Carbon Free Boston — Or How to Save the World in a Few Easy Steps

Boston’s Green Ribbon Commission has just released Carbon Free Boston, which outlines a pathway to a carbon-free city by 2050.  It’s a thoughtful and careful report.  My immediate reaction was two-fold.  Of course we have to do all this and of course this will be nearly impossible.

The transmittal letter to Mayor Walsh acknowledges the immensity of the undertaking:

The report’s analysis makes clear the great magnitude of the change needed to achieve carbon neutrality. It requires an electricity grid that is powered by renewable sources of energy and a large-scale reduction in the use of oil and natural gas for transportation, space heating, and hot water. It requires immediate and dramatic efforts to make buildings more energy efficient. It entails replacing travel in personal vehicles with greater use of public transportation, cycling and walking, while eliminating the use of internal combustion engines for remaining vehicles. And it necessitates sending zero-waste to landfills and incinerators. These necessary achievements will require innovation and transformation in our city’s core systems. And we will need to make these changes in a way that is cost effective, that equitably distributes benefits and burdens, and that does not unduly disrupt ongoing operations.

I can’t begin to go into all the details of what has to be done, but here are a few that highlight some of the necessary challenges:

  • In 2050, 85% of buildings will have been built prior to 2018 – and all of these will require “deep energy retrofits”
  • “A carbon-neutral transportation system requires fundamental changes to how people and goods move around Boston”  These changes include
    • The easy moves, such as completely electrifying our cars, buses, and trains, and
    • The more difficult moves, such as getting people out of cars to transit, biking, and walking
  • “Rethinking consumption” in order to eliminate waste generation

I noted recently that we seem to be near a tipping point in climate change belief among US citizens.  Even so, it’s a long journey from believing in climate change to deep energy retrofits of all buildings, getting people out of cars, and eliminating waste generation.

Time to start walking.

Deadlines For Permit Issuance Are Double-Edged Swords

On Friday, the D.C. Circuit Court of Appeals ruled that applicants for licenses under the Federal Power Act may not reach private agreements with states to circumvent the FPA requirement that states act on water quality certification requests under § 401 of the Clean Water Act within one year.

The facts are important here and somewhat convoluted.  The short version is that PacifiCorp operates a number of dams on the Klamath River.  In 2010, PacifiCorp reached a settlement with California, Oregon, and a number of private parties – not including the Hoopa Valley Tribe, the plaintiff here – to decommission certain dams and relicense others.  However, the decommissioning was dependent on certain third party actions, including, apparently, federal funding.  Part of the settlement required California and Oregon to “hold in abeyance” their § 401 certificate reviews.  Specifically, each year, PacifiCorp:

sent a letter indicating withdrawal of its water quality certification request and resubmission of the very same . . . in the same one-page letter . . . for more than a decade.

The Court was not pleased.

Such an arrangement does not exploit a statutory loophole; it serves to circumvent a congressionally granted authority over the licensing, conditioning, and developing of a hydropower project. … There is no legal basis for recognition of an exception for an individual request made pursuant to a coordinated withdrawal-and-resubmission scheme, and we decline to recognize one that would so readily consume Congress’s generally applicable statutory limit.

The Court limited its holding to the facts of this case; it does not apply, for example, to applications that are substantively amended and resubmitted.  It only applies to what PacifiCorp and the states unabashedly did here – reach a private agreement to get around the explicit provisions of the statute.

Nonetheless, it’s an important decision.  Based on data reported in the opinion, it may have a significant impact on a number of FERC licensing proceedings, where similar agreements may also be in place.

The decision also highlights an issue with these types of permitting deadlines.  These provisions follow a fairly well-trod path.  Some agency is slow in responding to permit applications.  A legislature responds by demanding that approvals be issued within a certain period of time.  The regulated community is happy.  Then, life moves on and, in the real world, parties realize that, for one reason or another, strict adherence to the statutory deadline is infeasible, impractical, or just plain not in anyone’s best interest.  They thus do what creative people do – they find a way around the deadline that was supposed to be protecting them.  Or, they try to do so until a court says no, no, no.

Be careful what you wish for.

Americans Are Increasingly Sure About Climate Change: That Appears to Include DOD

Two reports crossed my desk this week that, together, made me wonder if we’re finally nearing the tipping point on climate change belief in the United States.  First, Yale and George Mason released Climate Change in the American Mind. The report shows that almost 75% of Americans think global warming is happening and more than 50% are very sure that it’s happening.  More than 60% of Americans think it’s mostly caused by human activity.

