Senator Doug Ericksen, R-Ferndale, and a bipartisan group of lawmakers in the Senate believe they’ve found a cheaper alternative to Gov. Jay Inslee’s cap-and-trade proposal, and they want to fundamentally rethink the way Washington state utilities are investing in renewable energy.
Their vehicle: Initiative 937, the renewable energy-mandate that Washington voters put in place in 2006, which requires the state’s 17 largest utilities, representing about 80 percent of the state’s electricity customers, to acquire 15 percent of their energy from renewable sources by 2020.
Under the proposal, utilities would be able to get credit for every half metric carbon that’s saved, reduced or prevented from entering the atmosphere, rather than invest in new renewable energy or buy renewable energy credits. Every half-ton would equal a credit that a utility would have to otherwise purchase.
“No wrenching upheaval to our economy is necessary,” Ericksen said in a statement last week. “We don’t need to jack up the cost of electricity and fuel and hope the pain of these energy taxes will force our low-income citizens to use less. We have a better way.”
At a news conference last week, Ericksen stood in front of a display that tallied off standard criticisms of I-937 and the wind industry it’s fostered in Washington state through dollars utilities have been forced to spend to meet the renewable energy mandate. At the bottom, however, was a small note: wind power displaces hydropower, and requires fossil fuel backup.
Few statements touch off fiercer arguments among renewable energy advocates and opponents of renewable energy mandates. Across the globe, studies have come out questioning the environmental benefits of renewable energy only to be touted by opponents of mandates and just as quickly assaulted by renewable energy advocates.
The proposal Ericksen is laying out seems likely to strike this nerve in the Legislature as it moves forward.
RENEWABLE ENERGY MANDATES UNDER SCRUTINY
Proponents contend that for most utilities in Washington state, investments in renewables do not reduce carbon, because wind and solar power are not entirely carbon-neutral sources. They require backup power to be brought online quickly to meet demand when the wind doesn’t blow or the sun doesn’t shine. That’s typically in the form of carbon-creating natural gas burning.
This hits on the most pernicious element of the discussion over ramping up renewable energy generation in the coming decades, fueled mainly by government mandates in renewable portfolio standards. Washington’s is 15 percent by 2020, while the California Legislature introduced bills this week to move to a standard of 50 percent renewables by 2030.
Thirty states in the U.S. have these standards to varying degrees, and increasing them or rolling them back has been the subject of highly charged debates in Legislatures across the nation. Washington has been no exception with I-937. There’s billions of dollars at stake in the fight over energy, and Washington has turned into one of the leading developers of wind energy in the U.S., ranking 9th overall in the number of turbines with more than 1,700 turbines and 27 projects, according to the American Wind Energy Association.
Wind farm projects routinely have price tags in the hundreds of millions of dollars, such as a 267-megawatt, $500 million project commissioned by Portland General Electric in Eastern Washington, or a $1 billion project in Goldendale from the California-based Cannon Power Group. Overall, I-937 is credited with $8 billion in spending over the last decade, and Ericksen contends much of that money — 78 percent — has gone out of state via renewable energy credits or to renewable energy companies based elsewhere.
Some supporters of renewable energy see Charles and David Koch, the libertarian oil and gas industrialists, behind every attempt at watering down the standards, which they consider crucial to combating global climate change. “Koch Brothers-backed front group spews anti-wind propaganda,” is typical of what you’ll find online defending attacks on renewable energy standards. Conservatives see an artificial market for wind disguising the natural gas development needed to prop up sags in wind production, fueled by government mandates, tax breaks and utility rate hikes.
The proposal spearheaded by Ericksen attempts to sidestep that debate. It has a scope that’s broader than just Initiative 937, as it aims to give utilities incentives to reduce carbon. Four bills back up the main legislation, SB 5735, which would give tax incentives for alternative fuel commercial vehicles, switching the state ferry system off diesel fuel to liquefied natural gas, offering tax breaks for small-scale nuclear energy development, and cutting off “coal-by-wire” — out-of-state, coal-fired electricity delivered to customers on Washington state’s power grid.
As Ericksen said last week, the proposal doesn’t intend to strand any investment in wind that utilities are already making. The investments in wind energy could continue under his proposal, leaving that aspect of the law intact. Utilities that are investing in wind currently will still see it count. He says he just wants to redirect some of the next $8 billion to be spent in reducing carbon emissions within Washington state.
“The bill corrects a longstanding flaw in I-937 by aligning the measure with what most voters probably thought they were getting back in 2006,” Ericksen said last week. “We get a cleaner environment. We get a more flexible and workable law. And we protect the utilities that have already made big commitments to wind power, because we don’t strand their investments.”
State Sen. Doug Ericksen, R-Ferndale.
The bill has Senate Majority Leader Mark Schoesler, R-Ritzville, Sen. Linda Parlette, R-Wenatchee, and Sen. John Braun, R-Centralia as co-sponsors. Two Democrats, Sen. Tim Sheldon of Potlatch and Brian Hatfield of Raymond, have also sponsored the measure. Sen. Maralyn Chase, D-Shoreline, is not listed as a co-sponsor but said she supports the legislation at a news conference Wednesday.
