By THE LA TIMES EDITORIAL BOARD MARCH 2, 2021
In September, while touring the charred wreckage left by yet another devastating wildfire, Gov. Gavin Newsom declared: “This a climate damn emergency.” The state’s ambitious strategies to curtail greenhouse gas emissions were not enough to counter the effects of a warming planet, Newsom warned, and he pledged to “accelerate all of them, across the board.”
Except, apparently, at the California Energy Commission, where officials want to delay a requirement that new homes be built only with electric appliances.
Climate activists have pushed the commission to ban natural gas hookups in new residential construction starting in 2023. Instead the commission appears to prefer a phased approach, requiring that builders first begin to incorporate electric water heaters or home heating systems before requiring fully electric construction in 2026.
The commission is expected to vote on the new building standard this summer.
In a “climate damn emergency,” there’s no time to delay commonsense regulations. Natural gas in heating and cooling systems, water heaters and stoves causes about 10% of California greenhouse gas emissions. Postponing the mandate for all-electric new construction by three years would result in an additional 3 million tons of carbon emissions by 2030 — the equivalent of putting 650,000 more cars on the road for a year, according to one analysis.
In 2018, the energy commission required that newly constructed homes and low-rise apartment buildings have solar panels to generate electricity. Requiring all electric appliances and systems is the next logical step.
It’s much cheaper and easier to build all-electric buildings from the get-go compared with the cost of retrofitting older buildings. It costs about the same, or less, to build an all-electric home, although there is concern that consumers could face brownouts and higher utility bills unless the state addresses long-standing problems with the electricity grid and electricity rates. The fact is, California has already committed to weaning its energy system from fossil fuels in the coming decades. It doesn’t make sense to keep building gas infrastructure in new homes. As it is, the state is likely to spend billions of dollars in the coming years to help property owners swap out gas appliances for electric ones.
Certainly, the transition to all-electric homes would be a big change for California. For example, only about 2% of homes have electric heat pumps, according to building industry groups. Contractors need to become familiar with the equipment. So do local building departments and inspectors. It’s a sign of how far behind the curve we are and how much help the building industry needs to adjust.
But this isn’t groundbreaking work — most new homes built in the U.S. in recent years don’t have gas hookups, The Times reported last year. Nor is the ban on gas hookups so unusual. More than 40 cities in California have adopted building codes that ban gas infrastructure or require buildings to be ready for all-electric appliances.
The shift to all-electric buildings is inevitable. California can’t afford to wait, and Newsom shouldn’t let it.
The natural gas industry reveals its playbook for subverting local clean energy policy by pushing line-by-line revisions of proposed ordinances, activating customer opposition, and lobbying top state and local officials. (The Guardian/Floodlight)
Massachusetts climate and justice advocates endorse a bill that would impose a fee on carbon emissions from transportation and heating that would fund local climate projects. (Energy News Network)
Volvo announces it will only offer electric vehicles starting in 2030. (Associated Press)
Biden faces climate clash over LNG
Dominion Energy’s Cove Point liquefied natural gas terminal along the Chesapeake Bay in Maryland is pictured in this 2014 file photo. The U.S. Energy Information Administration says it expects U.S. LNG exports to “more than double” between 2020 and 2029. Gary Cameron/Reuters/Newscom
The Biden administration has yet to fully delineate its position on liquefied natural gas, prompting cautious optimism from industry but spurring pushback from groups that want to phase out the fuel.
In an interview Friday, Energy Secretary Jennifer Granholm acknowledged DOE’s legal responsibility to review proposed LNG export facilities and suggested that could move in step with things like curbing flaring and leaks from gas pipelines (see related story).
LNG shipments are often bound for “countries that would otherwise be using very carbon-intensive fuels,” Granholm said, adding that “it does have the impact of reducing internationally carbon emissions.”
“However, I will say there is an opportunity here, as well, to really start to deploy some [carbon capture, use and storage] technologies with respect to natural gas in the Gulf [of Mexico] and other places that we are siting these facilities for that we are obligated to do under the law,” Granholm said.
The comments highlight a dilemma the Biden administration is facing on LNG: How will the fuel coexist with aggressive climate targets without infuriating a core of the Democratic base? President Biden has vowed to tackle climate change by transitioning to a net-zero-emissions economy by 2050.
It’s currently unclear how Biden might differ on the issue from the previous two administrations. President Obama got many LNG export projects off the ground, and both Trump administration Energy secretaries were enthusiastic supporters. Former Energy Secretary Rick Perry’s DOE dubbed it “freedom gas” at one point, boasting that it provided U.S. allies with a cleaner source of energy.
