ESG & Industry Updates

In March, RENEW Northeast and the American Clean Power Association (ACPA) filed a complaint with the Federal Energy Regulatory Committee (FERC) asking the agency to find that ISO New England market rules “provide undue preference to natural gas only resources” and to direct the grid operator to fix its ruled to end that preference.

The allegation is based on how the reliability is weighted for natural gas versus “intermittent” resources like solar and wind. For example, solar is scored lower for reliability based on winter supply issues, wind turbines are lowered through summer months based on projected output, but natural gas is presumed to have 100% reliability despite growing concerns that capacity problems in the Northeast Region would potentially make gas inaccessible under full winter loads in extreme situations. If you recall, natural gas capacity in the region has been a concern for quite some time. 

We wrote an article for Oil & Energy in April laying out the details and basis of the complaint, as well as how the capacity auction works and served to generate this complaint. You can read that article in its entirety here: Renewable Advocates Target ISO New England

Brayton Point in Somerset was once the largest coal-fired plant in Massachusetts, and was the last to be decommissioned in 2017.

The plan for the site has been to develop it into Massachusetts' first major offshore wind manufacturing facility, as an integral part of the Commonwealth's approach to its renewable energy portfolio. 

This February, Governor Baker and State Officials announced that a 47 acre parcel of the property would be sold to Prysmian Group, who will manufacture high tech subsea transmission cables on the site that will be used to  bring offshore wind generated electricity back on site and into the grid. 

Prysmian is looking to invest up to $300 million dollars in the Brayton Point facility, and would create a projected 250 high paying jobs on site. Part of the enticement to the project for Prysmian was assurance from Avangrid Renewables that the manufactured cables would be used for the Commonwealth Wind projects, as well as the parallel project in Connecticut (Park City Wind). Avangrid is also the joint partner with Copenhagen Infrastructure Partners on the Vineyard Wind Project. 

Vineyard Wind (off Martha's Vineyard) is set to be the first large-scale offshore wind project in the country. Approved by the Biden Administration last year, the Vineyard Wind project will consist of up to 84 wind turbines and expected to produce 800 megawatts of power, or enough to power 400,000 homes. 

Back to Brayton Point - Mayflower Wind (also off Martha's Vineyard) will generate 400 megawatts, and feed into the Brayton Point site.  Mayflower will also be building a converter station at Brayton Point to facilitate movement of wind generated electricity into the grid. Mayflower also has said its proposal includes $42 million additional dollars in on-shore development and have proposed establishing an operations and maintenance facility at a former industrial site in Fall River and plan to utilize a Somerset based company for a crew transfer vessel for employees as well.  

This investment on local infrastructure and the tax revenue that involved facilities will generate, not to mention the creation of plentiful higher paying jobs for the area is a huge positive for Southeastern MA, an area that has been impacted over the decades by phase outs of manufacturing and changes in the fishing industries that were once the lifeblood of the area.  

Overall, Massachusetts looks poised to really be in the lead when it comes to offshore wind generation as we watch multiple projects come together. As the Governor said at the gathering in February "One of the biggest challenges we will all face as we go forward from here is figuring out how to get the generation where it needs to go" - that is a problem that the development of Brayton Point seeks to help alleviate. 

I wrote an article for the March issue of Oil & Energy Magazine on the Brayton Point site redevelopment, you can read that article in its entirety here: Revisiting Brayton Point: Offshore Wind Brings New Life to Closed Coal Site 

(Below: Brayton Point Currently (left), and to the right, a rendering of the proposed redevelopment)

The Advanced Clean Truck Rule, first adopted in California, has been adopted by three Northeastern States as well - namely, Massachusetts, New York & New Jersey. The rule requires an increasing percentage of medium & heavy duty trucks sold to be Zero Emission Vehicles (ZEV), beginning in 2025. The Act requires manufacturers to participate in a credit/deficit program to increase the number of ZEVs sold in the state, and a one time report detailing in-state operation of vehicles over 8500lb to "inform future decisions about emission reductions from the transportation sector". 

