Climate Cabinet Education

RECAP: 2023 APPA National Conference

By Ethan Kirkham, Public Power Program Manager The American Public Power Association (APPA) hosted their annual National Conference in Seattle last month, bringing together Public Power leaders from across the country to learn more from one another about clean energy solutions, market outlook, cybersecurity, customer outreach, and federal funding. With this being the first APPA National Conference hosted since the passage of the Inflation Reduction Act (IRA), Climate Cabinet’s Public Power Program Manager Ethan Kirkham and Senior Advisor Frances Sawyer attended APPA’s national conference to see how Public Power leaders were responding to the changing landscape ahead of the law’s implementation. Here are some key observations from the conference: Admittedly, there is still a lot to be established about the IRA. At the time of the conference, we were collectively still waiting on more federal guidance on Direct Pay, and—though we’ve seen rubber just starting to hit the road with programs like the Climate Pollution Reduction Grants at the state level—it will be some time before we see concrete examples of the IRA’s impact for publicly owned utilities. That being said, Public Power utilities, which operate not-for-profit and have to keep tight budgets, are aware of and appropriately interested in taking advantage of federal funding. At Climate Cabinet Education, we published a guidebook to help muni leaders leverage these historic dollars.  Some munis have already begun incorporating potential IRA funding into their resource planning, but many others don’t have a clear vision of how they can access these funds due to lack of guidance, staff capacity constraints, or lack of a strong tradition of federal funding to Public Power, and are still looking for a way to get a piece. To that end, the APPA hosted the Administrator of the Rural Utilities Services at the United States Department of Agriculture (USDA)—former mayor of Chattanooga Andrew Berke—to talk about some of the funding available via the USDA’s Rural Utilities Service. Berke recommended that munis partner with coops to get in on the benefits. (If that sounds interesting to you, stay tuned because later this month we’ll be releasing a blog post outlining what these benefits could be).  In addition, there was a presentation from State Energy Offices (SEOs) on how the IRA is transforming the landscape of the clean energy transition at the state level, and how states are looking to pair these federal funds with existing state programs. One key part of this presentation was opening up the idea that SEOs can develop better communication and partnerships with Public Power utilities to help them take advantage of the IRA. This is a relationship we hope to see strengthened to maximize the impact of the IRA at the local level.  What was clear from attending this conference and these federal funding oriented sessions was that Public Power leaders know there’s historic funding out there, and they want in. Although wind and solar paired with battery storage is leading the way on the clean energy transition, some utilities are looking to other sources like biomass, hydrogen and nuclear to meet their energy demands of the future. At APPA’s National Conference many utilities shared their current thinking on these technologies, their experience pursuing them so far, and how they intend to use them in the future. There were conversations being had about the role which these technologies could have in our energy future and considerations on the cons to the pros which come with them. Already many Public Power utilities are making investments in these experimental technologies with hopes to take advantage of supporting funds from the IRA. Climate Cabinet Education does not endorse or condemn any of these technologies, but along with everyone else with their eyes on the industry, we are monitoring how these technologies play out in the coming 5 to 10 years. Finally, reliability was perhaps the biggest concern among Public Power leaders that was present in nearly every conversation. As we electrify more and more services, demand for electricity is ever-growing, raising the stakes for whenever the grid fails to meet demand. This is a large reason utilities are so interested in diversifying their energy portfolios, along with battery storage to mitigate intermittent generation. With an increase in extreme weather events as a result of climate change, this ever growing grid is also more vulnerable: winter storms freeze gas pipelines, droughts diminish hydropower, heat waves affect wind patterns, the list goes on. Investments in transmission infrastructure, distribution grids at the local level, resiliency measures like microgrids, and energy storage like batteries will all manage the risks that the grid faces.  Climate change and the clean energy transition bring new challenges and new opportunities for the electricity sector and Public Power leaders are planning accordingly. Concluding thoughts Spanning all across the country, in different geographies and policy circumstances, Public Power collectively deals in the whole gambit of considerations in utility management and the clean energy transition. APPA’s national conference was a wealth of expertise and provided a great insight on trends and projections in the near and long term for the sector. See you in San Diego for APPA 2024! P.S. For Climate Cabinet’s reflections from the APPA Joint Action Conference back in January, check out our previous blog post on it!

