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December 30, 2025

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Hawaii Study Examines Carbon Tax Impact

A draft study on carbon pricing in Hawaii suggests that an appropriately structured carbon tax and monetary redistribution program would lower GHG emissions, provide households with a dividend and not overly hamper the state’s economy.

The University of Hawaii Economic Research Organization (UHERO) prepared the report for the Hawaii State Energy Office. Entitled Carbon Pricing Assessment for Hawaii: Economic and Greenhouse Gas Impacts, the state’s first comprehensive carbon pricing study examines four scenarios for taxing carbon in Hawaii.

Under the first scenario, the state would tax polluters $70/metric ton (MT) for carbon dioxide emissions, the social cost of carbon (SCC) calculated by the Obama administration’s Interagency Working Group on the Social Cost of Greenhouse Gases in 2016.

A second scenario would see the state charge $1,000/MT based on the state’s 2045 carbon neutral goal.

Hawaii carbon tax
Graph shows the projected change in Hawaii’s total economic output under four different carbon tax scenarios. | University of Hawaii

The third and fourth scenarios repeat the first and second scenarios but include a carbon tax revenue dividend to be paid to households.

Both taxes would be introduced gradually, reaching their full levels by 2045. The $70/MT plan is projected to result in a long-term GHG reduction of 25 MMT (million metric tons) by 2045, while the $1,000/MT plan would reduce emissions by 150 MMT.

All four tax schemes would cause a dip in economic activity over the long term relative to a baseline scenario with no carbon tax. “These declines are relative to a baseline of growing [Gross State Product] … Thus it is not a decline from the 2019 economy, but rather represents a slower growth pathway,” the study said.

The $70 plan would reduce the “total output” of the economy by 0.6% by 2045, falling to 0.5% with the inclusion of a dividend program. The $1,000 plan would cut economic output by 4.7%, or 4.2% with the dividend.

While imports and visitor spending would see modest downturns, Hawaii’s exports would take a roughly 5% hit under the $70 plan, rising to 30% under the $1,000 plan. “There is an overall loss of competitiveness for Hawaii goods and services” under either plan, the study said.

Energy prices would also be impacted, with the $70 plan raising gasoline prices by 63 cents/gallon and natural gas prices by 35 cents/therm, while electricity prices would remain unaffected. The $1,000 plan would drive up gasoline prices by a whopping $9/gallon, natural gas by $4.90/therm and electricity by 3 cents/kWh.

The electric vehicle sector would reap benefits because of increased gasoline prices. By 2045, EV vehicle miles travelled would increase by 20% under the $70 plan and more than double under the $1,000 plan when compared to the baseline projection of no carbon tax.

Household Impacts

“One of the things we were particularly interested in here is understanding how a carbon price would affect different kinds of households by income level,” Makena Coffman, the study’s principal investigator, said during an April 7 presentation of the study to the Hawaii Climate Change Mitigation and Adaptation Commission.

In examining energy use based on household income, the study’s authors found that the top 20% of earners consume 32% of Hawaii’s gasoline, 31% of its natural gas and 26% of its electricity, whereas the bottom quintile consumes 9.6%, 12% and 14%, respectively. The study concluded that a flat dividend rate for households would be progressive because, as Coffman said, “It would be high-income households who pay into the tax more.”

The study also found that by 2045 the $70 plan would provide the state with $610 million in annual revenue, compared with $2.8 billion under the $1,000 plan. Distributed equally, that would provide about $1,000 and $3,000 annually per household, respectively.

Without dividends, both plans would see net spending power drop by a few percentage points depending on household quintile. With dividends, the $70 plan yields a marginal increase in net spending power, while the $1,000 plan results in a marginal decrease. The dividend under the $1,000 plan “is not enough to offset the impacts of the shrinking economy,” the study said.

The study makes a case for implementing a direct carbon tax instead of pursuing other policies to mitigate GHGs, contending that the economy-wide approach “lowers the cost of reducing GHGs because it captures a range of GHG reduction opportunities while harmonizing sectoral interactions.”

“Often regulatory policies are less effective because they fail to address total emissions directly and instead target a proxy for emissions (e.g., vehicle miles traveled) or the rate of emissions (e.g., emissions per unit of electricity generated),” the study said. “Carbon pricing also addresses both new technologies and the ongoing use of fossil fuels … Carbon pricing can be implemented economy-wide, serving to capture GHG reduction opportunities in multiple sectors and harmonize the marginal cost of abatement among sectors.”

If implemented, the $70 plan would lower GHGs by 13% and the $1,000 plan by 70% when compared to the no carbon tax baseline. But the study notes that “[a]s the carbon price approaches $300-$400/MT CO2 [equivalent] … the effectiveness of the carbon tax declines as fewer GHGs are reduced per dollar of tax.”

“There is little economic argument for Hawaii, or any other state, to unilaterally adopt a very high carbon price,” the study concludes. “Hawaii’s per capita emissions are double the global average — motivating a responsibility to play a role in global GHG mitigation.”

The authors contend that a carbon price in line with the Obama administration’s SCC assessment would encourage renewable development and “dissuade fossil fuel burning in power plants and vehicles,” going “a long way” in reducing Hawaii’s contributions to global GHGs.

“At the federal SCC price, returning revenues in equal shares to households would benefit lower-income households relatively more as well as make all of Hawaii’s households economically better-off,” the study said.

Reaction

After the April 7 presentation, the commissioners offered little comment on the study other than expressing satisfaction with the scope. State Rep. Nicole Lowen (D) said that the study’s energy use estimates represented statewide averages that might obscure regional differences.

“Can you speak to what the difference might be between residents in more rural areas who have to spend significantly more on gasoline, for example?” Lowen said. “I feel like it’s important to think about how we look at an average, but it doesn’t account for the differences between islands or between rural and urban.”