“Today marks the beginning and the starting point of a non-partisan dialogue,” Chase said. “We need to talk about conservation. We need to talk about cap-and-trade.”
But Cliff Traisman, a lobbyist for the Washington Environmental Council, the Washington Conservation Voters, and wind interests, cautioned against opening up I-937 and tinkering with it. It’s created jobs for workers building the wind turbines, as well as tax revenue to local governments in rural areas, he said.
He said the measure has worked as voters intended it to, and broadening the scope to focus on carbon emissions reductions goes beyond the original intent of the law, which was to diversify the state’s mix of energy sources. The Renewable Northwest Project cites more than 3,800 jobs created overall. According to the group’s 2013 status report, I-937 has spent $5.8 billion in creating 2,809 megawatts of wind capacity, $1.8 billion to create 18 megawatts or solar, and $435 million to generate 152 megawatts of bioenergy. It says almost $150 million has been returned in tax revenue.
“We think they fundamentally undercut the intent of the renewable portfolio standard,” Traisman said. “The intent of the law was to diversify the energy mix beyond the existing base.”
And, any overhaul of I-937 will ultimately have to pass by the veto pen of Gov. Jay Inslee, a strong proponent of further wind and solar energy development in Washington state. He is one of 23 governors to belong to the nationwide organization Governors’ Wind Energy Coalition and has advocated in favor of expanded renewables since he was in Congress.
A LOOK AT THE GRID
Washington’s electricity grid is primarily composed of zero-emissions hydropower and nuclear, and consistent use of wind and solar requires backup generation. I-937 also fosters biomass generation, a more reliable baseload power source that may grow in popularity in the coming years. But if the past decade is any indication, Washington will most likely be investing in wind.
Grand Coulee Dam on the Columbia River
Offsetting hydropower with wind or solar may provide other environmental benefits such as more water for stream flows to benefit salmon, but the proponents of Ericksen’s bill argue you won’t reduce carbon by swapping hydro with wind or solar, as some of the public utility districts in Central Washington are doing now.
Yet, utilities are frequently complaining that they’re investing in power production they don’t need, with surplus energy, usually hydropower, getting sold to other states such as California.
According to the Pacific Northwest Utilities Conference Committee, the four-state region of Washington, Oregon, Idaho and Montana is in energy surplus in terms of overall supply, but are working to develop supplies to meet wintertime peak demand. Wind is of little help there, as utilities are planning 1,800 megawatts of electricity but that only adds up to 240 megawatts of usable energy, according to deputy director Shauna McReynolds.
According to PNUCC regional forecasting, wind and natural gas are the two sources primarily being developed in the Pacific Northwest. About half of the development in the next 10 years will be natural gas, with wind making up most of the remainder, the forecast said.
On the surface, the American Wind Energy Association claims 3,000 megawatts of capacity, enough for 640,000 homes. However, that assumes that the wind blows consistently.
A master’s thesis done in 2011 by Duke University graduate student Navin Shekar, now with the Federal Energy Regulatory Commission, examined the issue of backing up wind’s intermittence with natural gas in Washington state. His research found that for the all the wind farm locations across Washington state, the average capacity was about 23.77 percent. That conclusion was based on three years’ worth of production data from the Western Wind Dataset, catalogued by the National Renewable Energy Laboratory.
Based on 2010 forecasts, he concluded that the state will have to build an additional 1,500 megawatts of wind or solar energy. Hydropower can back up wind power. Shekar found reasons to doubt that in the future because of water supply variability and potential cost increases, although renewable energy advocates argue that hydropower can be a principal backup source for wind. Shekar’s analysis focused strictly on the use of natural gas as a backup, using General Electric LM6000 combustion turbines, frequently used in peaker plants.
His analysis concluded that meeting I-937’s requirements with wind would require 110 to 140 megawatts in reserve, about 7 to 10 percent. This would increase carbon emissions by 30,000 to 113,000 metric tons of annually, but that the power source would prevent 590,000 to 672,000 in carbon emissions annually if Washington were to rely solely on natural gas to feed increased consumption instead.
For that reason, Shekar ultimately recommended that the state continue to develop wind energy as it moves toward meeting I-937’s requirement. It’s only one study, and Shekar recommended further research into the subject.
But, critics of the renewable energy mandate see a different conclusion. The money devoted to wind development would be better spent on efforts aimed at directly cutting carbon emissions through conservation, they say. They argue wind energy is most effective at cutting carbon emissions in states with dirtier electric grids such as California, or Ohio, where the power source, intermittent as it is, wholly supplants fossil-fuel burning. In a state like Washington, utilities find themselves buying wind energy to replace an already clean source in hydro.
