TRP Clean Energy Report

October 22, 2014
The House and Senate are adjourned until after the November 4 elections. Following the midterms, lawmakers are expected to return for two weeks before breaking for the Thanksgiving holiday. Congress is likely to also be in session through December, when work will continue on appropriations, expired tax provisions and curbing corporate inversions. Other issues that could be considered during the lame-duck session include defense and intelligence operations reauthorizations, terrorism risk insurance (TRIA) reauthorization as well as bills related to commerce, sanctions and trade. 

Energy Efficiency
DOE Moves Ahead with Fossil Fuel Phaseout for Buildings
On Oct. 10, the Department of Energy said it plans to push ahead with a controversial rule that would require many federal buildings to phase-out the use of fossil fuels by 2030.  The agency released a supplemental proposal, which follows Senate legislation (S. 1199, S. 2262) that would have blocked the rule from taking effect while increasing efficiency standards for federal buildings.  Mandated into law in 2007, the rule would require new and renovating federal buildings to eliminate the use of fossil fuel sources by 2030.
Among the changes in the newly updated rule, DOE calls for the establishment of a petition process to seek a “downward adjustment” in the phaseout requirements and inclusion of combined heat and power as an allowable fuel source. The department estimates that the rule would save 1.9 million metric tons of carbon dioxide emissions in 2030. Sens. Joe Manchin (D-WV) and John Hoeven (R-ND) sponsored the original Senate bill (S. 1199) to block the original rule’s implementation.  Its language was incorporated into efficiency legislation from Sens. Jeanne Shaheen (D-NH) and Rob Portman (R-OH) (S. 2262) to extend existing efficiency targets for federal buildings from a 30 percent in 2015 to a 45 percent reduction by 2020. (BNA, Natter, 10/10).
CBO: House Efficiency Bill Would Increase Federal Spending
According to the Congressional Budget Office (CBO), a House bill (H.R. 2689) to boost energy efficiency projects would raise federal spending by $450 million by 2024 though the use of energy savings performance contracts, or EPSCs.  Offered by Reps. Cory Gardner (R-CO) and Peter Welch (D-VT), federal agencies would be authorized to enter into ESPCs and utility energy service contracts with private companies who will perform energy upgrades on federal buildings.  Senators John Hoeven (R-ND) and Chris Coons (D-DE) sponsored a companion measure in the Senate. The House Energy and Commerce Committee approved the Gardner-Welch in April.
CBO scores the projects as an increase in federal spending because they are funded by discretionary funds, despite arguments from efficiency advocates who believe the projects will result in long-term cost-savings for taxpayers. As a result, in September, Gardner and Welch introduced a separate resolution calling on CBO to change its scoring methodology for energy efficiency projects. It remains uncertain if H.R. 2689 will be brought to the House floor for a vote.  (E&E News, Bush, 09/25).
Climate Policy
Defense Department Releases Climate Change Plan for Military
On Oct. 13, the Department of Defense issued a report calling climate change an “immediate risk” to national security. Defense Secretary Chuck Hagel released the plan, which outlines how the Pentagon plans to protect bases, prepare for humanitarian disasters and plan for global conflicts. DoD’s “2014 Climate Change Adaptation Roadmap” warns that rising sea levels could flood coastal U.S. military bases at home and abroad, while extreme weather and drought could threaten military training areas, deter amphibious landings and complicate intelligence capability. While previous Defense Department reports have described climate threats, the road map is the first to outline specific agency actions and incorporate climate readiness into military campaigns and contingency plans. Military analysts largely praised the plan, saying climate change must be considered in the midst of immediate threats from the Ebola virus, terrorism, and Russian military actions in Ukraine.  (E&E News, Friedman, 10/14).
Senator Seeks ‘Carbon Score’ for All Bills
On September 18, Sen. Bernie Sanders (I-VT) introduced a bill that would require the Congressional Budget Office to calculate the effect legislation would have on carbon emissions. Sanders’ bill aims to ensure Congress knows the environmental effects when it considers legislation. The bill would require CBO to identify how much a measure would increase or decrease carbon emissions. (The, Cox, 09/19).
Renewable Energy
Army Touts Advances in Renewables
On Oct. 8, U.S. Army officials touted the military branch’s success in gaining private-sector financing for large-scale renewable energy projects on its lands. Amanda Simpson, executive director of the newly established Office of Energy Initiatives, said the Army has two large-scale renewable energy projects under construction, seven in development, and three more set for release later this month. Army officials said the service is on track to meet its goal of producing or purchasing 1 gigawatt of renewable power by 2025.
