Thank you for reading our eighth issue of Currents for the year.
We are very pleased to announce that we have expanded our Natural Resources team with the addition of new Member Matthew W. Gallimore. Matt's primary areas of practice are corporate law, energy law, natural resources law, and mergers and acquisitions. He is a fourth-generation coal miner, having worked both as a surface coal miner and in an administrative position in the coal industry prior to attending law school.
He provides legal representation to land companies, coal companies, and other clients with respect to coal leases and subleases, commercial property leases, solar leases, correlative property rights issues, and other real property matters. He also provides outside general counsel services to clients, including legal counsel with respect to corporate governance matters, employment matters, governmental regulatory permitting and compliance matters, loan compliance matters, contract disputes and other potential litigation issues, and other legal matters.
Please join us in welcoming him to the firm!
We hope you enjoy this issue, and, as always, thank you for reading.
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● What is the Hydrogen Hubbub?
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Hydrogen is seen by many as the fuel of the future, a substance that can provide heat through combustion, or electrical power from fuel cells, emitting only water in the process. Its potential usefulness, specifically its ability to replace fossil fuels without generating greenhouse gases, makes it the poster child for clean energy.
Click here to read the entire article.
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“Proponents and opponents are still awaiting a new environmental analysis that could permanently halt or change plans to drill there.”
Why this is important: After years of debate and political wrangling, Alaska’s Arctic National Wildlife Refuge (“ANWR”) was opened up for bidding on oil and natural gas leases in 2021; this was a reflection of an all-of-the above energy policy, including U.S. produced fossil fuels. The surprisingly few bids for lease that were offered were secured by Alaska’s own Industrial Development and Export Authority (“AIDEA”), and AIEDA had been proceeding with pre-development surveys, but as the article notes, the Biden administration ordered the Secretary of the Interior to “pause” any development and ordered a new environmental analysis (claiming the analysis performed during the Trump administration was inadequate). AIDEA, the state of Alaska, two Native Corporations, and others challenged the stoppage as a violation of federal law. As the article details, the U.S. Court District Judge ruled in favor of the federal government, and she was not persuaded that the “pause” was a “functional rescission” of the leases. While environmental interests have praised the decision, the policy debate and legal action will undoubtedly continue when the Department of Interior issues its new environmental impact statement, which is expected by the end of September. --- Derrick Price Williamson
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“California's government is racing to curb greenhouse gas emissions by 85%.”
Why this is important: California’s plan to achieve net zero carbon pollution emphasizes the creation of clean energy, but misses the mark on creating an infrastructure to store that energy to be used when demand is the highest. Energy storage is among the most important developments in clean energy production. One issue with solar energy is that production does not always meet energy demands, i.e., there is little to no production during evening hours, when demand can peak, at least for residential users. Without a storage infrastructure, an element strikingly absent from the state’s plan, California will continue to rely on fossil fuels to keep the lights on during peak demand hours. --- Joseph C. Unger
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“New rules from FERC are designed to reduce the years long delay in getting new renewable energy projects online.”
Why this is important: FERC’s new grid interconnection rules are intended to bring new generation capacity online more quickly, reducing a multi-year interconnection backlog. The article details many of the high points of the more than 1,000 page order from the FERC (full text available HERE). Among other things, the article notes that the new rule will require projects to be ready to interconnect, reducing, if not eliminating, speculative projects that sought a place in the interconnection queue but were not ready (and may not even have intended) to interconnect and produce power. FERC Order 2023 comes at a pivotal time as the energy sector is undergoing a fundamental transformation in favor of less carbon-emitting resources and more intermittent renewable resources. With thousands of megawatts of generation going offline that currently serve customers, new generation must come online to replace it. Order 2023 seeks to address one part of the equation by breaking the logjam that has prevented new projects from coming online in a timely fashion. As the article notes, however, this is only one piece of the puzzle, and more reform is necessary to bring more renewable energy online. --- Carrie H. Grundmann
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“Higher costs and a lack of regulations make steel firms reluctant to invest in a cleaner steel-production method, according to CREA.”
Why this is important: In the past two years, China has approved an incredible number of new carbon emission intensive steel mills that will increase global CO2 levels. China has approved $100 billion to build the new capacity. The new plants will use 119.8 million tons of coal for blast furnaces and 76.6 million tons for basic oxygen furnaces. The combined CO2 emissions of these new plants will equal the yearly CO2 emissions of the Netherlands. These increases continue to slow worldwide efforts to reduce CO2 emissions. --- Mark E. Heath
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“A liquefied natural gas export terminal would create jobs, grow the economy, and help our allies overseas.”
Why this is important: The Philadelphia LNG Export Task Force created by the Pennsylvania Legislature is exploring the potential for establishing an LNG export terminal at the Port of Philadelphia. This is a long overdue effort to expand LNG export facilities on the East Coast of the United States in order to place more clean burning Appalachian shale gas into foreign markets. Such an export facility would be a huge economic engine not only for Philadelphia, but also for that region as a whole. Additional exports of affordable shale gas would benefit our European allies, who continue to search for alternatives to their previous dependence on Russian natural gas. A shift in public policy to promote additional LNG export facilities on our East Coast would promote both domestic economic prosperity and the welfare of our international partners. --- William M. Herlihy
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“Gov. Glenn Youngkin’s plan to withdraw Virginia from the Regional Greenhouse Gas Initiative, a multistate effort aimed at reducing carbon dioxide emissions, will be challenged in court.”