“That was totally out of scope to [this study], but I think it’s really important,” Coffman said. “That is the next step.  How do you take this information and make it spatial.”

Hawaii Sierra Club Director Marti Townsend pointed to another area of potential inequity.

“It is a little unfair to me to set a price on carbon and have the general public pay for it when we have large corporations that disproportionately benefited from the use of carbon and actually delayed the transition to clean economies,” Townsend said. “The state of Hawaii is facing very expensive climate mitigation measures, and there is no reason why the fossil fuel companies cannot also participate in helping us address this.”

Coffman agreed, explaining that the specifics of implementation were beyond the study’s focus but were important for the success of either plan.

UHERO will release the final study on April 23.

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Michigan LDCs in Turf War with Transco over EV Charging

Two Michigan local distribution utilities have squared off with Michigan Electric Transmission Co. (METC) over the transmission company’s request to spend $15 million on a pilot project to build charging facilities for long-haul medium- and heavy-duty commercial vehicles.

In November, METC filed a request with FERC to recover its costs to build three charging stations along the state’s interstate highways (ER21-424). It also sought assurance that FERC would grant it 100% of its costs if the project is abandoned for reasons beyond METC’s control, in accordance with the commission’s 2009 Smart Grid Policy Statement.

Because of the charging demands of commercial trucks, METC said, their DC fast charging (DCFC) stations “may be best served by interconnections to the transmission system depending on the local system configuration and the availability and proximity of robust distribution infrastructure.” The proposal received support from Michigan officials, including the Public Service Commission, along with General Motors, Ford and several clean energy groups.

But Consumers Energy and DTE Electric Co. have asked the commission to reject METC’s petition until the company can provide more details, saying it could conflict with the distribution planning process and infrastructure development already underway in the state. They say METC’s proposal belongs in MISO’s Transmission Expansion Plan process.

FERC is expected to issue a ruling in the dispute on Thursday.

Corey Proctor, manager of transmission design at METC parent ITC Holdings Corp., told FERC in testimony that the DCFC charging stations will be sited based on criteria including proximity to interstate highways and existing transmission, available properties with willing partners, and location of ancillary services such as convenience stores, restrooms and existing petroleum fueling locations.

METC said it is only requesting cost-recovery of transmission-related infrastructure such as transmission lines of 138-kV and above and associated substations and technology to convert AC power into DC power.

“Power will be supplied by local distribution companies, and the charging stations will be owned and operated by third parties,” Proctor said. “Consequently, the pilot project will depend on the applicant’s successful collaboration with its customers and unaffiliated vendors that provide DCFC services.”

Proctor said although the pilot locations could recharge light-duty EVs, they will be designed to serve medium- and heavy-duty long-haul trucks with charging ports that can charge batteries with that have a demand of 1-3 MWh. Each charging station will have six charging ports.

METC would like to begin the pilot project next year.

Policy Statement

FERC’s 2009 policy statement, issued in response to the Energy Independence and Security Act (EISA), provides “guidance regarding the development of a smart grid for the nation’s electric transmission system, focusing on the development of key standards to achieve interoperability and functionality of smart grid systems and devices.” It set an interim rate policy to apply until the commission adopts interoperability standards.

METC said its proposal meets the policy statement’s requirements for rate recovery: it will advance the policy and goals of Section 1301 of EISA; will not adversely affect the reliability and cybersecurity of the bulk electric system; minimizes the possibility of stranded investment; and will include information-sharing with the Department of Energy’s Smart Grid Clearinghouse.

“Additionally, the pilot project will provide information to METC and the commission regarding the important role that transmission can play in facilitating the deployment of medium- and heavy-duty commercial EVs,” Proctor said.

The company said it can implement the project through the MISO and regional distribution system interconnection planning framework and recover its costs through MISO’s tariff.

Consumers Energy, DTE Oppose

METC’s 5,600-circuit mile transmission system (120 kV to 345 kV) is spread over two-thirds of Michigan’s Lower Peninsula. Consumers Energy is a transmission customer of METC whose 67,000 miles of electric distribution largely overlap METC’s service territory.

Both Consumers and DTE, which owns 40,000 miles of distribution in southeastern Michigan, say they have been heavily involved in Michigan’s efforts to encourage EV use.

Consumers’ “limited” protest said FERC should be careful to “preserve the well-established demarcation between transmission and local distribution facilities, both under the Federal Power Act and under a longstanding contractual arrangement between Consumers Energy and METC.”

Consumers also said the proposal shouldn’t circumvent existing regional transmission planning processes and that METC should be required to partner with Consumers and other affected distribution companies.

Consumers said FERC should reject the application without prejudice and require METC “to work with affected stakeholders, including distribution companies and load-serving entities, and return to the commission with a proposal to construct specific facilities that fit within a coordinated framework for encouraging electric vehicle adoption in Michigan.”

Consumers also asked the commission to conduct “stakeholder collaboratives” on the role of transmission facilities in the EV transition.

Consumers and DTE also insisted most distribution facilities can handle truck charging loads.

“METC’s witnesses contemplate charging stations that could individually serve 2.5 MW of load with all chargers in operation — an amount that is normally (and easily) served by local distribution facilities and local distribution companies,” Consumers said. “Even loads ten times larger could readily be served by Consumers Energy’s high-voltage distribution system.”

DTE said that METC’s application falls short of the requirements in FERC’s Smart Grid Policy and “also sows confusion and potential conflict with the distribution planning process and infrastructure development already well underway in Michigan.”

“Moreover, based on the description of the pilot project provided so far, METC appears to be seeking rate incentives for facilities that may well be local distribution facilities and thus outside FERC’s jurisdiction.”

