The Paris Agreement on climate change set a goal to keep Earth from warming by more than 2 degrees Celsius by 2050.
But if global warming proceeds at its present pace, the world’s temperatures will likely grow 2.8 C by that date, according to a University of Washington study.
The Paris agreement target of cutting carbon emissions by 1% annually should be increased to 1.8%, said the study, published Feb. 9 in Communications Earth & Environment.
Adrian Raftery | University of Washington
The projected 2.8-degree figure “is very discouraging,” said Adrian Raftery, a professor of statistics at the university, who tackled the study with then-doctoral candidate Peiran Liu.
The study concluded that 2100 would likely see a 2.1- to 3.9-degree increase with 2.8 degrees being the median. However, the median could decrease to 2.3 degrees, if nations meet their 2030 carbon-cutting goals. These conclusions are based on complex statistical models involving population growth, gross domestic product growth and carbon intensity, a measure of carbon dioxide produced per dollar of GDP.
The 2021 analysis builds on a 2017 study by Raftery that concluded Earth had only a 5% chance of meeting the 2 degrees-or-less target in 2100.
Raftery’s work for the U.N. Intergovernmental Panel on Climate Change led to the 2017 study, and that led to the question of what would be the likely temperature rise between now and 2100.
“Obviously, this is what inquiring minds want to know,” Raftery said.
The Paris Agreement included goals for individual nations with deadlines of 2025 to 2030. The study showed the U.S., Brazil, China, Australia and much of Europe being among the least likely to reach their targets in 2025 and 2030, while Russia is among the most likely. But Russia has promised to do very little under the accord, Raftery said.
Meanwhile, Raftery pointed to France — with high-speed trains and a high number of carbon-free nuclear plants — as a nation to pay close attention to regarding dealing with global warming.
The 2021 study noted that the world’s carbon intensity has decreased 2% annually since 1960. But that is offset by global GDP growth of 2% annually, which essentially leads to the two factors canceling each other out.
Work has begun on the next study: looking at the relationship between global warming and specific locations. For example, how big a role does the distance from the equator have on global warming impacts.
“Global warming doesn’t affect everywhere equally,” Raftery said. Further study would examine the relationship between carbon emissions and agriculture and health, he said.
Raftery would also like to see the nations in the Paris Agreement set annual goals for reducing carbon emissions, instead of aiming for targets such as 2030, 2050 and 2100. That’s because far-in-the-future goals “make it harder for people to focus on them,” Raftery said.
New York state hopes to adopt medium- and heavy-duty zero-emission vehicle (M-HD ZEV) standards by the end of this year.
The New York State Department of Environmental Conservation (DEC) on Wednesday presented its plan for a rulemaking on the standards in a session with stakeholders. The rulemaking would build on the state’s commitment last year to address M-HD emissions through coordinated action with 14 other states.
Jeff Marshall of the DEC’s Air Resources Board said the department anticipates publishing a proposed rulemaking by June and adopting a final rule by December. Under that timeline, he said, the rule would be effective for the 2025 vehicle model year, which can start as early as January 2024.
New York would adopt California’s M-HD ZEV standards, also known as advanced clean truck (ACT) standards, under existing New York regulations on emission standards for motor vehicles. The M-HD ZEV standards are similar to a light-duty ZEV program already in effect in New York.
The Clean Air Act allows states to adopt California’s more stringent standards instead of federal standards. Marshall said that New York first adopted the California motor vehicle emissions program starting with the 1992 model year for light-duty vehicles. The new rulemaking would expand on several iterations of standards New York has adopted since then.
Last year, New York signed a multistate M-HD ZEV memorandum of understanding that suggested states consider adopting California’s ACT standards. The DEC also plans to add to the rulemaking California’s omnibus heavy-duty low oxides of nitrogen (NOx) standards and Phase 2 greenhouse gas standards, which advance the M-HD emissions reductions originally set by the federal heavy-duty national program, or Phase 1 GHG standards.
ACT
The ACT standards have an original equipment manufacturer annual sales requirement that ensures car makers are placing a target number of vehicles for sale in New York each year. Marshall said that the sales requirement increases annually, with a goal of having 100% ZEV in the applicable vehicle classes by 2045. Manufacturers can earn credits for vehicles that comply with the regulations and use those credits for flexibility on future requirements.
