College of Law Center for Energy and Sustainable Development

James Van Nostrand
July 26, 2012

NY Times
July 23, 2012

Will Drought Cause the Next Blackout?
Michael E. Webber

About half of the nation’s water withdrawals every day are used for cooling electric generating plants. As the nation suffers the most widespread drought in 60 years, stretching across 29 states, the risk is great that power plants may be forced to shut down, due to the insufficient water flows to serve the cooling function. Oil and natural gas production may be threatened as well, given the millions of gallons of water necessary for hydraulic fracturing, the process used to extract oil and natural gas from shale in several regions of the country. In Texas today, some cities are forbidding the use of municipal water for hydraulic fracturing. The multiyear drought in the West has lowered the snowpack and water levels behind dams, reducing their power output. The U.S. Energy Information Administration recently issued an alert that the drought was likely to exacerbate challenges to California’s electric power market this summer, with higher risks of reliability problems and scarcity-driven price increases. As climate change trends continue and the demand for energy in the U.S. continues to grow, this water vulnerability will become more important over time.

James Van Nostrand
July 26, 2012

NY Times
July 23, 2012

Save Energy, Win a Prize
Diane Cardwell

This New York Times article reports on the use of social media by utilities to encourage their customers to use less energy. The article reports that the need to find ways to encourage long-term conservation is ever more critical. Although states and utilities have run conservation programs for decades, as a nation we are far from acquiring all cost-effective energy efficiency. At least 25 states have set specific goals for reductions in energy use that in many cases will continue to increase even as electrical demands and the grid’s complexity keep growing. West Virginia has no such energy efficiency targets; although an Energy Efficiency Resource Standard (EERS) was proposed during the 2012 legislative session, it failed to make it through the House Judiciary Committee. As a result, the energy efficiency programs run by the State’s utilities (Appalachian Power and First Energy) are fairly modest. Moreover, utilities in West Virginia do not consider energy efficiency and conservation to be resources in the same sense as “supply-side resources” (e.g., generating plants), as there is no requirement in West Virginia for utilities to engage in integrated resource planning (a process that puts demand-side resources (energy efficiency and conservation) on the same footing as supply-side resources in the utility resource acquisition process).

Nationwide, the total budget for utility customer energy efficiency programs in 2010 was $4.6 billion, up more than four times from the $1.1 billion spent on such programs a decade earlier, according to the American Council for an Energy-Efficient Economy (ACEEE). West Virginia is not following this national trend in boosting investments in energy efficiency; the State, ranks 44th out of the 50 states in ACEEE’s State Energy Efficiency Scorecard. In ACEEE’s analysis of energy efficiency programs nationwide, West Virginia tied in last place with Alaska with respect to utility public benefits programs and policies metrics, scoring 0 out of 20 points. The EERS proposed during the 2012 legislative session by Delegate Mike Manypenny (D-Taylor) would have established long-term energy efficiency targets for electric utilities, requiring reductions in electricity consumption of 5% from 2010 levels by 2018 and 15% by 2025. The bill also would have provided financial incentives for utilities that meet or exceed their targets. According to ACEEE’s analysis, “[t]he utility regulatory business model has been a long-standing barrier to energy efficiency in West Virginia and the presence of an EERS that includes financial incentives for utilities that meet their targets could have moved the state of a much higher rank in the Scorecard.”

Utility customers in West Virginia need access to utility-sponsored energy efficiency programs. The state continues to face dramatic price increases for residential customers and, while customers have little control over the rates charged by utilities, they may have some control over their utility bills if they could avail themselves of utility energy efficiency programs. Policymakers in West Virginia have a number of options to make this happen. First, legislators could adopt an EERS, as proposed by Delegate Manypenny. Second, legislators could adopt integrated resource planning, as proposed by Senator Foster during the 2012 legislative session (S.B 162), which would stimulate investment in energy efficiency by placing demand-side investments on the same footing as generation resources. Third, if the legislature fails to enact either of these measures, the Public Service Commission has all the statutory authority it needs to (1) impose energy efficiency targets on the utilities it regulates, and (2) require utilities to engage in integrated resource planning. It’s time to move West Virginia out of the ranks of the lowest-performing states in the country with respect to energy efficiency.