Although there is concern that some of the increase is simply variation in the numbers among Republicans, based on whether the Denier-in-Chief has been fulminating recently, these data are consistent with my general sense that the evidence is just getting too overwhelming – part of that evidence being, of course, that more Americans are seeing first-hand the impact of extreme weather events, and there are just too many of them, in too many different contexts, to say that they are all just random events.

The second piece of evidence was the Report on Effects of a Changing Climate to the Department of Defense.  Apparently, President Trump is too busy to notice that our military is quite concerned about the impact of climate change on DOD facilities and operations.  The summary is a bland, sobering, military-speak document that makes clear just how severely climate change will affect DOD.  About two-thirds of 79 facilities that DOD examined are currently vulnerable to current or future flooding and more than half are vulnerable to current or future drought.

Here’s hoping that history will look back and say that, somewhere around 2019-2020, public belief in anthropogenic climate change became commonplace, and denial – in the public debate as well as the scientific debate – became the realm of cranks.

Who Needs a Carbon Tax When We Can Raise the Real Estate Excise Tax?

Governor Baker announced today that, as part of his FY 2020 budget, he would be proposing to increase the real estate excise tax in order to fund the Global Warming Solutions Trust Fund.  The Governor stated that, in the long run, the tax increase would provide $137 million annual to fund adaptation efforts.  

Though my friends in the real estate industry may not be happy, I think that this is a fine idea.  They do have a point, though.  Climate change is a little bit bigger than just the real estate industry, and adaption is not just about protecting property.  Governor Baker has been unreceptive to a variety of taxes during his time in office.  His unreceptivity includes both a gas tax increase some years ago and – at least so far – a carbon tax.

At the same time, he’s been saying all the right things about our obligation to address climate change (and, in fairness, his administration has been doing some good things on the climate front).  This famously cautious Governor has been sounding as though he’s really thinking about his legacy as his second term starts and he wants part of that legacy to be connected to the Commonwealth’s response to climate change.

If the Governor has erased the bright line that precludes tax increases, then it’s time to think big.  Time for a carbon tax.  Invest the money in building a renewable economy.  Or return the money to those who would really be adversely impacted by a carbon tax.  Either way, be bold, Governor.  It’s legacy time.

EPA’s New Approach to Cost Benefit Analysis: Charles Dickens or Alice in Wonderland?

I’ve only now had the opportunity to catch up with EPA’s proposed reconsideration of its approach to cost-benefit analysis for the Mercury and Air Toxics Standards.  I don’t know whether I’ve gone down a rabbit hole or it’s just that the law is an ass.  Either way, it’s not good news.

As far as I can tell, EPA today does not really challenge the analysis performed in 2016 in response to Michigan v. EPA.  Instead, EPA simply takes the position that the Clean Air Act does not authorize EPA to consider the ancillary benefits of the rule, i.e., the reductions in particulate matter emissions that would result from implementation of the rule, in assessing costs and benefits.

For my entire career, I’ve challenged my environmental friends, siding with the bad guys and supporting cost-benefit analysis.  Now, the new administration comes across a rule that it doesn’t like, so EPA concludes, not that the analysis was wrong, or that cost-benefit analysis is bad, but simply that it can ignore benefits of the rule as ancillary and therefore not within the scope of the cost-benefit analysis.

The simple proposition is that we should regulate when a regulation’s benefits exceed its costs and not regulate when its costs exceed its benefits.  If the law precludes EPA from considering certain benefits of a regulation, then the law is an ass.  If EPA is pleased that the law precludes it from doing its job to implement regulations that provide a net benefit to the public, then we’ve truly fallen down a rabbit hole.  I’m sure that the people who develop fatal illnesses as a result of PM exposure from power plants will be comforted by knowing that the illness wasn’t caused by exposure to hazardous air pollutants.

Is RGGI For Transportation About to Happen? All Will Be Revealed in 2019

On Tuesday, nine Northeastern and Mid-Atlantic states participating in the Transportation Climate Initiative – notably not yet including New York – announced that they:

will design a regional low-carbon transportation policy proposal that would cap and reduce carbon emissions from the combustion of transportation fuels through a cap-and-invest program or other pricing mechanism.

It’s a major development.  Electric sector emissions have dropped substantially in recent years and now account for less than half the GHG emissions resulting from transportation.  States with ambitious GHG reduction goals know that transportation is the next area requiring attention.