Army bases currently have two components to energy security and resilience: on-site energy (focus on microgrids that allow managers to direct power to the most important missions) and energy storage. Officials say the long-term focus is on producing on-site energy including greater use of renewable energy production. Army leaders say the service has doubled its consumption of renewable energy between fiscal 2012 and 2013 and are on track to again double it this year. Leaders say the service branch is also the largest federal adopter of Energy Savings Performance Contracts, under which private-sector companies cover the cost for energy upgrades and then get repaid from the resulting savings. Officials say the Army has signed $319 million in such deals. While most are aimed at energy efficiency, but water efficiency and microgrids have also been the subjects of such contracts, according to officials.  (E&E News, Snider, 10/9).
Interior Releases Rule to Guide Renewable Development on Federal Lands
On September 25, the Department of Interior released a new proposal creating a competitive leasing framework for renewable projects aimed at spurring development of commercial-scale solar zones in the western U.S.  The plan is in response to President Obama’s Climate Action Plan, which calls on Interior to approve 10,000 megawatts of renewable energy on federal lands by 2020. The proposal is focused on solar development and would allow the BLM to conduct competitive lease sales within the 19 designated solar energy zones (SEZs), which is akin to the current process for oil and gas development on federal land.  The leasing process would ultimately allow BLM to hold regular lease sales on nominated land parcels in the SEZs. The agency hopes to finalize the new rule by next year, officials said.
Interior finalized and approved 17 SEZs in the Western Solar Energy Plan in 2012 and added two more last year in California and Arizona. If completed, the projects could produce up to 27 gigawatts of solar energy. Interior officials said. The proposed rule follows Interior's September release of a draft Desert Renewable Energy Conservation Plan (DRECP), which calls for establishing 2 million acres of new commercial-scale renewable development. The proposed rule and the DRECP aim to streamline solar and wind energy development on public lands by creating more certainty over siting and mitigation costs (E&E News, Streater, 09/25).
Alternative Fuels
Federal Agencies Announce New Biofuels Initiative
The Navy, Energy, and Agriculture Departments jointly announced a new initiative to spur the development of biofuels to be used as transportation fuel for the military and private sector. The initiative grants three companies government contracts to build new refineries to manufacture biofuels. The awards were to biorefineries capable of producing “drop-in” biofuels to meet the transportation needs of the military and private sector. Made through the Department of Defense's (DOD) Defense Protection Act (DPA) of 1950, the awards support the Administration’s goals to boost and diversify the domestic fuel supply base, make America more energy independent and strengthen national security. (National Journal, 9/18).
Other News
EPA Issues Regulatory Clarity Letter on Waste-Derived Bricks
On Oct. 6, the EPA said that a waste-derived ‘brick’ meant for use as a coal substitute may be regulated as a fuel, allowing the material to be burned under less strict Clean Air Act requirements. In a regulatory clarity letter, the agency said the composite material, called EcoTac, is considered Clean Air Act compliant under the EPA’s nonhazardous secondary material rule, rather than stricter rules governing most solid waste.  According to the letter, EcoTac consists of adequate amounts of biofuels materials to meet the EPA’s processing definition for nonhazardous secondary materials.  This year, the agency has released more than 20 “comfort letters” affirming its intent to regulate certain materials as fuels rather than as solid wastes under its final February 2013 nonhazardous secondary materials rule. Some provisions of the regulation face challenge in federal appeals courts by industry and environmental groups.  Meanwhile, the EPA has proposed expanding the categorical exclusions to include construction and demolition wood, paper recycling residuals and creosote-treated railroad ties (BNA, Adragna, 10/06).
House Panel Investigates DOE Participation in EPA Power Plant Proposal
On Sept. 23, the House Energy and Commerce Committee wrote Energy Secretary Ernest Moniz, seeking records of discussions between the DOE and EPA concerning proposed carbon dioxide performance standards for new power plants. The panel is investigating whether the EPA’s proposed performance standards violate the Energy Policy Act of 2005, which prohibits the department from considering any carbon capture projects funded by the DOE. The letter seeks any records of meetings or discussions between the DOE and the EPA related to projects funded under the act’s Clean Coal Power Initiative. The EPA published new source performance standards for carbon dioxide emissions from new fossil fuel-fired power plants in January. Three of the four power plants the EPA cited in its proposal to demonstrate that carbon capture systems are being deployed commercially have received funding or tax incentives under the Energy Policy Act of 2005.  The EPA has acknowledged the projects received federal funding, but it said supporting evidence, including technical studies, demonstrates carbon capture’s viability (, Childers, 09/23).
House Duo Sponsors Bill to Retrain Coal Workers
On Sept. 18, Reps. Peter Welch (D-VT) and David McKinley (R-WV) introduced legislation that aims to create a transition assistance program for coal miners who have lost their jobs because of a downturn in the industry. The Welch-McKinley bill would establish a program similar to the Trade Adjustment Assistance Act, which aids workers displaced because of foreign trade. Workers would be eligible for benefits and training if a commission decides they lost their jobs due to any of a variety of factors causing a downturn in the coal industry. The lawmakers said they’ll begin the push for additional co-sponsors next year, when the new Congress takes office (National Journal, 9/18).