February is the month when lawmakers in California introduce new bills to the new session. Each year, thousands of bills are introduced, but only a select few make it to law. Even as a state with front-running climate and energy policies, it is no exception. This post will discuss some of the notable bills introduced.
Solar (mostly rooftop solar PV)
The hottest topic on solar energy policy in California is hands down the implementation of NEM3.0 that went into effect in spring 2023. the revised rate structure lowers compensation for exported solar production by about 75%. As a result, California’s rooftop solar market slowed down significantly since NEM3.0’s implementation. Since NEM3.0 went into effect, rooftop solar sales decreased between 66 and 83% compared to the same time in 2022, according to a California Solar Storage Association survey.
AB2256: Public utilities: low-income customers (Friedman, D-44).
Summary: An act to amend Section 382.1 of the Public Utilities Code, relating to public utilities, AB2256 would make non-substantive changes to provisions relating to the Low-Income Oversight Board. The Low-Income Oversight Board advises the CPUC on low-income electricity, gas, and water customer issues and to serve as a liaison for the commission to low-income ratepayers and representatives. AB2256 would require the CPUC to fully consider the costs and benefits (such as better local air and water quality, avoided land use impacts, and associated system cost benefits) of rooftop solar when revisiting its net energy metering (NEM) tariff.
Importance: AB2256 would boost rooftop solar by including environmental and societal benefits in the way the CPUC calculates its value. In California, NEM3.0 went into effect in spring 2023, where the revised rate structure lowers compensation for exported solar production by about 75% and makes batteries an essential component of a residential solar project. As a result, California’s rooftop solar market slowed down significantly since NEM3.0’s implementation.
AB2619: Net energy metering (Connolly, D-12).
Summary: An act to amend Sections 2827 and 2827.1 of, and to add Section 2827.2 to, the Public Utilities Code, relating to energy, AB2619 would direct the California Public Utilities Commission to reconsider the rooftop solar reimbursements it slashed by about 75 percent in 2023. In other words, AB2619 would repeal NEM3.0 and supports California’s rooftop solar market.
Importance: AB2619 would direct CPUC to make sure reimbursements are big enough to drive a doubling of rooftop generation by 2045 in accord with state renewable energy goals. Naturally, the solar industry such as SEIA welcomes the bill. But the old problems would come back, namely, those who are not well-off enough to afford rooftop solar would be subsidizing affluent homeowners.
SB1118: Solar on Multifamily Affordable Housing Program (Eggman, D-5)
SB1190: Mobilehomes: solar energy systems (Laird, D-17)
SB1508: Solar energy: multifamily housing (Stern, D-27)
Note: These bills are incomplete as of writing. These bills are known as “spot” measures, which are missing policy details and could be fleshed out at any time.
Summary: SB1118 would attempt to enact future legislation relating to the Solar on Multifamily Affordable Housing Program. SB1190 would allow a homeowner or resident to install a solar energy system on their mobile home. SB1508 would facilitate the installation of solar energy systems and solar energy storage technologies in multifamily housing. Not much is known about this bill currently.
Importance: One glaring theme of residential energy policy in the U.S., whether it be the federal Weatherization Assistance Program or California’s NEM, is that multifamily housing units (e.g., apartments and condos) tend to be an afterthought. Existing programs and policies are designed with single-family households in mind, a reflection of American cultural preference, where owning a single-family detached residence is the pinnacle of the American Dream. In an apartment building where the occupants (instead of the landlords) are responsible for paying their own electric bills, the landlords have just about no incentive to install solar energy systems.
Offshore Wind
Compared to solar and hydrogen, fewer bills related to wind (especially offshore wind) have been introduced. California has the potential to be a leader in offshore wind deployment but faces several hurdles.
AB2208: Offshore wind energy projects: bond act (Zbur, D-51)
Summary: AB2208 would enact legislation to submit to the voters an act authorizing the issuance of general obligation bonds in the amount of $1 billion for seaport infrastructure improvements to facilitate offshore wind energy projects off the California coast.
Importance: A bond could help kickstart offshore wind development, but California has a recent history of mismanaging billions of dollars of housing bonds to tackle the housing shortage. In a state where rampant NIMBYism runs strong, the state simply lacks strong enough laws and oversight to ensure that cities and counties are doing their part to build affordable housing. There is little reason thus far to expect a different, more positive outcome for offshore wind bonds such as the one AB2208 is proposing.
