Ohio Environmental Law Blog : Ohio Environmental Lawyer & Attorney : Joseph Koncelik : Frantz Ward Law Firm : Environmental Regulation, Land Use, Compliance : Cleveland, Ohio

Ohio State Senator Kris Jordan (R-Powell)  introduced Senate Bill 216 which would repeal Ohio's renewable portfolio standard ("RPS").  The RPS requires  that the state's electric utilities provide 25% of their retail energy supply from advanced and renewable energy sources such as clean coal, wind, and solar energy by 2025.  

Ohio enacted the RPS in 2009.  Each year the percentage of electricity to come from renewable or advanced energy sources gradually  increases until you reach the maximum of 25%. 

The bill is co-sponsored by Senators Tom Patton (R-Strongsville) and Bill Seitz (R-Cincinnati). The Senators argue that the RPS requirement is driving up electricity prices during a tough economy which is bad for economic development. 

The proposal comes as Governor Kasich is hosting a two-day energy summit to discuss Ohio's energy policy.

Short Term Job Gains

When Ohio enacted the RPS, the proponents argued that it would lead to job growth.  First, jobs would be added as projects were developed to meet the RPS requirements.  Second, manufacturers of renewable energy parts and equipment are more likely to locate in a state that shows support for its industry through passage of an RPS.

A recent study discussed in a prior post suggests those arguments have validity. 

• Ohio ranks 6th in the country in total clean energy related jobs with a total of 105,306.
• Ohio also ranked 12th in total clean energy jobs added between 2003-2010.

Long Term an Over-Reliance on Coal Hurts Ohio

Ohio still gets approximately 90% of its power generation from coal-fired power plants.  There is no argument that coal power has been subject to a flood of new and proposed regulations.  Those regulations include the following:

• Mercury limits
• Greenhouse gas regulations
• NOx SIP Call- cap and trade for power plants
• Cross-State Air Pollution Rule- greater reductions from power plant emissions enacted this year

This is just a partial list of the regulations facing coal power.  With all these regulations forcing more controls the cost of coal power is going to continue to rise.  It is not too difficult to see Ohio would be very wise to diversify its power portfolio or face future price shocks from these new regulations.

Not to overly simplify, but any good stock broker tells its customers to diversify their portfolio to reduce risk.  In particular, a broker will advise their client to reduce their investment in companies/stocks that are facing "head winds" or challenges in the future.

This is exactly the position the state is in when it relies almost exclusively on coal power.  The RPS serves as a tool to diversify its energy portfolio prior to experiencing these future price shocks.

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Governor John Kasich has not revealed his true feeling regarding the Renewable Energy Portfolio (called the Advanced Energy Portfolio Standard in Ohio) which mandates a certain percentage of electricity should be generated from renewable sources like solar, wind, biomass and others.  Ohio's RPS was instituted as part of Governor Strickland's major energy legislation- S.B. 221.

While the Governor has not affirmatively announced a position, there appears growing sentiment he may be cool to the idea of energy generation mandates.  He recently announced an energy summit with Battelle in Columbus. The Summit will be held on September 21st ad 22nd and will be called "Ohio Governor's 21st Century Energy & Economic Development Summit." Leaders from energy, business, education, government and economic development have all been asked to participate.

However, his comments in announcing the summit suggest he believes major reform is needed and perhaps SB 221 needs review.

"Right now, Ohio essentially has no energy policy, but at the same time energy costs are major factors in the success of every sector of our economy, especially manufacturing and agriculture," said Kasich, as reported in The (Cleveland) Plain Dealer.

Reasons to Support RPS

Those in favor of the RPS say its a job creator by supporting green energy and suppliers to green energy development companies.  They also point to Ohio's heavy reliance on coal power- nearly 90% of generation.  While cost of baseload coal may be cheaper than renewable sources, the difference is shrinking due to advances in green technology and more and more regulation on coal.

The regulatory trend line for coal does nothing but continue to point upward.  With each new regulation the cost of coal power continues to climb.  Here is examples of regulations recently issued by EPA affecting coal:

• Rule on toxic emissions from power plants
• Toxic standards from industrial boilers
• Clean Air Transport Rule for coal fired power plants
• Revisions to the NAAQS, including a potential tightening of the ozone standard in August
• Potential regulation of coal ash (EPA seeking comments)
• Soon to be proposed cooling water intake structures rule
• New Source Review Enforcement Cases (Includes recent TVA settlement)
• EPA existing ad future greenhouse gas regulations

A shift away from Ohio's heavy reliance on coal will takes years to accomplish.  Supporters of S.B. 221 argue the RPS puts Ohio on a steady path to diversify its portfolio.

Opponents of RPS

Those who oppose RPS mandates argue it drives up energy prices by forcing utilities to purchase more expensive renewable energy.  As energy prices escalate, they argue, companies face higher operating costs.

The Debate Has Already Commenced

Supporters of S.B. 221 and the RPS are already starting to make their voices heard.  Perhaps they are anticipating a potential assault on Ohio's fledgling RPS.  

"Since inception of the energy law, over 1,700 renewable energy projects have been approved, including over 1,000 MW of wind power - enough energy to power over 300,000 homes." Guest Column Larry Feist is Program Chair in Electro-Mechanical Engineering Technology and Power Systems Engineering Technology at Cincinnati State Technical and Community College.  (Click here to read Cincinnati Enquirer Article)

Other states have already made the decision to increase their green energy mandates. Governor Jerry Brown signed into law Special Senate Bill 2, raising California's Renewable Portfolio Standard (RPS) from 20% to 33% by 2020.

Governor Kasich's budget slashed funding for renewable energy projects by 38% causing some in the industry to question his support going forward.  This from a Business First article:

The president of SolarVision LLC in Westerville said alternative power sources, such as wind and solar, take a backseat to drilling for oil and natural gas when he hears the governor talk about energy in the state. Kasich often mentions the promising potential for oil and natural gas wells in eastern Ohio where new drilling methods have opened up the huge Marcellus and Utica shale formations for development.