That’s not true for all utilities. Avista, which serves customers in the Spokane region as well as Oregon and Idaho, and Puget Sound Energy are reliant on coal-burning to generate power, and spending on wind energy makes sense for them, particularly in the light of the U.S. Environmental Protection Agency cracking down on coal through its Clean Power Plan.
Traisman argues that wind has helped cut some carbon emissions based on this, as it gradually nudges out coal. “It has multitude goals, including carbon emissions,” Traisman said. “Reducing carbon emissions is only one component of I-937.”
Critics point out that wind energy needs storage and smart-grid technology to be effective in the long run, so that when the wind blows it can be banked and tapped as it’s needed. Proponents of wind energy have long argued that the best way to address wind’s intermittent supply is through enhanced storage and increased wind development in overall capacity and geography. Storage technology is still under development, though, and opponents see I-937 as a means of trying to build your way out of the problem of intermittent supply.
For Benton County Public Utility District, however, it’s a different story than Avista or PSE, spokeswoman Karen Miller said. The PUD, which serves about 50,000 customers in the Tri-Cities area, gets 80 percent of its load from hydropower, and another 8 percent from nuclear.
The renewable energy credits or power it had to buy over the last three years cost $8.5 million, and it anticipates spending $3.1 million in 2015, which ramps up to $3.6 million every year until 2019. By 2020, when the full weight of I-937 hits, the utility estimates it will be spending $4.6 million every year for the foreseeable future. Miller said the PUD had $120 million in retail sales last year.
It’s power Benton PUD can’t use, Miller said, as the utility district has freed up electricity for its load through conservation measures. Smaller public utility districts are already forecasting that they’ll hit I-937’s spending cap of 4 percent of retail revenue without reaching the 15 percent renewable standard, because they’re not large enough and don’t bring in enough revenue.
“We’d rather be purchasing it strategically,” Miller said. “We’d rather be spending it on something like conservation.”
Other utilities have similar costs to come into compliance — Tacoma Power, one of the 17 utilities with about 160,000 customers, estimated in 2013 it will spend $2.1 million on RECs in 2015, an amount it figures it will continue spending until 2019, when it ramps up to $3.5 million. Utilities contend they have to pass the costs of these onto their ratepayers to cover the expense.
TARGETING CARBON TONS
Ericksen’s legislation spells out several means of alternatives to I-937 compliance. Washington state government agencies were responsible for producing 1.23 million metric tons of carbon in 2011, and the state ferry system accounted for 15 percent of that total — 63 percent of the statewide vehicle fleet’s emissions, according to a Department of Ecology report. Switching the ferries to liquefied natural gas banks that savings in reduced emissions.
Another bill in Eriksen’s package would offer companies and utilities up to $25,000 per vehicle for converting fleets to alternative-fuels. The break would come in the business and occupation tax, or public utility tax owed to the state annually. The total program is capped at $6 million annually. A third bill would carve out a sales tax exemption for the construction of small-modular nuclear reactors, a technology favored by Sen. Sharon Brown, R-Kennewick, and other members of her caucus as a carbon-free energy source that could become an alternative to wind and solar energy development, although it’s a decade out from taking hold here.
The main thrust of the proposals, however, is devoted to giving utilities credit for cutting or preventing carbon emissions by investing in the best available technology — not necessarily wind power — which would count toward their I-937 compliance. That could mean reducing emissions via conservation, by investing in electric vehicle charging stations, or, as the News Tribune reported last week, Puget Sound Energy spending $275 million to build the state’s first liquefied natural gas fueling facility at the Port of Tacoma.
The logic supporting it says that the state should provide incentives for converting its existing grid and transportation system to cleaner energy sources, without the tax involved in a cap-and-trade program, or the spending on developing new power sources that I-937 requires currently.
WILL IT GO FAR ENOUGH?
That’s the question sure to crop up as the debate begins in the Legislature. Gov. Inslee’s cap-and-trade program sets a hard, legally enforceable limit on emissions from each firm generating more than 25,000 metric tons of carbon annually. It decreases each year, becoming a tougher standard to meet.
In 2008, the Legislature set targets to hit in terms of carbon emissions reductions: To meet the goal in 2020, Washington would have to cut its estimated carbon output of 97.9 million metric tons down to 88.4 million metric tons. It gets increasingly difficult from there. By 2035, the goal drops to 66.3 million metric tons. By 2050, it’s 44.2 million metric tons.
Ericksen and other Republicans in the Legislature have labeled the targets “non-binding” and says SB 5735 is “about carrots, not sticks.”
Senate Minority Leader Sharon Nelson, D-Maury Island, told reporters last week that she was “pleased” to see efforts from Republican leadership in the Senate to address climate change. House Democrat Majority Leader Pat Sullivan said his caucus was devoting its energy to passing the governor’s cap-and-trade proposal.
Cap-and-trade cleared its first legislative hurdle when it passed the House Environment Committee on Tuesday afternoon, and it will move on to a budget or finance committee subsequently. Ericksen said his proposal is moving on a separate track to cap-and-trade, but it’s easy to see where the two could meet head-on ultimately.
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