Hydrogen
Hydrogen could play an important role in California’s climate transition. As one of the seven hubs funded by the Department of Energy $7 billion H2Hubs program, ARCHES is California’s initiative to accelerate renewable hydrogen projects and the necessary infrastructure. This year sees some bills that would pick up from where AB1550, which would have imposed strict rules on how and where hydrogen production facilities get their molecules, left off. As 2023’s most ambitious hydrogen bill, AB1550 died out last year’s after much fanfare.
SB993: Clean energy development incentive rate tariff (Becker, D-13)
Summary: SB993 would require the CPUC to establish a clean energy development incentive rate time-of-use tariff to encourage the development of new commercial or industrial electrical loads that contribute to the state’s efforts to reduce the emissions of greenhouse gases. In layman terms, this means SB993 aims to boost clean hydrogen production in California and protect the grid at the simultaneously by adjusting the price of electricity for hydrogen producers throughout the day.
Importance: Additionality is a concept that diverting existing clean electricity to make hydrogen will cause emissions to increase by forcing grid operators to draw more heavily upon fossil energy (natural gas usually) to make up the difference. Given that ARCHES plan to produce clean hydrogen using renewable energy and biomass, SB993 seems to make a lot of sense.
SB1018: Electrical corporation: definition: exclusion of certain solar or wind generating technologies (Becker, D-13)
Summary: SB1018 would revise the definition of “electrical corporation” to exclude a corporation or person employing certain solar or wind generating technology that uses the energy only for an electrolyzer technology facility that produces hydrogen from water or a facility using the electricity to provide industrial process heat, but not for departing electric load. In other words, SB1018 would enable firms and people to start generating and using their own energy to produce hydrogen or industrial process heat rather than purchasing it through the electrical grid.
SB1420: Hydrogen (Caballero, D-14, Archuleta, D-30, Dodd, D-3, and Newman, D-29)
Summary: SB1420 proposes many changes, but the most notable one is that the bill would treat hydrogen more like wind and solar on the state grid by qualifying it to count toward utilities’ renewable energy buying requirements, for purposes of the California Renewables Portfolio Standard Program. In addition, SB1420 would also qualify hydrogen for the permit streamlining that Gov. Gavin Newsom created for wind, solar and other resources in 2023. SB1420 would also require California Air Resources Board to adopt regulations requiring:
1.) No less than 33.3% of retail hydrogen produced for or dispensed by fueling stations that receive state funds to be made from renewable hydrogen;
2.) No less than 60% of retail hydrogen produced or dispensed in California for use in transportation is made from renewable hydrogen by December 31, 2030; and
3.) By December 31, 2045, the remainder of retail hydrogen produced or dispensed in California for use in transportation is made from a mix of renewable hydrogen and clean hydrogen.
Happy New Year! As we march toward 2024, the need for a cleaner economy remains as important as ever. A quarter into the 21st century, and a quarter away from the proverbial 2050 net-zero deadline, in the quest of energy transition, humans have achieved quite a lot, but they have also fumbled a lot.
Looking Back on Energy Transition: The Good and the Bad
In industrialized countries, greenhouse gas emissions have peaked and are slowly coming down thanks to renewable energy becoming more mainstream in the electric power sector. New scientific and technological breakthroughs have contributed to the increasing popularity of vehicles that run on alternative fuels and powertrains (e.g., hybrid, battery electric, natural gas). Both private and public sectors have continued to invest in nascent but promising clean energy innovations such as clean hydrogen, carbon capture and utilization, sustainable aviation and marine fuels, modular nuclear with advanced reactors, and energy storage solutions.
But at the same time, GHG emissions continue to rise globally. As underdeveloped countries’ standard of living rise, their energy consumptions will also rise. None of these countries will voluntarily reduce energy consumption (thus sacrificing economic development) to make a dent in GHG emissions, especially when large and developed nations like the United States are the biggest polluters. Some of the highlights of the last few climate change conferences include confusing signals, weak and non-binding agreements, and finger-pointing among representatives on who bears the responsibility of climate loss and damage, as well as who should fund climate resilience, mitigation, and adaptation.
Top Clean Energy and Climate Issues to Tackle in 2024
Given the track record, needless to say, a lot remains to be done. But given current progress, it isn’t possible, feasible, nor realistic to act on all fronts. However, some issues are often considered critical for laying the foundation of a clean and sustainable economy. Here, I propose a few top priorities to tackle, as their importance can vary based on regional contexts, immediate challenges, and the urgency of certain environmental threats:
Transition to Renewable Energy: Shifting away from fossil fuels is a key step to mitigate climate change and reduce dependence on non-renewable resources. Carbon dioxide removal and carbon capture technologies are still not ready for deployment, for now, the best way to reduce emissions is to shift toward carbon free and low carbon fuel sources.