In addition, the standards have a one-time, large entity reporting requirement for organizations that meet specific M-HD ownership criteria. Those entities include businesses with more than $50 million in annual revenue and at least one M-HD vehicle as well as state and local governments with at least one M-HD vehicle. The one-time report submitted by the covered entities would provide the DEC with information on existing use cases and gaps in EV infrastructure to inform future rulemakings, Marshall said.
Omnibus Standards
The omnibus heavy-duty low NOx standards that the DEC is considering apply to exhaust emissions for vehicles over 10,000 pounds with heavy-duty diesel engines. They would set heavy-truck NOx emissions at 0.05 grams per brake horsepower-hour (g/bhp-hr) through model year 2026 and 0.02 g/bhp-hr in model year 2027. The standards also set heavy-truck particulate matter emissions at 0.005 g/bhp-hr starting in model year 2024.
Useful life and warranty requirements are included in the omnibus standards.
“Diesel engines last a long time, and you want the emission control portion of the engine to last a long time as well,” James Symon of the DEC Air Resources Board said during the stakeholder presentation. “A warranty would ensure that the engine emission control system is free from defects and make sure that the equipment is durable and lasts throughout the useful life of the vehicles.”
Phase 2 Standards
The Phase 2 GHG standards that the DEC also plans to add to the rulemaking are based on California’s version of the federal Phase 2 standards. The increased M-HD emissions reductions under the federal Phase 2 GHG standards apply through model year 2027 and vary by vehicle type.
Symon said that while California’s standards are aligned with the federal standards, they include a group of additional stipulations. California’s standards include, for example, a credit adjustment to incentivize use of low-global-warming-potential refrigerants and advancements in minimum ranges for plug-in-hybrid electric vehicles.
Comment Period
Although the DEC is not in a formal comment period for the planned rulemaking, Marshall said it is seeking input from stakeholders on the potential regulations. He encouraged interested parties to submit comments by March 10.
Eversource Energy CEO Jim Judge said Wednesday that the utility posted profits of $1.2 billion ($3.55/share) in 2020, even as it dealt with “the highest level of storm activity ever for our company.”
The figure represents about a 33% increase over 2019’s earnings of $909.1 million ($2.81/share).
Despite severe damage from Tropical Storm Isaias and other weather-related events, Eversource, which supplies electricity, natural gas and water service to 4.3 million customers in Connecticut, Massachusetts and New Hampshire, also reported net income of $271.9 million for the fourth quarter last year, a nearly 9% increase over the same period in 2019. The quarter-over-quarter increase was off a comparable increase in total revenue, which the company said was led by gains in its transmission and distribution segments.
Judge also detailed Eversource’s long-term strategy of being “the principal catalyst to greenhouse gas reductions in New England.” He said that Eversource has divested all its fossil-fuel generation, reduced methane leaks in the distribution system and improved “the efficiency of our delivery system, our facilities and our vehicles.”
“This has enabled us to be in sync with all the states of New England, which are targeting greenhouse gas reductions within their borders of at least 80% by year 2050,” Judge said. “Our long-term strategy is built around being a principal enabler of that reduction.”
Judge said Eversource has set a goal of net-zero emissions. The company invested more than $500 million in custom energy efficiency initiatives in 2019 that will reduce emissions by 3.2 million metric tons, he said.
Eversource Energy’s reported progress toward net-zero emissions | Eversource Energy
“Efforts to significantly expand our zero-emissions vehicle charging infrastructure and reduce the number of homes heated with oil offer very significant additional opportunities to reduce the region’s emissions,” Judge said.
Eversource’s “most significant initiative,” Judge said, is its partnership with Ørsted, which the company expects to result in the construction of 4,000 MW of offshore wind facilities off the coast of Massachusetts. It expects that will annually reduce GHG emissions by approximately 6 million tons.
Judge added that all the steps in the South Fork Wind Farm review process in New York have either been met on or ahead of schedule since the U.S. Bureau of Ocean Energy Management established its revised schedule last summer.
Judge said that recent action at the federal level underscores the “government’s support for these projects” like South Fork, Sunrise Wind and Revolution Wind.