Despite being a relatively small percentage of the total vehicles in the United States, medium and heavy duty trucks contribute an estimated 60% of tailpipe nitrogen and particle emissions. So far, California, NY, MA, NJ and Oregon have adopted the rule (Maine is expected to sign on later in 2022) and all combined their fleets constitute about 20% of the total vehicle class, so their adoption of the regulations is expected to have a major and relatively immediate impact. In New Jersey, their transportation sector is responsible for 40% of emissions and despite impacted vehicles (buses, trucks) only making up about 40% of their total number, they're responsible for 25% of transport related emissions. Massachusetts by 2050 expects to see a 51% reduction in nitrous oxide, 23% in particulate matter emissions, and 53% GHG emissions drops as a result of adopting this measure. If you extrapolate these expectations out, the impact of this rule's adaptation should be very significant.  

Of added significance is, as discussed with regard to current Administration concerns about environmental justice, the Advanced Clean Truck Rule is expected to be especially beneficial to historically impacted communities, as heavy transportation and its resultant particulate emissions disproportionately impact urban communities, including communities of color. The steep reduction in GHG and particulates expected from ZEV adaption will have the greatest impact where those emissions are currently concentrated most heavily. 

The rule is in effect pre point of sale, so it impacts manufacturers of these medium & heavy duty trucks. It's a little unclear yet how timelines, if any become put in place, would work for existent fleets - one can only assume that the one time reporting rule included in the ACT adoption will be used to address that question down the line. It's also unclear what exactly the mix of ZEV looks like, and how the timeline on the rules impact will impact sales cycles and equipment turnover going forward, and what impact that will have on fleets, fleet operators, and end level consumers. 

I wrote an article for Oil & Energy Magazine's Jan/Feb issue on the specifics of the rule and how it breaks out by each state that has adopted thus far in the Northeast. You can read that article in its entirety here: Oh Truck No! Three Northeast States Adopt Zero-Emission Vehicle Rule 

Over 70% of the American West, Southwest and Northern Plains has been categorized as a D3 (severe) drought or higher since June. In October, the US Bureau of Reclamation issued its 5 year projections for the Colorado River, which serves 40 million people in the American West. Projections help management consultants better plan for future demands and determine allocations appropriately based on the data.

Ongoing drought conditions in the region have led to drastic and unprecedented changes in water allocations. These cuts in allocation have devastating implications for regional farmers and ranchers, their livelihood and the commodity markets their products determine pricing versus demand for more broadly. It also complicates the clean energy picture, as hydroelectric plants (which produce 40 billion kwh of energy for millions of homes and businesses in the Western region) become not only unable to enhance capacity, but become less able to meet current loads and meet demand.

Additionally, the continuing drought conditions and their impacts are a concerning sign for what is to come with climate change. Lake Powell & Lake Mead are the largest man-made reservoirs in the country, and their levels largely depend on snowpack conditions in the region. Warmer temperatures and drought conditions have caused both to dip to historic levels as well as causing a first-ever water shortage on the Colorado River. Should levels continue to drop, downstream states could become unable to access water downstream from Lake Mead and the implications of that would be devastating.

In 2019 seven regional states along the Colorado River signed a plan to prop water levels up, and portions of the infrastructure bill passed at the end of 2021 address ongoing concerns and provide funding for infrastructure improvements in the Western region to at least forestall the worst potential longer term impacts.

I wrote an article for Oil & Energy magazine that goes into more depth on the specifics of the problem, as well as how the infrastructure bill will attempt to address concerns. You can read that article in its entirety here: Drought Relief for Western States

A groundbreaking report “Avoided Deforestation: A Climate Mitigation Opportunity in New England and New York” was released in September by a Clark University research group. The study measures the levels of climate mitigation that could be achieved in the Northeast if deforestation was prevented.

New England and New York release 4.9 million tons of CO2 equivalent each year due to forest loss, while simultaneously losing approximately 1.2 million metric tons that could have been stored by the forests annually. Massachusetts alone loses an average of 5,000 acres annually (its 1 million acres across the continental United States).

Overall deforestation is equivalent to about 2% of all fossil fuel emissions in New England, so it isn’t a small issue, taking action could have a significant impact on climate projections.

There is a new online mapping tool from the Nature Conservancy that calculates the potential of intact forests across the US, which is allowing land managers and developers to determine the forest areas with the highest carbon stock and sequestration levels so they are able to make development decision with this information in mind.