James Van Nostrand
July 16, 2012

Last week I had the pleasure of touring the Longview Power Project, which is located just north of Morgantown near the Pennsylvania border. At a cost of approximately $2.0 billion, Longview is the largest privately-funded project in West Virginia history. Longview came on line in December 2011, and generates 770 megawatts (MW) of power, or about 695 MW net of the service station requirements (i.e., the electricity consumed on site). Several features of this state-of-the-art coal plant are noteworthy:

• It is a merchant plant. Unlike the plants owned by investor-owned utilities such as Mon Power (First Energy) or Appalachian Power (American Electric Power), Longview is owned by an independent power producer. (The plant is operated by GenPower.) An investor-owned utility owning and operating this plant would be assured of cost recovery, as the output would be sold to the “captive” ratepayers of the utility, and ratepayers would bear the costs of the plant’s operation through their electric bills. In the case of Longview, however, the investors are taking the risk that the output of the plant can be sold into the market at a price that covers its costs, and (hopefully) produces a profit.

• Longview is profitable. This plant uses the latest in supercritical pulverized coal (SCPC) technology, and thus operates at efficiency levels far greater than virtually all other coal plants in the nation’s fleet of coal plants. The efficiency is generally reflected in the “heat rate” at which the plant converts energy into electricity. While the average net heat rate of coal plants across the country is 10,600 Btu/kWh, the Longview plant has a heat rate of 8,728 Btu/kWh. That means the plant has lower operating costs, which is important given its status as a merchant plant. If the plant were inefficient and “out of the money” or “above market,” its output could not be sold in the wholesale power markets, and Longview’s investors would lose money.

• Longview is cost-competitive. The output of Longview is sold into the regional wholesale power market, the PJM, which is short for Pennsylvania-Jersey-Maryland. PJM is a regional power market that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. Its headquarters are located in Valley Forge, PA, about 20 miles northwest of Philadelphia. PJM essentially creates the marketplace where buyers and sellers of electricity meet, and is also responsible for operating and maintaining the region’s transmission network and “keeping the lights on,” at least at the transmission level. In its role as the market maker for wholesale electricity, PJM essentially dispatches all the power plants in the region, in order according to their variable operating costs, until supply equals demand (which establishes the market-clearing price). For example, nuclear plants, which have very low operating costs, are dispatched first, while “peaking” natural gas-fired plants (typically simple cycle combustion turbines) or older, inefficient coal plants are dispatched at the margin. PJM system operators will work their way up the dispatch cost curve until market equilibrium is achieved (i.e., supply equals demand). That is why the efficiency of Longview is so important. Because of the low-cost characteristics of Longview – its heat rate of 8,728 Btu/kWh is far superior to the average of the coal plants in the PJM of 11,000 Btu/kWh – it ranks very high in the dispatch order and the plant is virtually “in the money” 24 hours a day, 7 days a week.

• Longview is relatively “clean.” Longview is equipped with state-of-the-art air emissions reduction technology. These systems include:

Low NOX burners with overfire air and selective catalytic reduction (SCR) technology
Hydrated lime injection system to reduce acid mist
Removal of particulate matter (PM) through 99% efficient fabric filter baghouse

• SO2 removal through 98% efficiency wet flue gas desulfurization system (FGD). Although the combined effect of these systems achieves significant removal of mercury, it is noteworthy that the plant would not meet the requirements of the EPA’s new Mercury and Air Toxic Standards (MATS) rule if it were to be licensed as a new facility. As an existing source, however, Longview easily clears the standard of the top 12% cleanest emitters.

• Longview is a “mine mouth” project, and thus fuel arrives by overland conveyors directly from a nearby mine 4 ½ miles away. Less than two hours passes from the time the coal is mined until it reaches the bunker at the plant. This mine mouth supply reduces the delivered cost and avoids the impacts associated with trucks, rail or barges. The mine is operated by MEPCO, which is based in Morgantown, WV. MEPCO is the largest independent coal operator in the region, with about 800 employees. MEPCO has a long-term contract to provide coal to Longview, which consumes about 275 tons per hour, or about 2.3 million tons annually. MEPCO also provides coal to two nearby First Energy plants (Hatfield’s Ferry Power Station and Fort Martin Power Station) under long-term coal supply agreements.