President Biden signed an executive order in January requiring that the Department of the Interior to conduct a full assessment of OSW siting processes to align with the administration’s renewable energy production goals. In December, Congress and the IRS provided additional financial incentives for OSW development that include a 30% investment tax credit for projects that commence construction before January 2026, with a 10-year safe harbor for eligible projects.
“Taken together, these changes add more certainty to the tax benefits available for offshore wind and underscore the federal government’s support for these projects,” Judge said.
The Maine Public Utilities Commission on Thursday opened an investigation into the design and operation of the state’s electric distribution system.
“To address climate change in the years ahead, we will be placing new demands on our electric distribution system, and we must assess how to modernize the grid at the lowest cost for Maine people,” PUC Chairman Philip Bartlett said in a statement. “Recent issues related to interconnection of distributed resources highlight both the challenges we face and the urgency of the need for effective planning.”
On Feb. 11, the PUC opened a separate investigation into the interconnection practices of Central Maine Power (CMP).
An investigation of Maine’s power grid is underway to ensure that renewable energy projects like this solar farm in Rockland can connect to the grid in a timely and cost-effective way in the future. | Crispins C. Crispian, CC BY-SA 4.0, via Wikimedia Commons
Maine Gov. Janet Mills on Feb. 8 sent a letter to Bartlett asking for the investigation into CMP, saying she was dismayed by reports that the utility would need to upgrade more than 100 substations in order to complete existing interconnection agreements. Mills also asked the PUC to conduct a broader review of the grid to ensure it can handle growth of renewables and distributed energy resources. (See Lawmakers Chase Affordability in Energy Transition in Maine.)
CMP must respond to the PUC by Friday regarding concerns that its recent notices to customers about changes to interconnection costs jeopardizes “hundreds of millions of dollars in investment … for Maine homeowners and businesses,” according to the PUC’s notice of filing.
The PUC will retain experts to prepare a report about the current design and operation of Maine’s distribution grid. It will follow up with a formal investigation so stakeholders can comment on the report’s findings. The commission did not provide a timeline for when the report will be released.
Achieving net-zero carbon emissions by midcentury will require an unprecedented public-private partnership, a transparent carbon offset market and direct air capture, said the founders of a new corporate alliance organized to deal with the causes of climate change.
“When we think about the challenge of removing carbon from the American way of life, we must re-imagine what our obligations are, how we can work with government,” Southern Co. CEO Tom Fanning said in remarks announcing the creation of the Net Zero Business Alliance on Wednesday. “Think back to the missionary zeal when we approached the first landing on the moon. These [carbon] issues are that important. These are things we have to do hand-in-glove with the government.”
In addition to Fanning, the founding members include United Airlines CEO Scott Kirby; John Tyson, chief sustainability officer of Tyson Foods; Weyerhaeuser CFO Russell Hagen; and Occidental Petroleum CEO Vicki Hollub, who was unable to participate in the kickoff session. The group will be expanded to include additional industry sectors in the coming weeks, according to the D.C.-based Bipartisan Policy Center, which organized it.
Fanning used the session to announce that Southern, which set an intermediate goal of 50% carbon emissions reductions from 2007 levels by 2030, met the target last year.
“So, without a forcing mechanism we’ve beat it by 10 years. Now 2020 was an unusual year,” he said referring to the economic slowdown resulting from the coronavirus pandemic. “We get that. But here’s the important point: The entrepreneurial spirit of America, combined with the public policy needed to accomplish big things has [created] an opportunity to achieve these kinds of results in a comprehensive way. And we have to do this not [only] in the silo of energy but in working with my brothers and sisters here in broader industries.”
BPC President Jason Grumet underscored the gravity of the carbon issue by noting that “the scale of this challenge is profoundly and dramatically underappreciated.”
“Solving climate change is going to place a tremendous burden on shareholders, on customers and ultimately on taxpayers,” Grumet said. “The scale of this challenge is a profound logistical issue, and the folks that we know have the capacity to make the kind of changes in the extremely narrow time frame available are the companies … we are working with.”
Though managing significantly different industries, Fanning, Kirby and Hagen believe that to reach the kind of carbon reductions climate scientists are calling for, industry will have to capture carbon dioxide directly from the air and sequester it underground.
United has partnered with Occidental on a direct air capture project. Occidental intends to capture the CO2 at well fields and use it to flush out oil and gas from old wells, leaving the carbon underground. The industry has used CO2 for years in old well fields that have lost pressure. The difficulty has been to make certain the carbon does not make its way back to the surface.