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Democracy dodged a bullet this week

Checks and balances. This fundamental principle in the U.S. Constitution set the long-term foundation for what is today’s United States of America. If one body of government overreaches in its authority – whether it be federal or state government – then there’s another branch of government that provides necessary accountability.  We see examples of this process unfold on an annual basis. The U.S. Congress can provide oversight hearings to the Office of the Presidency. Governors can veto legislation state governments pass during legislative sessions. And, the U.S. Supreme Court can provide judicial oversight to critical issues in our state and federal governments.  This checks and balances system is a core pillar of this country’s democracy, and without it, power and corruption can cause the entire democratic experiment to rot from the inside and out.  Enter Moore v. Harper.  Last December, The Supreme Court heard oral arguments on a concept pushed by far-right extremists called the “independent state legislature” theory. Under this idea, state legislatures would have the unchecked authority to set their own federal election processes – including but not limited to drawing gerrymandered maps and establishing the state’s own set of electors required for the Electoral College in presidential elections.  In short, if the High Court ruled in favor of Moore, then state legislatures would have been able to override state courts when evaluating gerrymanders – effectively eliminating a core component of the all-important checks and balances system. If the Court had accepted the state legislative theory, it would have essentially allowed state legislatures to choose their own set of electors according to their partisan preferences. Political parties would  be more beholden to their desire for power and influence than the will of voters.  Thankfully, American Democracy dodged a bullet this week when the Court rejected Moore by a 6-3 margin. This opinion came as a surprise by many – including many in Climate Cabinet Education – because of the Court’s conservative supermajority in place and its recent history of unraveling historic precedents set by the Court itself, including Waters of the United States protections (Sackett v. the EPA) and pollution regulations on power plants (West Virginia v. EPA). And, let’s not forget the Court’s unpopular decision to overturn Roe v. Wade too. At Climate Cabinet Education, we view this decision as more evidence that gerrymanders – and the theories floated to justify them – have become so extreme that even conservative Justices aren’t buying Republicans’ excuses for them. The Court rightfully made the right call, but the moment once again put a spotlight to what is happening in state legislatures across the country. As Climate Cabinet has argued in its “Power Grab” report, Republicans are concentrating power in state legislatures – and are using that power to disenfranchise voters and prevent any tangible action on some of the most pressing issues facing this nation – including fighting the climate crisis. At the same time, extreme schools of thought like “independent state legislature” theory and dangerous court challenges like Moore v. Harper are originating in the states – in this case, North Carolina. This Supreme Court ruling could have devolved even more power to the states and eliminated key checks and balances on state legislatures.  Accepting the so-called “independent state legislature” theory would have ushered in a dangerous precedent that could have ultimately undone the democracy itself. Any issue would have been on the chopping block – including climate change.  The Supreme Court made the right call and the United States got lucky this time. This case only underscores why, at Climate Cabinet Education, we’re laser-focused on what’s happening in state legislatures: ground zero for climate and democracy. We hope you’ll continue to follow along.

