Top Washington D.C. Clean Energy Policy Stories from 2013
U.S. clean energy policy was as caught up in Washington gridlock as most other issue areas in 2013. No climate-saving clean tech bill passed through Congress and even modest, bi-partisan energy efficiency legislation failed to get to the President’s desk. In fact, 2013 will largely be known for energy policy actions that didn’t happen – a sort of 365 day buffer period until bigger decisions are made in years to come.
With that said, while Washington D.C. policymakers chose not to act on anything energy-related, that doesn’t mean under-the-radar policy maneuvering wasn’t taking place, which could have significant impacts in the future. With that, here are my top Washington, D.C. clean energy policy stories of 2013.
The Clean Energy RD&D Budget Continues To Fall
The seemingly endless fight for robust public investment in clean energy research, development, and demonstration (RD&D) programs continued well into 2013, as Congress passed the FY2013 Continuing Resolution, applied mandatory sequestration cuts, and fought over appropriations bills for FY2014. The full-year Continuing Resolution (CR) appropriated funding to energy RD&D programs consistent with FY2012 budgets, but the impacts of sequestration—which reduced DOE office budgets by hundreds of millions of dollars—put federal R&D investment “at its lowest point since FY2002,” according to AAAS.
While President Obama’s budget request for FY2014 prioritized energy innovation by upholding and even raising budgets for programs supporting basic science, low-carbon transportation, and clean energy manufacturing, House appropriations proposals decimated critical investments in DOE programs, including cutting the Office of Energy Efficiency and Renewable Energy (EERE) by 43 percent from FY2013 CR levels. Support for these “connective tissue” programs is integral to successful development and commercialization of clean energy technologies. Perpetual cuts to energy innovation funding and the Department of Energy and the Department of Defense in particular restrict the development of a functional innovation ecosystem capable of producing clean energy technologies that are cost and performance competitive with fossil fuels.
Congress also failed in 2013 to come to a compromise over the 2013 America COMPETES Act reauthorization, which supports core science and engineering programs that directly translate to national economic development and competitiveness. The reauthorization should include a recommitment to doubling funding for federal basic science research over the next ten years, which unfortunately the nation has fallen behind since its initial promise in 2008.
DOE National Lab Commercialization Reform Taking Center Stage
The Department of Energy (DOE) National Labs represent almost $15 billion in public investment in advanced energy, materials, physics, chemistry, and nuclear weapons R&D. Spanning 17 institutions throughout the country, the Labs were originally created to develop the atomic bomb and are today used to conduct research and tech development universities and the private sector are unwilling or unable to do. And while their list of success stories is long – everything from full body scanners at airports to thin-film solar panels – the need to quickly move more Lab innovations to market is increasingly more important because of pressing global challenges like climate change and a slow economic recovery.
As a result, Washington policymakers are starting to lay the groundwork for reforming the National Lab system to spur more tech commercialization. Secretary of Energy Ernest Moniz has made National Lab reform a key component of his term at DOE. In his first testimony in front of the House Science Committee in June, Sec. Moniz stated that he wants the Labs to tap more into regional economies to facilitate technology transfer and intends to make the Labs more like Innovation Hubs, which are deep collaborations among researchers and industry. In practice, he’s created a National Laboratory Operations Board to work out management and operations barriers between the Labs and DOE and created a unified Under Secretary for Science and Energy to create an overarching strategy among the 13 non-nuclear security Labs.
In Congress, Sen. Tom Udall (D-NM) is developing the Technology Transfer, Invention, Innovation, and Implementation Act to strengthen the tech transfer functions within the DOE and the National Labs. The House Science Committee approved Rep. Chris Collins (R-NY) and Rep. Derek Kilmer’s (D-WA) TRANSFER Act, which aims to direct a small share of STTR funds towards a new program aimed at supporting innovative approaches to tech transfer at universities and federal laboratories, such as the DOE Labs. And there is additional bipartisan interest in National Lab reform brewing on Capitol Hill, particularly as it related to reforms that could be added to the America COMPETES reauthorization bill.
ARPA-E Losing its Bipartisan Support
Despite an extremely successful year introducing six new programs to tackle the nations most significant clean energy technological challenges, ARPA-E faced substantial threats to its budget for FY2014. Currently funded at $260 million for FY2013, the House Energy and Water Appropriations committee voted to slash ARPA-E’s funding by 80 percent, to only $50 million. A funding cut of this size would decimate the relatively young agency’s ability to perform just as it is beginning to reach maturity.