Biden officials have, however, made comments that mirror those from industry and some analysts about the role LNG exports can play in offsetting the continued growth of coal, particularly in China and Southeast Asia.
Similar to Granholm, deputy Energy secretary nominee David Turk endorsed LNG as an important export last week.
“We’re a democracy; we’re the leader of the free world. I think it’s a much better outcome for Japan or others to get their energy supplies from the U.S. than to get it from Russia or other countries,” Turk said amid Republican questioning at his confirmation hearing before the Senate Energy and Natural Resources Committee.
Still, Turk said, the United States needs to do a “better job” of capping methane emissions of natural gas, a chief criticism of LNG opponents. In a December report, for instance, the Natural Resources Defense Council said increased LNG exports are in conflict with efforts to contain global temperature rise to 1.5 degrees Celsius (Energywire, Dec. 8, 2020).
Under questioning from Sens. John Barrasso (R-Wyo.) and Mike Lee (R-Utah), who asked about the potential of sending LNG to coal-burning countries, Turk declined to detail how the department would determine whether new LNG projects would be approved, saying that it would follow the law.
While the Federal Energy Regulatory Commission oversees siting and permitting of LNG export terminals, DOE under the Natural Gas Act is tasked with determining whether exports to countries that do not have free-trade agreements with the United States are in the public interest.
“I certainly wouldn’t want to prejudge any particular circumstances coming before the department,” Turk said.
He did say one factor would be the energy source that LNG would replace, adding that if it were going to a country using coal, “then you would have net positive in terms of the climate benefit.”
Environmentalists, meanwhile, pointed to White House climate envoy John Kerry’s comments last week at the CERAWeek by IHS Markit energy conference as evidence that the Biden administration’s stance on LNG is still up for debate. Kerry warned energy companies that they risk losing assets if they don’t adapt faster.
However, Charlie Riedl, executive director of the Center for LNG, said that Kerry’s remarks about stranded assets didn’t mention LNG by name and that the group — a committee of the Natural Gas Supply Association — would work with the Biden administration “on continuing to unlock the benefits of increased global LNG use in place of dirtier fuels.”
“The LNG industry continues to work with the natural gas industry as a whole to produce the cleanest energy possible to help create a clean energy future,” Riedl said in a statement. The center in January released a set of principles to address methane emissions.
U.S. LNG exports are expected to more than double between 2020 and 2029, according to projections in the U.S. Energy Information Administration’s most recent annual energy outlook. Exports could increase even more with “higher oil prices or lower U.S. natural gas domestic prices,” the report said.
As of September 2020, there are seven LNG export terminals in the United States, according to FERC, and nearly two dozen that are approved.
At least six other projects also have been proposed or are in pre-filing, a process that occurs before the project goes to FERC for approval, according to the latest list on the agency’s website.
The Biden administration is wading into the issue as recent events underscore how different the political and industry dynamic is from when Obama took office more than a decade ago.
In November, a French company pulled out of a $7 billion deal in November to import U.S. LNG due to reported concerns over methane emissions (Energywire, Nov. 4, 2020).
The withdrawal by Engie SA was sharply criticized by the Trump administration’s Energy Department and raised questions about whether stronger regulations could allay concerns over the emissions footprint of U.S. natural gas.
Last month, Houston-based Cheniere Energy Inc. announced it will provide emissions data for the LNG cargoes it produces in a bid to improve the company’s environmental performance.
Christopher Smith, Cheniere’s senior vice president of policy, government and public affairs, said the announcement is about the company “trying to skate to where the puck is going.”
“Transparency is about getting information out, and we’re trying to take steps not only to be more transparent, but also to work with our suppliers to make some of these measures even better and more positive,” said Smith, speaking at a virtual discussion last month hosted by the Payne Institute for Public Policy at the Colorado School of Mines.
While he did not comment directly on Engie’s withdrawal when asked, Smith said trends reflect “a desire for transparency and good data,” noting that the company did not support the rollback of Obama-era methane regulations under the Trump administration.
“There’s a desire for transparency; there’s a desire for good data; there’s a desire for peer-reviewed models and methodologies,” Smith said. “And so the way that you help policymakers make good policy is that you proactively lean into providing access to good, reliable, peer-reviewed data that policymakers can have confidence in.”
Clark Williams-Derry, an energy finance analyst at the Institute for Energy Economics and Financial Analysis, said that for U.S. firms looking to export LNG to Europe in particular, “emissions are going to become an increasingly potent political issue.”
While Williams-Derry said he did not know whether other U.S. LNG exporters would follow Cheniere’s lead, he said the sector’s “major image problem” is grounded in reality because of the level of flaring and venting happening in places like the Permian Basin.