I wrote an article for Oil & Energy magazine detailing the issues around deforestation and climate mitigation, particularly as the development of solar photovoltaic systems grows in volume. You can read that article in its entirety here:  Conservation Matters: Study shows preserving forests would help slow climate change

This past Friday, November 5^th, the House passed a $1.2 trillion dollar infrastructure bill after weeks of legislative infighting, primarily between progressive Democratic members and their more centrist colleagues, in addition to the given squabbling across party lines. 

At the end of the day, 13 Republicans supported the measure where 6 Democrats did not. Simply put, the moderate republicans & democrats a la Joe Manchin ultimately voted “yea” where “the Squad” went “nay”.

Some of the more ambitious social spending related items were ultimately trimmed from the original proposal, including parental leave, $100 billion for workforce development, $400 billion to bolstering care for disabled and elderly Americans via expanded access to long term care services, $18 billion for VA Hospital modernization, and items regarding home health care worker pay levels.

Also conspicuously absent on the other side of the ledger – the proposed increase in corporate tax rate (from 21 to 28%) was scrapped, as were multiple tax hikes proposed to pay for some measures. Presumably, the social spending items that were ultimately trimmed from the Infrastructure package will be added to the separate 1.75 trillion Climate & Social spending bill (the so called “Human Infrastructure” bill) up next.

What’s still included?

• $110 billion for roads, bridges, and major infrastructure projects.
• $11 billion for Transportation safety, including crash mitigation for cyclists.
• $1 billion to reconnect communities divided by prior infrastructure projects, particularly in minority neighborhoods disproportionately impacted.
• $39 billion to modernize public transport systems
• $66 billion on rail infrastructure additionally, to reduce the Amtrak backlog and modernize the Northeast corridor.
• $65 billion in Broadband Infrastructure expansion & improvement
• $17 billion to Port infrastructure
• $25 billion to Airports
• $7.5 billion for zero & low emission busses and ferries
• $7.5 billion for building out EV charger network
• $21 to environmental remediation of Superfund sites, abandoned mines, and orphaned gas wells.
• $55 billion to upgrade water infrastructure, including removing lead piping.
• $65 billion to rebuild the electric grid

As mentioned previously, the passage of the infrastructure package from the view of those who work in utility contracting, electrical contracting, and other related union jobs (particularly in the Northeast) will be a huge boon to their members in terms of providing multiple long term projects, and thus multiple long term well-paying jobs.

One major variable to keep an eye on will be how much ongoing frustration and shortages along all facets of the supply chain, from manufacturing to delivery, may serve to push timelines on projects and ultimately slow progress forward on the outlined goals of the bill.

Stay tuned!

The Biden Administration has announced new methane regulations from the COP26 Climate Summit in Glasgow, Scotland this week. Estimates are that the new regulations will affect  up to 75% of the methane emissions in the United States. Regulations will apply largely to the Oil & Gas industry, specifically addressing “flaring” (purposeful venting) during production and leaks across the system infrastructure.

Methane is responsible for up to 30% of global warming, according to the UN Environment Program, and is estimated to be 25 times more potent than Carbon Dioxide. In recent years this had led to more focus on methane (versus Carbon) emissions, as because of the potency, decreases in methane are much more likely to have a faster and more meaningful impact on slowing Climate Change.

If this sounds familiar, it’s likely because in 2014 the Obama Administration announced similar Methane regulation controls (you can get a refresher here: Methane & Consumers Giving Nat Gas Headaches ) Those rules were enacted in 2016 and subsequently relaxed by the Trump Admin, before being reinstated by the Biden Admin. Hard to keep track of.

The oil & gas industry is responsible for an estimated 30% of methane emissions domestically, and the new rules are expected to reduce emissions from equipment, production sites, and covered areas by up to 75%. In tandem with the expanded EPA regulations, the DOT’s Pipeline & Hazmat Safety Administration is implementing the PIPES act which upgrades and expands existing pipeline setups to cut methane leakage. Other targets of emission reduction are landfills, and enhancing the abandoned mine & well closure program – orphaned mines have been an oft ignored thorn in the side of the federal government & EPA for decades, abandoned mines often leak methane and other gasses, or pollute their areas (For a refresher on that, check this article out: Accidents Happen: EPA Spill Highlights Difficulty of Mine Decontamination)

In an odd continuation of an ongoing trend, the new methane regulations will be “voluntary, incentive-based” changes in the Agricultural sector. This would seem to clash with the global concern over agriculture produced emissions, particularly those from concentrated feed lot (CAFO) based livestock production. The agricultural sector produces emissions comparable with the entire transportation sector (including airplanes) globally (14-18% for both), and agricultural emissions have increased approximately 12% since 1990, which is in contrast to the focus on emission reduction we have seen implemented (in a mandatory fashion) in other sectors. In terms of emissions, the US Agricultural sector produced approximately 698 million metric tons of CO2 equivalent in 2018, a staggering 36.2% of which was in the form of methane.