Center For Public Enterprise’s Chirag Lala explains Direct Pay

When we learned last year that the Inflation Reduction Act would open up Direct Pay provisions for clean energy tax credits, like the Investment Tax Credit & Production Tax Credit,  to tax exempt entities, we on the Public Power Program here at Climate Cabinet were psyched. This new development immediately stuck out as a major game changer in the clean energy transition. What piqued our interest in particular—you’ll be shocked to hear—was what this means for publicly owned utilities.  Following conversations with public power leaders across the country, however, we found that many people in the positions to bring home these amazing benefits provided by the Inflation Reduction Act (IRA) were not aware of Direct Pay and many of those who were aware were not exactly sure the extent of what it means for their utilities and the communities they serve. As the landscape has had more time to unfold and federal guidance has trickled out, it is crucial to connect leaders to information and support to reach for the opportunities available to them. That is why we were happy to see that Center for Public Enterprise released a report on Direct Pay—written by fellow Chirag Lala—at the end of March. The report, titled Direct pay: an uncapped promise of the IRA, communicates the paradigm shift that is occurring. In a comprehensive yet very readable breakdown, Lala explains Direct Pay as and some major questions surrounding it including: how it was before changes and what possibilities have opened up with the changes, how it fits into existing financial models for renewable energy, and the benefits the expanded eligibility can have both in bolstering clean energy economies and achieving the goals set out by the IRA. You find the report answers questions you didn’t know you had, and for that I highly recommend giving it a read. Lala concludes the report by—importantly—acknowledging the challenges that Direct Pay faces moving forward, namely: implementation, awareness, incompleteness, and state capacity. We agree, and are actively building out our capacity to connect Public Power leaders to the support and resources they need to bring IRA funds home. Center for Public Enterprise hopes to help address these challenges by, in Lala’s words, “working with prospective public and private beneficiaries of direct pay and seeking practitioners’ understanding of the capacities they need, legal obstacles or barriers to further action, and policy changes that would facilitate the deployment of public investment.” Go to this page for the release of the CPE report! Further guidance on Direct Pay is set for release on June 6th, we’re looking forward to seeing further how things will unfold, and will be back with more thoughts. Ethan KirkhamPublic Power Program Manager — Like this blog post? Subscribe to “The Switch” below!  Subscribe to Climate Cabinet Education’s “The Switch” Newsletter * indicates required Email Address * First Name Last Name Organization

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Part Three: The Inflation Reduction Act in Public Power Communities: A Case Study Series

Case 3: Lansing, Michigan Climate Cabinet Education   For the last two weeks, Climate Cabinet Education has focused on how public power leaders for cities and towns could leverage the climate benefits provided under the Inflation Reduction Act (IRA). Now, it’s time to focus the conversation on how the IRA can help city leaders invest in their communities, follow through on and fund equity commitments, and advance environmental justice.     In conversations about climate policy that are oriented around greenhouse gas emissions or power plants, the communities most affected by climate change and the burdens of our energy system can be glossed over or completely ignored. Community organizers and environmental justice advocates have worked for decades to draw attention to this oversight, and build power for justice. Thanks to their efforts, some cities are starting to address inequities associated with historical fossil fuel based development, redlining, energy burden, unequal access to the benefits of clean energy, and more.    Since the start of the Biden Administration, there’s been a much needed uptick of coordination between city and federal government partnerships. At the federal level, the Biden Administration began the Justice40 initiative, which sets a goal to use 40% of certain federal funding for marginalized, underserved, and environmental justice (EJ) communities. The IRA – in pursuit of meeting Justice40 goals – contains several environmental justice and low-income targeted provisions. These provisions, as well as many others within IRA, can be utilized at the municipal level to advance and prioritize EJ goals.   The City of Lansing, Michigan is an example of how the IRA can help a city follow through on its equity and justice goals in policy across city sectors – making it the third case study in Climate Cabinet Education’s “The Inflation Reduction Act: A Guide for Leaders of Public Power Utilities” guidebook. The City of Lansing adopted a Climate Action Plan in 2020 that focused on city facilities and expanded operational capacity for exploring future climate action. The Sustainability Action Plan then followed in 2022. The City has a goal in line with the Paris Agreement to reduce carbon emissions 59% by 2030. To meet this threshold, the City works with the city’s municipal utility (the Board of Water and Light) to invest in distributed energy resources at municipal properties and to set clean energy goals as part of the utility’s resource planning process    But, the partnerships don’t end with emissions goals. The goals set forth in Lansing’s Sustainability Action Plan stretch across several city departments and rely on valuable coordination with community-based organizations – especially to meet their environmental justice goals.    As a part of Lansing’s Sustainability Action plan, each of the following areas is prioritized and given particular EJ considerations: energy efficiency, renewable energy, mobility and transport, conservation and protection of water resources, land use, and materials management. The table below explores how IRA funds can potentially be used to address Environmental Justice concerns associated with 5 of those 6 focuses of Lansing’s Sustainability Action Plan. Table showing which IRA programs could support the City of Lansing’s EJ goals – set by its Sustainability Action Plan – throughout its government.   In addition to existing customer outreach efforts to connect assistance programs to those who need them, the new Environmental and Climate Justice Block Grants can be used to develop community-based programs and organization partnerships for customer outreach. This program would help the utility identify specific community needs. This new setup would not only begin to solve long-standing injustices, but it would also begin to create trust between customers and the city government – achieving the overall goals set by Justice40.   Next week, we’ll take a look at Climate Cabinet Education’s final case study, Seattle, where proactive climate action has the community navigating the next frontier of the clean energy transition: electrification.