Without direct carbon capture, significant reductions to achieve net zero are unlikely, Kirby said. “The reality is we emit 4,000 times the amount of carbon emissions than we did in the pre-industrial era. We cannot plant 4,000 times as many trees.”
Weyerhaeuser grows trees on 11 million acres of land in the United States and 14 million acres in Canada. But Hagen agreed that forestation won’t by itself solve the carbon problem.
“We need to combine all of these solutions. It’s an enormous problem. We do need to continue with the technology to capture carbon and to work on emission reductions,” Hagen said.
He said the development of mature carbon credit markets for long-term sequestration to deal with climate change is well underway.
“We are seeing the emergence of a lot of different stakeholders. Investors are demanding a response. It is really going to be critical that we as companies have a transparent view of the actions we are taking to address not only our shareholders but the broader stakeholder group to begin really driving toward a net-zero solution,” he said.
Markets trading carbon credits are demanding credits that lock up carbon in standing timber for up to 100 years, he said. “As we think about how we are going to engage in this … we have to bring a high standard so our brand, our credibility, stands behind whatever carbon credits we may bring to market.”
Tyson added that his company has been looking at carbon sequestration in farmland. He agreed that carbon credits and carbon markets are beginning to proliferate but said they pose a risk. “We are not yet sure of the science,” he said of carbon sequestration with agriculture. “Demand [for carbon credits] far outstrips the supply of high-quality credits.”
Kirby said climate change cannot be addressed without being honest about the difficulties. “The reality is that batteries will never have energy density to fly long haul aircraft with a lot of people on board. Even hydrogen, which has higher energy density, requires three times the weight as jet fuel,” he said. “There are going to be parts of the economy where we are still emitting carbon.”
He said United’s “100% green” climate plan does not include traditional carbon offsets. “I’ve talked to enough CEOs who just want to check the box. Write a check once a year and [say] `I did my part on carbon.’ We are not going to solve the problem” through such methods, he said.
“I challenge anyone to go up and look at some of these entities that provide carbon offsets to companies to find out what their projects are. It is almost impossible. … I know Weyerhaeuser is doing great things, and others are doing things that are real. But a lot of [purported carbon offset programs] are simply not real.
“At United, we know we’re still going to be emitting carbon into the atmosphere, and when we say ‘100% green,’ we really mean every molecule of carbon dioxide that comes out the back [of a plane] is a molecule that gets sequestered underground.”
The Massachusetts Department of Energy Resources (DOER) on Tuesday designated $10 million in rebates for purchases of medium- and heavy-duty electric trucks.
Purchases of private, commercial and government fleet vehicles made on or after Feb. 16 will be eligible for rebates ranging from $7,500 for pickup trucks to $90,000 for tractor trailer trucks. The rebate values will decrease over time based on expected declines in prices of electric vehicles as major manufacturers such as General Motors, Daimler, Peterbilt, Kenworth and Volvo bring electric trucks to the market later this year.
“The expansion of the successful MOR-EV program to include trucks continues the progress we have made in the Commonwealth to reduce harmful greenhouse gas emissions and make clean transportation more financially viable for residents and businesses,” Gov. Charlie Baker said in a news release.
The new subsidies for trucks build on the state’s MOR-EV program, which has offered rebates for EVs since 2014, dolling out $37 million in rebates and incentivizing the purchase of 18,000 EVs.
The Baker administration allocated $54 million to the program for 2020 and 2021.
“Reducing emissions from medium- and heavy-duty vehicles will help to improve air quality and act as a catalyst as we continue to transition from carbon-intensive transportation options toward cleaner and more environmentally friendly vehicles,” Energy and Environmental Affairs Secretary Kathleen Theoharides said in a statement.
In December, Baker joined a pact with Connecticut, Rhode Island and D.C. to reduce motor vehicle pollution by at least 26%.
DOER Commissioner Patrick Woodcock said the proposal to expand the rebate program to trucks was initially proposed to a group of manufacturers and dealers last fall and amended with feedback.
The department is relying on the manufacturers to make the rebate program, as well as the incremental drop in rebate value, known to buyers, Woodcock said.
