It’s the Infrastructure, Stupid

A New Renewable Plan for California?

There is a rumor that the Schwarzenegger Administration is in the process of preparing an executive order and legislative package to expand the Renewable Portfolio Standard (RPS -- this is the requirment that in state utilities procure a specific amount of generation from renewable sources) from 20% to 33% by 2020.  There may be three options to get to 33%: 1) a legal mandate, 2) a goal set in law (thorough legislation) or 3) set by the Air Resources Board in the AB 32 Scoping Plan.  There will be three elements in implementing this policy.  There will be an executive order (EO) with two primary elements on transmission and siting.  There will be a third element which will be a legislative package of bills.

The devil is always in the details, but if the move to 33% will truly streamline the siting process, which is the only reason to do this, then I would say that this is not only necessary, but it would become the only way that the state might actually achieve this goal.  Of course, no investment will be attracted if contracts are not offered to attract that business.  I do hope everyone is mindful of that. 

While I understand tha this is still under development, sources close to the proces indicated that this has moved from a conceptual draft and is closer to being official in the coming weeks.  Stay tuned!

  

Do We Really Want to Stop Global Warming?

There were a couple of stories yesterday about cities having small carbon footprints…  The San Diego Union Tribune carried one and so did The San Jose Mercury News – both good stories, but how do these cities fair when we keep hearing that the state will not achieve it’s 20% renewables target by 2010 (as is mandated under current law)?

 

Let’s assume that we could not only meet that target, but better yet, we exceeded that target…  How would these cities then be impacted (on a global scale) by events such as the eruption of the Chaiten volcano in Chile last month that spewed lava and blasted ash more than 12 miles (20 kilometers) into the sky or the devastating earthquake that rocked China this month?

Seems to me, that we will really need to step up efforts around the globe if we really hope to impact global warming…  But back to my question, and closer to home (at least as far as generation is concerned), how will we accomplish this without the infrastructure to allow us to deliver the low emission generation? 

California really needs to re-evaluate our views on this matter and allow for creative thinking.  Do we really want to have a lasting impact on global warming?  I mean in the positive sense…  Since the answer is a resounding "yes," I would submit that we had better allow for the infrastructure to be developed, including transmission, solar, wind, hydro, natural gas (we need the gas generation to run when the wind is not blowing) and yes, even rethink nuclear generation.  Admittedly, nuclear is not in the cards anytime soon, but we need to begin that dialogue today.  How can it be that France and Japan are doing so well with nuclear and we can barely even say the word? 

Last month I wrote about the comments that Governor Schwarzenegger made at the Yale Climate Change Conference .  He’s right – we all need to take a deep breath and get out of the way and allow the infrastructure that is needed to be built to actually be built.  Otherwise we should be honest and admit that we really don’t want anything to change.  The more we stand in the way of the infrastructure development that is needed, the harder it will be to turn global warming around.

Governor Schwarzenegger Says CA Will Be First to Clean Energy Independence

While touting the potential of renewable power but remaining silent with regard to --the “hydrogen highway”--(I still believe someone talked him into touting this early in his governorship) Governor Schwarzenegger said California will be the first state in the nation to reach energy independence while fighting global warming.

In a speech last week on May 13 at a meeting sponsored by the University of California, Irvine, and the Milken Institute, he called on business leaders and scientists to protect the state’s economic and environmental future.

He urged energy and other industry leaders to think about the long-term benefits of investing in renewable resources. The Governor touted AB 32, the Million Solar Roofs initiative, his executive order to create a low carbon fuels standard, and the state’s green building initiative.

Sounds great... But message to the Governor and his staff: PLEASE, take a moment to reach out to your own Administration -- particularly your appointees at the various energy agencies and environmental agencies. The only way that the energy industry will realize all the goals established to date, is if the industry is afforded a market with market signals and rules that will allow all of that to happen. Hate to say, this, but so far, so bad...