Energy Efficiency: Improving energy efficiency is still a cost-effective way to reduce overall energy consumption and decrease environmental impact. Improving energy efficiency also has the added benefit of lowering energy costs and saving money.
Sustainable Transportation: Transforming transportation systems to be more sustainable is crucial for reducing emissions and promoting cleaner modes of travel. As developing countries continue to improve their economic well-beings, demand for private automobiles is expected to increase.
Circular Economy: Moving towards a circular economy helps minimize waste and encourages the responsible use and disposal of products. We simply send too much junk into the landfills and are failing spectacularly on the 3Rs.
Carbon Pricing: Implementing effective carbon pricing mechanisms provides economic incentives for businesses to reduce their carbon footprint. Despite the recent surge in carbon price ($190 per ton), we can expect it to go up.
Technological Innovation: Investing in clean technologies and innovations can drive systemic change across various industries. Technological innovation on cleantech and climate tech may also reduce the burden on climate mitigation and adaptation.
Environmental Regulation and Governance: Strong environmental governance ensures that industries operate responsibly and adhere to sustainability standards. We all know that the private marginal environmental cost and the social marginal environmental cost are completely misaligned. But no one is currently incentivized to align the two.
International Collaboration: Global cooperation is essential for addressing environmental challenges that transcend national borders, such as climate change. But will future climate change conferences be mired in further infighting, finger pointing, and political bickering?
With 80,000 attendees, COP28 is the largest UN climate summit ever. By comparison, last year’s COP27 had about 50,000 accredited attendees. Yet, the public reception this year have been rather… meh?
It shouldn’t be surprising. COP28 had been plagued with scandals months before the summit, from reports that the UAE presidency planned to use the meeting to secure oil and gas deals, to the resignation of Hilda Heine, former president of the low-lying, climate vulnerable Marshall Islands and (former) member of the main advisory board of the COP28.
For three decades, year after year, delegates talk and talk, while greenhouse gas emissions keep barreling toward new highs. Time after time, representatives and leaders make flashy promises only to then walk out of the agreements or quietly sweep the unmet goals under the rug.
And let’s not forget that fossil fuel lobbyists are having an increasingly dominant presence at these COPs. At COP26, there were 500 delegates with a fossil fuel background. At COP27, that increased to to over 600 delegates. And COP28? Drum roll please… there were almost 2,500 representatives from fossil fuel industries, per the BBC.
This is akin to allowing representatives of the military industrial complex to attend antiwar protests, or NIMBYs to attend housing development meetings.
Déjà Vu! I've Seen This Commitment Before?
COP28 concluded with a compromised agreement to transition away from fossil fuels. Mainstream media hailed this as a historic outcome and a landmark deal.
That sounds nice, except, didn’t we already hear something like this before? For instance, the COP27 agreements accelerate “efforts towards the phase down of unabated coal power and phase-out of inefficient fossil fuel subsidies.” Meanwhile, at COP26 in Glasgow, delegates pledged to “phase down” unabated coal and committed to net-zero targets (eventually in the faraway future).
While transitioning from fossil fuels sounds stronger than phasing down unabated coal and phasing out inefficient fossil fuel subsidies, the wordings are simply confusing. What do they mean by “unabated coal” (and what is abated coal)? What constitute (in)efficient fossil fuel subsidies? Little clarifications have been given.
Even if COP28 defines abated as at least 90% of fossil fuel emissions from power plants, and 50%-80% of methane from energy supply, nothing is said about downstream emissions. Not to mention, reaching net-zero emissions imply significantly moving away from fossil fuels; it is impossible to CCS (which is carbon neutral at best but often not) or CDR one’s emissions away given their lack of economic feasibilities, proven track record, and other factors.
The UN’s slogan for COP28 is “climate action can’t wait”, but the outcomes of COP28 simply don’t reflect a sense of urgency.
Another year, another climate change conference.
The 28th Conference of the Parties (COP28) to the UN Framework Convention on Climate Change (UNFCCC) will be held in Dubai, United Arab Emirates, from November 30 to December 12, 2023. The purported goal of the annual global conference is to bring together leaders from governments, businesses, nongovernment organizations, and civil society to find concrete solutions to the defining issue of our time.
Each time, the UN comes up with some slogan to instill hope, excitement, or call for action to give the impression that these so-called global leaders are actually getting things done. Last year’s slogan was “Delivering for People and the Planet” for COP27, and this year’s theme for COP28 is “Climate Action Can’t Wait.” (Notice the sense of urgency in this year’s theme instead of “togetherness” and “for the planet” from the previous years?)