ARPA-E’s new programs—METALS, REMOTE, FOCUS, RANGE, SWITCHES, and REBELS—finance breakthrough research projects in energy efficient manufacturing, natural gas to liquid fuels conversion, advanced solar conversion and storage, electric vehicle battery systems, power electronics for a more responsive and effective electricity grid of the future, and transformational fuel cell technology for distributed power generation. These investments serve as an invaluable piece of the energy innovation ecosystem and have leveraged millions of dollars in private sector follow-on investment.
Another Showdown over the Expiring Wind Production Tax Credit
The Wind Production Tax Credit (PTC) started 2013 on a high, but is ending 2013 on a low. The PTC – a 10 year, 2.3 cents per kilowatt hour subsidy eligible for operating wind turbines – expired in December 2012 only to be saved in January 2013 fiscal cliff deal. The 11th hour bill, the American Taxpayer Relief Act, extended the PTC for one year, but also allowed projects to benefit from the credit as long as they begin construction before it expires. Historically, the PTC only applied to turbines that were put in operation before the credit expired. As a result, more wind projects could gain the subsidy.
Nonetheless, the PTC is set to expire again as the ball drops in Times Square and Congress seems unwilling to take on extending any tax credits, let alone one for the wind industry. But some in Congress are pushing for changes. Sen. Max Baucus, outgoing Chairman of the powerful Finance Committee, released his draft energy tax reform proposal which would continue the PTC for another three years, but eventually replace it with a broader production tax credit for low-carbon technologies. A group of nine Republican Senators and one Democrat are instead pushing to allow the PTC to sunset. In comparison, a bicameral group of Senate and House Democrats are pushing to extend the PTC long-term.
More likely than not though, the PTC will lapse once again causing dramatic changes for wind deployment in the United States beyond 2013. According to The Energy Collective’sJesse Jenkins, “Outside of the Interior states then, only compliance with state renewable portfolio standards would keep the wind industry moving without the federal tax credit. In short, while the wind industry will survive without the PTC, it won’t necessarily thrive.”
Keystone XL Pipeline Decision Continues to Drag On
In what feels like an episode of the Twilight Zone, the State Department continues to drag its feet on whether to approve the Keystone XL Pipeline. The pipeline under review is a 1,179-mile proposed stretch between Hardisty, Alberta and Steele City, Nebraska, which would bring crude oil from tar sands operations in Canada to Texas oil refineries. Environmental groups have fought construction of the project since 2010, questioning the potential impacts an oil spill could have in critical Nebraska aquifers as well as the efficacy of deploying greenhouse gas intense tar sand oil into the world energy market as it tries to address global climate change.
Ultimately, the Department of State provides final approval of the cross-boarder pipeline, which it’s been considering since 2012. In March 2013, the State Department released its Environmental Impact statement of the project, finding that it would cause no significant impacts. The EPA responded the following month stating the State Department findings were incomplete and further analysis was necessary. As a result of the need for more environmental analysis as well as over 1.5 million public comments on the review, the State Department decision has slipped into 2014.
The delay seems to be having an impact as many environmental and climate advocates focus more on fossil fuel divestment campaigns across the country, which doesn’t have a definitive end like the Keystone decision does. Nevertheless, 2013 didn’t bring an end to the Keystone XL saga, but 2014 looks like it will. The sooner the better, as it’s clear that new activist strategies are needed to address climate change.
Coal Power Plants Are Warned: Innovate or Die
Brayton Point Power Plant, Massachusetts.
With Congressional gridlock continuing to stymie any effort for new climate or clean energy policies, President Obama is turning to executive actions to cut greenhouse gas emissions. In June 2013, the President announced his Climate Action Plan, while relatively quiet on new efforts to spur clean energy innovation, aimed to advance new regulations on power plants to account for carbon emissions. In September, the EPA released their first regulations for carbon emissions emitted from new power plants, essentially requiring new coal plants to use carbon capture and sequestration or not be built at all. Advanced natural gas plants meet the new standards.
Of course, the new standards won’t go into effect right away. It will take a year for EPA to finalize the new rules, after which it’s almost certain the regulations will face legal challenges, which may delay implementation even longer. Nonetheless, the coal industry in the United States has been warned – either innovate better, cheaper carbon capture technologies or continue to lose energy market share to natural gas.
The latter shift to natural gas is also being helped by new EPA regulations on power plant mercury and arsenic emissions that officially go into effect in 2016 and impact all power plants, new and old. These regulations, combined with the prospect of new carbon regulations for existing power plants in 2014, may be the beginning of coal’s gradual death as a major producer of U.S. electricity.
Matthew Stepp is a Senior Policy Analyst with the Information Technology and Innovation Foundation (ITIF) specializing in climate change and clean energy policy. His research interests include clean energy technology development, climate science policy development, transportation policy, and the role innovation has in economic growth.
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