The debate in Ohio appears to be just heating up.  One thing is certain, businesses don't like uncertainty.  As long as the possibility that S.B. 221 and the Ohio RPS may be repealed or revamped, it creates uncertainty which creates head winds for projects moving forward. 

As the debate over the budget ends in July, there is no doubt that energy policy will once again take center stage especially with rising commodity prices.

(Photo: Great Valley Center Image Bank- Everystockphoto.com)

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With about ten days until election day races around the country are getting more heated.  Ohio's race for Governor is a study in contrasts on many issues.  Energy policy is certainly one of them.

Governor Strickland has pushed the development of advanced energy projects aggressively during his tenure.  Through passage of Senate Bill 221, he created the states renewable portfolio standard (RPS) mandating 12.5% of the State's energy come from renewable sources. 

He also created grant programs that sought to foster renewable energy projects in the State, such as the Advanced Energy Fund. According to the Ohio Department of Development's webpage the Advanced Energy Fund has made more than $41.9 million in investment in nearly 400 advanced energy projects.  The Fund is set to expire at the end of this year.

Congressman Kasich has built a solid lead in the polls.  One of his more creative proposals is to do away with the Ohio Department of Development as it is currently constructed.  He wants to transform the Agency into a non-profit organization with corporate board members. 

How will his proposal impact the development of advanced energy in the State?  It may depend upon the membership of the board.  The business community has some deep divisions when it comes to advanced energy.  Those same divisions appear between the candidates.

Kasich has expressed concern with renewable mandates and subsidies.  In a September Plain Dealer article this is how his spokesperson described his stance:

Strickland said the Republican would consider repealing an Ohio policy requiring that 12.5 percent of the power sold in Ohio come from renewable technologies by 2025.

The Kasich campaign said the governor's portrayal of Kasich's stance is inaccurate.

"John does not oppose the renewable energy standard and would not seek to repeal it," Kasich spokesman Rob Nichols said in an e-mail.

Kasich recently questioned the cost of the energy standard in an interview with the Dayton Daily News. He said he disagreed with the mandate if it increases consumers' utility bills.

Manufacturers who are deeply concerned about rising electricity prices in Ohio like Kasich's stance- go for the lowest cost alternative. Renewable energy manufacturers and companies that supply parts to those project may have a different perspective.

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Clean Ohio Council has expanded the types of eligible projects that can receive funding under the Clean Ohio Revitilization Fund (CORF).  Parks, urban waterfronts, solar and wind projects are now eligible for funding so long as these projects take place on a brownfield. 

This change will create greater competition begining in Round 10 of the program.  

Three Grant Tracks Under CORF

For round 10 of the CORF, applicants can now seek funding under three different development scenarios:

1. Known End Use Track- $3 million for projects with a use of the property identified as part of the application.
2. Redevelopment Read Track- $2 million for projects on land believed to be primed for redevelopment, but with no specific end use identified. 
3. Sustainable Reinvestment Pilot Track- $1.5 million for sustainable Infrastructure, which includes certain park projects and green infrastructure, urban waterfronts, and cleanfields and brightfields (Wind and Solar projects).

The CORF program has funded very good projects which have always been classic brownfield redevelopment projects, such as the following:

• Construction of new commercial or industrial facilities on a brownfield property
• Expansion of existing industrial and manufacturing facilities onto contaminated land
• Refurbishment and/or renovation of existing structures for reuse

The classic redevelopment projects with known end users have become less frequent in recent rounds.   In order to increase the number of applicants, the Clean Ohio Council decided to create the Known End User Track.  This allowed clean up of brownfields in key locations in hopes of attracting development on these parcels.

Perhaps because the State fears future reductions in applications submitted for CORF, the Clean Ohio has decided to expand eligible projects far beyond the classic brownfield redevelopment project.

Sustainable Reinvestment Pilot Track

In Round 10 of the program, there will be up to $8 million available for these projects.  Here are some of the key aspects of the Sustainable Reinvestment Pilot Track:

• Can only get a maximum of $1.5 million in funding
• Must be on a brownfield
• Can spend the grant funds on demolition, clean up and infrastructure activities
• Infrastructure expenditures are capped at $400,000
• For this track, the definition of "infrastructure" is expanded to include:
  • pathways
  • structures used to manage stormwater
  • wetlands
  • stream restoration
• 25% Match is required, and the following can be used as match:
  • park amenities
  • plants, trees, landscaping, urban gardens
  • solar panels and components
  • wind turbine components
  • green roofs
• Projects must meet the following for infrastructure or new construction:
  • Follow sustainable best practices
  • LEED
  • Green Infrastructure Guidelines
  • Local ordinance mandating all future construction on the project property meet LEED guidelines for a period of 10 years

Parks and Waterfront Restoration Projects Now Eligible

Under the new track, parks and urban waterfronts redevelopments can also be projects.  This subcategory is called the Signature Parks, Sustainable Infrastructure and Urban Waterfronts category.  All park and waterfront projects must meet the following:

•  80% of area must be greenspace or public space
• max 20% of area can be used for parking
• deed restrictions good for 10 years
• commitment for maintenance and stewardship
• Signature Parks or Sustainable Infrastructure must be a minimum of 1.5 acres
• Urban Waterfront projects must be a minimum of 1.0 acre

Cleanfields/Brightfields (Wind and Solar)

Nothing is provided in the Round 10 CORF policies regarding restrictions on this subcategory of the Sustainable Reinvestment Track.  However, if you review the scoring methodology the Council will use to evaluate these projects, the following a key considerations:

• project site has grid access with a participating electric company; or
• project will result in net-metering for an existing entity
• the electric generation site will be a minimum of 25 acres

Impact of New Track

Clean Ohio has not increased funding by $8 million.  Rather, the Council decided to make up to $8 million of the total $23 million available in CORF Round 10 available for the new Sustainable Reinvestment projects. For future applicants, this change likely means increased competition. 

