The best policies to help coal towns weather the switch to renewables

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Monday, October 3, 2022

In the face of competition from cheaper and cleaner sources of energy, coal mines and plants have been shutting down across the U.S. for the past decade. “We’ve lost 45,000 coal [mining] jobs since 2012,” said Jeremy Richardson, manager of the carbon-free electricity program at RMI, a clean-energy think tank. The energy transition “is already happening.” (Canary Media is an independent affiliate of RMI.) For towns living through this transition, it can be devastating. Coal workers lose well-paying jobs, and communities lose a bedrock of their economies. How communities weather these choppy seas depends on the level of support they receive, which varies from state to state. That’s one of the takeaways of a new report by RMI, which analyzed 16 bills passed by states since 2011, all aimed at easing the transition away from fossil fuels and into the clean energy economy. The report’s findings enable lawmakers to learn from what has been done before to support a just transition for coal communities, Richardson told Canary Media. Three states in particular stand out for their policies, according to Richardson: Colorado, New Mexico and Illinois. Here’s what they’re getting right. Colorado: Office of Just Transition In 2019, Colorado passed a bill to create a “groundbreaking” office dedicated solely to supporting coal communities, Richardson said. The first in the nation, the Office of Just Transition put together a roadmap, the Colorado Just Transition Action Plan, which clearly lays out the steps it would take to help communities transition their economies away from coal. This includes funding, which the office has started distributing this year, for specific economic development projects such as business parks and outdoor recreation. Proposed by Democrats, the office wasn’t a popular idea across the aisle. Republicans initially balked at the legislation and refused to support it when it passed in 2019. But with grant money going to their communities, some have since changed their minds — and their votes, with some Republicans now backing boosts to the office’s funding. The concept has gained traction, even in the top coal-producing states, West Virginia and Wyoming. However, bills in those states were significantly altered between when they were introduced to their final votes, and they ultimately failed to pass. “Those bills didn't go anywhere,” Richardson said — but it’s encouraging that even in states where talk of coal closure has historically been political poison, lawmakers are starting to have these conversations. In Colorado, a 2021 law enables the state’s Office of Just Transition to provide immediate relief to workers and their families. It can test “innovative coal transition work support programs,” which could potentially include temporary wage replacement or “differentials” (payments to make up for the difference between their current and former job salaries) for three years, according to Richardson. To shore up a town’s tax base — the majority of which may have been generated by the coal industry — the state also requires utilities to file plans that show how they’ll compensate governments in the wake of coal industry closures and lost tax revenue. Xcel Energy, for instance, will continue to pay property taxes to the city and county of Pueblo through 2040 to compensate for shutting down Comanche Generating Station in 2031, decades ahead of schedule. New Mexico: Just transition funds New Mexico passed the Energy Transition Act in 2019, which, according to Richardson, stands out for creating dedicated pools of funding. These are allocated for the economic development of impacted communities, assistance for displaced workers and support for tribal communities, totaling $40 million. As the RMI report states, recognizing tribal communities is important because they “must recover from not only coal plant closure but also a historical legacy of dispossession and disinvestment.” Richardson said that New Mexico was “one of the first states really to say, ‘Look, we're going to actually try to invest in the places that are going to be harmed by the shift away from coal.’” The state’s legislation also authorized $30 million for coal plant decommissioning and reclamation costs, though the timeline for implementing the law is unclear. However, when the funds do materialize, they will come from the financial wizardry of securitization — a process akin to refinancing a mortgage such that early closure of expensive coal plants results in savings. That savings can be passed on to workers, communities and utility customers. When the New Mexico legislation was enacted, securitization