Climate Talks and Bad PR
And blah blah blah. Does anyone else feel that it is starting to look a lot like Earth Day 
, where people symbolically turn their lights off 
for one hour? Or how about Pride Month, where companies immediately revert their rainbow-color logos to normal the moment July rolls around? It is the time of year that’s become more of a feel-good, virtue signaling exercise than a way to advance climate action.
Some worry that the public perception of this year’s COP has already been on a rocky start. Earlier this year, some members of the United States Congress and the European Parliament expressed concerns on “permitting private sector polluters to exert undue influence on UN Framework Convention on Climate Change (UNFCCC) processes” in a letter.
In addition, despite repeated urgings to limit global warming to 1.5 degrees Celsius (the Paris Agreement goal), a new UN report shows that the world is barreling toward 3 degrees Celsius warmer by the end of this century.
But this is not really news. Previous reports have also similarly shown repeated failures of policies to keep countries’ climate pledges and promises (nationally determined contributions, or NDCs) in check. For example, last year’s UN Emissions Gap report (UNEGR) states that “updated national pledges since COP26 – held in 2021 in Glasgow, UK – make a negligible difference to predicted 2030 emissions and that we are far from the Paris Agreement goal of limiting global warming to well below 2°C, preferably 1.5°C. Policies currently in place point to a 2.8°C temperature rise by the end of the century.”
Past COPs, Failed Aspirations, and Empty Promises
But since the first COP in 1995, what have we achieved? The track records are not good. Global emissions continue to trend upward, leaders of developed countries are accusing developing countries of not doing enough and vice versa, and these so-called leaders are lecturing ordinary people to do their share while flying around in their private jets.
Most industrialized countries and some central European economies in transition agreed to reduce GHG emissions by 2008-2012 to 6%-8% below 1990 levels during the Kyoto Protocol (COP3, 1997). The U.S. would be required to reduce its total emissions an average of 7% below 1990 levels. But the Bush administration rejected the protocol in 2001, arguing that ratifying the treaty would create economic setbacks in the US and did not put enough pressure to limit emissions from developing nations.
That was quite a rich statement coming from the leader of the country with the highest GHG emissions. And the U.S. failed to reduce emissions below 1990 levels (GHG emissions peaked in 2007).
The most recent climate change conferences did not end on a high note. COP25 (2019) became the longest on record when it ran 44 hours over schedule. Part of the reason for the schedule overrun was due to delegates unable to reach consensus in many areas, pushing decisions into the following year under “Rule 16” of the UN climate process, which states that “any item of the agenda of an ordinary session, consideration of which has not been completed at the session, shall be included automatically in the agenda of the next ordinary session, unless otherwise decided by the Conference of the Parties.” Overall, global leaders had failed to unite to show increased ambition on mitigation, adaptation & finance to tackle the climate crisis.
COP27 also had a tepid end in which countries agreed to outcomes that reflected only modest, incremental progress on reducing emissions, despite a clear emissions gap from the UNEGRs. The overall progress on adaptation left much to be desired. Finally, despite the establishment of a loss and damage fund, the countries were not able to determine who would provide the funding and which vulnerable developing countries will receive the funding (to be determined in COP28).
So, what will it be for COP28? More real climate actions and less virtue-signaling, pandering, and grifting. Please.
**Note: This is part 2 of the DOE H2 Hubs series
The previous post looked at the feedstock of the 7 winning H2 Hubs. This time, we will look at the use cases proposed by these hubs. Collectively, these hubs are expected to produce a collective three million metric tons of hydrogen annually—30% of DOE’s 10 million metric tons/year goal by 2030.
Hydrogen: Jack of All Trades, Master of None?
Hydrogen is the Swiss-Army Knife of energy, able to do many things across various greenhouse gas emitting sectors. But, just as you won’t use a Swiss-Army Knife for all possible purposes, you also won’t use hydrogen for everything you could possibly do with it. (Michael Liebreich has a pretty good analogy in his old Hydrogen Ladder post.) As much hype as hydrogen is receiving in the cleantech space, the reality is that it will have to be competitive compared to incumbent energy sources. Clean hydrogen will need to be cheaper, better, more scalable, safer, more convenient than other solutions in order to win its way into the global economy.
In other words, if clean hydrogen is to be an integral part of the clean economy, the hubs will need to successfully demonstrated hydrogen’s role in various end-uses. And that’s why we are talking about the proposed use cases. But right now, clean hydrogen is a jack of all trade and a master of none.
DOE’s End-Use Diversity Focus
The Bipartisan Infrastructure Law (IIJA) required four end-use sectors to be included in the hubs: industry, transportation, power, and residential and commercial heating. Furthermore, the DOE funding opportunity announcement (FOA) was specifically looking for end-use diversity.