Although climate watchers are rightly anxious about how long it will take to implement this “RGGI for Transportation” approach, I think that the participating states have actually set themselves a very ambitious agenda.  They plan to complete the policy design process within one year – though they don’t commit to having the program in place in one year.  Even so, here’s the list that TCI itself has identified for 2019:

  1. Determine the level at which to cap emissions;
  2. Develop monitoring and reporting guidelines to ensure that transportation-related emissions decline over time;
  3. Identify the regulated entities and determine which fuels to include;
  4. Develop mechanisms for cost containment and compliance flexibility;
  5. Identify shared priorities for investment of proceeds;
  6. Establish clear processes and timelines for implementation; and
  7. Assess ways to foster broader transportation equity across communities.

It’s not going to be easy to accomplish all of this in one year.  Kudos to all of the governors who have agreed to try.  They’ve got to be thinking about yellow vest protests and, as necessary as we may think this is, it still requires some significant political courage to proceed.

It may be some home-state rooting, but I think that a special shout-out should go to Governor Baker in Massachusetts.  At times, he been reasonably criticized for being to cautious and too unwilling to spend any of his substantial political capital.  Nonetheless, there are signs, of which this TCI announcement is only the most recent, that Governor Baker is looking to accomplish more in his second term and may in fact be looking to establish a meaningful climate legacy.  If so, then he’ll really deserve our congratulations – I know that many people will be watching to make sure that he really delivers!

Massachusetts Comprehensive Energy Plan — There’s a Lot to Do.

Last week, the Massachusetts Department of Energy Resources released its Comprehensive Energy Plan. It’s a generally solid piece of work, even if it doesn’t say anything hugely surprising. Its various policy recommendations can be summarized fairly easily: electrify and conserve.

The first recommendation is nicely illustrated by this pie chart from the CEP.  In 2016only 17% of Massachusetts’ energy demand of 1,074 trillion BTUs was from the electric sector. Transportation uses 44% of our energy and buildings (referred to in the report as “thermal”) use 39%.

My clients in the electric generation sector have long noted that we’re never going to meet our long-term GHG-reduction objectives without addressing transportation emissions. The CEP leaves most of the transportation recommendations to the report released Friday by the grandly-named Commission on the Future of Transportation. With respect to energy use, the Commission made what seem to me to be three key recommendations:

• Improve electric charging infrastructure

• Establish a “goal” to require all new cars, light duty trucks, and buses sold in Massachusetts beginning in 2040 to be electric or have an equivalent emissions profile

• Establish a RGGI for transportation system with the other Northeast and Mid-Atlantic states

Sounds easy.

How about buildings? It’s time now to realize that efforts to decarbonize buildings can’t be far behind, particularly since buildings are long-lived capital assets. In fact, one of the most interesting statistics provided in the CEP was that:

Even with aggressive fuel switching, 93 percent of the thermal sector consumption is forecast to be met through fossil fuels in 2030.

In other words, under any scenario, the thermal load from buildings is going to be met almost entirely by fossil fuels, at least through 2030, so we better reduce the load. Thus the focus on conservation as well as electrification. This helps to explain the 81 separate references to heat pumps in the CEP.

The big take-away? Time to get to work.

The WOTUS Rule and the Purpose of the Clean Water Act

A lot of proverbial ink has been spilled regarding the Trump administration’s proposal to amend the definition of “waters of the United States” under the Clean Water Act.  The administration has focused on what it views as a more reasonable legal interpretation of the historical scope of the term.  It has also emphasized returning authority to the states and providing more certainty to landowners.

Environmentalists have focused on the broader interpretation that has historically been given to the term and that the Scalia opinion in Rapanos did not command a majority of the Court.

I think that the environmentalists are closer to the mark, but my approach would be to go back to first principles.  Here’s the first sentence of the Clean Water Act:

The objective of this Act is to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.

Although the administration’s proposal pays lip service to this by blandly stating that the rule will still be protective, it makes almost no effort to contradict the massive amount of science behind the 2015 rule.  I’ll go further – any effort by the administration to argue that science does not warrant a broader definition would be arbitrary and capricious.

In other words, any effort to narrow the 2015 rule is inconsistent with the objectives of the Clean Water Act.  I’m actually sympathetic to the administration’s legal argument.  I think that any environmental legal scholar has to admit that it’s a bit of a stretch to say that some ephemeral stream that is literally never “navigable,” is nonetheless a “navigable water.”

But if that’s the case, then, rather than publishing a rule that fails to “restore and maintain the chemical, physical, and biological integrity of the Nation’s water,” shouldn’t the administration be asking Congress to amend the definition of WOTUS to allow EPA and the Corps to accomplish the objectives of the Act?