“It is important to highlight that METC is a transmission owner, only,” DTE said. “It does not own any distribution facilities, and therefore METC lacks the requisite insight into the distribution system which is needed in order to be able to ascertain the most appropriate and cost-effective method of service for a new, end-use customer.”

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NJ Outlines Plan to Boost EV Truck Sales

The New Jersey Department of Environmental Protection (DEP) unveiled proposed rules Wednesday that would require manufacturers to meet increasing sales targets for medium- and heavy-duty electric trucks in the state after 2025, to cut carbon emissions.

The rules, which set out a system of credits and deficits governing the number of vehicles that manufacturers would have to sell in the state, are based on California’s Advanced Clean Trucks regulation approved last year.

The DEP estimates that the rules will reduce carbon emissions by 2.6 million metric tons from 2024 to 2040. Environmentalists welcomed the rules, saying they address a key source of pollution that particularly affects communities close to ports and highways. By focusing on the trucking industry, the rules also target one of the industries that underpin the state’s economy, providing transportation for goods to move from the Port of New York and New Jersey to distribution centers.

New Jersey EV Trucks
| Shutterstock

The rules are designed to help move New Jersey toward Gov. Phil Murphy’s goal of zero carbon emissions by 2050. Transportation accounts for 42% of carbon emissions in the state, and emissions from heavy trucks are a big contributor. The state’s master plan, released in 2019, assumes that 75% of medium-duty trucks and 50% of heavy-duty trucks will be electric by 2050.

“New Jersey has the opportunity to become the East Coast leader in truck electrification,” said Hayley Berliner, clean energy associate with Environment New Jersey. “We would urge a rapid adoption of this rule by the end of the year.”

There are few electric trucks on the road in the state. The Port Authority of New York and New Jersey says only a handful serve the port, and the New Jersey Motor Truck Association says it knows of none in use around the state. Truckers say the electric trucks on the market are too expensive and can’t go far enough without needing to refuel. In addition, truckers say, there are too few recharging points around the state. (See NJ Looks to Boost Heavy-duty Charge Points.)

The announcement Wednesday opened a two-month public comment period on the rules, with a public hearing to be held by DEP on May 20.

Rising Sales Goals

The rules apply to the manufacturers of all vehicles larger than 8,500 pounds who sell more than 500 vehicles in New Jersey annually.

Under the rules, manufacturers accrue “deficits” based on their sales of vehicles in the state that are neither zero-emissions or near-zero emissions vehicles. The deficits are calculated based on factors including the model year, the weight class group and whether a vehicle is considered a tractor.

To follow the law, the manufacturer must accrue credits that are equal to or exceed the value of deficits it accrues in a particular year. Credits would be awarded for the sale of a vehicle in New Jersey that is zero-emissions or near-zero emissions, with the value of the credits based on the weight class.

Each year after 2025 through 2035, the value of deficits increases, based on sales percentages set out in the rules, forcing the manufacture to sell more electric vehicles to remain in balance with deficits, or to otherwise obtain credits. Manufacturers that don’t accrue enough credits to wipe out their deficit can purchase credits from another manufacturer that has accrued an excess. Credits can also be banked if they are not needed in one year and used in subsequent years.

The proposed rules require the individual manufacturer’s sales of zero- or near-zero emissions vehicles to rise each year in the decade after 2025 until they account for 55% of class 2b and 3 trucks by 2035, 75% of Class 4 to 8 trucks and 40% of truck tractor sales.

Penalties for EV Sales Shortfall

Manufacturers that fail to comply with the rules face a fine of $2,500 for the first offense and up to $30,000 for each offense after the third one. Manufacturers face similar penalties for claiming credits for the sale of a vehicle to a purchaser not from New Jersey.

To provide data for future rule changes, the proposal requires that manufacturers report EV sales figures and requires federal, state and local governments that use trucks more than 8,500 pounds in weight, along with businesses and non-profit organizations that use them, to submit a report on how they use the vehicles.

Environmental groups, some of which had participated in a public hearing on the proposal last year, expressed enthusiasm for New Jersey’s action.

“We are very excited to see these rules move forward,” said Mary Barber, director of regulatory and legislative affairs for the Environmental Defense Fund, who tracks New Jersey Legislation. “Its introduction will have a really big impact.”

The organization in March released a consultant’s report suggesting that while electric trucks still had some way to go match the needs of the market in terms of the distance they can travel before recharging, the EV trucks available at present are up to many of the tasks that truckers face. The report concluded that more than 70% of the trips made between the Chino yard of NFI Trucking and the ports of Los Angeles and Long Beach could be done within the range of an existing electric truck.

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Report: US Should Target 100% EV Sales by 2030

The key question about the electrification of U.S. transportation is no longer if it is technically or economically feasible, but how fast it can be accomplished and what federal, state and local policies will be needed to drive rapid and widespread consumer adoption.

Berkeley 

A new report from the University of California, Berkeley envisions a scenario in which 100% of new car and light-duty truck sales will be electric vehicles by 2030, with medium- and heavy-duty truck sales going all-electric in 2035. Meeting this those aggressive targets, however, will require the installation of 120 GW of new solar, wind and storage each year through 2035 to decarbonize the grid, and the installation of 300,000 to 350,000 new EV chargers annually for the next 20 to 30 years.

Speaking at a media preview of the report on April 8, co-author Nikit Abhyankar, a senior scientist at UC Berkeley’s Goldman School of Public Policy, admitted the numbers are high, but with the right policies, achievable. And, he argued, the benefits will outweigh the costs.