proposals had to be authorized at the state level. But the recently passed Inflation Reduction Act has essentially made the tool available nationally, according to Richardson. The climate law creates the new Energy Infrastructure Reinvestment Program in the Department of Energy Loan Programs Office. The new program allows utilities to apply for low-interest loans, guaranteed by the Loan Programs Office, to retire fossil plants early and invest in clean energy. The program can also finance coal site remediation, bolstering an area where state legislation has often been weak, according to RMI’s report. Illinois: Centering workers and environmental justice communities In September 2021, Illinois passed the Climate and Equitable Jobs Act, a law backed by labor and climate justice groups. It included especially powerful provisions for displaced workers and what the state classifies as “environmental justice communities” that have borne the brunt of fossil fuel pollution. The Illinois legislation created an $80-million-a-year program for clean-energy job training hubs that prioritize displaced energy workers, residents of environmental justice communities, and underserved or disadvantaged individuals, including people who have been incarcerated or in the foster care system. To help ensure the programs lead to employment, the law requires that developers of renewable energy projects hire a workforce that consists of at least 10 percent displaced coal workers and underserved groups. It increases that proportion up to 30 percent by 2030. Moreover, the law stipulates that workers at utility-scale renewables projects be paid prevailing wages and have protections under project labor agreements. The law also calls for the state to partner with community-based organizations to get the word out and recruit for these clean energy worker-training programs. The act includes other just-transition policies that hit common pain points. It stipulates that coal plant owners give more notice of mass layoffs, raising the federally required minimum of 60 days to two years. That’s meant to give workers and communities more time to seek assistance. Illinois is also the only state so far that has tried to address the cultural dislocation of the energy transition, according to the report. Its legislation created a grant program that can be used, for example, for counseling services or projects that commemorate a community’s coal legacy — a source of pride that can span generations. “Illinois is probably the most comprehensive of any of the states” in its just-transition policy measures, said Richardson. A high bar for just transition policy Besides comparing existing transition policies, the RMI team also laid out what an ideal policy could look like, proposing a three-part strategy that tackles the problems that transitioning coal communities face over time — immediately in the wake of coal closures, in the short term and in the long term. Immediately, workers and their families need relief, including temporary wage replacement and stopgap benefits, for example. “We don't have a strong safety net in the United States; you lose your health insurance and your retirement benefits when you lose your job,” Richardson said. Local governments similarly need support to recover tax revenue lost when coal operations shut down. In the short term, coal sites need to be cleaned up and reclaimed so that they can support future economic development, said Richardson. Coal ash ponds contaminated with toxic heavy metals can leach into groundwater if they’re unlined, abandoned or otherwise mismanaged, presenting a health hazard that’s also a liability for developers. “Who wants to invest in a community where the drinking water is poisoned? Why would you buy the property and try to do something with it?” said Richardson. “You need comprehensive cleanup to set your community up for success.” And in the long term, communities need well-coordinated, sustained funding to revitalize their economies post-coal. “Economic development and diversification, to be successful, take decades,” Richardson said. “It just really takes committed and robust funding.” Ambitious policy that truly supports coal communities isn’t necessarily politically palatable in every state. But lawmakers can still take small steps and build momentum for these measures over time, Richardson said. He again cited the example of Colorado, where the Office of Just Transition garnered increasing bipartisan buy-in over the course of just a couple of years, he said. For state lawmakers looking to help their own communities transition, Richardson said, “Start at the place where the politics of your legislature will let you start.” It could be the seed that impacted workers and communities need.