“The U.S. oil and gas industry can no longer sweep the flaring and venting problem under the rug,” Williams-Derry said. “It’s dragged its feet for years, and Texas oil and gas regulators have allowed the industry to boost flaring and venting to the highest levels in decades. But this leniency is now hurting the industry rather than helping it.”
Williams-Derry said tackling U.S. emissions will likely require a combination of state and federal regulations and the construction of more pipelines to move gas to market that otherwise might have been flared or vented.
Coal and methane
Steven Miles, a nonresident fellow at Rice University’s Center for Energy Studies, said the Biden administration needs to spell out its position in more detail, warning that not doing so could jeopardize the United States’ competitive edge.
“Addressing methane emissions and flaring would help set the tone that the U.S. is here to play,” said Miles, adding that those steps would give greater confidence to overseas buyers looking to negotiate and finalize agreements with U.S. producers.
In a policy brief last month, Miles outlined several actions the Biden administration could take to make U.S. LNG cleaner, including the adoption of “EPA methane emissions rules that reflect our climate obligations.”
Making LNG exports cleaner isn’t enough for some opponents, who argue that the United States should be more focused on reducing fossil fuels overall in the energy system.
“While they will not disappear overnight, and it would certainly help to reduce methane emissions and other impacts of oil and gas, cleaner fossil fuels cannot substitute for aggressive actions to reduce all fossil fuel activity as soon as possible,” said Lorne Stockman, a senior research analyst with Oil Change International, in an email.
Melinda Pierce, the Sierra Club’s legislative director, added last week after Granholm’s confirmation: “The Department of Energy can and must focus on growing clean energy, not locking the country into decades of fossil fuel development by supporting infrastructure such as LNG terminals.”
Yet the American Petroleum Institute, which represents more than 600 members, seized on comments last week from Granholm at an appearance at CERAWeek.
Alex Munton, a Wood Mackenzie principal analyst for LNG in the Americas, said “there is no realistic sense” that the administration would raise environmental objections to scrap already approved projects, which are on pace to make the United States the No. 1 exporter of LNG worldwide within the next few years.
Still, he noted that Richard Glick, who recently became FERC chairman under Biden, has dissented in the past on a number of LNG projects.
Glick has repeatedly issued extensive dissents and opposed LNG projects and pipelines, emphasizing FERC’s reversal in May 2017 of a practice in which the commission accounted for greenhouse gas impacts (Energywire, July 19, 2019). In 2019, for example, Glick dissented on FERC’s approval of the Gulf LNG Liquefaction project, saying the commission’s order approving the project violated both the Natural Gas Act and the National Environmental Policy Act.
Munton said Wood Mackenzie is bullish about LNG demand in the long term and noted that “there will need to be future supply to ensure demand is met.”
“We think the market will continue to grow, that LNG will continue to increase in demand in major economies and markets,” Munton said, citing increasing demand in China, India and other parts of Asia. “The big question is where the LNG is, where’s the LNG going to come from? This is all future demand growth.”
At CERAWeek, some executives also contrasted LNG’s climate impacts with those of coal.
Michael Sabel, the founder and CEO of Venture Global LNG, said inexpensive LNG exports are probably in a position to have the biggest impact on emissions “by reducing adoption of new or development of new coal plants and encouraging conversion from coal to gas.”
China “is continuing to … develop new coal plants, and so the cheaper we can make the gas, the more we can encourage China and other countries to not choose coal,” he added.
Reporter Hannah Northey contributed.
Biden’s ‘Buy America’ plan may hit a solar wall
Miranda Willson, E&E News reporterPublished: Monday, March 1, 2021
President Biden, joined by Vice President Kamala Harris, delivers remarks on his “Buy American” initiative on Jan. 25. Adam Schultz/White House/Flickr
President Biden has pledged to make the United States a leader in clean energy manufacturing as part of his efforts to jump-start the economy and create “millions” of green jobs.
But when it comes to boosting U.S. production of solar parts and modules — key technologies in Biden’s plans to zero out electricity-sector carbon emissions — the administration faces an uphill battle.
Asia has maintained its status as the dominant solar manufacturing hub despite steep tariffs imposed by the Trump administration. What’s more, critics have said protectionist U.S. trade policies such as tariffs have backfired, hampering domestic solar deployment and increasing costs.
“This is the sector that is most clearly dominated at the moment by Chinese players,” said Ethan Zindler, head of Americas at BloombergNEF, during a webinar Thursday on clean energy supply chains hosted by the Center for Strategic and International Studies.
