CPP Oral Arguments Underway Before the D.C. Circuit

Interested observers arrived hours in advance (or paid line-standers) to get into the courtroom or one of several overflow rooms to watch today’s oral arguments before the D.C. Circuit on challenges to the Clean Power Plan. This morning the court tackled the first two argument segments listed in its order setting the “lineup” for oral arguments: (1) all issues related to EPA’s statutory authority, including generation shifting and state authority issues, except those related to Clean Air Act Section 112, and (2) issues related to whether Section 112 of the Clean Air Act bars regulation of carbon dioxide under Section 111(d).

The ten judges (Judge Merrick Garland, who is nominated to the Supreme Court, recused himself) were active in their questioning from the very beginning, and the court was almost immediately behind the time limits set in its earlier order. The judges were particularly interested in the first argument segment, which was scheduled for 70 minutes but lasted over two hours.  Right off the bat, Judges Tatel and Griffith questioned challengers’ claim that the CPP was a “transformative” action aimed at creating a “new energy economy.”  Conversely, Judge Kavanaugh seemed skeptical of the CPP defenders’ argument that this case was not so significant a development as to raise the Major Question Doctrine, under which the court would not defer to EPA’s interpretation of the Clean Air Act.

Argument segment two, on Section 111(d) of the Clean Air Act, was scheduled for 49 minutes but went nearly 90 minutes.  Judge Pillar, who did not participate in earlier portions of this case, repeatedly questioned the logic behind the challenger’s interpretation, although the judges had pointed questions on both sides’ understanding of the 1990 amendments to the Clean Air Act.

We will keep you posted on the remaining portions of the oral argument.

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Modeling Goes On for the CPP

Although the fate of the CPP remains uncertain, groups continue to model different scenarios that assume its implementation.  In a recently released report, the Center for Climate and Energy Solutions (C2ES) compared five studies concerning CPP implementation. (Specifically, the studies are by MJ Bradley & Associates, the Energy Information Administration, the Bipartisan Policy Center, the Center for Strategic and International Studies and the Rhodium Group, and the Nicholas Institute for Environmental Policy Solutions at Duke University.)  C2ES identified several results that are consistent across all the studies, including: mass-based and rate-based plans yield similar cumulative emissions reductions; emissions are higher under a rate-mass patchwork scenario; and rate-based plans have higher total compliance costs than mass-based plans.  The studies included the extension of federal tax credits for wind and solar in the business-as-usual scenarios.

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DOE Task Force on the Future of Nuclear Power Releases Draft Report

UPDATED 7.25.2018 The draft report was approved at the September 22, 2016 quarterly meeting. The final report for the Task Force on Future of Nuclear Power could be found here.

The Secretary of Energy Advisory Board (SEAB) Task Force on the Future of Nuclear Power issued a draft report on September 16, 2016 calling for policy and market changes to support future deployment of nuclear power.  Appointed by Energy Secretary Ernest Moniz, the Task Force was charged with developing an initiative to attain significant future deployment of nuclear technologies.  The draft report finds that in order for existing and future nuclear generation to be fully cost competitive, overnight capital costs must decline, while policymakers and electricity markets must take strides to more accurately value carbon-free generation.

The Task Force reports that current overnight capital costs—the cost of building a new nuclear power plant assuming no financing costs—are estimated to be $5,000/kilowatt-electric (kWe).  If overnight capital costs were reduced to $2,000/kWe, the Task Force found that the levelized cost of electricity (LCOE) for new nuclear generation should be competitive with other non-carbon-emitting generation.  But the report finds that additional changes are needed if existing and future nuclear generation is to achieve full cost competitiveness, including that electricity markets must recognize the value of carbon-free electricity generation based on the social cost of carbon emissions avoided—either by charging generators for their carbon emissions, or compensating generators at $0.027 for each kilowatt-electric-hour (kWe-hr) of carbon-free electricity they generate.  Finally the report highlights that current wholesale electric market rules in many parts of the U.S. make valuing base load nuclear generation difficult, including the rate structure of wholesale capacity markets and preferential dispatch for renewables.

The full SEAB will consider whether to approve the draft at its quarterly meeting on Thurday, September 22, 2016.

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Annual Energy Outlook 2016 Now Available

Yesterday, the Energy Information Administration (EIA) released its Annual Energy Outlook 2016.  EIA has updated its reference case to include new legislation and regulations enacted since April 2015, as well as model changes and data updates.  In the electric power sector, updates include the incorporation of 3 GW of previously unannounced nuclear retirements, explicit representation of 8.8 GW of coal-fired units that are being converted to natural gas between 2016 and 2025, and modification of the module to include CPP representation.

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Frequently Asked Questions about the Paris Agreement

Earlier this month, the Congressional Research Service (CRS) released Climate Change: Frequently Asked Questions about the 2015 Paris Agreement.  CRS starts with a summary of and context for the Paris Agreement, noting that “Members of Congress have expressed diverse views about the [Paris Agreement] and may have questions about its content, process, and obligations.”  CRS explains that the principle mandatory provisions of the agreement for individual parties are procedural—the submission of Nationally Determined Contributions is required, but the specific contents are not dictated.  And the elements that are binding are consistent with obligations on the U.S. that the United Nations Framework Convention on Climate Change already imposes.  CRS notes that there is no established legal remedy—such as compensation for loss or damage—for parties that perceive themselves as particularly vulnerable to climate change, although this was hotly negotiated.

Over 170 governments signed the agreement on April 22, 2016—setting a new record for signatures on a United Nations treaty in a single day—and the agreement is open for signature until April 21, 2017.  CRS explains the process for the entry into force of the agreement, as well as countries’ (nonbinding) pledges to contribute to greenhouse gas (GHG) mitigation.  The U.S. has pledged to reduce U.S. GHG emissions by 26–28% by 2025 compared to 2005 levels.  CRS notes that economic and technological factors that may help meet this goal include: natural gas prices, environmental compliance costs, the retirement pattern of coal-fired power plants, restrained demand for electricity, lower costs of renewable energy and battery capacity, state and local policies, public support for renewable energy, and extension of renewable energy tax credits.

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