• Longview provides about 100 good-paying jobs. In addition to the employees at Longview, the MEPCO coal mine producing the coal for Longview employs over 210 miners.

The Longview Power Project is an impressive facility, and makes a strong case for a continuing role for coal in the nation’s electricity future. In the face of historically low natural gas prices, which have resulted in depressed wholesale electricity prices, Longview is still in the money, and is returning profits to its investors. More important, this relatively clean facility is displacing older, dirtier generating units, thereby achieving a lower carbon footprint for the region’s electricity supply. Longview is succeeding in the competitive PJM power markets, thanks to its high-efficiency supercritical pulverized coal technology. With its extensive air quality control systems, Longview easily meets all currently effective emissions requirements (although it would not meet the EPA’s limits for CO2 emissions once the greenhouse gas regulations become effective for new sources).

The Longview story stands in sharp contrast to the dozens of coal plants throughout the country that are scheduled to be retired in the next few years. While most of the coal industry blames the extensive plant closures primarily on the “job-killing EPA,” the fact of the matter is that most of these plants are being closed due to simple economics: with natural gas prices at historical lows, inefficient coal plants simply cannot compete, and the dispatch stack at PJM (and similar market forces) are forcing retirement of plants that have long outlived their useful lives. Longview proves that coal – and relatively “clean” coal at that – can compete, if the electric utility industry chooses to invest in the latest generating and emissions reducing technologies.

National Oceanic and Atmospheric Administration

State of the Climate: National Overview June 2012

Extreme heat in the second half of June helped make the first six months of this year the hottest January to June ever recorded in the lower 48 United States, according to the National Oceanic and Atmospheric Administration. Eighty-six locations set temperature records in June, with another 87 tying existing marks. That helped push the average temperature in the contiguous United States to 71.2 degrees Fahrenheit, 2 degrees above the 20th-century average. The sizzling heat capped the warmest 12 months since record-keeping began in 1895, NOAA said, inching out the previous record-holder—June 2011 to May 2012—by just 0.05 degree Fahrenheit.

In addition to the warmer temperatures, drought conditions now cover 56 percent of the contiguous United States, the highest percentage since the government-supported Drought Monitor began 12 years ago, NOAA said, helped by below-average precipitation in the West, Plains, Ohio Valley and mid-Atlantic states. Wyoming recorded its driest June ever last month. Colorado and Utah recorded their second-driest Junes, with eight other states experiencing conditions that rank among the 10th driest for the month. Precipitation totals across the country were mixed during June. The nation as a whole experienced its tenth driest June on record, with a nationally-averaged precipitation total of 2.27 inches, 0.62 inch below average.

U.S. Energy Information Administration

Monthly coal- and natural gas-fired generation equal for first time in April 2012

Recently published electric power data show that, for the first time since the U.S. Energy Information Administration (EIA) began collecting the data, generation from natural gas-fired plants in April 2012 was virtually equal to generation from coal-fired plants, with each fuel providing 32% of total generation. Preliminary data for April show net electric generation from natural gas was 95.9 million megawatthours, only slightly below generation from coal, at 96.0 million megawatthours. The EIA report notes that there are strong seasonal trends in the overall demand for electric power. In April, demand was low due to the mild spring weather. Also in April, natural gas prices as delivered to power plants were at a ten-year low. EIA predicts that with warmer summer weather and increased electric demand for air conditioning, demand will increase, requiring increased output from both coal- and natural gas-fired generators.

NY Times
April 13, 2012

How Green Are Electric Cars? Depends on Where You Plug In
Paul Stenquist

With the increased interest in electric vehicles, there is also increasing attention being paid to the air emissions benefits of displacing gasoline-fired vehicles with vehicles “fueled” by electricity. The extent of air emissions benefits depends on the fuel source used to generate the electricity used to charge the vehicle. If gasoline is displaced with electricity that is 100% generated from coal, for example, are there any reductions in greenhouse gas emissions associated with the move to “electrify” the transportation system?