While grant funding for wind, solar, parks and urban stream restoration is understandable, the Clean Ohio program is moving away from classic brownfield redevelopment projects.  The core of the program has always been to remove the barriers to commercial and/or industrial reuse of contaminated land.  In essence, with more competition less money will be available for these classic clean up projects.

Deadlines

Applications are due to your local library by January 14, 2011 as a part of the scheduled Round 10 of the Clean Ohio Revitalization Fund. Approved applications will be announced in May 2011. 
 

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On April 15, 2009 the Public Utilities Commission of Ohio finally adopted the long awaited rules that will govern Ohio's energy efficiency requirements and its Alternative Energy Portfolio Standard (AEPS).  Ohio was one of the last states to have adopted a Renewable Portfolio Standard (RPS)- more broadly defined as a AEPS in Ohio.  However, as one of the largest energy intensive states in the Country the finalization of the rules will surely spur growth of "green energy" related business in Ohio.

As a former regulator, a frequent mantra in describing the decision making process was- "if both sides are unhappy then you know you did your job well."   Well the Commission appears to have followed that mantra in responding to the vast amount of comments that were filed on the rules.  It sided with the Utilities on many issues and it sided with consumer and green groups on many issues.  It rejected many suggestions and complaints by Utilities and it rejected many suggestions and complaints by consumer and green groups.

The rules cover three major aspects of S.B. 221 passed by the Ohio Legislature in the summer of 2008:

1. Energy Efficiency and Demand Reduction Programs
2. Alternative and Renewable Energy Portfolio Standards
3. Greenhouse Gas Reporting and Carbon Dioxide Control Planning

Here is a brief recap of the changes made in response to comments.

Energy Efficiency and Demand Reduction Programs- The Commission completely restructured the rules governing energy efficiency and peak demand reductions.  The Commission revisions where designed to "reflect a focus on the program planning and review process."

• Cost Effectiveness- added new definitions of "cost effective" and "total resource cost test" that are applied to energy efficiency programs.
• Procedures for Review of Compliance Plans-  New hearing requirements were added on the planned portfolio of programs offered by an electric utility to meet energy efficiency benchmarks.  The hearing requirement was added in response to criticism that the benchmark review process be opened up and follow traditional Commission rate case procedures.
• Independent Auditors- Commission requires use of independent program evaluators (hired by the Utility but work at the direction of Commission Staff) to review and verify claimed energy savings and peak-demand reductions
• Calculating the Baseline for  Measuring Efficiency Improvements- the baseline will be measured by a "rolling average" of the last three years of kilowatt hours purchased instead of a fixed average of 2006 through 2008.  The Commission basically rejected claims by Utilities that using a rolling average keeps raising the bar because it incorporates the energy efficiency improvements each year.  As a result, the Utilities argued the energy saving requirement is closer to 39% than the 22.2% required in S.B. 221
• Banking "Overcompliance"- Commission will allow Utilities to "bank" over compliance with the energy efficiency benchmark and apply the overcompliance to future years
• Adjusting for Economic Growth- Baseline can be adjusted to account for either growth or reductions in economic growth.  The idea is to remove the influence of a changing economy on achieving energy efficiency improvements
• Mandated Efficiency Improvements- Utilities cannot count energy savings that result from customer installed appliances or equipment that are mandated by law including the Energy Independence and Security Act of 2007

Alternative Energy Portfolio Standard- S.B. 221 splits the 25% of electricity energy by 2025 standard into two separate benchmarks- one for "alternative energy" sources and another for "renewable energy sources."  The rules put a lot more teeth into the renewable energy benchmark, including specific interim benchmarks. 

Overall, the Commission did not address significant concern with some of the loose aspects of the Alternative Energy benchmarks.  These include the definition of what constitutes "Clean Coal" as well as what can be counted toward meeting the Alternative Energy Benchmark.  However, as detailed below, the Commission did put teeth into the "cost cap" provisions associated with compliance with either benchmark.

• RFP- Rejected a suggestion that renewable and alternative energy be procured through a Commission sponsored RFP process to ensure transparency
• Biomass- with regard to wood resources, the Commission allows use of wood and paper manufacturing waste, urban wood and tree residues, forestry residues, forest management or other land clearing.  However, forest resources must be from "sustainable forest management operations."
• Clean Coal- the Commission rejected criticism that the current rule would provide credit to technology that is "designed" to reduce CO2 irregardless of whether the reductions are actually achieved.
• Co-firing- will qualify as a renewable energy resource as determined by the proportion of energy input from the renewable energy resource.
• "Delivered into this State"- Commission will still require a power flow study and/or deliverability study to show power in the PJM or MISO transmission systems are deliverable into the state.
• Distributed Generation- renewable energy credits (RECs) generated from distributed energy sources belong to the owner of the equipment
• "Double Counting"- cannot use one project to meet both the energy efficiency benchmarks and the AEPS
• "Unbundling"-  Cannot unbundle other positive environmental attributes associated with creation of a REC and sell those attributes separately.  The classic example is you cannot sell the climate change CO2 reductions as well as RECs from one project.  You will have to choose with credits are more valuable
• Energy Storage- by itself cannot be considered a renewable energy resource
• Cost Cap- rejected utilities argument that the advanced energy and renewable energy cost caps be aggregated as one 3% cap. Also, rejected claim that the 3% increase is measured by isolating cost of generating the renewable or alternative energy.  Rather, the cost cap is triggered only if overall cost of supplying all forms of electricity rises more than 3% in order to meet the alternative energy or renewable energy benchmarks.  This ruling makes it far more difficult for Utilities to trigger the cost cap provisions.
• "Catch-up Provision- Commission effectively drops the requirement that future year benchmark compliance requirements be increased by the amount of undercompliance of the previous year due to the 3% cost cap

Greenhouse Gas Reporting Requirements

The Commission rejected concerns raised by Utilities regarding the mandate in the rules to become participating members in the Climate Registry.  The Commission noted that  S.B. 221 requires reporting and tracking of CO2 emissions must be performed.