In the face of competition from cheaper and cleaner sources of energy, coal mines and plants have been shutting down across the U.S. for the past decade. “We’ve lost 45,000 coal [mining] jobs since 2012,” said Jeremy Richardson, manager of the carbon-free electricity program at RMI, a clean-energy think tank. The…

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Energy & Environment — A closer look at the ‘loss and damage’ fund

COP27’s highly touted “loss and damage” fund still has major uncertainties — including where its money will come from. Meanwhile, the Biden administration is easing some restrictions on ESG investing and Europe is proposing a price cap on natural gas. This is Overnight Energy & Environment, your source for the latest news focused on...

COP27’s highly touted “loss and damage” fund still has major uncertainties — including where its money will come from. Meanwhile, the Biden administration is easing some restrictions on ESG investing and Europe is proposing a price cap on natural gas.   This is Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. For The Hill, we’re Rachel Frazin and Zack Budryk. Someone forward you this newsletter? Close Thank you for signing up! Subscribe to more newsletters here The latest in politics and policy. Direct to your inbox. Sign up for the Energy and Environment newsletter Uncertainties about fund lead to skepticism A newly agreed “loss and damage” fund in which developed countries would pay for climate damages suffered by vulnerable developing counterparts lacks both details and actual funding, raising questions about whether it’s merely a symbolic breakthrough.  Developing nations responsible for the smallest amounts of climate pollution for years have called for such a fund, which has been resisted by the United States and other wealthy countries.  That changed over the weekend when nearly 200 countries agreed to launch a new fund at the United Nations climate change conference (COP27) in Sharm el-Sheikh, Egypt.    The agreement states that the fund will help developing countries respond to “economic and non-economic loss and damage associated with the adverse effects of climate change, including extreme weather events.”   OK, so what’s still unknown?   The deal provides no money, and no organizational structure, saying such details will be worked out in the coming months. It creates a “transitional committee” made up of representatives from 24 countries who will be tasked with finding funding sources and setting up the fund’s structure and governance.   “A loss and damage fund has been established and that’s important on its own, but it’s an empty vessel,” Morgan Bazilian, a public policy professor at the Colorado School of Mines, told The Hill.    What about the U.S.?  The government divided by the midterms is likely to pose a hurdle for getting U.S. funding. Some Republicans are already expressing opposition. “Insanity. This wasn’t even on my list of the top 1 million things the United States should do with money we don’t have,” Sen. Kevin Cramer (R-N.D.) said in a written statement that his office shared with The Hill when asked for his thoughts on the deal.   Yet, reaching this point at all is a first:  “There was just a tremendous breakthrough this time of getting the United States and other traditional blockers to stop blocking,” said Jean Su, the energy justice program director at the Center for Biological Diversity.   She acknowledged that there are still “big questions,” including “whether finance will actually get delivered,” but said that ultimately it gave “vulnerable communities around the world a glimmer of real hope.  Read more about the uncertainties here. Biden eases ESG restrictions for financial advisers The Biden administration is making it easier for money managers to consider climate change and other environmental and social factors in retirement investments.   The Labor Department on Tuesday issued a new final rule making it so that these fiduciaries can consider “the economic effects of climate change” in investments that they oversee.  Assistant Secretary for Employee Benefits Security Lisa Gomez said in a statement that the rule was issued to end a “chilling effect” created by Trump-era restrictions on considering environmental and social factors in investing.    In 2020, the Trump administration issued a rule that was expected to discourage the consideration of environmental and social factors in this type of investing.  Read more about the new rule here.  WHITE HOUSE UNVEILS ENVIRONMENTAL JUSTICE SCREENER The White House on Tuesday unveiled a tool aimed at screening for environmental justice communities – disadvantaged communities that face high pollution burdens.   White House Council on Environmental Quality Chair Brenda Mallory said in a statement that the tool would enable the administration to make sure that these communities particularly see benefits from its climate actions.   “The Climate and Economic Justice Screening Tool identifies communities that have faced historic injustices and have borne the brunt of pollution so we can ensure they’re some of the first to see the benefits of climate action,” she said. EU proposes gas price cap ahead of winter The European Commission on Tuesday proposed a temporary cap on natural gas prices, with the goal of taming energy costs and safeguarding supplies ahead of winter.  The so-called Market Correction Mechanism” would serve “to protect EU businesses and households from episodes of excessively high gas prices in the EU,” while reducing volatility on European gas markets, according to the Commission.  “Following the Russian invasion of Ukraine and weaponization of energy supplies, natural gas prices have seen unprecedented price peaks across the EU,” a statement from the Commission said.  At the end of August, Russian state-run energy company Gazprom shut down its main gas pipeline to Europe for what it said would be three days of maintenance, but then never resumed operations.  Natural gas prices reached all-time highs in Europe during the second half of August — a situation that the Commission described as “highly damaging for the European economy, with contagion effects on electricity prices and an increase in overall inflation.”  On Tuesday, Gazprom threatened to cut off its last running gas pipeline to Europe, which runs through Ukraine, next week. The company accused Kyiv of diverting gas supplies intended for Moldova and creating a “transit imbalance.” The Gas Transmission System Operator of Ukraine denied the accusations, asserting that all volumes of gas destined for Moldovan customers were being transferred “in full.”  With an uncertain winter ahead, the European Commission stressed that it intends “to prevent the repetition” of August’s price surges by proposing a “temporary and well-targeted instrument.”  How does it work? In the case of extreme gas price hikes, the instrument would automatically intervene — setting a safety price ceiling of 275 euros ($282) per megawatt-hour on month-ahead title transfer facility (TTF) derivatives.  Read more here, from The Hill’s Sharon Udasin.   WHAT WE'RE READING The U.S. Promised Tribes They Would Always Have Fish, but the Fish They Have Pose Toxic Risks (ProPublica and Oregon Public Broadcasting) Nuclear plant along Lake Michigan will not reopen after federal application denied (MLive) Europe’s Wind Industry Is Stumbling When It’s Needed Most (The New York Times) Bison’s relocation to Native lands revives a spiritual bond (The Associated Press) ICYMI EPA reports drop in significant Clean Water Act violations Biden administration to allocate $550M for community-based clean energy  🦖 Lighter click: Not historically accurate, but we’ll let it slide. That’s it for today, thanks for reading. Check out The Hill’s Energy & Environment page for the latest news and coverage. We’ll see you tomorrow.