I’m not naïve.  I know it’s not going to happen.  But it would be a lot more honest on all sides and would have the merit of achieving the objectives of the Clean Water Act.

“Managed Retreat?” — Once More, Scientists Fail to Consult with Branding Specialists

Two seemingly unrelated adaptation stories caught my eye last week.  The first involved efforts by the California Coastal Commission to provide guidance on “Residential Adaptation” to climate change.  The primary reason why the draft guidance is getting so much attention is that the Commission raised the possibility of “managed retreat” in some situations.

I get the point of managed retreat.  It seems preferable to repeatedly bowing to political pressure and bailing out coastal property owners who ignore the risks associated with climate change.  I will say that, once more, the forces of good have done a pretty terrible job with their messaging.  I know this – our President will never have anything to do with anything that involves “retreat.”  The President wants to Make America Great, while his enemies just want to Make America Retreat.  Who’s going to win that PR battle?

At the same time, the National Academies of Sciences, Engineering, and Medicine just released its report on “Renewing the National Commitment to the Interstate Highway System.”  Even aside from climate change, it’s not a cheery report.  My take?  We’re on our way to having a third-world highway system, unless we are willing to raise revenue.

Add in climate change to the funding shortfalls and I foresee a third-world highway system that has important pieces underwater in big storms.  The NAS report is a big picture analysis of what’s necessary to maintain the highway system; it is not per se about climate change.  Nonetheless, it uses a lot of ink addressing the concept of resilience.

The bottom line is that, if we’re not willing to raise revenue to do basic maintenance, we’re certainly not going to raise revenue to make our highways resilient in the face of climate change.  If I-10 is both falling apart and repeatedly under water in 2030, it may be left to President Donald Trump, Jr., to manage the retreat.

Coming Soon To a Major City Near You — Building Energy Efficiency Standards

Members of the New York City Council have introduced a proposal to impose mandatory building energy efficiency standards.  The standards, which vary by building type and use, would apply to buildings greater than 25,000 square feet, though rent-regulated buildings would be exempt.  

The real estate industry is a powerful force in New York City and I believe that our current President may have some views on this legislation.  Nonetheless, the bill does have 25 sponsors, including the Speaker.

The standards are expressed as annual limits on carbon dioxide equivalent emissions, based on different emissions intensity limits applicable to different categories of buildings.  The limits would first be effective in 2022, with increasingly stringent limits over time.  There are variance provisions, including one related to economic hardship.

We are not long removed from the advent of requirements on building owners to report energy usage.  When the reporting obligations were first imposed, including Boston’s Building Energy Reporting and Disclosure Ordinance, local governments were quick to reassure the real estate industry that this was merely a reporting obligation, intended to ensure that market participants had information about building energy use.

Nonetheless, property owners understood that such reporting requirements were merely the nose of the camel.  It now appears that, as in the parable, the camel is politely suggesting that it follow its nose into the tent.

SMART is Open!

November 26th was a big day for solar energy in Massachusetts.  As promised, the Massachusetts Department of Energy Resources (“DOER”) opened the application portal for the long-anticipated SMART Program.  Applications received between November 26th and November 30th will be considered to have been received at the same time.  Starting on December 1st, applications will be reviewed on a first come, first served, basis.

Also on November 26th, the Massachusetts Department of Public Utilities approved a model tariff to implement the SMART Program.  The Massachusetts electric distribution companies now have until December  3rd to file company-specific tariffs, which should be a formality.  A few days earlier, on November 23rd, the Department cleared up some lingering issues relating to the SMART tariff, clarifying the process for setting application fees (which will be overseen by both DOER and the Department), allowing the capacity blocks and compensation rates for the former NSTAR and WMECo service territories to remain separate (but with instructions to combine them by January of 2020), and confirming that the distribution companies cannot register certain solar facilities in the wholesale energy market as settlement only generators (at least until a forthcoming decision addresses issues related to solar participation in capacity markets more generally).

A lot of people have been waiting for and working towards this date for a long time.  The authorizing legislation for the SMART Program was signed in April of 2016.  DOER has been working with stakeholders to design and refine a post-SREC program for at least that long, as documented in gory detail on DOER’s website.

Like many new regulatory programs, the SMART Program can seem complex.  And it can be frustrating to participants when there is no past experience to use as a guide for program implementation.  But there is excitement about SMART for good reason.  The big question now is how quickly the 1,600 MW of the SMART Program will fill up, especially the capacity available in the National Grid territory.   The 400 MW threshold for a DOER review of the program is likely to be reached quickly.

