The Obama administration today laid out a roadmap of policy suggestions designed to capitalize on a transformed energy landscape without losing sight of the overarching need to reduce its contribution to climate change.
White House officials touted the Quadrennial Energy Review, which focuses on the energy industry’s infrastructure needs, as a two-pronged tool. First, it assesses the effect of recent developments such as the advent of hydraulic fracturing, which sparked the domestic boom in oil and natural gas production, and the decreasing costs of renewable energy technologies such as solar and wind, whose deployment has more than tripled since President Obama came into office.
Next, it recommends various policies that would improve the reliability of the electric grid, secure domestic supplies of oil and gas, and drive the types of greenhouse gas emission reductions that will be necessary for the president’s overall climate goals.
Release of the QER comes just months before U.S. EPA is set to finalize its Clean Power Plan, which aims to reduce the power sector’s carbon footprint 30 percent by 2030.
The Clean Power Plan and other recent EPA rules, along with cheap natural gas, are contributing to a wave of coal plant retirements, while intermittent renewable energy is contributing a growing share of the overall U.S. power supply.
“Those trends will continue,” said Dan Utech, the deputy assistant to the president for energy and climate change, during a conference call today.
John Holdren, assistant to the president for science and technology, praised the U.S. electric grid for its reliability but acknowledged “that system faces real challenges” from a shifting generation mix, climate change, potential cyberattacks and more.
Among other proposals in the QER is the creation of a $3 billion to $5 billion grant program for states that can show innovative approaches to improving the resilience and reliability of the electric grid. It also touts a $3.5 billion request in President Obama’s fiscal 2016 budget for an interagency grid modernization initiative.
While the QER touches on concerns regarding the siting and permitting requirements associated with building new transmission, it does not propose any extensive overhaul of the National Environmental Policy Act (NEPA), the 1969 law that generally constitutes the most direct federal involvement in decisions that otherwise are more concentrated at the state and local level.
NEPA reform has been a longstanding goal of congressional Republicans and stakeholders associated with various industries, but green groups and their Democratic allies tend to resist efforts to amend the foundational environmental statute. Utech said the administration has been engaged in an ongoing effort to “modernize” NEPA implementation and improve transparency associated with the law but did not commit to additional changes.
Republicans on Capitol Hill said they already were working to address infrastructure needs. A House leadership aide sent a memo to reporters this morning pointing to passage this year of legislation to approve the Keystone XL pipeline from Canada, which the president vetoed, as well as House-passed bills that would have expedited liquefied natural gas exports and set deadlines on permitting decisions for new natural gas pipelines.
“If the Administration is serious about securing our energy future, a good start might be with the bipartisan bills passing out of the House,” wrote Matt Sparks, a spokesman for Majority Leader Kevin McCarthy (R-Calif.), in the email.
A leading environmentalist touted the administration’s overarching focus on climate change in crafting the QER roadmap.
“The president is right to make this a top national priority. By focusing on how energy is transmitted, stored and distributed, this report charts a path toward to a clean energy economy supported by a modernized energy grid,” Natural Resources Defense Council President Rhea Suh said in a statement today. “A smart, 21st century power infrastructure — combined with the increasing deployment of energy efficiency and renewable sources of energy — will ensure America’s continued economic prosperity and competitiveness while protecting our health and the health of our planet by reducing carbon pollution — and combating dangerous climate change.”
The QER does not mention the proposed Keystone XL pipeline, which would transport oil sands crude from Alberta to refineries along the Gulf Coast, but it does recommend better integration between U.S. energy systems and those of its neighbors on the continent.
KXL was omitted so as not to interfere with the ongoing review underway at the State Department, Holdren said. Besides, he noted, the single project “would be a very small part of the overall integration between the U.S. and Canada.”
The QER proposes allocating $2.5 billion to $3.5 billion over a decade to repair aging natural gas pipelines and replace old lines. It also would aim for a more than $2 billion program in the Department of Transportation to improve rail and highway infrastructure used to transport energy and other commodities; that program would be expected to leverage up to $5 billion in private investment.
Utech said the administration was open to working with Congress to find areas of common ground, and he said that the proposed spending programs were aimed at catalyzing as much additional private investment as possible. He also touted the programs as a way to address safety concerns while also finding ways to reduce greenhouse gas emissions associated with energy infrastructure.
The administration is seeking ways to “really nudge that process” toward reducing emissions, Utech said. “Most of the proposals for new spending are of that variety.”
Natural gas drillers were glad to see an emphasis on job-creating investment opportunities but worried about the QER’s parallel call for DOE and EPA to address methane emissions from natural gas infrastructure.
“The administration clearly recognizes the environmental, economic and national security benefits of our abundant natural gas resource, and we support the QER’s emphasis on jobs, safety and methane emissions,” said Dan Whitten, a spokesman for America’s Natural Gas Alliance. “But we believe that the best path to making methane emission reductions is through cooperative efforts with industry and not through a slow-moving and potentially costly mandatory process.”
The report also grapples with the ongoing domestic oil glut, especially when it comes to the light oil that fracking unlocked. On the call, Utech observed that the current debate has shifted from worrying about excessive oil and natural gas imports to “debates about how much and what kind” of exports to authorize. He pointed to DOE’s authorization of nearly 6 billion cubic feet per day of liquefied natural gas exports but said policy shifts were not currently contemplated on crude export policy.
Utech pointed to the Department of Commerce’s clarification that companies can export condensate — a lightly processed type of crude oil — as a response to immediate concerns about a glut of light oil on U.S. markets. The administration, he said, “will evaluate policy options as needed.”