According to the report, because EVs cost less to operate and maintain, making all new cars electric will provide $2.7 trillion in consumer savings over the next 30 years, which translates into average household savings of $1,000/year. Shifting the 100% target for new car sales even five years to 2035 would defer over $400 billion in consumer savings, Abhyankar said.

Emissions reductions for the transportation sector — now the largest source of GHG emissions in the U.S. — would be similarly dramatic, 60% by 2035 and 93% by 2050. The reduction in air pollution alone would avoid 150,000 premature deaths by 2050, Abhyankar said.

Aggressive adoption of EVs could cut transportation sector emissions in the U.S. by 60% by 2035 and 93% by 2050, relative to 2020 levels | UC Berkeley 

“If you also add the avoided deaths due to [decarbonizing] the grid, that number increases by approximately 80,000 to 85,000,” he said.

The onslaught of numbers is underpinned with some of the basic economics driving the growth of EV sales in the U.S. — battery price and performance, Abhyankar said.

“All the experts have been wrong on how fast battery prices are going to [drop], and that includes us,” he said. “The industry has always beaten all the battery price forecasts.” EVs should reach price parity with internal combustion engine vehicles by the mid- to late 2020s, he said, buoyed by the growing commitments of automakers and corporate fleets to EVs.

So, with GM, Volkswagen and Ford all rolling out EVs, why not let the market take care of the transition?

“The quick answer to that is business-as-usual growth in EVs will not be consistent with climate neutrality goals and also [limiting climate change UC to] the 1.5 degrees Celsius goal we really need to achieve,” Abhyankar said.

Targeted, Phased-down Incentives

At present, EVs account of about 2% of new car sales in the U.S. While arguing that technical and economic feasibility should be the central factors in growing the market, Abhyankar acknowledged that significant policy and regulatory support will be needed.

More than 40 recommendations are laid out in a companion report to the Berkeley study, compiled by policy consultants Energy Innovation. Sara Baldwin, director of electrification policy at the firm, zeroed in first on federal and state standards and the role of the National Highway Traffic Safety Administration and the EPA in setting, respectively, fuel economy and emissions standards.  Both should be made more rigorous over time “such that tailpipe emission standards reach zero grams per mile by 2035,” she said.

These strong standards would, Baldwin said, “support investments in mass production of EVs across all brands and classes, and this, in turn, supports consumer preferences for more models and helps bring vehicle costs down more quickly. It really is the most cost-effective way of getting there,” she said.

The prime example is California, where the state’s Zero Emission Vehicle Program — which sets 2035 as the target for all new car sales to be zero-emission vehicles — has helped create the largest EV market in the nation.

Expanded, but carefully targeted incentives are also needed to reach more people and market segments, Baldwin said, such as providing incentives for public and private fleet conversions. “We also recommend phasing down the incentives over time to help avoid gaming and ensure that the vehicles themselves are becoming more cost-effective,” she said.

Making EVs the Default Choice

The impact of EVs on the grid is another core area of concern in both the Berkeley and Energy Innovation reports. Adding 300,000 new chargers to the electric system will increase electricity demand about 2.2% a year through 2050, Abhyankar said, which will in turn require about $10 billion a year in investments for charging infrastructure and distribution system upgrades.

Energy Innovation’s recommendations in this area are largely focused on utility best practices — analyzing and developing maps for hosting capacity for EV chargers (as some utilities already do for solar), streamlining permitting and interconnection processes, and integrating EV chargers into distribution planning.

US EV Sales
| Shutterstock

Longer-term impacts of rising demand linked to EVs will need to be monitored, but Abhyankar believes they will be minimal. “Wholesale electricity costs and distribution costs on a per kilowatt-hour basis do not increase beyond 2020 levels, primarily because of the large reduction in solar, wind and battery prices,” he said.

The transportation section of President Joe Biden’s $2 trillion infrastructure plan is well aligned with many of the Energy Innovation recommendations, Baldwin said. Biden’s $174 billion to grow the U.S. EV market “sends a clear message that this area requires attention, focus and investment to compete globally,” she said.

Other potential synergies include the plan’s call for investment in domestic EV manufacturing, replacing diesel trucks and school buses and ensuring access and benefits for low-income and disadvantaged communities. Biden, however, puts no timeframe on transportation electrification, a move that could be politically sensitive for his ties to working class voters and unions.

By its own admission, the Berkeley report is limited by its focus on technical and economic feasibility. But, as Biden prepares for his international Leaders Summit on Climate next week, the report’s insistence on making EVs the default choice for new car buyers sooner rather than later could play a vital role in meeting his aggressive climate goals.

[Editor’s Note: An earlier version of this article mistakenly attributed the study to the Lawrence Berkeley National Laboratory.]

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UPDATED: MISO Capacity Auction Values South Capacity at a Penny

MISO’s ninth annual capacity auction cleared MISO South zones — two months removed from emergency load shed orders — at just a penny/MW-day Thursday.

Southern zones 8-10 — Arkansas, Louisiana, Mississippi and Texas — cleared at an all-time low of 1 cent/MW-day while Midwestern zones 1-7 — Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Montana and Wisconsin — cleared at $5/MW-day.

Last year, Michigan’s Zone 7 became MISO’s first local resource zone to clear at the $257.53/MW-day cost of new entry, signaling a need to build new generation. Most other zones cleared around $5/MW-day. (See Michigan Prices Soar in 8th MISO Capacity Auction.)

MISO said the low clearing prices in the 2021/22 Planning Resource Auction, especially in MISO South, are because of increased supply and lower peak demand forecasts. MISO’s South-to-Midwest capacity transfer limit bound during the auction, causing the $4.99 price separation.

MISO Capacity Auction

2021/22 PRA clearing prices |MISOSpeaking at a conference call to discuss results Thursday, MISO Manager of Capacity Market Administration Eric Thoms said zones 8-10 experienced an average 2.5% decrease in demand forecasts.