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I have been following discussion regarding the green elements of the Presidents Stimulus Package, known as the American Recovery and Reinvestment Act of 2009.  There is certainly a lot directed toward environmentally related projects, especially renewable energy development.  Leading some to call these provisions the "Green New Deal." 

What is the real story behind some of the spending that has been reported?  You certainly can find information all across the web and on government sites that simply lists the amount of money in the bill and which program it has been directed.  However, detail about what the money will really be used for can be hard to find.

Bottom line, some provisions are better than others.  For instance, much of the money directed toward U.S. EPA will pay for existing projects.  This includes prior grant applications, clean ups already under contract or projects previously selected for funding.  So, for many of you expecting great new opportunities for EPA related projects, I don't think the bill offers you that much. (with the exception of diesel engine related grants- see below).

The renewable energy side of the equation is a totally different story.  There are continued and new tax incentives as well as new grant opportunities.  There is a lot in the bill and it will literally pay to stay on top of what is available. 

I.  EPA Side- the American Recovery and Reinvestment Act of 2009 specifically includes $7.22 billion for projects and programs administered by EPA. 

Below is a description of the major areas of funding as well as an analysis of whether this funding presents new opportunities. EPA has established a web site page with helpful links that discuss the opportunities in the Stimulus Bill relative to the money designated for EPA.

Brownfields:  There is over $100 million directed to U.S. EPA's brownfield redevelopment program.  I was intrigued regarding this new slug of money for it could present another great opportunity for clients outside of the Clean Ohio program.  However, after asking for more details from U.S. EPA, I learned that this money is basically already spent.  The U.S. EPA intends to use it for projects that requested funding back in 2008 but were not funded due to an over abundance of proposals.  While its good news more projects are getting funded, I believe U.S. EPA could have even received better project proposals if they would have allowed for new applications. 

Diesel Emission Retrofits Act (DERA):  The Stimulus directed over $300 million in new money to fund the DERA program. DERA is the federal grant program that pays for diesel engine retrofits, repowers and replacements.  Last years allocation was only $50 million for the entire country.  So the Stimulus does provide real, new money for this program.  U.S. EPA intends to spend the money quickly so watch U.S. EPA's website and Recovery.gov to jump in with your project.

Underground Storage Tank (USTs) Cleanups: $200 million was provided to U.S. EPA's Leaking Underground Storage Tanks (LUST) Program, EPA provides resources to states and territories for the oversight, enforcement and cleanup of petroleum releases from underground storage tanks (USTs). EPA estimates that every year 7,570 new releases occur which just adds to the sites that have not yet been completed.  There could be as many as 116,000 sites requiring clean up actions in 2009. However, it appears the funding will be used to help pay for clean ups of abandoned tanks rather than create a new grant program.  Here is additional detail from the from the Convenience Store News regarding the Stimulus package:

Other measures relevant to c-stores include a final approval of $200 million for the Leaking Underground Storage Tank (LUST) Trust Fund, which assists in the cleanup of abandoned gas stations, but will not pay for inspections or to assist state reimbursements programs.

Superfund Cleanups: $600 million was provided to U.S. EPA's superfund program.  However, these funds will be obligated mostly through existing contracts and Interagency Agreements.  In 2009 there could be as many as 20 Superfund sites ready for construction, but not funded due to budget shortfalls. The Recovery funds will begin to address those sites, plus accelerate construction at many of 600 sites where work has been limited in the past by funding constraints.

Clean Water State Revolving Fund and Drinking Water State Revolving Fund: $4 billion for assistance to help communities with water quality and wastewater infrastructure needs and $2 billion for drinking water infrastructure needs. A portion of the funding will be targeted toward green infrastructure, water and energy efficiency and environmentally innovative projects. (guidance on the green infrastructure component)

Ohio EPA has begun soliciting projects for its Drinking Water and Wastewater Revolving Loan Programs.  However, projects must already have been planned and reviewed by Ohio EPA for inclusion on project planning lists.  For instance, drinking water projects must be on the Drinking Water Project Priority List (PPL).

II.  Renewable Energy- the American Recovery and Reinvestment Act of 2009 bill is anticipated to provide around $43 billion for renewable energy in the form of tax breaks and other incentives

The extended entry includes a summary of the renewable energy incentives and investment as assembled by the American Council on Renewable Energy (ACORE). (the link provides you a hard copy of the ACORE document- which does a great job of assembling the relevant information for renewable energy incentives- or see the extended entry for a summary).

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On August 20, 2008, the Public Utility Commission of Ohio (PUCO) put forth proposed rules governing alternative and renewable energy sources.  The rules main purpose was to govern implementation of the State's new Advanced Energy Portfolio Standard (AEPS) established in Senate Bill 221.  The AEPS is broader version of a renewable portfolio standard (RPS) adopted by other states which mandates a certain percentage of power come from designated renewable energy sources.

The PUCO set a very aggressive public comment period in an attempt to finalize the rules quickly.    The comment period closed on September 26, 2008.  In the short month long comment period, the PUCO received hundreds of pages of divergent comments on the proposed rules. (See my prior post: Issues with proposed rules governing the AEPS)  Since closure of the comment period, the PUCO has failed to developed a second version of the rules. 

Today, a company filed a new letter on the docket which discusses the real world impacts of the delay in finalizing the rules governing the administration of the AEPS in Ohio.  Until the rules are finalized, no one knows what the renewable energy credit (REC) market will look like in Ohio.   A REC is the certificate issued to generators of renewable energy sources.  The certificate can be sold to the utilities to meet their compliance requirements with the AEPS.  REC are seen as a way to encourage renewable energy development.