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Part Two: The Inflation Reduction Act in Public Power Communities: A Case Study Series

Case 2: Sikeston, Missouri Climate Cabinet Education   Last week, Cabinet Cabinet Education introduced a new blog series highlighting how municipal utilities (munis) large and small could leverage the Inflation Reduction Act’s (IRA) historic climate investment for their own clean energy transition needs. We used Columbia, Missouri as our first case study to kick off the conversation, and now we want to turn to its neighboring community of Sikeston for our second case study in the series.    Now, there are several hurdles to IRA implementation that Public Power leaders must overcome in order to bring maximum benefits to their communities, but a fundamental barrier when it comes to investments is smaller local budgets. With nearly 2,000 municipal utilities in the country, the majority of them serve communities of under 100,000 people, and many under 20,000. Meaning, their financial resources are often very limited.  But for those small and rural munis, the IRA implementation could present a huge boon for their future. The IRA makes previously inaccessible programs available to small munis: like Direct Pay, which makes clean energy tax credits that have historically only been available for taxable, private entities available to local governments and nonprofits; and some USDA programs which were traditionally geared at rural electric cooperatives are now available to munis with populations of less than 20,000. This includes $1 billion in forgivable loans for clean energy projects via the Powering Affordable Clean Energy (PACE) program. This kind of funding would transform a small town’s future.   A good example of how these funds could pair with other IRA dollars in small Public Power communities is Sikeston, Missouri. Despite being a rather small muni with around 9,000 customers, Sikeston was responsible for the 47th most electric generation of any public power utility in 2020. This is thanks to the Sikeston Power Station, a 261 megawatt (MW) coal plant which the muni has owned and operated since 1981. What isn’t used to serve their own electric load of around 70 MW is sold to a number of other Missouri munis, including our previous case study subject: Columbia.    Electric sales from surplus generation at their directly-owned plant has been an economic boon for Sikeston, but the clock is ticking for the now 42 year old coal plant. If Sikeston were to invest in clean energy generation and/or battery storage, they would be able to retain the benefits of energy asset ownership and also tap into the lifelong benefits of the Production Tax Credit through Direct Pay. When the time comes to replace Sikeston Power Station (SPS), the current plant site alone could fit a small solar farm and a project like this could be eligible for a number of IRA benefits. Sikeston, if SPS were closed, could qualify as an Energy Community, granting additional 10% increase to Direct Pay clean energy tax credits. If they begin to pursue this line of action before 2026 then they also gain access to Energy Infrastructure Reinvestment Financing for the site restoration and new build. In the meantime, PACE could be used to finance a battery investment at the existing plant site with up to 40% loan forgiveness, and the Investment Tax Credit could cover up to 30% of the investment (if wage and apprenticeship bonus provisions are met). Once operating, the Production Tax Credit could provide up to $0.15/kw with the same bonus provisions.   Removing a lot of the technical jargon: Sikeston has the opportunity to leverage IRA dollars for new renewable energy plants that would create another economic boon for the community.   Another, potentially more significant option for Sikeston could be investing in battery storage, which could have access to both the Southwest Power Pool (SPP) and potentially the Midcontinent Independent System Operator (MISO). These are regional operators that ensure reliability across the electric grid – and battery storage is a key ingredient for ensuring reliability in the era of renewable energy. Both MISO and SPP are expected to have renewables make up 30% of their grid by as early as 2026, so battery storage at Sikeston would play a beneficial role.    Battery storage is space efficient and could potentially be built without impacting the Sikeston Power Station, allowing a less stringent retirement and site restoration timeline. It would give Sikeston ample access to energy from renewable rich MISO or SPP to use as dispatchable power, either in their community to meet load or sold back to the grid as arbitrage. This is also compatible with any future solar builds that may interest Sikeston.    Capital expenditure costs of battery facilities are expected to fall significantly by 2025—including in the 8-10 hour storage range—and when considering the direct pay tax credits, forgivable PACE loans, and Reinvestment financing, these projects could be more affordable than in the past. By using their coal plant site for large volume battery storage (and with room to spare) Sikeston can continue being a leader among smaller public power utilities. This is also compatible with any future solar builds that may interest Sikeston.    The Inflation Reduction Act presents a great opportunity for Public Power utilities large and small to make investments in clean energy, as has been demonstrated by the previous two case studies. But a clean energy portfolio is not every community’s only goal or opportunity for the energy transition.    Next week, we will be looking at Lansing, Michigan and how the IRA can support their equity and justice goals across city sectors.