Solar advocates say there’s good reason for the Biden administration to be interested in manufacturing: Producing more solar parts domestically could ease the transition to 100% carbon-free electricity by 2035, a campaign pledge of Biden’s that will require a massive build-out of renewable energy.
In addition, shipping solar parts and materials around the world contributes to greenhouse gas emissions, said Desari Strader, president and founder of Violet Power, a company that last year announced its intention to create an integrated solar manufacturing supply chain in the United States.
“If you truly care about climate change, you put your energy source near your supply chain and feedstock,” Strader said.
Industry leaders say they see signs that Biden is serious about addressing the issue.
Biden has signed an executive order aimed at strengthening the Buy American Act, which instructs the federal government to give preference to domestic manufacturers when procuring goods and services. The order closed loopholes in the BAA that allowed some companies doing business overseas to benefit from the policy and bolstered enforcement tools to ensure that the government works with firms that employ people in the United States, according to the White House.
“This order is deeply intertwined with the President’s commitment to invest in American manufacturing, including clean energy and critical supply chains, grow good-paying, union jobs, and advance racial equity,” the White House said in a statement.
While executive action alone may not be enough to expand domestic manufacturing of solar panels, industry leaders have welcomed Biden’s order.
“It sends a signal to the market that the federal government wants to buy a lot of solar panels, and they want them made in America,” said Bob Keefe, executive director of E2, a business group that advocates for clean energy jobs. “Somebody is going to figure out how to do that. It’s as simple as that.”
Many analysts say Biden’s procurement strategy has added significance because the federal government is the nation’s largest energy consumer, and some of the president’s other clean energy moves could be limited by Congress (Energywire, Feb. 10).
Solar panels could be installed at federal facilities across the country run by the Department of Defense and other agencies, said Minh Le, who directed the SunShot Initiative at the Department of Energy’s Solar Energy Technologies Office under former President Obama.
Additional policies will be needed to make the United States a leader in solar manufacturing, but focusing on BAA is a good start, Le said.
“I believe the Biden administration will follow up that policy position with a number of incentive programs that will support domestic manufacturing, and look at it beyond a simple, ‘I’m going to support one segment of the industry,’ but think about the entire value chain,” Le said.
But critics of Biden’s approach say his policies mirror former President Trump’s and would increase costs.
After Biden signed the BAA order, the Bloomberg editorial board wrote that the new rules would force the government to buy more expensive products.
“If that happens, it’s taxpayers and users of public services who’ll suffer the consequences,” it said.
Competing with China
In 2019, there were fewer than 35,000 American jobs in solar manufacturing, compared with roughly 162,000 in installation, according to the Solar Foundation’s national solar jobs census.
The same year, three-fourths of solar installers nationwide obtained modules produced outside the country, the census said. To the extent that domestic module production did occur in 2019, almost all solar cells used to make the modules were imported, according to the census.
In some cases, companies that have tried to manufacture solar modules or cells domestically haven’t been able to stick it out in the face of foreign competition.
Last September, the only facility in the United States that made solar cells ceased operations, said Xiaojing Sun, a senior research analyst at Wood Mackenzie. Panasonic Corp., which operated the solar “Gigafactory” with Tesla Inc. in Buffalo, N.Y., stopped its production at the factory as part of the electronics giant’s strategy to streamline global solar operations, the company said at the time.
China, which produces most of the world’s solar cells and polysilicon used in panels, supports solar manufacturing through direct subsidies and other policies that aren’t the norm in the United States, Sun said. That makes it difficult for U.S. manufacturers to compete, she added.
“Manufacturers themselves [in the United States] get less support from all levels of government,” Sun said.
With China facing allegations of human rights abuses against as many as 1 million Uyghurs, a minority population of mostly Muslims in the country’s northwest Xinjiang region, reducing the solar industry’s reliance on foreign supply chains is also a moral necessity, according to some in the industry (Energywire, Oct. 26, 2020).
‘Buzzwords’ and Congress
Bringing manufacturing “back” to the United States has long been a politically popular idea. In 2012, Obama pledged during his reelection campaign to create 1 million new manufacturing jobs. Trump made similar promises in 2016.
Yet the United States has lost nearly 5 million manufacturing jobs overall since 1997, according to the nonpartisan Economic Policy Institute.
For Biden’s manufacturing push to be effective for solar and beyond, the administration must think about supply chains holistically, according to analysts and industry representatives. That means incentivizing and supporting production of not just panels but the materials that go into them, including glass, aluminum, steel and polysilicon, or at least finding ways to make those materials cheap and readily available.
