Lawsuits, legislation could short-circuit wind, Clean Power Plan

WASHINGTON, Oct. 28, 2015 - If the right energy policy choices are made, the Department of Energy forecasts that wind power's current 4.5 percent of the nation's end-use demand could surge to 10 percent by 2020, 20 percent by 2030 and 35 percent by 2050.

The policy choices include a rapid shift from coal power to wind and solar – a shift that’s key to the Obama administration’s Clean Power Plan (CPP) to limit carbon emissions from coal-fired power plants for the first time. But the administration’s ability to implement the CPP and its other climate programs will be decided by how the courts rule on a flood of lawsuits filed Friday by West Virginia and 25 other states along with business and industry organizations and individual businesses. The suits charge that EPA has exceeded its legal authority in its CPP rules. Another 15 states including New York, California, Illinois and Iowa support the CPP.

The lawsuits’ initial goal is to have the courts issue a stay order to prevent EPA from enforcing its CPP rules until there is a final court decision on whether the EPA has the legal authority to implement the plan. Karen Harned, executive director of the National Federation of Independent Business small business legal center, said in a call with reporters Monday that the courts need to block EPA’s Clean Power Plan because EPA is “doing expressly that which Congress has already rejected.”

In filing suit Friday, U.S. Chamber of Commerce President and CEO Thomas Donohue charged that “The EPA’s rule is unlawful and a bad deal for America. It will drive up electricity costs for businesses, consumers and families, impose tens of billions in annual compliance costs, and reduce our nation’s global competitiveness, without any significant reduction in global greenhouse gas emissions.”

In contrast to the dire warnings in the lawsuits, the Energy Department’s March 2015 report, Wind Vision: A New Era for Wind Power in the United States, states that with wind power costs down more than a third since 2008 thanks to new technology, construction of a domestic manufacturing base, and economies of scale, it has already been established that “utility-scale wind power is a cost-effective source of low-emissions power generation.”

Another key point in the DOE report is that wind’s current trajectory indicates that if wind continues to gain market share, U.S. electricity consumers will be major beneficiaries. By 2050, the report sees the payoff from wind power’s potential growth including $149 billion saved on consumers’ electricity bills and $280 billion in savings from lower fossil fuel prices. As a bonus, the report says the switch to wind would reduce the electric power sector’s water use by 23 percent.

All bets are off, however, if Congress either passes legislation to rescind the Clean Power Plan or once again fails to renew the Production Tax Credit (PTC) and Investment Tax Credit (ITC) for wind which expired in 2014. These short-term tax credits are intended to offset the fossil fuel industry’s permanent tax breaks and to reflect the health and environmental benefits provided by energy sources which reduce carbon emissions. As shown by the DOE chart above, wind’s growth has slowed precipitously whenever Congress has let the PTC and ITC lapse. Not shown in the chart: the thousands of jobs lost, manufacturing plants closed, and billions in investment dollars switched to overseas projects whenever the tax credits are in doubt.

In its third-quarter U.S. Wind Industry Market Report released Oct. 22, the American Wind Energy Association (AWEA) says that the industry is on track to achieve DOE’s ambitious growth targets. But it also warns that the momentum could be halted once again if Congress fails to renew the PTC and ITC tax breaks.

Explaining the report’s findings, AWEA CEO Tom Kiernan said that “We are on the cusp of greatness. There are over $20 billion worth of wind farms under construction right now, creating well-paying jobs and spurring economic development in rural communities across the country.” But he warned, “This growth is in jeopardy, however, as continued policy uncertainty could throw the wind industry off yet another economic cliff.”

One measure of the threat is that wind installations dropped 92 percent in 2013 when Congress failed to renew wind’s tax breaks. “Extending the Production Tax Credit and the Investment Tax Credit this year for the longest practical term,” Kiernan said, “will help wind power grow our economy and deliver more savings to American homeowners and businesses.”

The AWEA report shows that over 1.6 gigawatts (GW) in new wind capacity was installed for the third quarter of 2015, resulting in nearly 3.6 GW added for 2015 so far. This pace more than doubles the capacity installed for the same period in 2014 and brings total U.S. installed wind capacity to 69.47 GW, which is enough to power 18 million average American homes.

Looking forward, the report finds that a near-record of more than 13.25 GW of wind capacity is under construction in the U.S., with an additional 4.1 GW in advanced stages of development. Completion of these projects would bring total U.S. capacity to 86.8 GW. Those figures put the industry on track to achieve DOE’s Wind Vision goals of U.S. installed wind capacity of 113 GW by 2020, 224 GW by 2030, and 404 GW by 2050. As part of that growth, DOE sees the potential for 22 GW of offshore wind capacity installed by 2030 and 86 GW by 2050.

AWEA notes that the third quarter also saw North Carolina launch its first-ever wind farm, becoming the 40th state with commercial-scale wind power generation.

AWEA adds that corporations including Amazon and Hewlett-Packard and a growing list of U.S. cities have signed wind power purchase agreements for 20 years or longer. “These long-term contracts help non-utility purchasers of wind to hedge against the risk of increasing fuel costs by locking in low, fixed-cost rates for wind energy output,” AWEA explains, pointing out that “These commitments also help companies and cities to achieve their internal carbon reduction targets.

In a webcast about AWEA’s 3Q report, Kevin Helmich, Iberdrola Renewables’ managing director for Midwest and Eastern origination, said that in order for wind to give consumers new savings and reliability opportunities, “We encourage Congress to continue affording those opportunities by extending the renewable Production Tax Credit to enable the construction of thousands of additional megawatts to serve consumers large and small with affordable, clean power.”

The latest AWEA numbers confirming wind power’s rapid growth come at a critical time. Wind power is a key part of the administration’s Clean Power Plan (CPP) And the CPP is a key part of the administration’s effort to persuade other countries to commit to equally bold carbon emissions limits when the international climate summit is held in Paris Nov. 30 to Dec. 11.

But coinciding with the anti-CPP lawsuits filed Friday, Senate Environment and Public Works Committee Chairman Jim Inhofe, R-Okla., joined Senate Majority Leader Mitch McConnell, R-Ky., and Sen. Shelley Moore Capito, R-W.Va., in sponsoring congressional resolutions to rescind the Clean Power Plan.

Aiming his remarks directly at the climate summit in Paris, Inhofe said that rescinding the CPP is “intended to make it very clear to the international community that the majority of Congress does not support the president’s climate agenda. The majority of Congress does not support any effort to fund his climate agenda, and any associated promises made by this administration, whether through political or legal means, will be short-lived.”

DOE’s Wind Vision report forecasts that a rapid transition from coal to wind by 2050 would reduce electricity costs and generate hundreds of billions of dollars in savings along with environmental and health benefits. In sharp contrast and echoing the anti-CPP lawsuits, Inhofe charges that implementing the CPP “will cost over $192 billion, increase the price of electricity, reduce grid reliability, and have no considerable impact on the environment.”

Oklahoma’s other U.S. senator, Republican James Lankford, has introduced his PTC Elimination Act to “phase out federal renewable energy tax credits, including wind, by 2026.” He says that while he supports wind as part of an all-of-the-above energy strategy, wind has become “a self-sustainable, multibillion dollar industry” so that “there is no need for the taxpayer to continue to subsidize a wind start-up tax credit.”

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