Offshore Wind Moves Forward on California Coast

Progress continues on the controversial proposal to install a multi-billion dollar wind farm off the California coast. The five project areas will provide future power needs equivalent to the electricity produced by Diablo Canyon Nuclear Power Plant, which was on schedule to be retired until this past legislative session. On November 21, PG&E received a federal grant of $1.1 billion to keep it operating for another five years.

Progress continues on the controversial proposal to install a multi-billion dollar wind farm off the California coast. The five project areas will provide future power needs equivalent to the electricity produced by Diablo Canyon Nuclear Power Plant, which was on schedule to be retired until this past legislative session. On November 21, PG&E received a federal grant of $1.1 billion to keep it operating for another five years. California’s deep waters, 3,000 feet, are three times as deep as any floating wind turbines have been launched. Forging into the unknown presents a number of concerns and promises that engineers, officials and citizens are weighing out. Leases to Outer Continental Land, needed to locate as many as 1,300 mega-sized wind turbines, will be auctioned off December 6. The process for building 2-5 GigaWatt offshore wind projects, producing more electricity than Diablo Canyon, gets underway with the Bureau of Ocean Energy Management’s lease sale auction starting at 7 a.m. Pacific. They will warm up with a practice auction the day before. The auction could take two days to reach a conclusion and settle on five winning bidders. The lease sale includes three Morro Bay areas, (80,062 acres, 80,418 acres, 80,418 acres), and two Humboldt areas, (673,338 acres and 69,031 acres) totaling 373,268 acres of the Outer Continental Shelf, 20-30 miles offshore. Forty-three bidders have qualified and ponied up the $5 million bid deposit to participate.‍ Bidding credits‍ Bids will be considered not only on amount of money, but also on how they propose to use the bidding credits. Bidders can qualify for up to 20 percent credit by committing to investing in workforce training and supply chain development. They can also get up to five percent credit for a Lease Area Use Community Benefit Agreement and five percent for a General Community Benefit Agreement. CBAs are intended to mitigate potential impacts on- and offshore to communities, tribal, or other stakeholder groups and may assist fishing and related industries by supporting their resilience and ability to adapt to impacts that may arise from the development of the lease area. A Lease Area Use CBA would be between the lessee and a community or stakeholder group “whose use of the geographic space of the Lease Area, or whose use of resources harvested from that geographic space, is directly impacted by the Lessee’s potential offshore wind development. ”The General CBA would be with communities, tribes, or stakeholder groups that are expected to be affected by the potential impacts on the marine, coastal, and/or human environment from activities resulting from lease development that are not otherwise addressed by the Lease Area Use CBA. Eric Endersby, Morro Bay’s harbor director, sees how those credits can help the waterfront. “We are the closest port to the Morro Bay area, and we are a protected port, so it makes sense for the operations and maintenance boats to be coming and going out of Morro Bay,” he said in an interview. “There would be a lot of fuel sales, a lot of high-dollar, high-skilled jobs. The cable is coming into Morro Bay, through the grid system, so there’ll be that aspect to it. We see a revitalization of our working waterfront.” Other ocean users The leases require consideration of other users, from commercial fishing and Department of Defense national security to vessel speed requirements, use of low-energy geophysical survey equipment and coordinating with the Coastal Commission on plan submissions. Bidders know that BOEM has no authority to issue leases in national marine sanctuaries. The Morro Bay wind areas are adjacent to the Monterey Bay National Marine Sanctuary and the proposed Chumash Heritage NMS. Violet Sage Walker, chair of the Northern Chumash Tribal Council, wrote in an op-ed in The Tribune, “The Northern Chumash Tribal Council advocates for marine conservation, equitable mitigation measures and fair community benefits. We believe offshore wind must coexist and cooperate with marine protections, and we see this as a unique opportunity for a collaborative effort, not a combative one.” Frankie Myers, vice chair of the Yurok Tribe in Northern California, said at the Floating Wind USA 2022 conference in San Francisco, that the ocean is the last place his people have to pray. “We can’t go any further west,” he said. “What will our descendants see? Another colonial resource or a collaborative partner?” Lines on a map are abstractions that are irrelevant to fisheries and tribal lands. Full details are in the Final Sale Notice National and state goals The West Coast Floating Offshore Wind projects, with a goal of 4.5 GW of power by 2030, are part