The problem is that there are so many questions left regarding the construction of the rules, no one can set a reliable price for RECs. S.B. 221 contained a cap on REC prices of $45 per megawatt which certainly is the ceiling on REC prices in Ohio.  However, that leave a huge range in potential prices that is highly dependent on the construction of the rules.

The compliance period for the AEPS in Ohio begins in 2009.  Without an established market projects will get delayed.  This will make it far more difficult for Utilities to comply with the AEPS mandates.  In 2009, Utilities must develop or purchase .25 % of their total generation capacity from renewable energy sources.  While a quarter of a percent may seem tiny, in an energy market as big as Ohio's there will be a significant need for RECs.

In 2008 Ohio generated 13,000 megawatts of power.  A quarter percent means the REC compliance market in 2009 will be around 32,500 megawatts.  This is certainly enough to drive a significant amount of project develop in the State. 

Until the rules are established, the market for RECs will be uncertain.  Without this needed certainty many will delay moving forward with projects.  Of the states with an RPS, Ohio was one of the last states to establish an RPS.  This has meant Ohio has been late to the game in attracting investment and green jobs related to the renewable energy market.  The rules need to be finalized quickly so that Ohio doesn't lag further behind. 

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Governor Ted Strickland made his State of the State speech today.  While almost the entire speech was focused on education there were a few interesting nuggets relative to Ohio's progress in developing green jobs. 

"Over the last three years, Ohio has led the nation with 350 new or expanded facility projects in the renewable energy sector.

 Take solar energy, for example. The Toledo area has become an international center for solar research and production, with more than 6,000 people working in the solar industry. First Solar and Xunlight (Zun-light) both launched major expansions just this past year.

 All across the state we’ve seen advanced energy creating opportunities."

Later in the speech Strickland discussed Ohio's efforts to incorporate energy efficiency requirements into new government buildings:

Together we took the school building program that Governor Taft and the legislature created, and we expanded it to fund hundreds of new and renovated school buildings. And our new schools are being built to efficiency standards that will reduce our energy costs for the life of the building. In fact, Ohio has the largest energy efficient school building program in the nation.

The Governor should be commended for creation of a Renewable Energy Portfolio Standard (Ohio calls it an "Advanced Energy Portfolio Standard").  His initial proposal was greatly improved upon in the Legislature.  However, the rules governing implementation of the RPS seem to be currently stuck at PUCO after the Commission was flooded with comments on how to improve them.  Without improvement we stand to lose the momentum gained through passage of the energy legislation.

The Governor also included Advanced Energy Grant Funding in the Job Stimulus package passed recently.  However, the size of the grants ($250,000 for non-coal projects) seem to be too small to attract major new development to the State.

Is Ohio losing the momentum on attracting green jobs and economic development? 

President Obama has made clear his priority is renewable energy, climate change and green jobs.  Given Ohio's importance in the election this seems like a perfect fit to start getting Ohio out of its economic crisis and create the jobs of the future. Unfortunately, the Governor included no new proposals or ideas for how to build on Ohio's recent momentum in his State of the State address. 

Many states recognize the huge changes that are coming as a result of climate change and energy.  Unfortunately, Ohio lags these other states in developing and attracting the talent to truly lead in these areas.  As purely anecdotal evidence, when I attend national conferences that discuss these issues I will sometimes be the sole representative from Ohio. Meanwhile the New England States and West Coast dominate these conferences. 

Granted I don't attend every conference in these areas, but Ohio has certainly not lead on renewable energy.  It was the 26th state to pass an RPS.  Ohio has not lead at all on climate change. Its efforts have been focussed on resisting rather than improving climate change proposals. 

When the major policy changes on climate change and renewable energy are put forward, where do you think the jobs will go? 

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Rep. Ross McGregor introduced H.B. 632 to require the Director of Natural Resources to establish a plan to make available for lease areas of the bed of Lake Erie for the purpose of wind energy development and to require Lake Erie wind farms to be certified by the Power Siting Board.

Legislation is necessary to create a mechanism to place wind turbines on Lake Erie.

For those who have not been following this proposal, here are some links of interest:

Great Lakes Energy Development Task Force-  This group, lead by Cuyahoga County Prosecutor Bill Mason, has been exploring the feasibility of developing off-shore wind in Lake Erie. The feasibility study will recommend whether or not to proceed with the development of the Great Lakes Wind Energy Center – and if so, how to fund and implement its development. The study will provide a conceptual design for the offshore turbines, including the technical function and scope of the site.  The feasibility study is expected to be completed by the second quarter of 2009. 

Volokh Conspiracy- Blog post regarding design issues faced by locating in the Great Lakes versus Salt Water.  Good array of comments that further flush out the issues...

Opposition View from Local Cleveland Blog-  Bill Callahan questions whether the Region's first investment "should be a handful of experimental wind plants that can’t go on line in less than five years; must be engineered from the ground up with unpredictable costs, unpredictable construction and operating problems, and unpredictable output economics; and for all these reasons can only be built with millions of dollars in scarce public subsidies that would otherwise support lots of smaller, less risky initiatives?"

Proponent View Green Energy Ohio-  On their wind activities page they discuss the progress being made on the project.

My View-  In yesterday's post I discussed the prospect of Ohio becoming a leader in developing Clean Tech to boost its economy.  In that post I discuss the need for Ohio to find ways to lead the nation in Clean Tech development.  Austin (Texas) and Research Triangle (N.C.) and Silicon Valley (Calif.)  where the first to identify and lead in promoting technology to develop their economies.  For Ohio, and hopefully Cleveland, to beat all the other areas competing for Clean Tech jobs it must be a visible leader.  It must do something bold and first.  For those reasons, being the first to develop fresh water wind makes sense.

(Photo: Flickr Phault)

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The gloom and doom of today's economy, especially in Cleveland, is covered almost daily.  Job's have been disappearing from the area at a rapid clip.  The front page of the Cleveland Plain Dealer has almost been dedicated to breaking the bad news.  See, Plain Dealer Article "Northeast Ohio Job Loses Spread."