MISO’s Independent Market Monitor has reviewed and certified the auction results.

The grid operator said all zones’ capacity volumes exceeded their respective local clearing requirements. MISO prepped for the auction with a 120-GW systemwide coincident peak and a 134-GW planning reserve margin requirement. (See MISO Preps for Capacity Auction, Spring Peak.)

MISO cleared a total 133.9 GW of capacity. Natural gas generation provided most of the capacity at 40%, while coal generation followed at 34%. Nuclear generation held steady at about 9%. Wind and solar furnished 3% and 1%, respectively. While still a small share of total capacity, MISO said the 3,590 MW of wind cleared was a 10% increase compared to last year, and the 1,426 MW of solar represented a 68% rise.

Thoms said this year, no energy efficiency resource registrations qualified for auction participation.

MISO leadership acknowledged the incongruity of the South’s low clearing prices and recent maximum generation events that required load shedding after both the February freeze and 2020’s Hurricane Laura.

“The continued frequency of emergency events, including what MISO experienced in February, reinforce that the summer-focused resource adequacy construct will need to be modified to ensure resource availability, particularly with the continued evolution of the resource portfolio,” Executive Director of Market Operations and Resource Adequacy Shawn McFarlane said in a press release.

Most MISO emergencies occur outside of summertime, Thoms said, providing more confirmation that MISO should rethink its summer peak reliability emphasis.

“That will be more support for these ongoing reforms,” he told stakeholders.

MISO said it wants to transition away from summer peak planning and hold four independent seasonal auctions by the 2023/24 planning year. It also wants to impose a tougher capacity accreditation on planning resources, though that proposal is being redeveloped after criticism from stakeholders. (See MISO, Stakeholders Disagree on Post-storm Accreditation.)

MISO plans to go into greater detail on the auction results at its Resource Adequacy Subcommittee teleconference May 12.

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NJ Rate Counsel Turns to State Supreme Court over Nuke Subsidies

New Jersey’s Division of Rate Counsel on Monday appealed to the state Supreme Court the dismissal of its suit seeking to block $300 million in subsidies for three South Jersey nuclear units as it continues to oppose a renewal of the subsidies by the Board of Public Utilities.

The Rate Counsel filed a Appeals Court Backs NJ Nuclear Subsidies.)

The ZEC program provides subsidies to nuclear power plants at risk of closure so that they can remain open to generate carbon-free power and help the state meet its goal of reducing greenhouse gas emissions by 80% by 2050. The BPU awarded the $300 million in ZECs to Hope Creek, which is owned and operated by PSEG, and Salem Units 1 and 2, which PSEG operates and co-owns with Exelon. (See NJ Approves $300M ZECs for Salem, Hope Creek Nukes.)

In a separate action on Friday, the Rate Counsel urged the BPU not to renew the ZECs. It argued that the two companies had failed to show that without the subsidies, the nuclear plants would lose money, or that the level of subsidies they are seeking is “affordable to New Jersey retail distribution customers.”

The BPU is expected to vote in the coming weeks on whether to extend the ZECs for another three-year period.

PSEG declined to comment on the Supreme Court petition. Instead, the company referred to its filing with the BPU on Friday that argues that even with the $300 million in ZECs, the companies would not generate enough revenue to cover the “risks inherent in the plants’ operation.” Without a subsidy of the proposed amount, PSEG would “take steps to close the plants,” the company said.

Asked for a comment on the Rate Counsel’s two actions, Exelon referred to PSEG’s response.

Staff Decision Rejected

The three-judge appellate panel made its ruling in response to a suit filed by the Rate Counsel after the BPU first awarded ZECs to PSEG and Exelon in March 2019. The agency, which is charged with protecting ratepayers’ interests, argued that the ZECs were arbitrary and capricious and that none of the plants need them to remain financially viable.

In preparation for the BPU’s 2019 decision on whether to award the ZECs or not, staff found that all three units would operate profitably through May 2022. As a result, staff concluded that they were not eligible for the subsidies.

But the BPU rejected that conclusion. It said the evaluation team had improperly excluded from its calculations consideration of PSEG’s operational and market risks. In dismissing the Rate Counsel’s suit, the appellate court agreed, saying that the legislature clearly intended the BPU to consider the “costs and risks” in considering the eligibility of applicants seeking a ZEC award.

The Rate Counsel told the Supreme Court that it will argue that the BPU made the award based on factors “other than the eligibility criteria” set out in state law. Among the arguments cited by the division were that the appellate court adopted BPU quantification of operational and market risks and costs, rather doing the analysis itself.

It also argued that the appeals court ignored the transcript of the BPU meeting in which commissioners explained the bases of their decisions and “effectively” overruled a past legal decision that required that rates be just and reasonable.

BPU Submissions

The Rate Counsel’s brief to the BPU argues that PSEG’s arguments “fall short” of proving that it needs the subsidy and that it needs to be at the proposed level.

“When the board takes a close look at the evidence in this matter, it is clear that PSEG overstates its projected costs, including the costs of operational and market risks, and understates its projected earnings,” the Rate Counsel said. “PSEG continues to rely on phantom costs that either do not exist or are not paid out as part of its operating expenses.

“Likewise, PSEG understates its revenues, understating both its energy and capacity revenues, while overstating the risk to earning capacity revenues.”

It also argued that PSEG’s calculations of the “emissions avoidance benefits” of keeping the plants open are also flawed because they are based on data for the Eastern U.S. and Canada, rather than areas that directly impact New Jersey’s air quality.

In its own filing, PSEG said that the counsel’s arguments are a simply a “rehash” of those made to, and rejected by, the legislature, BPU and Appellate Court.