Massachusetts is set to see more fleets of service-related electric vehicles like those pictured here following the infusion of $10 million for the state’s electric vehicle rebate program. | Shutterstock
The rebate values were based on numbers provided to the state by a local transportation company. The cost of a smaller diesel box truck on the market is about $55,000, and the electric version is about $165,000.
Even with the rebate, purchasing a new electric truck is still more expensive. But Woodcock said companies should shoulder the upfront cost for the lower maintenance and fuel costs of EVs.
The trucking and transportation industry is “looking to be part of the Commonwealth’s climate solutions,” Woodcock said.
“Electrification is the future,” and trucking and transportation companies would be “naïve if they didn’t see it,” Kevin Weeks, executive director of the Trucking Association of Massachusetts told RTO Insider.
However, a $90,000 rebate is only doable for “the biggest of the big,” such as the U.S. Postal Service, FedEx and Amazon, Weeks said.
Large tractor trailer trucks cost between $100,000 and $150,000, but an electric tractor trailer costs close to $300,000. Even with the rebate, buyers are still facing $75,000 or $85,000 more in costs.
And most electric tractor trailers can only travel up to 300 miles before they need to recharge, which is not sustainable for long-haul trucks that go about 600 miles per day.
The rebate program is “awesome for smaller trucks,” such as those used by USPS, since they only go up and down neighborhood streets, Weeks said.
The specific charging infrastructure large tractor trailers need is not available in the state, he added.
The fast-charging stations in Massachusetts built by companies like Eversource cannot charge semi-trucks, Megha Lakhchaura, director of policy and utility programs for EVBox North America, told RTO Insider.
“Trucks charge in a very specific way, and it requires a lot of planning,” Lakhchaura said.
Massachusetts will need to work with utilities to build up the capacity to charge trucks on a large scale and propose a program for companies and site hosts to install charging components, she said.
Programs for incentivizing electric trucks in places like California are effective because the southern part of the state has developed the heavy-duty charging infrastructure needed to support trucks.
Some members of the Trucking Association of Massachusetts purchase about 20 new vehicles per year. In a couple of years, they will purchase two or three EVs in one year, but at the current prices, it is not feasible for them to do so, Weeks said.
“The barriers to entry are still there, but things will change,” he said. “We’re appreciative of the rebate, but I don’t think you’ll see many people jumping at a $90,000 rebate for tractor trailers in Massachusetts.”
The panel discussion on green hydrogen at the National Association of Regulatory Utility Commissioners’ Winter Policy Summit last week hit many of the same themes sounded at the organization’s summer conference. Speakers at both events touted the potential of the emissions-free technology to provide days or even weeks of power while acknowledging the challenge of scaling the still-expensive process of using renewable energy to produce hydrogen from water. (See NARUC Panel: ‘Green’ Hydrogen Could Lower GHGs.)
What appears to have changed in the last six months is the level of energy industry buy-in, as evidenced by the Electric Power Research Institute’s recently launched Low-Carbon Resources Initiative, which CEO Arshad Mansoor said was able to quickly raise $100 million from corporate sponsors for research on hydrogen and other low- and no-carbon fuels.
NextEra Energy’s Florida Power & Light generated plenty of industry buzz last July with the announcement that it would build a 20-MW electrolyzer to produce green hydrogen that would be mixed with natural gas to run a 1.75-GW combined cycle plant. (See NextEra Dips its Toe in Hydrogen Energy.)
Power to gas to power: production and distribution pathways for green hydrogen | Green Hydrogen Coalition
Despite the positive press, Matt Valle, vice president of development for FPL, cautioned that while green hydrogen “seems like a silver bullet, it may not be.”
“Think about the technological advances that are going on in lithium-ion batteries right now,” Valle said at the NARUC session on Feb 10. “You have solid state; you have longer-duration and flow batteries. It’s certainly not the only thing out there that could help decarbonize the economy. There’s a lot of hype right now, and you have to separate it.”
Utilities’ excitement about green hydrogen is linked not only to its ability to store energy for long durations, Valle said. It’s also about the technology’s potential to repurpose fossil fuel plants and natural gas pipelines that might otherwise become stranded assets.