The Article includes the graphic to the left which shows areas of job growth and declines.  The question swirling around Norheast Ohio is how to get the overall economy growing again. 

The most important change is to adopt a Statewide strategy to pursue jobs of the future, rather than putting most of our efforts and money to try and protect struggling industries like the auto companies. We need to look to where the jobs of the future are going to develop and be aggressive about jumping into that space.

Northeast Ohio has done that well with its efforts on attracting medical innovation investment.  Growth in health care is here to stay. 

So what is another job growth area of the future?  It has been discussed with ever increasing regularity- Shifting towards attracting clean technologies jobs that will be associated with the monumental changes associated with energy and Climate Change. 

I am by no means the first to point out Northeast Ohio needs to be aggressively positioning itself to attract those jobs.  For example, locally we have had champions like the Cleveland Foundation pushing leaders to fully embrace a strategy to attract Clean Tech to Northeast Ohio (see, Rich Stuebi's recent op-ed piece in the Plain Dealer)  And leaders are paying attention.  You may not know this but the Greater Cleveland Partnership was the only chamber of commerce in Ohio that supported including renewable mandates in Ohio's Energy Bill that passed this summer.

Progress is being made, but we better double our efforts or will be beat out by other states and regions who have their eyes on the same jobs.  Like it or not, Northeast Ohio's chances at success are intertwined with State leadership efforts on developing a Clean Tech economy.

What is leadership?   Leadership means being out front, not coming late to the party.  For example, Iowa long ago embraced wind energy and has a large portion of generation from wind.  So which state is landing a multi-million dollar new manufacturing facility? Of course it is Iowa.  Meanwhile, Ohio was one of the last states to adopt a mandate on renewable energy.

Texas has also been taking notice and positioning itself to tie its economy to the forthcoming growth in Clean Tech.  An organization call Catalyst just completed a study of Clean Tech opportunities in Texas.  The study includes a series of recommendations for State leadership to adopt to ensure Texas is well positioned. 

Below I have taken out the recommendations that are included in the Texas study and provided my own analysis as to how Ohio is doing in these areas.  It is intended as a scorecard on Ohio's strategy to attract Clean Tech jobs.

Market Recommendations

• Spur the creation of renewable energy markets by modernizing the state’s Renewable Portfolio Standard to promote non-wind generation, and update the state’s wind policy to promote the next generation of wind investment. (Ohio passed S.B. 221 that includes a broad RPS to encourage varies technologies.  The key issue with Ohio's RPS are the "out clauses" if costs to comply exceed 3%. Hopefully these clauses don't render the mandate useless)
• Incent and reward residential and commercial energy customers who choose renewable electricity options, including aggressive rebates or tax credits for solar installation or other distributed generation. (Ohio does include some limited incentives for renewables. The Ohio Department of Development (ODOD) has information regrading solar for consumers.  But an analysis should be done to compare Ohio incentives to those provided by other states. Growth in residential demand helps attract companies to Ohio.)
• Promote Texas companies by tying customer rebates and incentives to products designed, manufactured or marketed by Texas companies. (I am not aware that Ohio is doing anything in this area.  I know there is a "Buy Ohio" program, but I don't think it has much value in the Clean Tech arena)

Economic Development Recommendations

• Conduct a comprehensive analysis of how Texas' new energy economic development incentives compare to those of other key states. (Ohio should perform such an analysis.  Ohio has new funding for alternative energy projects through the Ohio Air Quality Development Authority (OAQDA).  However, more information is needed as to whether this is enough of an incentive to put Ohio ahead of other states)
• Consolidate existing and new incentives into a comprehensive and simple New Energy Incentive Package, and actively promote and market it by establishing a visible, coordinated state office to serve as a single point of entry for new energy economic development inquiries. (Ohio gets a mixed scorecard on this one.  Governor Strickland gets credit for creating an Energy Advisor position.  Also, he has increased available incentives.  However, authority and funding is split between OAQDA and ODOD.)
• Commit specific and significant portions of the Emerging Technology Fund and Texas Enterprise Fund to companies and efforts in new energy industries. (Again, Ohio has created the Alternative Energy Fund as part of its Job Stimulus Package.  However, grants are limited to between $50,000 to $250,000 on renewables which seems hardly enough to attract series development. It may be a good program for helping bridge research to commercial deployment, but a larger effort is needed.)
• Create a state-sanctioned venue through which university and community college officials, workforce development officials, regional and local chambers of commerce, and state leaders can develop a Green Jobs education and training strategy. (This has not been done at all in Ohio.  Efforts are scattered and not coordinated across the State.)

State Reputation Recommendations

• Change the political rhetoric surrounding the new energy economy. The world has recognized this is no longer a partisan issue, but an economic opportunity. As long as Texas leaders position the future—and the new energy economy—as bad for Texas’ economy, businesses will go to other states where they’re welcome. This will require current leadership to demonstrate more enthusiasm for the future economy. (This same sentiment can apply equally to Ohio.  Due to its historical manufacturing base and reliance on coal, associations and leaders view major changes such as Climate Change as only bad for Ohio's economy.  To be a leader, the State must be willing to embrace the changes and work to take advantage of them.)
• Convene a blue-ribbon commission on the new energy economy—consisting
  of traditional energy companies, renewable energy companies, universities,
  entrepreneurs, utilities and economic development entities—to design
  a long-term new energy economic development strategy for the state. This strategy should build upon the general suggestions of the Governor’s Competitiveness Council’s Report and State Energy Plan, and provide specific, executable strategies for promoting the new energy economy in Texas. (Another suggestion that would be wise for Ohio to adopt.  While there have been smaller efforts, development of a comprehensive plan is the only way to position the State for success.  A piece meal approach to incentives, RPS and training only means Ohio will be at best a middle tier state in attracting Clean Tech jobs)
• Appoint a statewide, cabinet-level New Energy Economy Czar, responsible for identifying, articulating and executing a statewide strategy for maximizing Texas’ New Energy economic development opportunity. (Governor Strickland did create the position of Energy Advisor filled by Mark Shanahan. However, this position certainly does not have equal status to the recommendation in the Texas study.)
• Launch a Manhattan Project-style initiative to design the model “future grid” that could serve as a national proving ground for emerging energy technology and a model for networks nationwide.  (While I don't have enough insight to determine if this is a worthwhile recommendation, the notion is correct that the State must take nationally visible efforts to distinguish itself from all the other States competing for these jobs.)