Another issue to watch is what types of solar facilities are developed.  The SMART Program was designed to support a diverse array of different solar facilities, including community shared solar, qualifying facilities, solar + storage, low-income solar, and agricultural solar.  In part, the SMART Program uses differentiated compensation to achieve that goal.  Now that the program is open, it will be interesting to see what types of facilities are actually developed.

Two Strikes Against the Administration’s WOTUS Suspension Rule

In August, a judge in South Carolina issued a nationwide injunction against the “Suspension Rule,” which delayed the effective date of the 2015 Waters of the United States rule.  Now, a judge in Washington state has gone even further.  Judge John Coughenour has vacated the rule.

The core of the new decision is the same as that in South Carolina.  By refusing to take comment on the impact of the delay in the effective date of the WOTUS rule, the Administration acted arbitrarily and capriciously and thus violated the Administrative Procedure Act.

For my non-lawyer readers wondering what the difference is between a nationwide injunction against the Suspension Rule and vacatur of the Rule, I’m picturing a petulant President Trump, sitting in a corner.  First, his teacher tells him that he can’t play with his shiny new toy – that’s an injunction.  Then, still not satisfied, another teacher comes by and takes the toy away completely.  That’s vacatur.

The National Climate Assessment Projects Major Economic Impacts. The President Doesn’t Believe It. Must Not Be True.

Last week, the government released the Fourth National Climate Assessment. Not surprisingly, it’s largely consistent with the prior assessments. As other commenters have noticed, the primary difference from prior reports is one of emphasis; the Assessment now includes substantial information about the likely cost to the economy if we fail to address climate change.

I had been wondering whether it was worth doing a post about the assessment – and then I saw that the President, when asked about the cost analysis specifically, said simply “I don’t believe it.”

Well, if the President, who, the last time I checked, was the person constitutionally responsible for the output of the Executive Branch, says that he doesn’t believe it, it must not be so.

I guess there’s no need for a blog post.

Internalize Externalities. How Difficult Can That Be?

Being a poor country environmental lawyer, I don’t often delve into the academic world.  I therefore just recently caught up to the article written last year by my friend Dan Esty.  Red Lights to Green Lights:  From 20th Century Environmental Regulation to 21st Century Sustainability, is a wonderful synthesis of a lot of work on how to build a better regulatory mousetrap.

The title does not exactly roll off the tongue, so I’ll do my best to shorten it.  And I can’t quite attain the one-word perfection of “plastics,” from The Graduate, but I think I can bring it down to two:  “Internalize externalities.”

It’s not a new idea, but that doesn’t minimize its importance.  For blog purposes, I’ll highlight just two points Dan makes.

  • Setting emission limits stifles innovation, because regulated industries have no incentive to attain continuous improvement.
  • Technological advances since the development of most of our environmental regulations in the 1970s and 1980s facilitate the use of market mechanisms and make them much more efficient and trustworthy.

And so I say, there’s a great future in internalizing externalities.  Think about it.

DOER: SMART on Track for November 26 Rollout

In a series of October presentations, the Massachusetts Department of Energy Resources (DOER) reiterated that it plans to launch SMART on November 26, opening an online portal at http://masmartsolar.com/ to begin accepting applications. All applications received between November 26 and 11:59 PM EST on November 30 will be considered as submitted at the same time with respect to capacity block assignment.

For applications received in the initial one-week window, projects will be ranked according to when the contract between the installer and the customer was executed (for projects less than or equal to 25kW AC) or when the project’s Interconnection Service Agreement was signed (for projects larger than 25kW AC).

Beginning on December 1, however, DOER will assign projects to capacity blocks on a first-come first-served basis.

While DOER will accept applications beginning November 26, don’t expect to receive Preliminary Statements of Qualification (SOQs) right away. DOER aims to release the first round of SOQs about a month after program launch. In the interim, it hopes to gather information about program uptake and to finalize details like the size of the adder tranches. It remains uncertain when final tariffs to implement the SMART program will be approved by the Department of Public Utilities.  Following the Order in D.P.U. 17-140 on September 26, the Distribution Companies filed a revised model tariff on October 16, but a further revised version is expected to be filed on November 16.

The big question is how quickly each capacity block and adder tranche will fill. In that regard, your guess might be as good as DOER’s — but DOER says it will release data on the capacity represented by submitted applications after the initial one-week enrollment period, and daily thereafter.

Check back for more information on the SMART program in the lead up to its launch and for updates on the capacity block shakeout once the program is underway.