Another major green hydrogen project in development, the Intermountain project in Utah, aims to recommission a former coal plant to initially burn a mix of hydrogen and natural gas, with the goal of running 100% on green hydrogen by 2045. Hydrogen produced for the plant will be stockpiled nearby in a natural salt cavern capable of keeping 150,000 MWh of power on tap, according to the nonprofit Green Hydrogen Coalition.
What an electrolyzer does: using electricity to split water into hydrogen and oxygen | Green Hydrogen Coalition
For Laura Nelson, executive director of the coalition, the rising interest in green hydrogen signals a critical expansion of the net-zero discussion. “When we talk about this 100% clean energy future, that means different things to different folks,” Nelson said. “The carbon neutrality goals are not going to be completely met with renewable energy and battery storage. We have this rapidly transforming energy system, and you’re going to need a robust portfolio mix.”
Nelson, Valle and Mansoor all pointed to green hydrogen as a bridge for decarbonizing industries that are hard to electrify.
“In order to get to the net-zero world, the most important opportunity is actually not in the electric sector; it’s in the industrial sector,” Mansoor said. “If you are in the chemical industry, if you are a petroleum company, if you are a plastics manufacturer, you’re not using petroleum; you’re not using natural gas in the future. You could be using hydrogen.”
“I typically don’t talk to chemical plants or steel plants or heavy-duty trucking,” Valle added. “What if I had hydrogen to potentially sell to those customers in the future? Not to necessarily say it has to be utilities, but somebody is going to have to generate a lot of green hydrogen. That is going to play a major role in decarbonizing the U.S. economy over time.”
New Technology, New Infrastructure
Hydrogen gas, produced from a natural gas feedstock, is already used around the globe for industrial processes such as oil refining, methanol production and ammonia production for fertilizers. But, according to the Green Hydrogen Guidebook produced by the GHC, as of 2019, green hydrogen represented 0.1% of global hydrogen production, with $365 million invested in 94 MW of capacity.
Pilot projects are a first step toward commercialization. But ongoing research and investment ― like EPRI’s Low-Carbon Resources Initiative ― are needed to whittle down costs and address other key issues about the technology. To produce hydrogen without carbon emissions, excess wind and solar energy are used to power an electrolyzer that splits water molecules into hydrogen and oxygen. The hydrogen gas can then be stored, for example, in a fuel cell or run through a turbine to produce electricity.
The GHC guidebook pegs the current cost of producing hydrogen via clean-energy electrolysis at $1,200/kWh. But, as the technology scales, prices could drop 90%, to between $115 and $135/kWh by 2030, according to the guidebook.
Scaling green hydrogen should bring down costs 90% by 2030 | Green Hydrogen Coalition
Nelson also stressed the importance of integrating green hydrogen into resource planning and wholesale markets.
“Regulation can be important for creating markets, and that’s what has to happen,” she said. “Market rules really have to allow green hydrogen to be an eligible technology. It is going to be critical to see an evolution of this resource to provide services in the energy storage, resiliency and reliability space.”
On the logistics side, storing and transporting hydrogen requires considering its difference from fossil fuels: Specifically, as the second lightest element on Earth, hydrogen takes up a lot more space. It is not “a one-on-one replacement for either petroleum or natural gas,” EPRI’s Mansoor said. “If you have one can of natural gas, you would need three cans of hydrogen.”
Valle points to efficiency as another key issue: Too much energy is lost in the process of making green hydrogen and then converting it back into electricity.
Converting renewable power to hydrogen, “you lose 30% or so of the energy,” he said. “When you take the hydrogen and run it through a combined cycle [plant], which has its own efficiency losses, you’re down to 50%. Hydrogen is not going to win head-to-head against the battery today.”
Still another problem is embrittlement, the weakening of metal infrastructure that may occur because of the hydrogen atom’s small size and ability to interact with metals and plastics. Whether natural gas pipelines could be used for 100% hydrogen remains a question, one that could lead to more regional production and consumption, said panelist Llewellyn King, host of the public affairs series “White House Chronicles.”
“Every new technology, every new material produces its own infrastructure” and generates its own innovation, King said.
“What information we have around testing and pipeline integrity is going to be important,” Nelson agreed. “How we construct and build that new infrastructure is going to be a function of how this particular commodity and the economy for this commodity emerge.”