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On Friday, November 7th, the Ohio Air Quality Development Authority (OAQDA) held a bidders conference to launch the Advanced Energy/Job Stimulus Program.  The Job Stimulus package set aside $150 million (over three years) to increase the development, production and use of advanced energy technologies in the state.

Those interested can begin filing applications for either grants or loans through the web portal on OAQDA's web page.  Unlike other competitive programs decisions will be made on a rolling basis, there is no deadline for filing applications.  However, $150 million is not a lot of funding for the types of projects involved, therefore it is likely available funds will dissipate quickly. 

The program has two separate pots of money:

• $66 million for clean coal technology projects administered through OAQDA’s Ohio Coal Development Office (OCDO).  Grants can be for up to $5 million for each project  The funding set aside for these projects is similar to other funding opportunities that have been provided by the OCDO.  Proposals will be reviewed by staff, outside reviewers and the Technical Advisory Committee and approved by OAQDA;
• $84 million for renewable energy and energy efficiency projects. Grants will be awarded in amounts from $50,000 to $250,000.  Loans will be $1 million to $2 million.  Funding will be in three $28 million annual appropriations administered by OAQDA. Projects will be reviewed by staff and outside reviewers, the Development Finance Advisory Council, approved by OAQDA.  Before funding can be awarded Legislative approval is necessary through the Controlling Board.
   

Some of the tips provided to bidders during the conference include:

1. "Tipping Point"-  Explain why a grant award or loan would be the tipping point in the project.  Would it help get the project through a difficult time?  Would funding allow some type of breakthrough? Would it lead to a possible major expansion in Ohio?
2. Jobs, Jobs, Jobs-  The main point of the funding is to stimulate job growth in the Ohio.  Therefore, you must be prepared to demonstrate that the project will generate jobs immediately.  New jobs will be favored over retained jobs.  Better if the are considered "foundational jobs"- meaning the project will lead to more jobs in the future.  Also, want to see better paying jobs.  
3. Leverage- The State wants to see that a grant award will other funding in the project.  Private funding is favored over other public financing.  The higher the leverage the better the application will be viewed. 

Applications can be made through the web portal.  To start the process applicants must only fill out a "letter of intent" which requires only minimal information.  OAQDA said at the bidders conference it is there goal to weed out unfundable projects early in the process. 

One other note, if you are going to pursue a coal grant, be advised that similiar with other funding through the OCDO, you will be required to sign a royalty/payment agreement.  OCDO is required by statute to seek a recovery for investing in research and development projects.  While I understand it is in the statute,  this requirement discourages businesses looking for funding that will accelerate commercial deployment of a proven technology. 

 (Photo: Great Valley Center Image Bank/everystockphoto.com)

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I have discussed  the ability of green jobs to help stimulate our economy.  However, that was before our energy crisis ended....temporarily.  The Wall Street Journal discussed President Elect Obama's plan to add 5 million new jobs through spending on clean energy.  As shown below, the Article questions the economic theory behind that plan.  Stating the Obama proposal does not account for the jobs that would be lost in the gas and coal sectors of the economy when such a shift occurs. 

The green-jobs argument rests on the notion that big capital investments in new-energy technology today will be more than offset by savings in reduced fossil-fuel costs. Though oil prices have fallen, the International Energy Agency predicted Thursday that once the economy picks up again, they will resume climbing, potentially topping $200 a barrel by 2030. The IEA called the current energy system "patently unsustainable" and called for "radical action by governments."

Several studies estimate that $1 invested in renewable energy or energy efficiency would yield up to four times as many jobs as $1 invested in oil and gas, whose basic infrastructure of wells, refineries and pipelines has been around for years. Moreover, those studies say, clean-energy jobs are likely to be centered in the U.S., unlike jobs in the oil and gas industry, which increasingly are spread around the world.

Critics say analyzing only new green jobs misses half the story. "It's not looking at the other side of the coin: You are spending more money for your energy," says Anne Smith, a vice president at CRA International. The consulting firm wrote a report for the coal-mining industry in April that concluded that, under a bill to cap global-warming emissions, gains in green jobs would be "more than offset" by job losses elsewhere in the economy. That bill failed, but Mr. Obama has said he supports capping emissions.
 

While the journal focuses on the loss in jobs in oil and gas, I think the main issue is the fall in commodity prices like oil and coal.  When those prices were soaring everyone wanted to shift into alternative energy, however the energy crisis is temporarily over.  I highlighted the statement in the article that "once fossil fuel prices climb again" the shift to clean energy will make sense.  The key is..."once the prices climb again."

Once the world economy grows again we will be in the same place we were in this summer.  It is a fact that there is just only so much oil to go around.  However, as discussed in my last post, the failing economy will also temporarily take away the momentum behind the green jobs push.  With oil down below $60 a barrel, the strong motivating factor that made everyone interested in alternative sources of energy is temporarily gone.  Right now we will be going into survival mode.  The question will remain for business- "What is the cheapest form of energy right now?" 

When commodity prices climb again (and they will), businesses will again consider clean energy has a hedge against ever escalating commodity prices.

(Photo: Flickr Crashworks)

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Have you ever heard of the irresistible force paradox?  What would happen if an irresistible force met an in-movable object?  I think this paradox may describe what will happen when the Obama Administration's environmental agenda meets the reality of the economy. 

