Posted on January 4, 2017
New Year, New Energy
by Jeff Jones
Gov. Andrew Cuomo’s 2018 State of the State address featured his Clean Energy Jobs and Climate Agenda, a plan that will keep New York moving forward as a national leader on energy and climate policy. Let’s welcome in the New Year by taking a moment to look broadly – both nationally and in New York - at where the electricity sector stands.
First, the market: In large parts of the US, it is cheaper to build new wind and solar than new coal, and in some cases cheaper than natural gas. In a recent survey published in Utility Dive, Energy Innovation’s policy expert Sonia Aggarwal reached the conclusion that the industry’s competitive dynamic “completely flipped” in 2017. Merchant coal plants in Texas and Massachusetts are retiring, unable to compete with natural gas and renewables, she reports, while utilities in Missouri, Wisconsin, and Minnesota are planning early shutdowns of coal. And in spite of the federal government’s actions to shut down the Clean Power Plan, three-quarters of the states will meet their CPP targets.
Globally, the growth in renewables is adding unexpected amounts of clean power in a world with flat or even declining demand. This power has zero marginal cost and is driving down wholesale prices. Customers win, the environment wins, and investors in renewables win.
Second, the federal government: The Washington Post recently described the new Republican tax law as a “windfall for [the] oil and gas industry”. Fossil fuel interests will reap billions in tax savings, including for capital expenditures. The cut in the corporate tax rate may add 5 percent to the earnings of Exxon Mobil and 23 percent to oil refiners’ earnings. Opening portions of the Arctic National Wildlife Refuge to oil exploration was another victory for big oil after a bitter 20-year fight, as would be reopening offshore waters to oil and gas exploration and development. Indeed, U.S. Secretary of the Interior Ryan Zinke recently announced the federal government’s intention to open over 90 percent of the National Outer Continental Shelf to oil and gas exploration and leasing. By contrast, current policy puts 94 percent of OCS off limits. The Zinke program proposes the largest number of lease sales in U.S. history.
Although renewables retained their modest and declining federal incentives in the new tax law, as well as the electric vehicle credit, efforts to expand these credits to fuel cells, geothermal and distributed wind failed. And adequate funds for Puerto Rican recovery - including an effort to replace the island’s creaky imported diesel system with distributed renewables - were not forthcoming, with full recovery of power predicted as late as May 2018.
Third, New York State: In contrast, and of greater importance than ever before, the policies and initiatives announced in Gov. Cuomo’s January 3rd State of the State address promise an even more aggressive commitment to renewable energy and energy efficiency. These commitments lay the groundwork for continued growth in renewable energy and energy efficiency: setting a new energy efficiency target to be announced by April, procuring 800 MW of offshore wind power through solicitations in 2018 and 2019, investments to deploy 1,500 MW of storage by 2025, as well as development of community solar for 10,000 low-income New Yorkers. These initiatives will add to the more than 146,000 clean energy jobs already held by New Yorkers. The Governor’s announced Clean Energy Jobs and Climate Initiative also includes proposals to strengthen the Regional Greenhouse Gas Initiative (RGGI) and reconvene the Scientific Advisory Committee on Climate Change. These measures provide a stark contrast to federal policy, and put New York’s regulatory agenda in line with the global growth of renewable energy.