Energy Transfer said Wednesday it has entered into an agreement with Enable Midstream Partners, a master limited partnership between OGE Energy and CenterPoint Energy, in which it will acquire Enable in a $7.2 billion all-equity transaction.
The companies said they have entered into a definitive merger agreement in which Energy Transfer will acquire all of Enable’s outstanding limited partnership units through a unit-for-unit exchange ratio of 0.8595. OGE will own approximately 3% of Energy Transfer’s outstanding LP units after the merger’s consummation.
Enable Midstream processing plant | Enable
As part of the transaction, Energy Transfer will also acquire the general partner interests from OGE and CenterPoint for $10 million in aggregate cash consideration. CenterPoint will also pay OGE $30 million when the transaction closes.
OGE, Oklahoma Gas & Electric’s parent company, holds a 25.5% LP interest and a 50% general partner interest in Enable. CenterPoint owns 53.7% of the common units representing Enable’s LP interests.
Both companies expressed their support for the acquisition in press releases, while also stressing their focus was on restoring service to their electric customers amid an unprecedented winter storm.
Enable Midstream’s service territory | Enable
OGE said the transaction places the company “on a clear path to becoming a pure-play electric utility” and gives it flexibility to exit the investment. CEO Sean Trauschke promised additional details during the company’s year-end earnings call on Feb. 25.
CenterPoint CEO David Lesar said the transaction “aligns with our new long-term growth strategy” and puts the company on “an accelerated path to reducing our exposure to the volatility of the midstream industry.”
The deal is expected to close this year.
Enable was created in 2013 by merging OGE’s Enogex midstream subsidiary with CenterPoint’s pipeline and field services businesses.
Connecticut Gov. Ned Lamont outlined three legislative proposals to address the threat posed by climate change at a virtual press conference Wednesday. They include codifying the state’s goal of a zero-carbon electric supply by 2040 and joining the Transportation and Climate Initiative Program (TCI-P) to reduce greenhouse gas emissions from vehicles.
Lamont, joined by Department of Energy and Environmental Protection Commissioner Katie Dykes, state Sen. Christine Cohen, state Rep. Joe Gresko and Connecticut Green Bank CEO Bryan Garcia, said Superstorm Sandy in 2012 was a “wake-up call” for him on the damaging effects of climate change.
“I saw what coastal flooding could do to our communities, what it could do to our homes, what it does to our electric grid,” Lamont said.
Connecticut Gov. Ned Lamont | State of Connecticut
Dykes said that “the science is clear: Climate change is real; it’s human-caused; and it has already altered Connecticut’s climate.” She said the sea level in Long Island Sound could rise 20 inches by 2050, increasing the frequency of coastal flooding and creating storm surges “on the level of what we saw from Superstorm Sandy” without a significant reduction in carbon emissions. Average temperatures in Connecticut could increase by 5 degrees Fahrenheit by 2050, including a five-fold increase in the number of days above 90 F and a decrease in frost days from 124 to 85 days per year.
Cohen, who represents an area that includes the shoreline communities of Branford, Guilford and Madison, said that if lawmakers “don’t provide real solutions for curbing global warming and sea-level rise … whole neighborhoods will cease to exist because of flooding.”
In December, Lamont joined Massachusetts, Rhode Island and D.C. in committing to TCI-P, which aims to cut greenhouse gas emissions from vehicles by 26% from 2022 to 2032 and invest $300 million per year in cleaner transportation choices and public health improvements. (See NE States, DC Sign MOU to Cut Transportation Pollution.)
“We cannot address climate change if we do not put in place a program that can help us invest in clean transportation options,” Dykes said.
TCI-P projects to increase retail gas prices in participating jurisdictions by 5 cents/gallon beginning in 2023, assuming fuel suppliers choose to pass down 100% of allowance costs to consumers. Multiple consumer protection safeguards, including a cost-containment reserve, are designed to limit the program’s impact on prices at the pump and would kick in at 9 cents/gallon.
“There are folks that have been cherry-picking studies that were done quite a while ago with very skewed assumptions to suggest that the price of gas for consumers would be higher than this,” Dykes said. “I don’t know what else to say except that those are inaccurate projections.”
“We can issue more credits that keep [an increase] at 5 cents and not more than 5 cents,” Lamont said. “Maybe it trends up to 9 cents over a period of time; again, we can control that and set those limits, so I think that’s worth noting.”