From regressive policy initiatives at the SWRCB to protracted permitting at the CEC and CPUC... in some cases, the process has turned from stumbling blocks to snares. Trust me, if these were to see improvements, the industry would respond and the infrastructure to deliver that green independent future would be closer to reality. And sooner than we all might otherwise expect. To do nothing, will mean that we will get nothing. Markets and industry need meaningful signals -- we don't have them today. We need tose market signals so that the infrastructure can secure the financing to get this stuff built.

Schwarzenegger Administration Holds Meeting on RPS/Senate Asks About Costs

The Administration is growing more concerned over the high probability of missing the Renewable Portfolio Standard mandate of utilities securing 20% renewable generation by 2010.

Though unpublicized, the Administration met last week with several stakeholder groups to discuss what might be done. I am told that the Governor had several pointed questions and that the staff did as well. How might we get to 20% renewables, and why will we miss the mark?

It is highly likely that we will see an Executive Order that will address how to get to the 20% -- and beyond -- the 33% that is being kicked around.

Why is this important now? Because of the initiative that has qualified for the ballot that would take us to 50% renewables by 2020. Is it doable? Sure, if we eliminate all of the barriers to building the infrastructure that would be needed. Will we do that? Even if it were done through regulation, the legal side will always slow the process down.

We need the infrastructure to get us to that green future – and to echo what the Governor said in his speech at Yale last month: "There's no two ways about it. Neither business nor environmentalists nor Republicans nor Democrats can be set in their ways. I suggest to them: Relax, exhale, just exhale and relax and let things move forward.”

In a hearing yesterday, the Senate Energy Committee had sharp questions about costs for the President of the CPUC, Michael Peevey: "How much is all of this, GHG reduction, RPS and other mandates going to cost?"

Great question!!! But we have no answers because we have not really looked at it...

I expect that a possible Executive Order on RPS will ignore the cost question, but maybe someone in the legislature will ask for an informational hearing to discuss the numbers that are out there already (EPRI calls it somewhere between $100 billion to $500 billion between 2020 and 2050 -- the smaller number to reduce GHGs by 25% and the larger number to reduce GHGs by 80%).

As I have stated before, going green is going to cost a lot of green... the better questions is who will pay for it? Will it be all ratepayer classes, or will we single out a few groups? The popular theme will be to make the wealthy pay for it... but how do we define that? Oh, get ready for that fun discussion that we will need to have at some point -- assuming we really do want to go green.

Republican Legislators and CMTA Call on Governor to Delay AB 32 Implementation by One Year

Republican legislators and the California Manufacturers & Technology Association (CMTA) called on the governor to delay implementation of AB 32, given the slumping economy, to help California’s businesses – state operating costs are 23 percent more than the national average.

With a price tag of between at least $100 billion by 2020 and $511 billion by 2050, according to the Electric Power Research Institute, AB 32 will raise business costs and further erode the state’s economy, according to CMTA.

At issue is whether the CARB, which is charged with developing a plan and rules to carry out AB 32, should begin enforcing emissions cuts in two steps, the first in 2010 and the next in 2012, or delay each milestone by a year.

CMTA and some legislators urged the state to take an extra year to study how to achieve the law’s objectives at the lowest possible cost. A one-year delay also might give the federal government time to move on climate change after the Presidential election next fall.

Two Observations: First, I don’t expect that this will be the end of this story, we may hear more on this given the growing budget shortfall (on May 14, the Governor is scheduled to speak on the budget -- some are calling it a $14 to $20 billion shortfall). Second, even with that, I doubt that the Governor will slow down AB 32 -- since this is the political issue that put him on a world stage, I think the Administration will politely thank everyone for being creative, but say no.

“We Need energy Solutions – And we need Them Now.”

Indeed. If you missed Jared Blumenfelds’ editorial in the Sacramento Bee on Sunday, it’s worth a read. I agree with most of what he says, though there are some aspects of his dribble that I do have issues with – but the whole piece can be captured in the following graphs (copied and pasted just as they appeared in the Bee):

“When it comes to global warming, the future is rapidly approaching. Electricity generation and distribution produces 40 percent of all the carbon dioxide emissions in the United States.

Despite a great deal of talk about climate change, the electric power industry's nationwide CO2 emissions have risen 5.9 percent since 2002 and a whopping 11.7 percent since 1997. We need energy solutions – and we need them now.

