Ohio Corporations Pushing for Reinstatement of Renewable Energy Requirements
In May 2008, Ohio enacted broad electric industry restructuring legislation containing advanced energy and renewable energy generation and procurement requirements for all of the state's retail electricity providers, except for municipal utilities and electric cooperatives. Utilities were presented with a multi-year schedule of interim targets, requiring the slow ramp-up of procurement from renewable energy sources. Each year, utilities were mandated to provide a growing percentage of their annual retail electricity supply from renewable and solar generation sources, with the ultimate goal of deriving 25 percent of their annual retail electricity supply from "alternative energy" by 2025.
The 25 percent share was to consist of 12.5 percent from "any new, retrofitted, refueled, or repowered generating facility located in Ohio," including new fossil fuel-powered plants, and 12.5 percent from renewable sources (including at least 0.5 percent from solar sources).
In May 2014, legislation passed by the Ohio General Assembly and signed by Governor John Kasich imposed a two-year freeze of the renewable generation standards. The interim requirements for 2015 and 2016 were frozen at the 2014 level of 2.5 percent for total renewable generation, and the solar-specific requirement was frozen at 0.12 percent. The 2014 legislation also removed a requirement that at least half of the renewable power required to meet the standards be produced within Ohio, thus allowing Ohio utilities to fully meet the requirements with renewable energy credits, or "RECs," generated by out-of-state resources. Absent legislative action, both requirements will begin rising again in 2017, reaching the ultimate targets of 12.5 percent total renewable generation and 0.5 percent solar generation by 2027, rather than 2025.
With the end of the two-year freeze approaching, bills have been introduced in the Ohio General Assembly that would reduce or completely eliminate the renewable energy standards. Interestingly to some, a range of Ohio business interests are resisting such efforts and urging Governor Kasich, a Republican, to veto such legislation if passed. On October 25, 2016, nine companies, ranging from Whirlpool Corporation to Nestlé to Gap Inc., joined with the investor group Ceres to urge Ohio lawmakers to lift the freeze and restore the 2008 renewable standards. The companies argued that such standards, particularly energy efficiency mandates, would help them meet their corporate sustainability goals, while saving money and attracting clean energy producers to the state. The Ohio Manufacturers Association is also on record supporting such requirements, as long as they are economically feasible.
For his part, Governor Kasich has vowed to veto any effort to extend the freeze or kill the renewable requirements entirely, although he has signaled a willingness to replace the 2008 standards with less stringent requirements. Since the 2008 standards will automatically be reinstated absent new legislation before the end of the year, Kasich seems to have a strong hand to play.
2016 CO 2 Emissions on Track to be the Lowest Since 1992. According to the U.S. Energy Information Administration ("EIA"), energy-related CO2 emissions for the first six months of 2016 were the lowest since 1991. The EIA attributes the reduction in emissions to mild weather, reductions in coal and natural gas consumption, and increasing renewable energy consumption.
EPA v. FERC —Climate Change and Pipelines. On October 11, 2016, the U.S. Environmental Protection Agency ("EPA") accused the Federal Energy Regulatory Commission ("FERC") of failing to undertake a proper analysis of climate change in its final environmental impact statement for the 160-mile TransCanada Corp. Leach Xpress pipeline. EPA's filing exposes friction between the two federal agencies over the degree to which climate change impacts must be considered in the approval process for pipelines. EPA's filing follows the Obama administration's call for federal agencies to include global warming impacts in their review of projects. The rift also comes at a time when the U.S. gas transmission network is undergoing significant expansion.