One of the items regarding agricultural emission control in the White House Proposal is investment in methane reducing practices like “alternative manure management systems”. Presumably (hopefully) this would be an investment in technology like the anaerobic digester technology we have seen make an appearance in MA, where dairy farmers have been diverting manure & food waste to be upcycled into energy. (More on that here: Mass Dairy Farmers Use Food Waste & Manure to Generate Renewable Energy)

So while we will have to wait to see how the new proposals take shape in actual regulation and enforcement, it’s worth noting that according to reports, the American Petroleum Institute (API) appears to support the proposal, with a response indicating they were “committed” to “continued progress” on methane emission reduction. 2020 methane emissions by oil & gas were down 10 percent versus 2019, but that was as a result of a collapse in production, not because of corrective action. The IEA estimates that 10% of methane could be reduced “at no perceptible cost” and where the US (along with Russia) is one of the world’s largest emitters, the new Biden regulations are an attempt to remedy that and push forward progress on a broader Climate agenda.

Stay Tuned!

The race is on among tech companies to be the first to perfect and roll out fully autonomous trucks. In 2016, Uber premiered the Otto - the first autonomous truck to complete a commercial shipment without a driver - it delivered beer after a 120 mile trek through Colorado. (We wrote an article on that at the time, for an Otto refresher you can find that here: Uber's Otto Delivers on Driverless Tech)

Since 2016 most of the focus (including by Uber) has pivoted to autonomous passenger vehicles, the most successful of which has been the Tesla. However, even the Tesla's impressive operating system cannot be fully driverless, because of the inherently complicated and difficult to predict nature of driving cars, particularly in urban areas and heavy traffic. Drive through downtown Boston or Cambridge on a weekday morning and it will be pretty clear, pretty fast, just how large the volume of variables involved for any onboard AI would be. Urban driving still requires human intervention, at least for the foreseeable future. (That's been the case all along: The Struggle is Real when it comes to Autonomous Vehicle Safety ) 

Long haul trucking however, runs almost entirely on the much-easier-to-navigate interstate highways. The so called "Depot to Depot" model involves preprogramming routes where the onboard AI systems would handle highway driving, leaving difficult aspects like offramps and surface roads to human drivers for the time being - with the ultimate goal down the line being fully autonomous driving. We wrote an article on the specifics of where the autonomous truck companies are in the process, what the challenges are, and what lies ahead for Oil & Energy Magazine this month. You can read that article here: The Race for Self Driving Big Rigs. 

For local/regional transportation companies, the timeline on autonomy is likely substantially further out than even autonomous passenger vehicles would be. For industries involving more complicated delivery operations especially, like fuel companies, it seems unlikely there will be full autonomy on the horizon, not just because of route difficulty, but the critical role of highly skilled drivers that do the actual delivering of product after stopping. For fuel, a Tesla type model where autonomy lightens the strain and load, while reducing emissions via efficient operation  is probably more realistic of a model.

However, if ten years ago you said all of the meetings conducted globally in 2020 would be on videoconferencing apps, people would have said you were insane so. We shall see. 

We're going to go millennial this month and talk about the ongoing controversy regarding bitcoin  - not the part you're thinking about, (to the moon!) -  but the controversy regarding the Carbon Footprint of digital currency, and what is seen as its "excessive" energy consumption. 

When most people think of digital currency, carbon footprints don't necessarily spring to mind. After all, the entire industry is just computers (and nerds) right? No shipping, no delivery, no need for massive buildings or corporate offices - the beauty of the whole system is hinged on it being completely digital. However, being completely digital means that the industry relies on using massive amounts of electricity for processing power to "mine". (Mining essentially relies on solving complex mathematics which requires insane amounts of processing power and speed). 