Frankly, the explicit inclusion of residential and commercial heating in the FOA is strange. For space heating in buildings, heat pumps are better and more efficient than hydrogen. Using renewable energy like wind to generate hydrogen and then using hydrogen for heat has a system efficiency of ~50%, compared to over 100% for heat pumps.
Another strange decision from the FOA is that DOE doesn’t seem to differentiate between use cases within a sector. For example, within the transportation sector, while hydrogen can be an excellent fuel candidate for aviation (IPCC category 1A3a) and shipping (IPCC category 1A3d), it is a poor choice for on-road light-duty vehicles (IPCC categories 1A3bi and 1A3bii).
Examining the Use Case Diversity of the 7 H2 Hubs
Here is a summary of the proposed end-uses of the 7 winning hubs:
At first glance, the selected hubs do appear to have a diverse proposed use cases collectively, spanning the transportation, industry, agriculture, and the buildings sectors as well as power generation. As expected, transportation and industry have the most sub-sectors and activities listed as proposed end-uses.
Heavy-duty transportation (trucking, buses) lead the way, with 5 hubs proposing it as an end-use, followed by power generation and aviation with 3 hubs.
But is the pursuit of diverse end uses at the expense of optimal allocation of use cases?
It is complicated to say. On one hand, hydrogen may be great for application such as hydrogenation and hydrocracking (a source of diesel and jet fuels), but these applications are rather niche and make up only a sliver of total GHG emissions. On the other hand, hydrogen’s competitiveness varies greatly even within a sub-sector. For example, international shipping, river cruises, and local ferries all fall under the shipping, a transportation sub-sector. Hydrogen ranges from having great potential for decarbonizing international shipping to being uncompetitive for local ferries (where battery-powered ferries may be more suited).
Interestingly, Heartland is the only winning hub that has space heating as a proposed end use while also being the only one without any transportation end-uses. Meanwhile, ARCHES is the only one that has public transportation as a proposed use case. But the problem is, public transportation just doesn’t need hydrogen in most cases. Shuttles and buses don’t travel long distances in a given day, stops frequently to pick up and drop off passengers, have predictable routes, and have depots to return to at the end of every drive shift. Their drive cycles and duty cycles favor battery-powered versions over hydrogen fuel-cell ones. Trains? Probably easier and more economically feasible to electrify the tracks instead.
What about trucks? The majority of the trucks on the road are regional. They might not cover enough miles for hydrogen to make sense. Regional trucks also tend to have a base to return to at the end of shift like buses. That leaves long-distance trucks, which make up a fraction of the trucking fleet but travel a disproportionately large share of vehicle miles. Hydrogen fuel cell could make sense, but current FCEV trucks are multiple times more expensive than diesel-powered trucks or even BEV trucks.
Finally, use cases where hydrogen could really make sense (e.g., fertilizer, ammonia, methanol, and steel production) aren’t popular: each has only 1-2 hubs proposing as end uses. And of these use cases, only fertilizer has no alternative to hydrogen; the rest can be produced using either biofuels or electricity or powered by batteries.
Conclusion
Did DOE miss the mark in the selection process with respect to use cases? Maybe, maybe not. Sure, there are better or worse use cases for hydrogen. Some of these hubs might not even make it to later stages of funding or live up to their promises. But for now, we can expect clean hydrogen supply to remain limited for many years to come. DOE should focus its investments on use cases where hydrogen is irreplaceable instead of making many bets across several use cases.
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All Aboard the Hydrogen Hubs Hype Train
The U.S. Department of Energy (DOE) on Friday announced its selection of 7 much anticipated regional hydrogen hubs (H2Hubs), totalling $7 billion in awards. These hubs are located in various parts of the U.S.—the Appalachia, California, the Gulf Coast, the Northern Great Plains, the Mid-Atlantic, the Midwest, and the Pacific Northwest. Collectively, these hubs are expected to produce a collective three million metric tons of hydrogen annually—30% of DOE’s 10 million metric tons/year goal by 2030.
The following table summarizes these 7 H2Hubs:
Hydrogen can be produced from diverse domestic resources and used across sectors. Production can be centralized or decentralized, grid-connected or off-grid, offering scalability, versatility, and regionality. Hydrogen can be produced from several technology pathways, feedstocks, and have several potential end-uses. It is no wonder that the Biden administration is all-in on the hydrogen hype train.
Recall that the funding opportunity announcement (DE-FOA-0002779) has three selection criteria focused on diversity: feedstock diversity, end-use diversity, and geographic diversity (see excerpt above). At first glance, the selected H2Hubs have covered these three fronts very well. But is that the whole story?