PSEG said that the award of $300 million, the “maximum that the current law allows, is justifiable as a bridge to a longer-term solution for these plants that will place them on a firmer financial footing for the duration of their licenses.”

“The continued operation of these plants will significantly reduce carbon emissions and increase the resilience of the state’s energy system, and will do so at a cost per megawatt-hour that is vastly more cost-effective to electric customers than wind or solar,” PSEG said.

“Keeping these plants in operation,” it added, “in fact will keep electricity costs to customers lower than they otherwise would be by hundreds of millions of dollars over the three-year ZEC period.”

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Massachusetts Fishermen Brace for Offshore Wind

Steve Budrow steered his sturdy, 47-foot vessel the Mary B. past the State Fish Pier in Gloucester, Mass., on a cloudy afternoon last week.

In his 25 years as a lobsterman, Budrow has faced many challenges. A nor’easter wiped out $16,000 worth of traps in 2003. The price of bait has skyrocketed. State regulators increasingly are imposing restrictions on when and where lobstermen can set traps to conserve endangered species.

Now Budrow faces the growth of offshore wind development, a situation he could not have imagined when he first began hauling lobster traps in the small rustic fishing town of Rockport, Mass.

The U.S. Bureau of Ocean Energy Management (BOEM) concluded its environmental review of the Vineyard Wind I project off the coast near Martha’s Vineyard last month. A statement from the agency signaled its willingness to approve Vineyard Wind’s construction with a cap on the number of turbines. (See BOEM Releases Final Vineyard Wind Impact Statement.)

The state’s sweeping climate bill signed into law last month requires utilities to procure 5.6 GW of offshore wind, and President Biden’s new infrastructure bill would expand offshore wind on the East Coast to 30 GW by 2030.

But Budrow and other Massachusetts fishermen say constructing offshore wind turbines and embedding power cables into the ocean floor to transmit the wind power threatens their livelihood, along with the livelihood of other waterfront industries on Cape Ann.

“It wears on you,” Budrow said as the Mary B. rounded the breakwater.

About 40 lobster boats gathered last week for a parade protesting the recent closure of all state waters to commercial lobster fishing to protect the migration of North Atlantic right whales from entanglement in trap lines. The right whale’s remaining numbers are estimated to be around 360.

“How does that make sense?” Budrow said. “Lobster fishing is shut down for three months, but the state will allow offshore wind companies to build wind farms near whale habitat.”

Offshore wind projects have not been planned for the waters where Budrow fishes, but tall orders for renewable energy at the state and federal level has Cape Ann fishermen bracing for more interruptions to the fishing, as they try to eke out a living, he said.

Subsea base construction and buried cables will limit the places where 50-ft lobster boats can haul traps and skim the seabed for scallops.

In Maine, the marine resources commissioner forced captains who fish along a survey route for an undersea power cable to move their gear. If fishermen didn’t comply, the state threatened to move the gear out of the way using the state’s Marine Patrol.

Further restrictions from OSW developments are the straws breaking the fishing industry’s back; fishermen off the coasts of Massachusetts and Maine are planning protests and visits to the state house.

“Eventually they are going to regulate us out of business if they don’t listen,” Budrow said.

The fishing community is a tight-knit one. Budrow pulled his boat up alongside other lobstermen as the boats chugged to Ten Pound Island and out to Gloucester Harbor.

Paul Theriault, who has been making a living as a fisherman in Rockport for five decades, said it feels like the industry is being attacked from all sides: politicians, conservationists and offshore wind developers.

“Lobsters are big in Massachusetts, but in Maine lobsters are king” as an economic mainstay for coastal towns, Theriault said.

Massachusetts harvests more than $459 million worth of mollusks, such as sea scallops, annually. Fisheries, seafood processors and vendors employ more than 5,700 people in more than 500 businesses, generating more than $300 million in annual wages, according to the state.

The industry also generates $600 million worth of gross state product annually, with Rockport as one of Massachusetts’s top ports for lobster landings.

“There are thousands of families that will be affected negatively by this project,” Theriault said.

He sits on the board of the Massachusetts Fishermen’s Partnership and meets with OSW developers to explain that the lobster industry in Massachusetts employs crew members, truck drivers, boat builders and captains.

“It’s been challenging to obtain products as one of the local, small lobster dealers,” Anthony Ciarametaro, a wholesale retailer based in Essex, Mass., said at the protest. He works with lobstermen like Budrow and Theriault to sell their catch to restaurants and markets, but fishing restrictions have left supply low.

Response from Vineyard Wind

In response to concerns that offshore wind turbines will encroach on fishing areas, Vineyard Wind reduced the number of turbines it planned to anchor into the sea floor from 106 to 84, and eventually to 62.

“Some fisheries will lose, and some will benefit,” Kevin Stokesbury, a researcher from the University of Massachusetts Dartmouth, said during a recent a webinar hosted by New England for Offshore Wind. He was hired by Vineyard Wind to assess the impacts of offshore wind on the fishing industry and help develop mitigations.

Areas designated for wind turbine construction in the Atlantic overlap with 40% of scallop fishing zones, Stokesbury said. But the lobster fishing industry might benefit from the creation of more subtidal, shallow habitat zones from the wind turbine platforms.

The final environmental impact statement from BOEM for the Vineyard Wind project said that “most potential unavoidable adverse impacts associated with the [project as proposed], such as disturbance of habitat or incremental disruption of typical daily activities, would occur during the construction phase or would be temporary.”

However, the project “could include effects on habitat or individual members of protected species, as well as potential loss of use of commercial fishing areas.”

Vineyard Wind agreed to provide fisheries mitigations for Rhode Island “after multiple discussions and negotiations,” according to the review, including a $4.2 million fund for direct compensation to Rhode Island fishermen for loss of equipment or claims of direct impact.

