The House Select Committee on the Climate Crisis released its Majority Staff Report on June 30, 2020, outlining an ambitious plan to reach net-zero greenhouse gas emissions throughout the economy by 2050. The proposed policies cover a broad range of topics, but they are all connected by a recognition that the energy sector is the “linchpin” of combatting climate change.[1] Among other topics, the report lays out ideas for changes in both the generation and transmission of electricity that would ultimately enable the United States to cut its greenhouse gas emissions close to zero.
Under the Select Committee’s proposed legislative goals, an amended Federal Power Act would give the Federal Energy Regulatory Commission (“FERC”) newfound authority to build the infrastructure for a “National Supergrid.”[2] Streamlined siting procedures for new transmission would enable FERC to build a long-range network of high-voltage direct current lines spanning the United States. The new supergrid would extend throughout the country so that renewable generation from a variety of sources, including offshore wind, would be available to a wider geographic area.[3]
The grid expansion efforts, however, are only one piece of the Select Committee’s proposal for a cleaner energy sector. Alongside upgrades in physical infrastructure, the report contains suggested reforms for market rules and operations to facilitate a shift to cleaner generation and transmission. To support the construction of a supergrid, Congress would direct FERC to help Regional Transmission Organizations and Independent System Operators (collectively, “RTOs”) cooperate on inter-regional planning. Cooperative planning among RTOs would have a new focus on building inter-regional transmission projects which would support emissions reductions through new renewable generation.[4] A national balancing authority would help manage the transfer of electricity between regions, and FERC would also be directed to consider establishing “macro RTOs” covering full interconnections.[5]
Reforms within RTOs would also ease the transition to greater reliance on renewables. To ensure that new renewables would be used to their fullest potential, Congress would direct FERC to help RTOs address interconnection backlogs for renewables. Priority would be given to interconnection analyses for sources that would contribute to states’ renewable targets. Additionally, costs would be assigned at a regional planning level rather than to individual generators, speeding up the interconnection process.[6]
Foreseeing that more transmission means a risk of more congestion, performance-based incentives would be established for RTOs to improve transmission capacity and efficiency.[7] The Select Committee’s proposals would also provide a path for non-transmission alternatives (NTAs) — including storage, demand response, and energy efficiency — to play a larger role in maximizing transmission efficiency. FERC would be directed to require RTOs to proactively assess NTAs during planning processes, as well as establish a rate for NTAs that is cheaper than transmission alternatives.[8]
Market reforms would supplement these transmission changes to ensure that renewables are more properly valued given their attributes. These attributes are typically not fully reflected in RTO market prices today — meaning that renewables tend to be somewhat undercompensated under most current RTO market rules. A combination of three proposals would dramatically change the way renewables compete in wholesale power markets on price. First, the Select Committee proposes eliminating tax cuts for oil and gas generators and imposing a federal price on carbon emissions.[9] Second, an amendment to the Federal Power Act would require FERC to consider the cost of carbon emissions when reviewing RTO pricing rules.[10] Finally, citing PJM’s controversial minimum offer price rule, a suggested amendment to the Federal Power Act would prohibit RTOs from engaging in price discrimination based on state subsidies.[11] Taken together, these market reforms would more accurately value the overall contributions of renewable energy resources in wholesale power markets, and promote the Select Committee’s overall goal of giving proper value to renewables’ flexible operational characteristics and low environmental impact.
The proposed overhauls in the electricity sector would support broader efforts to reduce climate impacts through electrification and renewable generation. For example, additional funding and tax credits would promote the development of new renewables that would take advantage of expanded market access. Investment and production tax credits would be expanded, and firms with low tax liability would have the option to reduce credit value in exchange for the ability to make credits refundable.[12] Distributed energy resources and microgrids would be developed to decrease dependence on a central grid.[13] Industry, transportation, housing, and other end uses would be electrified.[14]
Several of the proposed policies are already under consideration in the House. The Moving Forward Act (H.R. 2), passed by the House on July 1, 2020, would invest $70 billion dollars in transportation energy efficiency and new grid support for electric vehicle charging networks.[15] In addition, the draft appropriations bill for energy and water in fiscal year 2021 would provide funding for a variety of renewable projects and grid improvements, including nearly $8 billion in emergency funding for renewable and energy efficiency technology projects and over $3 billion for grid improvements and energy storage development.
Though it remains to be seen whether these proposals will gain enough congressional support to become law, the Select Committee’s proposals appear to have already gained traction among lawmakers.
[1] Select Committee Report at p. 4.
[15] Moving Forward Act Fact Sheet, under heading “Clean Energy.”