Hydrogen Hubs: A Cash Grab for Big Oil and Gas?
4 out of 7 H2Hubs (ARCH2, HyVelocity H2Hub, Heartland, and MachH2) will produce hydrogen using natural gas, a fossil fuel. This means over half of the H2 hubs will produce so-called blue hydrogen (using fossil fuels with carbon capture and storage). Right now, blue hydrogen is cheaper but dirtier than hydrogen produced from electrolysis from renewable energy and nuclear energy. Of these hubs, ARCH2 will produce hydrogen exclusively from fossil fuel.
Indeed, industry partners backing these 4 hubs include major oil and gas companies. See the table below.
Unfortunately, even the hubs that plan to produce hydrogen using electricity generated from renewable energy and/or nuclear energy aren’t blameless either. In a previous post, I wrote that a lot of renewable energy are waiting to be interconnected due to grid backlog. the grid is woefully outdated and there are not enough transmission lines to support the transition from a fossil fuel-based electric system to a decarbonized energy grid. This means the H2Hubs that plan to produce hydrogen from electrolysis should not divert clean energy from the grid. Otherwise emissions from electricity generation would increase.
Except for ARCH2, these hubs plan to use several methods for hydrogen production, but the exact mix may change depending on which projects make it through the DOE negotiations process. Although the Biden administration has emphasized that roughly two-thirds of the $7 billion pot is associated with the production of hydrogen from renewable energy, it’s too early to tell what the final result would look like (these hub demonstrations will run until around 2032, providing that they meet the milestones set by DOE.)
The next post will look at the end-uses proposed by these hubs.
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Recently, the Department of Energy (DOE) posted a request for information (RFI) regarding the development of green shipping corridors (GSCs) between the United States and the United Kingdom (DE-FOA-0003156). The purpose of the RFI is to solicit feedback from maritime stakeholders on issues related to the establishment of green shipping corridors between the U.S. and the U.K.
We are pleased to submit our comments regarding the U.K.-U.S. GSCs. This post summarizes the main points raised in our filing.
Read the filing below.
What are Green Shipping Corridors?
Green shipping corridors are maritime routes that showcase zero- and near zero- emission lifecycle fuels and technologies with the ambition to achieve zero greenhouse gas emissions across all aspects of the corridor in support of sector-wide decarbonization no later than 2050.
The concept of GSCs debuted back in COP26 as part of the First Movers Coalition. This means decarbonization of the maritime sector was NOT part of the Paris Agreement in 2015.
Ideally, Green shipping corridors should lay the ground for the massive reductions that will happen once these solutions roll out globally. Within the purview of this RFI, if the U.K.-U.S. partnership is successful, then ultimately zero-emission shipping should be a commercially viable option that can be deployed anywhere and not just on certain routes by 2030.
Challenges and Barriers
There are several challenges and barriers for a green shipping corridor between the U.S. and U.K.
Regarding technology barriers, uncertainty on the fuel pathways persists at the global level, and there is no clear alternative fuel of choice (unlike, say, sustainable aviation fuel for the aviation sector). Innovation must stimulate the further development of several fuel options to support a multi-fuel mix future suitable for different modes of operation and geography. But existing constraints on time and investments imply that it may be infeasible and impractical to place many bets.
Regarding policy challenges, some of them involve vessel types and implementation challenges. Currently, most of the proposed green shipping corridors focus primarily on container ships, but these are “low hanging fruits” that are relatively easier to decarbonize and comprise less than a quarter of the maritime sector’s total emissions. Furthermore, DOE should consider carefully whether it wants to implement a phased approach or go for zero- and near-zero emission demonstrations immediately. While a phased approach may ease the transition, relying on fossil fuels during an interim period may jeopardize the sector’s ability to fully decarbonize by 2050.
Regarding regulatory challenges, it is not certain whether the two countries are on the same page regarding the life-cycle assessment of shipping emissions. As a parallel, for sustainable aviation fuel (SAF), Argonne National Lab’s GREET model and the International Civil Aviation Organization’s CORSIA have different estimates of SAF’s life cycle emissions. And then there’s the Jones Act, the century old law that restricts water transportation of cargo between U.S. ports to ships that are U.S.-owned, U.S.-crewed, U.S.-registered, and U.S.-built… how will the U.K. deal with the Jones Act?
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California has one of the longest coastlines (3rd longest per CRS and 5th longest per NOAA), making it an ideal state for offshore wind deployment on paper. The Golden State also has clean energy goals (e.g., Senate Bill 100, Assembly Bill 2514) and is home to the largest cleantech investment ecosystems. Not to mention that offshore wind can help California diversify its clean energy portfolio (which is dominated by solar PV since its landmark climate bill AB 32 was signed into law in 2006.) By embracing offshore wind energy, California can make substantial progress toward its renewable energy goals, create jobs, enhance energy security, and contribute to global efforts to combat climate change. These conditions make it a no-brainer for California to aggressively pursue offshore wind.