The project will also provide Rhode Island with $12.5 million to establish a Rhode Island Fisheries Future Viability Trust and work with the Massachusetts Executive Office of Energy and Environmental Affairs to establish a Compensatory Mitigation Fund for $19.2 million and a Fisheries Innovation Fund for $1.75 million.

But fishermen like Theriault say they aren’t satisfied and argue wind turbines should be built on land instead of offshore.

“Putting things in the ocean is cheap because no one sees it,” Theriault said. “But that’s not a good reason to put it there.”

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NJ Looks to Boost Heavy-duty Charge Points

The New Jersey Board of Public Utilities is preparing a draft proposal on how to encourage the installation of EV chargers for heavy-duty electric trucks statewide, as a Newark-based trucking company is developing a project that could significantly advance the use of electric trucks in the Port of New York and New Jersey.

In the coming months, the board expects to release preliminary guidelines for promoting the development of charging sites for medium- and heavy-duty electric trucks and ensuring they are distributed across the state in line with the needs of trucks, buses and other users, said spokesman Peter Peretzman. The evaluation process will be similar to that in guidelines the BPU is close to concluding to set out rules on how and where to locate charging sites for light-duty electric vehicles around the state. (See NJ Looks to Boost EV Charger Numbers.)

New Jersey Heavy-duty EVs
The New Jersey BPU will soon release a straw proposal on how to accelerate the statewide deployment of charging sites for electric trucks and buses. | Daimler Trucks North America

The heavy-duty charger proposal and a project that trucking company International Motor Freight (IMF) has under development in the port are designed to put more electric trucks on the road in the state, where 42% of the carbon emissions come from transportation and electric truck use is minimal. The Port Authority of New York and New Jersey, for example, says it has only three electric trucks in service.

Truckers in New Jersey, like those around the nation, cite the lack of medium- and heavy-duty charging sites as a key obstacle to greater use of electric trucks. Other drawbacks include the short range of existing electric trucks ­— only up to around 250 miles — the high cost of the vehicles and the amount of space taken up by the battery, reducing the cargo area.

Yet industry analysts, including the authors of reports released last month by the Environmental Defense Fund and Lawrence Berkeley National Laboratory, say that technological advances, especially in battery size, mean that electric trucks are becoming more viable and can have long-term economic advantages over diesel. Reaping those benefits, however, will require government support, the reports said.

Limited Delivery Distance

The IMF project, which is designed for the company’s 7-acre yard in the port, was conceived with truck manufacturer Daimler Trucks North America, in part, because IMF’s typical cargo run fits in with the range and limitations of an electric truck fleet. The main business of the 45-year-old company, which has about 145 diesel trucks, is “drayage” trucking, the pickup and drop-off of containers at port terminals and client warehouses and distribution centers.

In February, the project drew support from Gov. Phil Murphy, who awarded $5.9 million from the state Volkswagen settlement to IMF for the purchase of 16 electric trucks and two yard tractors for moving cargo inside the port. The grant was part of $100 million in awards given by Murphy, who aims to position the state to reach zero emissions by 2050. (See NJ Gov. Unveils Green Transportation Plan.)

The IMF project will use Freightliner eCascadia trucks, about 20 of which are in use in test programs in California and collectively have driven 750,000 miles, Daimler consultant Markus Schwenke told the New Jersey Transportation Planning Authority in a February presentation. One of those trucks will be brought to New Jersey for a test in the second half of this year. The truck goes into production next year, he said. The manufacturer expects to deliver the trucks for the project in late 2022 or early 2023.

Several elements in IMF’s business make it a good fit for an electric vehicle project with Daimler, including the fact that customers are asking IMF to lower its emissions, Schwenke said. IMF trucks typically run trips of 100 miles to 150 miles a day, five or six times a week on the New Jersey Turnpike, he said. They include stops in New York, Elizabeth and the Port of Philadelphia, about 90 miles from the Port of New York and New Jersey, which fits easily within the 250-mile range of the eCascadia, Schwenke said.

New Jersey Heavy-duty EVs
Newark-based International Motor Freight will test out a Class 8 electric truck for daily trips averaging 100 to 150 miles, picking up and dropping off cargo around the Port of New York and New Jersey. | Daimler Trucks North America

“One hundred to 250 miles fits what IMF is doing as of today for minimum 50% of their operation,” he said. Trucks parked in the IMF yard could be recharged between about 4 p.m. and 2 a.m. to 3 a.m., he said. IMF plans to install 50 charging stations in the yard, with a combined 4 MW of energy and is considering 30,000 square feet of solar panels in the yard to feed power into battery storage, Schwenke said.

“Those batteries in the end can shave peaks during peak hours,” Schwenke said. “We want to be very cautious with withdrawing power from the grid when it’s most needed.” The truck’s 475-kW battery could be charged in two hours if need be, he said.

Adrian G Stewart, a member of Daimler’s electric mobility team, added that the project may include a charger at the Port of Philadelphia to provide “opportunity charging,” even though the port is an easy round trip for the eCascadia from IMF’s home depot.

“Trucks can sometimes have to wait for extended periods of time in the port to collect cargo,” Stewart said. “To make productive use of this time, trucks can be connected to a charger and would then require a shorter, quicker charge when they return home.”

Government Policies

Government support will be key to the advancement of electric trucks, according to the two reports published in March, which suggest that although electric trucks are viable, they have some way to go to before becoming routine players in the market.

A study prepared for the Environmental Defense Fund by consultant Gladstein, Neandross & Associates looked at the delivery demands of two trucking fleets in California and concluded that even under existing range and charging limitations, most of their required trips could be done with electric trucks.