According to industry reports, peak consumption was 143 terawatts, recorded in May. However, consumption has dropped some 60% since then, dropping to 62 TwH in July. Why? Because of 1) the Tesla decision to suspend bitcoin payments on May 12th based on environmental concerns, 2) China's decision in May to crack down on crypto mining, which resulted in approximately HALF of all miners being offline essentially overnight. 

In an odd twist, China's decision to boot bitcoin miners in May might end up being a saving grace for the industry longer term on the energy & carbon side, versus being a single impact drop from kicking everyone offline. Miners are increasingly moving to base out of the United States, where an increasing focus on renewable energy driven power and simultaneous development of more and more efficient processing equipment should help continue to drive down the overall impact of the industry. Mining works on thin margins, and electricity is often the most changeable variable overhead number, which also bodes well for enhancing renewable use as countries like the US focus on making renewable energy options more attractive financially than they have been historically. 

As anyone who's tried to read anything about bitcoin/digital currency is aware, its pretty confusing stuff. We wrote an article for Oil & Energy Magazine this month about the ins and outs of digital currency's Carbon issue and how it looks to be moving forward. You can read the article here: Bitcoin Miners Seek "Greener" Pastures in the United States 

The Biden Administration's 1 trillion dollar Infrastructure Package, the "Infrastructure Investment and Jobs Act" passed the Senate on Tuesday, with a voting margin of 69-30, meaning the passage was far more bipartisan than we are used to seeing as of late.

The  bill now heads to the House, where it faces a potentially more difficult road to passage, surprisingly not along the usual party lines as much as from a progressive faction in the House that has vowed  they would not vote on Infrastructure until a separate 3.5 trillion dollar social policy bill (the so called "Human Infrastructure" package) is passed. The second bill is expected to be a party line vote, occuring today or tomorrow, and it is unclear how long the standoff may be in the House regarding if the Transportation Package is passed ahead of the second bill as a standalone, or not. A lot of the answer to this likely hedges on whether the second bill is attempted to be pushed over as a budget resolution (which would allow passage sans Republican votes). 

The Transportation Infrastructure bill that is pending in the House, although at a whopping 1 trillion dollars, started back several months ago as a 2.3 trillion dollar plan.  Major concessions obviously were made to drop the totals, but here are some of the major categories the final bill is anticipated to include:

• Infrastructure:  $110 billion in new funding for physical infrastructure - including repair to roads and bridges, and a focus on both repairing and shoring up the infrastructure in areas vulnerable to climate change related damage.  
  
  
• Clean Energy: $73 billion to modernize the electrical grid (including transmission lines) and expand clean energy sources. New transmission lines will accomodate renewable energy sources like wind, solar, and geothermal into the grid, and higher voltage lines will allow vulnerable areas to better withstand climate related impacts to electricity access, like those we saw in Texas this past winter. 
  
  
• Lead Pipe Replacement: $15 billion for lead pipe replacement. This one is sort of oddly lowballed in the context of both the anticipated cost itself ($45-60 billion) and the size of the bill itself. Millions of homes and hundreds of municipalities in America are still serviced with lead pipes, and as the Flint Water Crisis illustrated in 2014, damage to the pipes that results in leaching of lead into the water supply can have devastating effects. 
  
  
• Public Transportation:  investment in rail transportation, including modernizing the Northeast corridor for Amtrak and expanding lines outside the Mid Atlantic region. Public bus and subway systems will also receive funding toward replacing aging equipment and infrastructure, as well as expanding routes with the goal of making public transportation more easily accessible to... well, the public. Currently only urban centers in some states have reliable public options and this portion of the bill is seen as a step towards expanding that access out to more rural communities. 

We'll have to wait til full passage to get into the nitty gritty and really see the end facts and figures on the bill's components, but outside of the political pundit commentary, at the very least people seem to agree that as far as regular citizens are concerned the key focus of the bill is the jobs expected to be created to handle repairing, building, and expanding infrastructure, as well as those that will be required to manufacture, manage, and coordinate those efforts. 

In the Northeast region in particular, the updating and expansion of Amtrak and public passenger rail, bridge repair, and investment toward shoring up areas vulnerable to climate related flooding and erosion is heralded by local unions as a boon to their members, particularly coming on the heels of quarantine's severe impact on construction and trade sectors. 

As mentioned, everything essentially now rests on the House and how they choose to approach passage of the Transportation bill - with or without the Human Infrastructure Bill attached. 

Stay Tuned!