of the Biden administration’s goal for Tackling the Climate Crisis at Home and Abroad, a commitment to deploy 30 gigawatts of offshore wind by 2030 and at least 25 gigawatts of onshore renewable energy by 2025.The state of California has set a target of 2-5 GW of offshore wind power by 2030 and 25 GW by 2045. Diablo Canyon Nuclear Power Plant’s two units combined produce 2.2 GW. Although intended to be retired in 2024 and 2025, in 2022 the legislature extended the plant’s licenses five years. ‍New port terminals needed Ten additional port terminals along California’s coast will be required to support the projects. None of California’s current ports is large enough or strong enough to support the wind turbine staging and fabrication. Terminals may be located in existing ports such as Long Beach and San Francisco, but construction of entirely new ports may be required. ‍Building the turbines Turbines are 1,100 feet tall on a base 425 feet wide. About 1,300 are projected to be installed in the West Coast projects. The size of the turbines presents problems yet unsolved, including moving the assembled turbines from the manufacturing facility into the water. It could take two weeks or longer to tow them out to the site where they will be tethered. The size and complications of constructing the turbines and setting them in place presents risks that are difficult to evaluate and insure. “What keeps me up at night is a project that is uninsurable,” one insurance executive said.‍ Deeper waters, bigger ships Hanson Wood, regional senior vice president for development in the West Region, EDF Renewables, said that although technical lessons have been learned from projects in Asia, there is no precedent for a wind project in California’s depths, around 3,000 feet. The chains tethering the turbines to sea floor anchors could put marine mammals at risk by catching drifting fishing gear and ensnaring them. The area is known as the Blue Serengeti for its migration routes of whales and seals. A ship large enough to transport the turbine parts, in compliance with U.S. Jones Law, is under construction in Texas. The 472-foot-long Charybdis is estimated to cost around $500 million. Humboldt has already received a grant for $10.5 million to renovate its facilities into the Humboldt Bay Offshore Wind Heavy Lift Marine Terminal, which will be capable of handling large heavy cargo vessels, offshore wind floating platform development and integration and decommissioning, and other maritime activities. Developing the Central Coast wind area could create around 15,000 new jobs, according to a report on the economic impact by REACH Central Coast and Cal Poly. Environmental impacts Environmental impacts such as the loss of wind energy that drives the ocean upwelling which is the central feature of ocean ecology in the area remain to be evaluated in the future. The amount of money involved is staggering, hundreds of billions of dollars, so those credits – 20 percent for workforce and supply chain, and five percent each for offshore and onshore impacts – will represent large amounts of money to communities like Morro Bay and Humboldt. It’s not without significant risk, though. In mid-November, Shell, with partners China General Nuclear Power Group and France’s Caisse des dépôts et consignations (CDC) canceled a demonstration floating wind project offshore France. Shell’s statement cited ”technical, commercial and financial challenges” in the execution of the project as the main reasons for the decision to cancel the EUR 300 million, 28.5 MW Groix & Belle-Île pilot wind farm, Le Parisien reports.“ The economic conditions linked to the project have been significantly modified, calling into question, for all the partners of the consortium, the economic viability of the project,” Shell was quoted as saying in a statement. State regulators Representatives of California’s State Lands Commission and the Coastal Commission attended the San Francisco conference, supporting the projects. Governor Gavin Newsom is committed to floating offshore wind and the regulatory agencies are on board. All projects will be subjected to California's notoriously contentious permitting process, but the pressure is on to get turbines in the water by 2030. With the workforce development required – it will take as long as two years to train welders to the skill level needed – new port terminals to be constructed, and techniques for anchoring the turbines in such deep water refined, sussing out the risks of screwing it up is needed. Yurok Vice Chair Myers said, “The path to messing it up is just so wide. ”While the powers behind the idea and the money are moving forward, those communities that will be most affected are watching from the sidelines. “I’m afraid that it will be just such a bright, shiny object that it will distract us from the changes we need to make,” one conference participant said privately. The question of whether this provides the solution California needs for its future power requirements, or if expenses and technical problems overwhelm it remains to be seen. We will keep you posted.

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