Why this is important: Virginia Governor Glenn Youngkin's plan to withdraw from the Regional Greenhouse Gas Initiative ("RGGI") is being challenged in court. RGGI is a multistate effort aimed at reducing carbon dioxide emissions by requiring power plants that want to release carbon dioxide into the atmosphere to buy allowances for every ton they emit at quarterly auctions. According to the article, Youngkin has been pushing for Virginia to leave RGGI since before he was in office, arguing that it is a tax that utilities can pass through to ratepayers. The article notes that under RGGI, the typical monthly customer bill for Dominion Energy customers has increased by $2.39 and that a similar increase could occur by 2030 if Virginia stays in RGGI.
In June, through its regulatory authority, the state’s Air Pollution Control Board ("Board") voted to repeal Virginia's participation in RGGI. In response, environmental groups have filed a notice in court stating their intention to challenge the Board's action. While not addressed in the article, Pennsylvania is also experiencing ongoing litigation regarding the Commonwealth's proposed entry into RGGI. While the outcomes of the impending legal actions are uncertain, the upshot is that many states have been and are continuing to grapple with equitable approaches to promote climate initiatives. --- Steven W. Lee
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“This means that the sweep of the blades as they rotate covers an area of 50,000 square meters (nearly 540,000 square feet).”
Why this is important: China has installed and began operation of the world’s largest wind turbine. Located at sea in the Taiwan Strait, where winds are often gale force, the single turbine will power 36,000 homes. This one turbine will produce 16 MW of power. The MySe 16-260 wind turbine is 500 feet tall and each blade is 403 feet long and weighs 50 tons. In the U.S., plans for U.S. Vineyard I off Massachusetts will have turbines that each produce 13 MWs. These large-scale wind farms at sea have a potential to greatly amp up renewable power production. --- Mark E. Heath
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“The unit 3 reactor at Plant Vogtle near Waynesboro, Georgia, has started commercial operation, primary owner Georgia Power said.”
Why this is important: In the continued drive for more renewable energy, nuclear power continues to prove to be the best option as a fully carbon-neutral technology capable of providing reliable baseload generation; however, it is not without substantial cost, particularly at utility-scale. The start of commercial operations for Unit 3 of the Plant Vogtle facility in Georgia demonstrate this dual nature of large-scale nuclear power (the first new in-service project of its kind in the U.S. in nearly a decade), with the potential for 1,100 megawatts of long-term clean energy for half a million customers, but at an astronomical price of $30 billion. The net benefit of this utility-scale nuclear in comparison with newer, distribution-scale nuclear technologies remains to be determined. --- Barry A. Naum
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“Nine companies and five organizations signed a letter to the General Assembly and Gov. Roy Cooper urging the adoption of House Bill 503, which would appropriate $500,000 for such a study.”
Why this is important: The article notes that in June 2023, a group of businesses and organizations – many with clean energy goals and/or missions – sent a letter to North Carolina Governor Roy Cooper and the General Assembly, urging them to approve House Bill 503, which provides funding to study energy market reforms in North Carolina. Market reforms include joining a regional transmission organization like PJM that creates a multi-state market for energy, or other efforts to increase electricity competition in the state. North Carolina’s largest utility, Duke Energy, has long opposed such market reforms and opposes any study of the issue. Duke Energy opposes the study even though a similar study commissioned in South Carolina found that restructuring energy markets could save ratepayers up to $362 million per year. As North Carolina is a larger jurisdiction, the article notes that some initial analysis from 2019 has suggested that savings in North Carolina may be even greater. Notwithstanding the potential savings, HB 503 has not – and likely will not – make it out of committee, and earlier efforts to pass similar legislation failed. --- Carrie H. Grundmann
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“Continued strong growth in Asian economies offsets declines in Europe and North America, highlighting need for stronger policies and investments to accelerate growth of clean energy.”
Why this is important: Global coal use driven by China and Southeast Asia nations remains at the near records of 2022. In 2022, the world used 8.3 billion tons of coal, up 2.2 percent. In 2023 and 2024, world coal use for power generation is predicted to decline slightly, but industrial use of coal will overcome the power generation decline. So far in 2023, power generation is up one percent while industrial use is increasing two percent. World consumption is now at 4.7 billion tons for the first six months of 2023. Worldwide, China and Southeast Asia use three of every four tons burned worldwide. In the first half of 2023, coal use in the U.S. fell 24 percent and 16 percent in the European Union, but was offset by China and India’s five percent increase in coal use. --- Mark E. Heath
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Here is a round-up of the latest statistics concerning the energy industry.
ELECTRICITY
PETROLEUM
NATURAL GAS
COAL
RENEWABLES
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