The level of greenhouse gas reductions from substituting electricity for gasoline to fuel vehicles depends upon the region of the country, and the composition of the electric generation mix in that particular region. According to a report by the Union of Concerned Scientists, electric vehicles (EVs) charged from the electricity grid nationwide produce lower global warming emissions than the average compact gasoline-powered vehicle (with a fuel economy of 27 miles per gallon)—even when the electricity is produced primarily from coal in regions with the “dirtiest” electricity grids. The U.C.S. report, which takes into account the full cycle of energy production (often called a well-to-wheels analysis), demonstrates that in areas where the electric utility relies on natural gas, nuclear, hydroelectric or renewable sources to power its generators, the potential for electric cars and plug-in hybrids to reduce carbon dioxide emissions is great. In regions with the “cleanest” electricity grids, EVs produce lower global warming emissions than even the most fuel-efficient hybrids. EVs charged entirely from renewable sources like wind and solar power produce virtually no global warming emissions.

The report divides the United States into 26 regions. Each region comprises a single interconnected electricity grid, though several utility companies may operate within a region. Because the utilities sell power among themselves, the emission levels for one city or utility cannot be pinpointed for every hour of every day, but regional analysis provides an approximation of average emissions over time. On this map, the numbers following the city names represent, as a miles-per-gallon equivalent, the amount of greenhouse gases generated in charging the battery of an electric Nissan Leaf in that city. The darkest regions on the map are served by utilities burning a high percentage of coal to generate power; in those regions, charging an electric car sends as much carbon dioxide into the atmosphere as driving a car rated at 31 to 40 m.p.g., about the same as a current compact model. In the lightest areas of the map the electricity is generated by cleaner fuels, so the equivalent miles per gallon is higher than the best of today’s hybrids. In Seattle and Portland, for example, where the electricity is provided primarily by hydropower, the greenhouse gas emissions for an electric vehicle are equivalent to a gasoline-powered vehicle achieving 73 miles per gallon. The comparable figure for this region (Pittsburgh, Columbus, Cleveland, Nashville, Indianapolis and Memphis) is 41 miles per gallon.

Senator Rockefeller
June 20, 2012

Holding on to the Past Denies Coal’s Future

On June 19, the Senate voted 50-46 to reject a resolution offered by Senator James Imhofe (R OK) under the Congressional Review Act to block the EPA’s Utility MACT Rule. West Virginia’s Senator Jay Rockefeller voted against the resolution, and delivered a statement explaining the basis for his vote. Among other things, Senator Rockefeller points out that it is inaccurate to blame the “job-killing EPA” and the utility MACT rule for closing down many of the nation’s coal plants. Rather, “there also are smaller, older and less efficient coal-fired plants slated for closure, not because of EPA regulations alone, but – as corporate boards decided long ago and companies themselves will tell you – because they are no longer economical as compared to low-emission, cheaper natural gas plants.” He also admonished coal operators who “have yet to step up as strong allies and partners ready to lead, innovate and fight for the future.” The rest of his statement speaks for itself, and is worth repeating here:

“Instead of moving the conversation on coal forward, some in the industry have demanded all-or-nothing, time and again, for the ill-sighted purpose of a sound bite or flashy billboard. These efforts make no progress, they don’t pursue attainable policy change, and they certainly don’t create or save jobs.

Change is upon us – from finite coal reserves and aging power plants, to the rise of natural gas and the very real shift to a lower-carbon economy.

Denying these factors and insisting that the EPA alone is going to make or break coal is dishonest and futile. Feeding fears with insular views and divergent motivations will leave our communities in the dust.

West Virginians deserve better.”

