Management Pty. Ltd. to finance the projects’ development.

In the second stage, Terra-Gen Power LLC acquired the projects from Allco, completed developing and constructing them, and sold the finished products to the plaintiffs.

The finished product, the Alta Wind Energy Center, is made up of eleven wind farm facilities.

Federal Claims Judge Thomas Wheeler set the final award at more than $206.8m. U.S. Court of Federal Claims Nos. 13-402T, 13-917T, 13-935T, 13-972T, 14-47T, 14-93T, 14-174T, 14-175T. Alta Wind I Owner-Lessor C, and Alta Wind I Owner-Lessor D versus the United States.

This article was republished with permission from Generation Hub.