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Five Takeaways from National Renewable Energy Policy Forum 2016

Last week, the American Council on Renewable Energy (ACORE) held its annual National Renewable Energy Policy Forum in Washington, DC, where leaders in clean energy business, policy and finance gathered to assess progress, debate new approaches and help shape policy visions for continued sector growth.

“Policy still matters” was the theme of this year’s event, which served to remind everyone that while 2015 was a transformational year in terms of policy wins (i.e., COP 21 agreement, Clean Power Plan, ITC/PTC extensions) much more work is needed strengthen the conditions for clean energy’s long-term future.

Here are my top five takeaways from the forum:

1) For clean energy, the good times are rolling

This was no coal industry confab – attendees and speakers portrayed an air of positivity not typically seen for an industry that has seen its fair share of setbacks and detractors over the years. The positive vibe was perhaps best expressed by Janet McCabe, EPA Acting Assistant Administrator – Office of Air and Radiation, who deftly paraphrased the old Irish blessing (wind was at our back, sun was shining warm) on St. Patrick’s Day to describe the ebullient mood of the industry.

And despite some relatively minor shortcomings and potential roadblocks that would be discussed throughout the day around 2015’s major policy wins, the Clean Power Plan, Paris agreement and Investment Tax Credit/Production Tax Credit (ITC/PTC) tax extensions were all hailed as transformational moments that would propel the industry’s continued growth.

2) Corporate renewables purchasing is becoming the operational mainstream

Panelists from Google and Amazon in the “Hot Topics in Changing Electricity Marketplace” session highlighted tremendous growth in corporate demand for renewables, which was also a theme of the ACORE pre-conference workshop.

Speakers noted that corporate renewable purchasing grew 60 percent in 2015 for a total of 3.44 gigawatts purchased, which is incredible considering 2012 corporate renewable purchasing was around was around 100 megawatts.

And it’s not just the numbers that show the trend is going mainstream; it’s the new players who are joining in. According to BRC, nearly two-thirds of the total energy purchased last year was from companies new to utility-scale renewable energy.

Google, Amazon and tech companies are still the vanguard but increasingly it’s companies like Dow Corning, Procter & Gamble Co. (P&G) and other non-tech companies that are making major investments in renewables. It’s also going beyond B2B bragging rights; P&G’s new Tide PurClean liquid detergent to be released in May will remind consumers on the label that it is produced with “100 percent renewable wind-power energy.”

3) Renewables going from “appetizer to entrée” presents challenges & opportunities

While wind and solar only account 5.1 percent of total large-scale electricity generation in the U.S. (up from 1.4 percent in 2008), the explosive pace of growth continues to change conversation among energy leaders.

Speaking on panel on the changing electricity marketplace, Jonathan Weisgall of Berkshire Hathaway Energy best encapsulated the major shift happening in electricity markets when he remarked that renewables are going from “appetizer to entrée.”

Attendees talked about how these “entrées” will get even larger if the trend around aggressive statewide renewable portfolio standards continues. Oregon’s recently passed law calling for a 50% renewable portfolio standard (RPS) for the state power mix by 2040; California’s for 50% RPS by 2030; and Hawaii’s for 100% RPS by 2045 were all cited as transformational examples.

While this shift presents great opportunities for the renewables, it also underscores a need for stronger governance that will enable better interconnection between regional power grids. 

Going into the forum I expected grid energy storage to be a hotter topic, but a lot more time was spent discussing how a more efficient dispatch of renewables could prove more consequential – a point made recently in a study from Nature Climate Change which found that better interconnection would enable wind and solar power to provide 80 percent of US electricity without price increases or the need for electricity storage.

4) EPA’s Clean Power Plan will probably endure legal challenges

Despite the recent decision by the U.S. Supreme Court to issue a stay of the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan (which calls for reductions in carbon emissions from the electricity sector by 32 percent over 2005 levels in the next 15 years) most speakers seemed cautiously optimistic the rule would survive legal tests and implementation would not be materially impacted as the case against EPA heads toward a likely hearing in the Supreme Court in Spring 2017.

To the point on implementation, panelist in the session entitled “Prospects for the Clean Power Plan” noted that while EPA cannot impose any Clean Power Plan requirements on states during the stay, nothing is withholding them from continuing to develop guidance on emissions trading.

When it comes to the makeup of the Supreme Court and how that might impact Clean Power Plan’s fate, most speakers seemed to agree that Justice Kennedy the would be favorable to EPA’s arguments, thereby downplaying the significance of how Scalia’s eventual replacement might shift the balance on this particular issue

5) New laws (or at least new interpretations) may be needed meet Paris commitments by 2025

The U.S. commitment to cut greenhouse gas emissions 26 to 28 percent by 2025  (compared to 2005 levels) in the Paris Agreement last December was lauded by many speakers for it potential to embolden clean energy investment in the U.S. and abroad, but attendees ultimately seemed split on whether new U.S. laws would be needed to meet our specific Paris GHG reduction commitments.

On one side, a few speakers indicated they didn’t think the variety of existing policies led by EPA’s Clean Power Plan, tax incentives for renewable energy and national fuel economy standards would be enough to meet Paris commitments. Instead, their view was that new regulation in the likely form of a cap-and-trade system would ultimately be needed.

On the other hand, speakers like Robert Sussman of Sussman & Associates talked at length about the possibility to meet or exceed our Paris commitments under existing law. Specifically, Sussman pointed to an existing provision under the Clean Air Act called Section 115 that would give a future administration the solid basis for action on climate change across many sectors of the economy, not just the power sector.

There’s a lot more to read about the prerequisites for action under Section 115 here, but essentially the provision says that EPA must determine that emissions of “any air pollutant” in the U.S. “may reasonably be anticipated to endanger public health or welfare in a foreign country” while also finding that the foreign country or countries have provided “reciprocity” to the U.S. by giving “the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section.”

In summary, there reason there is a strong legal case to be made is because we already classify greenhouse gas emissions as a pollutant and the U.S. is given “reciprocity” via the United Nations Framework Convention on Climate Change (UNFCCC).

At the end of the day, everyone seems focused on defending the Clean Power Plan and improving tax incentives for more forms of renewable energy to meet climate goals, but I would not be surprised if Section 115 continues to be brought up as a potential solution for meeting Paris commitments, regardless of the outcome of the Clean Power Plan in the courts.

Gil Jenkins is a Vice President in the Washington, DC office of Ogilvy & Mather, one of the largest marketing communications companies in the world. He counsels a broad range of clients that harness renewables or reduce the use of natural resources through innovative products and services. He can be reached at gil.jenkins@ogilvy.com

Gil Jenkins
Gil Jenkins is a Vice President in the Washington, DC office of Ogilvy & Mather
 
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