Washington Post
July 1, 2012

Keystone XL Pipeline Expansion Driven by Oil-Rich Tar Sands in Alberta
Steven Mufson

The Washington Post is presenting a series on the Keystone XL pipeline, which has become a controversial election year issue pitting energy independence (at least within the North American continent) against the concerns expressed by the environmental community about the greenhouse gas implications of extracting this particularly “dirty” form of petroleum. This article describes the extraction process:

“Unlike oil that spurts up from reservoirs in most of the world, including Saudi Arabia, half of Canada’s oil sands are dredged up in a process more akin to strip mining. Trees are cut, layers of wetland fen and peat are drained and peeled back, and then the companies dig into a rich layer of oil sands that go down nearly 400 feet. In areas to the south where the gunky oil lies even deeper, companies are drilling wells, generating and injecting steam into the ground to melt the bitumen, and then sucking it up to the surface.”

Adding to the concerns about the environmental impact is that the process is extremely energy intensive. According to the article, companies expend energy equal to one barrel of oil to extract four to eight barrels from the oil sands. A Congressional Research Service report released May 15 estimated that Canada’s oil sands produced 14 to 20 percent more greenhouse gas emissions than the average barrel of U.S. imported crude oil.

The Canadian Association of Petroleum Producers estimates that oil production from Alberta’s oil sands, now 1.7 million barrels a day, could nearly double by 2020, enough to supply nearly 20 percent of U.S. oil consumption. With that, the oil sands would be producing more than Venezuela, Nigeria, Iraq or Kuwait. The Keystone XL pipeline would provide the 1700 mile link between Alberta and the oil refineries on the Texas coast of the Gulf of Mexico.

NY Times
July 1, 2012

Taking One for the Country
Thomas L. Friedman

Thomas Friedman’s recent column in the New York Times focused on Chief Justice John Roberts “taking one for the country” in his decision to support the constitutionality of the Affordable Care Act. Friedman described the Roberts decision as “inspired by a simple noble leadership impulse at a critical juncture in our history — to preserve the legitimacy and integrity of the Supreme Court as being above politics.” Friedman’s column went on to observe that with leadership exemplified by the statesmanlike approach of Chief Justice Roberts, “America today is poised for a great renewal,” and he makes a couple of undisputable statements about energy policy refers to help make his case:

• “Our newfound natural gas bounty can give us long-term access to cheap, cleaner energy and, combined with advances in robotics and software, is already bringing blue-collar manufacturing back to America.”
• “If we can just get a few big things right today — . . . a plan on energy that allows us to tap all these new sources in environmentally safe ways — no one could touch us as a country.”

Whether you agree with Friedman on climate change issues (or with Chief Justice Roberts’s decision on Obamacare), it is hard to argue with Friedman’s vision for the energy future of the United States.

NY Times
June 10, 2012

America’s New Energy Reality
Daniel Yergin

Daniel Yergin, the author of several excellent books on U.S. energy policy, wrote this interesting Op-Ed piece in Sunday’s New York Times about the revival in oil and gas production in the United States. In 2011, the U.S. achieved the largest increase in oil production of any country outside of OPEC. Thanks to the ability to extract oil from shale, North Dakota, with its Bakken Shale play, overtook California as the nation’s third largest oil-producing state. Yergin points out that with production increasing and oil demand declining in the U.S., we are “on the way to becoming ‘energy less dependent’,” with the goal of energy independence still elusive.

Apart from the analysis of energy security and balance of payments associated with energy independence, the “other story” concerns the broader impacts on the economy. According to President Obama’s 2012 State of the Union address, shale gas development created 600,000 new jobs as of 2010, spread widely across the nation. Just as important, the low energy costs resulting from the abundant supplies of natural gas have stimulated a revival of manufacturing in the U.S., particularly in the area of petrochemical companies, and increased the competitiveness of American industry.

Yergin’s conclusion pretty much captures it, and includes a nod to renewable energy and energy efficiency, as well as the need to minimize the environmental impacts of developing oil and gas resources:

“America’s new story for energy is still unfolding. It includes the continuing development and expansion of renewables and increased energy efficiency, both of which will be essential to our future energy mix. But what is striking is this great revival in oil and gas production in the United States, with wide impacts on jobs, economic development and the competitiveness of American industry. This new reality requires a new way of thinking and talking about America’s improving energy position and how to facilitate this growth in an environmentally sound way — recognizing the considerable benefits this will bring in an era of economic uncertainty.”