“There are a lot of buzzwords about manufacturing job creation, but part of the challenge is manufacturing requires not just the manufacturing jobs for the facility, but for many other facets of the supply chain,” said Andy Klump, CEO of Clean Energy Associates, a solar and battery advisory firm.
Biden would need to implement both demand-side and supply-side policies to move the needle on this issue, according to analysts. Those could include tax incentives and credits coupled with specific and sustained strategies to decarbonize the power sector, said Logan Goldie-Scot, head of clean power at BloombergNEF.
“If companies are trying to build a best-in-class manufacturing facility, they’re looking for an indication that this won’t be a two- or three-year boom and then the market will disappear, but that it will stay,” Goldie-Scot said.
One option the administration could pursue is to restore the 48C advanced energy manufacturing tax credits. Established as part of the American Recovery and Reinvestment Act of 2009, 48C offered companies a credit of up to 30% when they invested in new manufacturing facilities or expanded existing ones that made clean energy technologies.
Biden indicated in his “Build Back Better” campaign plan that he would establish new tax credits for manufacturing, but those have not been announced yet. Efforts in Congress to expand tax credits also have run into headwinds in the past.
As for tariffs on imported solar, the administration could consider making them “smarter” while avoiding hampering any companies already engaged in domestic manufacturing, said Georges Antoun, chief commercial officer of First Solar.
“We would support efforts to reform tariffs and boost their effectiveness,” Antoun said in an email. “In fact, there’s a tremendous opportunity to make them more precise in their targeting of companies that benefit from unfair subsidies from the Chinese government even when they’re assembling their products outside of China.”
While Biden is expected to introduce an infrastructure bill that could include initiatives to address both jobs and clean energy, both when it will be introduced and how clean energy manufacturing might be addressed remain open questions.
In the meantime, Sun of Wood Mackenzie said she is watching to see what the administration does next.
“The difficulty the solar industry is facing now with building up domestic capacity didn’t start with the solar industry,” Sun said. “It’s just another example of the hollowing effect in the U.S. of domestic manufacturing. To reverse that takes a lot of effort.”
Trump tariff wild card
Trailers are parked outside the Tesla Inc. Gigafactory 2, a joint venture with Panasonic to produce solar panels and roof tiles in Buffalo, N.Y., in this Aug. 3, 2018, photo. Previously the only solar cell manufacturing plant in the U.S., the facility closed last year. Brendan McDermid/Reuters/Newscom
Biden hasn’t said whether he’ll reform solar tariffs enacted by Trump, and a debate continues over their effectiveness.
In 2019, tariffs on solar parts and related components appeared to help spur some companies to “begin or expand production in the U.S.,” according to the Solar Foundation’s job census.
“Over time, they have played a role in terms of bringing manufacturing jobs back to the U.S. in module assembly, and previously in solar cells, as well,” Sun said.
Other analysts say the benefits of tariffs have been minimal at best, and solar companies have differing views on the issue. First Solar, which has two solar module manufacturing facilities in the United States and says it is considering building a third, maintains that the tariffs are crucial for helping domestic manufacturers compete with China.
“By providing a level playing field for domestic manufacturers, tariffs help strengthen America’s energy security, ensuring that we do not cede leverage to China by sacrificing domestic R&D, technology development, and manufacturing capabilities,” said Antoun.
But Silicon Valley-based SunPower Corp. says the tariffs have made manufacturing more difficult.
SunPower operates a solar panel manufacturing plant in Oregon that is set to cease operations next month, a decision made in part because of trade barriers, said Suzanne Leta, head of policy at the company. Facing revenue losses and increased production costs due to Trump-era tariffs and quotas on imported cells, SunPower decided to shift its business model to focus on downstream services, such as sales and installation, said Leta, who is also on the board of directors at the Solar Energy Industries Association.
“[The tariffs] were very challenging, but more importantly, there are no other incentives put in place that are direct incentives to spur U.S. manufacturing — things like tax credits for manufacturers, low-interest loans or a federal clean energy bank,” Leta said. “There are so many tools in the toolbox that have not been used.”
A longtime opponent of solar tariffs, SEIA doubled down on its position earlier this month, joining the American Clean Power Association and a consortium of renewable energy companies in urging the White House to repeal a Trump administration proclamation from last October that increased certain tariff rates and reimposed tariffs on bifacial solar panels.
The White House has yet to comment on the groups’ letter, which said tariffs enacted over the last four years have cost 62,000 jobs and slowed growth in the industry overall.
“Despite trade policy headwinds, America’s solar and wind industries today employ more than 300,000 individuals across all 50 states,” the letter said. “We have merely scratched the surface of clean energy’s potential.”