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The Inflation Reduction Act in Public Power Communities: A Case Study Series

Case 1: Columbia, Missouri The Inflation Reduction Act will be remembered by many as the first significant investment by the federal government to fight climate change in the United States. And in conjunction with the bipartisan infrastructure law and the Chips and Science Act – these climate provisions will provide an overall punch against the climate crisis – the largest threat of our lifetimes.  Because of this federal policy, state and local leaders now have the opportunity to maximize these dollars and use them for clean energy projects – efforts that will create new jobs, lower utility costs, and lower pollution in one swoop.  But here’s what’s happened since the Inflation Reduction Act has been in existence: a large majority of Americans – including the people who can help with this clean energy transition – still do not know what’s actually in this signature law. Many have heard very little about these transformational opportunities.  It’s imperative that state and local elected leaders take advantage of the Inflation Reduction Act, and that’s why Climate Cabinet Education stepped up and released “The Inflation Reduction Act: A Guide for Leaders of Public Power Utilities” – a resource to help connect public power leaders to this historic investment. Announced alongside Barbara Buffaloe (Mayor of Columbia, Missouri) and Tim Nies, Regional Services Manager at Energy Northwest, this guidebook will help these municipal utility (muni) leaders maximize the opportunities provided by the IRA.  This resource is intended to help Public Power leaders from cities large and small and in all 50 states, because as Climate Cabinet knows, fighting the climate crisis does not stop along state lines. Also, each muni has its own special set of circumstances and requirements needed for their own clean energy transition. Recognizing the uniqueness of this situation, Climate Cabinet’s guidebook put a spotlight on four cities to help share what investment opportunities are possible.  As the start of a month-long series of blog posts highlighting the case studies featured in our guidebook, we’ll be using today to talk about Columbia, Missouri Columbia, MO is a city that has demonstrated a strong commitment to climate action – and the IRA presents an opportunity to accelerate climate goals, while potentially lowering costs associated with repurposing aging fossil infrastructure. When now-Mayor Barbara Buffaloe served as the city’s Sustainability Manager, the city council adopted the Climate Action and Adaptation Plan in 2019, which directs the city council to codify by ordinance a 2035 100% renewable energy goal for their municipal utility, Columbia Water and Light. Columbia’s municipal plant—which, since its coal generator stopped running in 2015, runs only gas and recently underwent coal ash cleanup—is a prime target opportunity for the IRA’s Energy Infrastructure Reinvestment Financing provision. This provision guarantees loans to clean energy projects utilizing energy infrastructure that has either ceased operation or is on the cusp of replacement by its owner, and the retired coal powered unit at the municipal plant could be a suitable site for converting into battery storage.  Currently, Columbia Water & Light’s current resource plan does not project investments in battery storage until 2038, but it could be in Columbia’s best interest to invest earlier than that date and the IRA could make this possible. In addition to the applicable cost saving, benefit maximizing measures in the IRA, lithium-ion batteries have declined in cost and are more affordable than ever.  On top of having defunct coal assets, the municipal plant’s current natural gas generators are aged and need upgrades, so the options provided by the IRA should be taken into serious consideration for not just the coal generator but for how the plant as a whole can be transformed to better benefit the community. By initiating a battery project at the site of the municipal plant before 2026, Columbia could unlock the IRA’s benefits by achieving the following:  Use the federal government’s Energy Infrastructure Reinvestment Financing loan guarantee, easing the financial burden of an inevitable energy transition Repurpose an existing site, and Implement technologies that can address public concerns around cost and reliability of a 100% renewable portfolio  With the historic precedent with the IRA, now – not later – is the opportunity for communities large and small to update its infrastructure that would produce new economic opportunities, a pathway toward a clean energy transition, lower utility costs for customers, and lower pollution for future generations.  Columbia represented a great case study in Climate Cabinet Education’s guidebook because it tells the story of how munis with out-of-use infrastructure could capitalize on the historic climate investments of the IRA. And this is just one of the many ways IRA financing can benefit residents of Columbia. Next week, we will take a look at another community in Missouri: Sikeston. The case study will explore how they can capitalize on the Inflation Reduction Act, including Department of Agriculture programs that are unavailable to many other municipalities. 