The study analyzed 12-months of trip data from two trucking companies, NFI of New Jersey and Schneider of Wisconsin, from their yards in California. It found that 71% of the 20,500 truck trips begun from NFI’s yard in Chino, many involving the movement of cargo containers to and from the ports of Los Angeles and Long Beach, could be completed by electric trucks fitted with 500-kWh batteries, which are available today. The study found that figure would rise to 93% of trips if a not-yet-available 1,000-kWh battery were used.

The report also concluded that the operating cost over the life of an electric truck was about 60% cheaper than for a diesel truck. However, without government subsidies or other supporting policies, the advantageous costs for the electric truck would be minimal, the report said. “Programs that provide support to reduce infrastructure costs are still needed.”

Of particular importance is California’s Low Carbon Fuel Standard (LCFS) program, which enables clean energy users, including electric truck users, to sell credits to emission producers that want to offset their carbon footprint, the report said. Without LCFS credit sales, “the positive results compared to diesel are erased,” the report concluded.

Long-term Cost Benefits

The Lawrence Berkeley National Laboratory report found that the lifetime total cost of ownership (TCO) of a Class 8 truck, the largest cargo-hauling truck, would be about 13% lower for an electric truck than a diesel truck. While upfront costs of buying an electric truck are greater — about $210,000 compared to $125,000 for a diesel truck — the fuel and maintenance costs are lower for the electric truck, the report said.

That calculation of 13% lower lifetime costs is based on a truck with a 300-mile range, which is about 50 miles longer than the longest range of most electric trucks currently available. But EV costs will fall as battery costs do, from about $135/kWh at present to an expected $60/kWh in 2030, the report said. That would make the TCO for an electric truck 40% lower than that of a diesel truck, the report said.

Key to the sector’s ability to reap those benefits will be government policies to encourage the use of electric trucks, said Nikit Abhyankar, a scientist at the laboratory and one of four authors of the report. Such policies should include incentives for truck purchases, measures that open the way for the creation of heavy-duty charging infrastructure and an effort to set electricity rates for charging at industrial levels, rather than the higher residential rates, Abhyankar said. “All three of them are equally important.”

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NY Carbon Tax Bill is ‘Premature,’ Opponents Say

Opponents of a bill that would put a price on pollution and charge a fee for emitting in New York say the bill replicates work already underway by the state’s Climate Action Council.

“It strikes us that moving forward with this bill is premature,” Ken Pokalsky, vice president of the Business Council of New York State, said Tuesday. “There is an enormous amount of work being done [by the council], and it’s addressing some of the very issues that this bill, in our view, would presuppose answers to.”

The Climate and Community Investment Act (CCIA) would prioritize the investment of funds obtained from payments for emission of greenhouse gases and co-pollutants in disadvantaged communities. The bill’s proponents say it builds on the commitments to environmental justice made in the 2019 Climate Leadership and Community Protection Act (CLCPA).

New York Carbon Tax
Rachel Patterson with Environmental Advocates New York said that a bill that would establish a carbon tax in New York builds on the equity commitments made in the 2019 Climate Leadership and Community Protection Act. | N.Y. Senate

“We know that climate change is impacting New Yorkers right now, and the impacts of sea level rise and deadly air pollution are worse for our vulnerable residence, low-income communities and communities of color,” Rachel Patterson, director of climate policy at Environmental Advocates New York, said during a public joint Senate committee hearing on the bill. “By charging polluters for their emissions, we can afford to support families, workers, small businesses and disadvantaged communities in the shift to renewable energy.”

The bill also would allocate funding for community-led energy planning, according to Patterson.

“Underserved communities know what changes need to be made to make their neighborhoods more resilient and improve air quality, and the funds from the CCIA will allow community members to have the power to shape their communities,” she said.

The Empire State Forest Products Association (ESFPA) echoed Pokalsky’s concerns that the bill is premature.

ESFPA believes the bill is missing the integrated analysis called for in the CLCPA, according to Executive Director John Bartow.

“That analysis should be completed before legislative or other financing mechanisms are created,” he said.

Program Costs

The CCIA would require New York to establish an index that lists the social cost of pollution for all regulated air contaminants in the state and set up a system of compliance fees that reflect that index.

The coalition NY Renews estimates that the fee would generate $15 billion per year for reinvestment, at a price of $55 per short ton of carbon dioxide equivalent. The bill also establishes a phased increase in the price. Ideally, the amount that covered entities emit would go down, eventually helping New York meet its 2050 emissions goal of an 85% reduction from 1990 levels.

“The CCIA prices the source of harm to frontline communities for the pollution that causes asthma, premature death and escalating climate crises,” said Raya Salter, lead policy organizer at NY Renews. Investments, she added, would be made in large- and small-scale renewable energy projects, building upgrades, energy retrofits and community-owned power, among other things.

At $55, according to Pokalsky, the natural gas industry would pay an extra $4.2 billion in a year, representing a 26% increase in costs. In addition, he said, the cost for gasoline would be $2.3 billion in a year, representing 55 cents/gallon.

The cost to one paper mill at $55, according to Bartow, would be $32.6 million in a year. Sector-wide, he said, the forest-related economy would pay $1 billion in a year.

“That is not sustainable to many of our business,” he said.

ESFPA has been working with the CAC’s Agriculture and Forestry Advisory Panel to build a role for forest and wood products, Bartow said.

“We need to accept that what we currently make using fossil fuels can be made from biomass, such as diesel to biodiesel, plastics to bioplastics, and petrochemicals to biochemicals,” he said. “We need to decide whether we want to host and grow these advanced bioprocessing facilities and manufacturing plants in our communities and have the jobs and the tax base that comes with them.”