Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program

Margaret Anne Hill, Christopher A. Lewis, Frederick M. Lowther, Frank L. Tamulonis III, and Stephen C. Zumbrun

At the outset of 2019, Pennsylvania Governor Tom Wolf set a goal for Pennsylvania to significantly reduce greenhouse gas emissions. Now, Governor Wolf plans to achieve that goal by taking the bold step to establish a carbon dioxide cap-and-trade program through executive action. On October 3, 2019, Governor Wolf issued an Executive Order directing the Pennsylvania Department of Environmental Protection (“DEP”) to begin the process for Pennsylvania to join the Regional Greenhouse Gas Initiative (“RGGI”, pronounced “Reggie”). RGGI is a market-based cap-and-trade program implemented by several Northeast states to reduce power sector CO2 emissions. Governor Wolf’s Executive Order made national headlines because of the potential implications of Pennsylvania—a state known for its coal and natural gas reserves—joining RGGI. But this news is only the start of a long regulatory process, one that could realistically take years to become implemented. At this stage, Pennsylvania fossil-fuel power generators should familiarize themselves with RGGI’s requirements and procedures as well as the rulemaking process by which the Commonwealth might join RGGI.

The RGGI Program

RGGI is a collective effort by its member states to create a Northeast regional cap-and-trade program affecting fossil-fuel power plants greater than 25 megawatts. Member states—currently Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont, with New Jersey in the process of rejoining—each enact statutory or regulatory programs in their respective states that are RGGI compliant. CO2 emitting power plants then participate in RGGI regional auctions to purchase CO2 emission allowances for usage, or to sell on secondary markets. RGGI caps the total amount of CO2 emission allowances, measured in tons of carbon, with the most recent cap being 80.2 MM-tons. Beginning in 2021, the cap will be set at 75.1 MM-tons, which will then be reduced by 30 percent between 2020 and 2030. Proceeds from the auctions are distributed to the respective states for investment in programs to further reduce CO2 emissions, such as energy efficiency, renewable energy, or consumer benefit programs. Continue reading “Pennsylvania Plans to Join the RGGI CO2 Cap-and-Trade Program”

In PG&E Bankruptcy, FERC Reasserts Concurrent Jurisdiction over the Disposition of Wholesale Power Contracts

Mark R. Haskell, Frederick M. Lowther, and Lamiya N. Rahman

With the May 1 order, the Commission reaffirms its view that it has concurrent jurisdiction over debtors’ efforts to reject their FERC-jurisdictional contracts in bankruptcy. Further developments in judicial proceedings in the Sixth and Ninth Circuits are expected.

On May 1, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) denied Pacific Gas and Electric Company’s (“PG&E”) requests for rehearing of two Commission orders asserting concurrent jurisdiction with bankruptcy courts over the disposition of wholesale power contracts PG&E seeks to reject through bankruptcy.1

In its Rehearing Order, the Commission acknowledged a circuit split regarding the relative authorities of the Commission under the Federal Power Act (“FPA”) and the bankruptcy courts under the Bankruptcy Code as they relate to the review and disposition of FERC-jurisdictional contracts in bankruptcy proceedings. However, the Commission affirmed its prior holdings that that “the way to give effect to both the FPA and the Bankruptcy Code is for a party to a Commission-jurisdictional wholesale power contract to obtain approval from both the Commission and the bankruptcy court to modify the filed rate and reject the contract, respectively.”2 Continue reading “In PG&E Bankruptcy, FERC Reasserts Concurrent Jurisdiction over the Disposition of Wholesale Power Contracts”

The Emergence of Creative Financial Tools for Renewable Energy and Energy Efficiency Projects

Frederick M. Lowther

The ingenuity of the renewable energy industry and the energy-oriented financial players is never to be doubted. Within the past few years, several creative financial tools have emerged to support the development of new wind and solar projects as well as further advances in large-building energy efficiency. The traditional regulatory and financial incentives for renewable energy and energy efficiency projects—investment tax credits, production tax credits, mandated renewable portfolio standards, mandated energy efficiency targets—remain in place (at least for now). However, there is a new incentive at play, one which until recently the industry has not tried to monetize. The new incentive is the desire, indeed the perceived need, of certain companies to “go green,” to demonstrate a commitment to improving the climate in the face of growing public concerns about climate change. Companies that produce consumer products—beer, bread, computers, pharmaceuticals, etc.—and companies that provide services—telecommunications, online shopping, search engines—have concluded that there is ascertainable value to putting words like “100% Renewable Energy” on bags, cans, and packaging; on social media advertising; and on bricks and mortar. Building owners perceive ascertainable value in labeling their buildings as “green” buildings. What the creative minds of the energy and financial industry players have done is develop vehicles to capture and quantify those values, and put them to use.

This blog post discusses three such vehicles: the Virtual Power Purchase Agreement (“VPPA”), the Virtual Net Metering Program (“VNMP”), and Metered Energy Efficiency Credits (“MEECs”). All three are relatively new, relatively complex, and in two cases—VPPA and VNMP—substantially regulated. However, the basic concepts are easy to explain and that is the goal of this post. Continue reading “The Emergence of Creative Financial Tools for Renewable Energy and Energy Efficiency Projects”

Charting Climate Change Cases: A Survey of Recent Litigation

Margaret Anne Hill and Stephen C. Zumbrun

Introduction

Right now, cases involving climate change are being heavily litigated in courts across the United States. Hundreds of climate change-related cases have been filed in both federal and state courts, where parties are challenging governments’ and industry’s knowledge of and contribution to climate change. In the abstract, one would think that litigation involving emissions of greenhouse gases (“GHG”) linked to climate change would largely focus on the federal Clean Air Act. Yet, climate change-related cases now involve ever-expanding causes of action, including not only claims under the federal Clean Air Act and other federal statutes, but claims under the U.S. Constitution, state law claims, and common law claims.

There are several active cases that may have major implications on the government’s role in determining the direction of climate change policy, and on private companies’ past and future liability for alleged contributions to climate change, as well as knowledge of climate change impacts on business decision-making. This article discusses notable current cases involving climate change. Continue reading “Charting Climate Change Cases: A Survey of Recent Litigation”

FERC Advances the Ball on Electric Storage, Calls for a Huddle on Distributed Energy Resource Aggregation

Stephen C. Zumbrun

In a move that has excited the renewable energy and electric storage industries, the Federal Energy Regulatory Commission (“FERC”) last month voted to remove barriers to the participation of electric storage resources in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations (“RTO”) and Independent System Operators (“ISO”). Pursuant to Section 206 of the Federal Power Act, which requires “just and reasonable rates,” FERC amended 18 C.F.R. § 35.28 to require RTOs/ISOs to revise their tariffs to establish market rules that recognize the physical and operational characteristics of electric storage resources and to facilitate their participation in the RTO/ISO markets. In the same order, FERC also punted on a decision for distributed energy resource aggregation reforms and called for a technical conference to further study possible reforms for the RTO/ISO markets. Continue reading “FERC Advances the Ball on Electric Storage, Calls for a Huddle on Distributed Energy Resource Aggregation”

New PA DEP Data Confirms That Methane Emissions Continue to Plummet from Unconventional Natural Gas Production in Pennsylvania

Michael L. Krancer

Pennsylvania DEP’s 2015 Air Emissions Inventory for Unconventional Natural Gas Operations is out. It was released late in the day on Thursday before the Labor Day weekend so there will be a lot of “debrief” as time goes on. But here is an early take. Continue reading “New PA DEP Data Confirms That Methane Emissions Continue to Plummet from Unconventional Natural Gas Production in Pennsylvania”