From Natural Gas to Green Energy: Shaping the Wave

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green energyConverting the US to green energy is a long-term game, one that takes decades to fully achieve, creative thinking and some compromise.

The Conservation Law Foundation, an organization that has helped shape forward-thinking green energy policy in New England, is offering an interesting prototype for moving from natural gas to green energy. It’s one that takes the long-term view and could serve as a model for states trying to meet the Clean Power Plan in the coming years.

Here’s how it came about. The group had worked for closure of an old coal-fired plant in Salem, Massachusetts. They won the fight, but soon after proposals emerged for a new gas-fired plant to replace the coal plant.

This was no surprise. Natural gas is increasingly supplanting coal nationwide. More than that, natural gas is helping to drive the shutdown of coal plants because it is cleaner and cheaper than coal.

CLF had to make a decision about its next step. Did it want to see another fossil fuel plant built, albeit one using a cleaner fuel? Probably not. But the organization also realized that the project was just one of a wave of natural gas plants being built in the U.S. It couldn’t stop the wave, but perhaps it could help shape its direction and timing and encourage its eventual give way to renewable energy.

“Knowing that other coal plants were likely to retire as well, we determined that we needed to find a pathway to allow for some continued displacement of coal with natural gas — but that made sure that any new natural gas infrastructure was properly conditioned so that it could comply with the mandates of the Global Warming Solutions Act,” said Shanna Cleveland, CLF’s acting program director for clean energy and climate change.

The Global Warming Solutions Act is a Massachusetts law that requires a 25 percent reduction in greenhouse gas emissions by 2020 and at least 80 percent by 2050.

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With that law in its back pocket, CLF sat down and began negotiating with the new power plant developer.

Cleveland acknowledged that CLF had the good fortune of working with a developer, Footprint Power, with a strong interest in taking an environmentally friendly approach. Still, negotiations took two years as the parties tried to find a way to bring together the developer’s economic requirements and CLF’s environmental position.

How it works

Here’s the deal that the parties finally filed with state regulators.

The parties set a date that the 630-MW plant will retire, a date earlier than otherwise likely, but one  that still allows the plant to operate long enough to depreciate the investment and pay back financing.

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After 10 years in operation, the plant begins to reduce its greenhouse gas emissions according to pre-set levels.

How might the power plant do that? The agreement offered a few options, the primary one being that it supplant gas-fired generation with renewable energy over time.

“One of the benefits that a lot of project developers are selling is the idea that a natural gas plant is more easily ramped up and ramped down than a coal plant. Often you’ll hear them claim these that these plants are compatible with being used to firm up wind power or other variable resources,” Cleveland said. “So this kind of locks them into that idea by saying, ‘Okay, you think that over time your plant is going to operate less and less because we’ll bring more and more renewables on to the system. Let’s hold you to that by having these limitations on your emissions moving forward.’”

If the wind power doesn’t come to be for some reason, the plant can instead meet its green energy obligation by securing offsets. The offsets might be purchases of New England renewable energy certificates or investment in local energy efficiency projects.

Hence, natural gas acts a bridge fuel, but as CLF puts it, it is a bridge with an end.

Model for the Clean Power Plan

Other states may want to replicate the model as they move forward on required greenhouse reduction plans under the federal Clean Power Plan, Cleveland said.

“If there are people out there that think we can meet the climate change reduction requirement simply by converting from coal to gas, they need to understand that is not technically possible. Natural gas still has a significant greenhouse gas footprint. This type of settlement acknowledges that there is some benefit from natural gas, but also assures it will be phased out over time,” she said.

What advice does Cleveland offer to others who might want to pursue a similar strategy?

  1. Look closely at the potential legal levers available in your state or region to get the developer to the table. If there are none, use the federal Clean Air Act.
  2. Get to know all the parties early. Build relationships so that you have credibility and currency with players and community.
  3. Think through the benefits and costs of the new project. CLF had to be mindful that Salem residents strongly supported a new power plant being built to replace job and tax loss.

Massachusetts already has an aggressive policy to reduce energy demand. For four years running it has been named the top state for energy efficiency by the American Council for an Energy-Efficient Economy.

So the lesson learned here?  Yes, after reducing demand as much as possible, build needed energy infrastructure. But build it with a plan that paves the way for a clean energy future.

For more detail, here is the settlement agreement approved by state regulators.

Let us know what you think of CLF’s model to move from natural gas to green energy. Join the discussion on Energy Efficiency Markets  LinkedIn Group.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

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