Dykes was also asked about the power outages experienced this week in ERCOT, MISO and SPP because of extreme winter weather. She called it “a catastrophic situation,” with several million people without electricity in “dangerously cold temperatures.”
She added that she is glad that FERC and NERC will be investigating the situation, which is something that Connecticut officials will be following “closely” to ensure that ISO-NE “is appropriately planning” for potentially similar weather events. “Protecting the grid has to be the first priority.”
According to Connecticut law, the Department of Energy and Environmental Protection (DEEP) must prepare a biennial assessment of future electric needs and plan to meet them. Since 2012, the state’s Integrated Resources Plan (IRP) has taken a holistic look at supply and demand to formulate recommendations for its electricity needs.
A draft of the latest IRP, released in December and the public comment period for which closed Wednesday, is Connecticut’s first evaluation and identification of pathways to achieve a carbon-free electric supply by 2040, as directed through an executive order from Democratic Gov. Ned Lamont.
Connecticut has made significant investments in clean energy and efficiency programs to put the state on a zero-carbon path. Through competitively bid long-term contracts, state ratepayers currently support more than 600,000 MWh/year of grid-scale renewables and more than 9 million MWh/year of nuclear resources. That is equivalent to nearly 65% of the electric consumption by ratepayers of Eversource Energy and Avangrid, Connecticut’s two principal distribution utilities. By 2025, that percentage is expected to increase to 91%, or 24.5 million MWh/year, as newly contracted but not yet constructed, offshore wind and grid-scale solar projects come online.
“The bottom line is that our modeling and our analysis show that a 100% zero-carbon electric supply by 2040 is feasible; it’s achievable,” Dykes said in a recent interview with RTO Insider. “Because of the [resource] investments that we’ve already made, we are already well on our way to meeting that target.”
She added that upgrades in the transmission system and more proactive planning are “critical” for Connecticut and the entire region “to unlock the potential for additional renewable resources, particularly offshore wind,” in the pursuit of decarbonization efforts.
“We’re facing a climate crisis; we’re running out of time; and we know that urgent action is necessary to reduce emissions and prevent the worst impacts of climate change from occurring,” Dykes said.
While the transmission system can support wind and solar, Dykes said the IRP’s modeling demonstrates that intermittent resources will be curtailed in each of the pathways. Thus, “we need to act urgently on upgrading our transmission system to unlock the potential for additional renewable resources,” Dykes said.
Upgrading the transmission system over the next two decades can reduce the amount of clean energy that will be wasted. Dykes said a scenario-based proactive planning process is needed. “We’re going to be plugging in resources in places that the grid has never built out to serve, and at the same time, New England has a terrible track record in terms of paying some of the highest prices per mile for transmission.”
Dykes said that Connecticut has been “very successful” with competitive procurements over the last few years. The capital cost of renewables has been falling, a subject of debate during a NEPOOL Markets Committee meeting in October between a stakeholder and a consultant hired by ISO-NE. (See “Face-off on Offshore Wind,” NEPOOL Debates Parameters for 2025/26.)
“It tells you a lot about the contrast between competitive markets that states have developed around the procurement for long-term contracts of renewable resources and the administratively determined rules in the ISO’s capacity market constructs,” said Dykes, a longtime proponent of reforming ISO-NE wholesale markets. “Essentially, in our competitive procurements … you don’t set those kinds of administratively determined rules around bid reviews where we have to get into the business of determining in advance what the cost of solar is or what the cost of offshore wind should be.”
Dykes said that “every single time” Connecticut has run a request for proposals for renewables, “it’s been a surprise and a shock sometimes to see the pricing that comes in. … The technology costs are coming down in shocking ways. …
“The competitive designs that states have been using toward these renewables procurements ensure that ratepayers are getting the benefits of seeing those prices coming down,” Dykes said. “By contrast … some of the challenges that we’ve had with the capacity market construct is that it relies on administratively determined preconditions and rules that in my view have some discriminatory impacts on the ability for different types of resources to clear that market and be counted towards our capacity requirements.”
DEEP expects to release the final IRP on March 12.
Eversource Energy CEO Jim Judge said Wednesday that the utility posted profits of $1.2 billion ($3.55/share) in 2020, even as it dealt with “the highest level of storm activity ever for our company.”