California has taken the bold step of requiring that 20 percent of all our electricity come from renewable sources by 2010 and is now looking at increasing that target to 33 percent renewable energy mix by 2030. This is excellent news. However, the grid that transports energy is itself part of the problem.”

I’m with you, Jared! So as the Governor said at Yale last week – there are a lot of folks that need to get over their hang ups and let some of these important projects bring the environmental benefits that will help us get green. This means adding transmission, adding state-of-the-art natural gas fuled generation (I agree no to coal unless it offeres sequestration of the CO2E) -- without these the reality of securing renewables will not materialize. Who will build something that cannot plug into the grid? With tightening credit markets who will take a chance on financing something that has no way of delivering the product to the user?

Let me replay what the Governor said in his speech at Yale: "There's no two ways about it. Neither business nor environmentalists nor Republicans nor Democrats can be set in their ways. I suggest to them: Relax, exhale, just exhale and relax and let things move forward.”

Governor Schwarzenegger Message to Republicans, Democrats and Environmental Activists: “Let things Move Forward”

On Friday last week, Governor Schwarzenegger delivered a very important keynote Address at the Yale Climate Change Conference. In his speech, the Governor speaks bluntly and basically tells environmentalists to get out of the way and let important projects that can bring environmental benefits move forward. The Governor states very clearly Democrat’s and environmentalists need to do the right thing and move out of the way:

“But the important point I want to make is that environmental activists and Democrats many times are just as much an obstacle in moving forward. Rhetorically, of course, they love to talk about renewable energy and geothermal and wind all those kind of things. But many times we have seen they are trying to slow down the approval process. It's kind of a schizophrenic behavior. They say that we want renewable energy but we don't want you to put it anywhere, we don't want you to use it.”

In what I see as the second time that the Governor has essentially endorsed the Sunrise Powerlink, the Governor says:

“San Diego Gas & Electric wants to develop solar geothermal fields in Imperial Valley and build 150 miles of transmission lines to go and take this power right into San Diego, but it faces opposition even though it would replace an old carbon based power plant.”

With the Renewable Portfolio Standard requirement looking like a failure (the in state utilities will not meet the 20% renewable energy portfolio requirement by 2010), it seems that the Administration has realized that the emperor wears no clothes and that the real problem in getting to the green future lies at the doorstep of the opposition. The Governor here calls on everyone to again do the right thing:

“So the point I'm making is it's not just businesses that have slowed things down, it's not just Republicans that have slowed things down, it's also Democrats and also environmental activists sometimes that slow things down.”

“So as one of my environmental friends and advisers said: There are no silver bullets, only silver buckshot. We need to find creative ways to overcome those obstacles. There's no two ways about it. Neither business nor environmentalists nor Republicans nor Democrats can be set in their ways. I suggest to them: Relax, exhale, just exhale and relax and let things move forward.”

If you have read my posts on this issue, this will all sound familiar. The Governor is absolutely correct in this instance. If we really want a green future, we all need to “relax and exhale and let things move forward.”

Renewable Portfolio Standard Task Force Coming Soon?

A senior California Public Utilities Commission official recently shared that Governor Schwarzenegger will soon announce a task force that will seek to secure renewable generation for the grid beyond the current 20% threshold. The current requirement is that utilities achieve 20% renewable energy for their customers by 2010 - an issue which I have written several posts on and by the way, a mandate which utilities will likely not meet. Not because they are unwilling, but because the ability to get the renewable energy to the customers does not really exist.

A great example is the delay we are seeing with the Sunrise Powerlink. Regulatory stumbling blocks and snares will continue to delay the 20% renewable energy goal, but maybe the task force will take this on? Maybe they can figure out a way to streamline the process? Well, if I understand it correctly, the intent is to figure out how we can get beyond 2010 - and to a 33% renewable energy requirement.

My suggestion would be to secure the 20% requirement first - but that's just me. If we can't get to 20% -- how will we get to 33% and what's so special about 33%?!

These are questions I intend to explore and educate myself on - when I get answers, I will share them.