Or is it?
There exist concerns and issues such as those on wildlife habitats, grid integration, and permitting and regulatory that California need to address.
Environmental and Ecological Concerns
California’s coastal waters are ecologically diverse and home to various marine species. Offshore wind projects can potentially impact marine ecosystems, migratory routes of marine animals, and even local bird populations.
The following maps show California’s national marine sanctuaries and the biological habitat areas off California’s coastline. As you can see, the only area(s) that might not encroach the natural habitats would be the coasts off of rural Northern California, a part of Central Coast, and Southern California.
But looking at the offshore wind speed, it is immediately apparent that Southern California has low wind speed, which means that region is not really suitable for deploying offshore wind.
That leaves parts of Central Coast (off of San Luis Obispo County) and rural Northern California (particularly Humboldt County).
Grid Integration Concerns
Integrating offshore wind energy into California’s existing power grid poses technical challenges. The transmission infrastructure needs to be upgraded to transport the electricity generated offshore to where it’s needed onshore. Nationally, the grid is woefully outdated and there are not enough transmission lines to support the transition from a fossil fuel-based electric system to a decarbonized energy grid. About 70% of the grid is more than 25 years old, which can be vulnerable to increasingly intense storms.
Per the LBNL study (2023), as of the end of 2022, the total capacity active in the queues is growing year-over-year, with >2,000 GW of generation and storage capacity. About half of that are from solar and solar (hybrid). About 150 GW of offshore wind is in active queue capacity.
Another hurdle is the need to balance the intermittent nature of wind energy with the grid’s stability. So far, besides some fundings from the recently climate landmark bills, not much has been done at both the federal and state levels to effectively solve these issues that are decades in the making.
Permitting and Regulatory Concerns
To connect a new source of power to the U.S. electric grid requires energy generators to go through an application process with a regional transmission authority or utility. The interconnection process starts with a request to connect to the grid, which officially enters the power generator in the interconnection queue. Next is a series of studies (e.g. feasibility, system impact and facilities studies) where the grid operator determines what equipment or upgrades will be necessary to get the new power generation on the grid and what it will cost.
Remember that there are not enough transmission lines and renewable energy power generators are waiting to be connected to the grid? To complicate the picture further, interconnection application process is often time consuming and requires upgrades to the grid, which are often so costly that power generators have to back out.
Indeed, of the almost 30,000 observations (year project entered queue range = 1995 to 2022) included in the LBNL study, nationwide, about half of the proposed projects are withdrawn, with another 35% currently in active queue or suspended. Just 13% of these projects are operational.
Of the 15 projects for offshore wind or offshore wind + battery (these entered queue between 2018 to 2021) in CAISO, 6 are in active queue and 9 have been withdrawn. This means none of these projects have yet become operational. (In the LBNL dataset, only one offshore wind project has come online nationwide. It entered queue in 2013 and became operational in 2020.)
Make no mistake, permitting bottleneck is a pervasive problem plaguing energy projects nationwide. But the problem seems more acute in California. Outside of CAISO, 3/4 of the projects in the dataset took fewer than 5 years from entering the queue to becoming operational. But just 38% of the projects in CAISO jurisdiction took fewer than 5 years to become operational. On the other hand, 1/5 of the projects in CAISO took at least 8 years to come online compared to just 4% of the projects in other regions.
Needless to say, California’s long process means projects that do come online come at later dates than anticipated. These delays often translate to additional project costs. In fact, almost 1/5 of these projects faced a delay of 5 or more years.
California’s burdensome permitting and regulatory environment don’t just apply to energy projects. The state is also famously known for its long and drawn-out processes and CEQA litigations on housing development and infill projects. These issues often make an already expensive project even most cost prohibitive.
Stay tuned for part 2.
Aviation accounts for 2% of global energy-related CO2 emissions. Without significant policy intervention, emissions from international aviation could triple in 3 decades. Perhaps this sense of urgency is why Sustainable Aviation Fuel (SAF) is getting so much attention lately.
Internationally, the multilateral Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is a 3-phase program administered by the International Civil Aviation Organization (ICAO). CORSIA has approved several SAF pathways for use in compliance.