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States Have Led the Way on Clean Cars

By: Blair St. Ledger-Olson, Legislative Director for Climate Cabinet Education   Last month, the Environmental Protection Agency (EPA) proposed bold updates to federal light duty vehicle standards that aim to dramatically accelerate electric vehicle (EV) deployment. The transportation sector is the largest contributor of greenhouse gas emissions in the U.S., making EVs a crucial solution in tackling the climate crisis. Furthermore, fossil fuel powered cars also create significant air pollution, leading to detrimental health impacts that are particularly borne by black and brown communities. The proposed new rules are the most aggressive standards ever set by the federal government, and they are designed to ensure that EVs make up the majority of new U.S. auto sales by 2032 – specifically 67% of new passenger vehicles. But the Biden administration can’t take all of the credit – this development follows a groundswell of leadership by the states. While vehicle emissions standards – or fuel economy – have historically fallen under federal jurisdiction, California was given unique authority to set their own standards due to their specific air pollution concerns. Individual states were then given the option to adopt California’s standards as well, instead of abiding by the less stringent federal standards. The California standards are made up of a Low Emissions Vehicle (LEV) and Zero Emissions Vehicle (ZEV) program, where the required number of cleaner cars to be sold in the respective state ramps up each year. Today, there are 17 states that have adopted either one or both components of the original Advanced Clean Car Standards, known as “Clean Cars states.” Together, these states and California represent more than 40% of the U.S. car market. However, the original version of the Advanced Clean Car Standards (ACCI) is set to expire in 2025, making way for an updated – and even bolder – version, known as the Advanced Clean Car Standards II (ACCII).  California Air Resources Board (CARB): 17 additional states have adopted components of the original clean car standards. The ACCII sets a path to 100% new vehicle sales being zero-emission – including both full battery EVs and plug in hybrid EVs. The ACCII will require almost 70% of the vehicles sold in participating states to be electric by the end of this decade, with increasing sales requirements leading to 100% of new vehicles being fully electric or plug-in hybrid by 2035.  Sound familiar? While not as aggressive as the ACCII, the proposed new federal rules clearly look to the example set by the Clean Cars program, which is a pattern often seen in federal policy. Time and time again history has shown how passing state laws has led to a federal victory. Women’s suffrage and interracial marriage are clear examples of this path, and we’re seeing climate policy follow it as well.  But this does not mean that states can now abdicate climate leadership to the federal government. Clean Cars states are actively in the process of deciding whether they will adopt these new ACCII standards come 2025, or revert back to the federal guidelines, and every state that has the ability should move forward with the ACCII. The federal standards now raise the floor on this issue by aiding states that do not have the legislative or gubernatorial makeup needed to adopt the bolder standards. Either way, states and municipalities still have a role to play in passing additional complementary policies that uplift our clean energy transition and ensure the success of bold EV standards.  There is a clear roadmap for more states to adopt the Clean Car Standards. States like Michigan and Arizona could be ones to watch in the coming years, and Climate Cabinet Education is here to help. As on-demand climate staffers for state and local lawmakers, we’ll continue connecting climate champions in states with the resources and tools they’ll need to become the 18th, 19th, and 20th states to join the Clean Cars movement.