The U.S. Department of Energy (DOE), the U.S. Department of Transportation (DOT), the U.S. Department of Agriculture (USDA), and other federal U.S. government agencies launched the SAF Grand Challenge in September 2022 to develop a comprehensive strategy for scaling up new technologies to produce SAF on a commercial scale. International NGOs, advocacy organizations, airlines, and other private sector stakeholders have followed suit voicing and pledging their support for SAF up-ramp.
SAF is an integral part of DOE’s Clean Fuels & Products Shot, the newest Energy Earthshots Initiative. Currently, few decarbonization options exist for the aviation industry, and these options are costly compared to conventional jet fuels. Some of these options such as batteries and liquid hydrogen fuel are far from commercially ready and are limited for small and short-haul flights due to their low gravimetric and volumetric densities. Meanwhile, SAF is jet fuel produced from sustainable feedstock (e.g., waste resources, cellulosic biomass, and captured carbon) and has a much lower carbon footprint than fossil-based jet fuels. In addition, SAF is a drop-in fuel that can be blended with other fuel types without any changes to aircraft design or existing infrastructure (unlike battery or hydrogen).
There are many production pathways for SAF, but not all have been approved by the American Society of Testing and Materials (ASTM) for drop-in use in aviation or by CORSIA for compliance. The following table describes some of these production pathways, feedstocks, technology readiness, and greenhouse gas (GHG) emission reduction potentials.
As one might infer from the table, with the exception of PtL, most of these production pathways involve using oils, fats, wastes, plants composed mainly of cellulose, hemicellulose, and lignin (lignocellulosic biomass), and starchy and sugary crops like sugarcane and corn.
Despite having many different feedstocks, aside from costs, feedstock constraints (and hence the lack of supply) is the biggest challenge to scale up and widespread commercial adoption. SAF is a nascent industry. There were no SAF in production as recently as 2015. Presently, SAF makes up a tiny share (~0.1%) of global jet fuel consumption. The International Air Transport Association (IATA) estimated that SAF production reached 79 million gallons (300 million liters) in 2022 while jet fuel consumption was 95 billion gallons (360 billion liters) pre-COVID 19. DOE’s SAF Grand Challenge has the goal of scaling SAF production to 3 billion gallons (11 billion liters) per year in 2030 and 35 billion gallons (132 billion liters) per year in 2050. There is a huge potential market for SAF.
Naturally, SAF has gathered substantial attention and interests from folks in the energy industry. But SAF also provides a prime opportunity for greenwashing. Meet the powerful corn lobby.
Does anyone remember the Renewable Fuel Standard and how corn-based ethanol was touted as the bridge to the next generation “advanced biofuel” during the Obama Administration? The debate on whether corn ethanol is climate friendly is a contentious topic. Early life-cycle assessments from the 2000s suggested that corn ethanol would produce 20% lower GHG emissions than gasoline. More recently, a 2021 Argonne National Lab study estimated that U.S. corn ethanol has 44%–52% lower GHG emissions than gasoline due to increased corn yields per acre, decreased fertilizer use, and improved ethanol production processes. On the other hand, a 2022 study by the Proceedings of the National Academy of Sciences contradicts previous research and found that ethanol is likely at least 24% more carbon-intensive than gasoline due to emissions resulting from land use changes to grow corn, along with processing and combustion.
All that is to say, factors such as land use and land use changes, changes in the production process and production level of nitrogen fertilizers, yield changes, and fuel market rebound effect–which can be hard to impossible to measure accurately–make accounting the true LCA of emissions from corn ethanol difficult.
Similarly, LCA (and techno-economic analysis or TEA) are inconsistent across the SAF industry. Furthermore, The LCA of pathways that are not fully developed may also have a high level of uncertainty that is not expressed in the model output. These two points are reflected by the large estimation range of GHG emission reductions in the table above.
To further complicate the picture, in the U.S., there is no standardized methodology on determining SAF’s life-cycle emissions. The 2021 ANL study referenced above uses the Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model that it developed for LCA modeling of corn ethanol and other biofuels. Meanwhile, ICAO has its own methodology for modeling SAF’s life-cycle emissions under CORSIA (ICAO CORSIA). All else equal, ICAO CORSIA’s estimates tend to be less rosy than GREET’s due to the differences in how both methods account for cropland pasture to corn cropping conversion and carbon sequestration from agricultural management practices.
And this is not even taking other externalities into account. For example, the IPCC’s 2022 AR6 Working Group III report concluded that the increased demand for biofuels, coupled with the finite availability of land and growing demands for food, feed, and fuels, food-and-feed crops may be redirected to biofuel markets, thereby creating a domino effect as agriculture expands to replace this loss (indirect land-use change).
Before the U.S. charges ahead with SAF production scale up, shouldn’t it first figure out its actual emission reduction potential?
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