Remember a few months back when oil peaked around $140 a barrel.  Of course you do...But do you also remember the momentum that the green movement due to the reality of limited resources and escalating energy prices.  Everything looks possible- a shift to renewable energy, energy conversation, higher gas mileage vehicles, and climate change legislation.

Now, only a few months later and oil is around $60-70 a barrel (I just filled up my gas tank for $1.90 per gallon)  We saw an economic meltdown the likes that has not been seen since the Great Depression.  How did this effect the momentum (the irresistible force) behind the Green Movement.  Let's take a sampling of recent headlines....

• Many Solar Energy Firms Likely to Fold During Economic Crisis- Analysts say nearly three-fourths of all solar energy companies could go out of business due to extremely tight credit, intense competition to produce solar panels, and falling prices.
• Local Government's Reconsider Costs of Green Building Mandates- The poor economy means tight budgets for most local governments.  This has forced local governments to begin questioning the costs associated with mandating LEED certification on new construction.
• T. Boone Pickens Places Wind Farm On Hold-  The dramatic drop in the cost of natural gas and the global credit crunch makes wind less competitive, according to Pickens.  As a result, he is putting on hold or scrapping plans for his massive 4,000 megawatt wind farm in Texas. (comment:  I guess Mr. Pickens is still a business man and not just motivated by getting us off of foreign oil)
• Renewable Energy Blues-  As reported in the Wall Street Journal, "when fossil fuel prices were soaring, things like offshore wind farms suddenly looked appealing, and guaranteed electricity prices from wind farms looked like a bargain. But with fossil fuel prices headed south and capital getting more expensive, renewables are losing some of their glow." (see also "Clean Energy Meltdown, Now GE is Bailing")
• Will EU Member States Use Economic Meltdown to Avoid Climate Targets-  When the economic crisis spread to Europe, the EU's ambitious goals on Climate Change were second guessed.  The current EU target of a 20% reduction in emissions by 2020 is set to automatically increase to 30%. Recently, Poland, Greece, Hungary, Slovakia, Romania and Bulgaria have opposed an increase in reduction targets.   Other EU countries are also second guessing their commitments. As reported in the Wall Street Journal, Germany’s foreign minister said recently: “This crisis changes priorities.” 

Exit polling from yesterday's election indicated that around 60% of the people who cast their vote made their decision based on issues associated with the economy.  After a quick search I could not even find where the environment ranked as a motivating issue.  I'm willing to bet it was a non-issue for the majority of the voters.

When the Obama Administration takes office and develops their environmental agenda it is likely to include: strong climate change legislation, renewable energy mandates, and policies that will not favor fossil fuels.  However, that Agenda will meet an immovable object that will likely cloud Obama's entire first term...the economy.  What emerges from the collision is anyone's guess.

(Photo: Flickr Transplanted Mountineer)

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On June 24, 2008, Governor Strickland signed Amended Substitute House Bill No. 562 (HB 562).  The legislation directed the Ohio Power Siting Board to adopt rules for the construction, operation and maintenance of electric generation wind facilities.  After receiving numerous comments from individuals, renewable energy associations, and other interests, the Power Siting Board has finalized the rule for wind facilities.  The rules outline requirements for issues including aesthetics, setback, noise levels, ice throw, blade shear and shadow flicker.  Here are some of the major issued under debated were resolved:

Siting of Wind Farms Treated Like Other Major Utilities

The American Wind Energy Association (AWEA) argued that the siting of wind farms should not be treated like other major utility facilities.  As a result AWEA argued some of the standards and application requirements would not apply to siting of wind farms.  The organization cautioned that doing so may discourage development of wind farms in Ohio.  But the Board rejected this approach after the sponsor of the bill, Senator Seitz, indicated it was the legislature intention to treat wind farms equally. 

Noise Standards

One significant issue of debate among commenters was whether the rules should include noise standards.  The Staff responded to those comments by rejecting the proposal to adopt a specific noise standard and evaluate each project on a case by case basis:

The Board and Board Staff shall evaluate the noise levels in
association with each application on a case-by-case basis in
light of the composition of the area surrounding the proposed
facility and will impose conditions on the noise emissions
during construction and operation of the wind-energy facility
as the Board determines to be appropriate. Such conditions are
enforceable pursuant to Section 4906.98, Revised Code.
Accordingly, we find it unnecessary to impose noise standards
as proposed by E-Coustic or to adopt operational noise
standards and measurement protocols as proposed by UNU.

Under the rules, each applicant will have to use computer modeling software developed for wind turbine noise measurement or a similar wind turbine noise methodology, including consideration of broadband, tonal, and low frequency noise levels to evaluate operation noise levels.

Setback Requirements

Another issue of significant debate was requisite setback requirements from wind turbines.  Many individual commented that strong setback requirements were needed to protect their property values and for public safety.  Similar to the issue with noise levels, the staff of the PUCO has decided to evaluate setbacks on a case by case basis. 

 (Photo: Kevin Dooley/everystockphoto.com)

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U.S. EPA is encouraging the development of renewable energy by identifying currently and formerly contaminated lands and mining sites that present opportunities for renewable energy development. The federal agency has prepared state by state maps and incentives fact sheets to provide easy access to information about development opportunities.

The attached map is a clip from google earth on U.S. EPA's website.  The map developed by U.S. EPA identifies numerous contaminated sites around the country that could be used for renewable energy development. The EPA used data from DOE’s National Renewable Energy Laboratory, the Comprehensive Environment Response, Compensation & Liability Act (CERCLA) and the Resource Conservation & Recovery Act (RCRA) to establish the list.

U.S. EPA's main technique in developing the maps and list of incentives is to marry state/federal brownfield redevelopment incentives with state/federal renewable energy incentives.  The overall message being that there are may be more government funds available to fund your renewable energy project by building on contaminated land. (attached is the incentive sheet for Ohio)

Because there are few areas Ohio that have sufficient wind resources, the majority of site are identified for either biomass energy or biofuel production.  (Here is a link to the biofuel map for Ohio).

U.S. EPA's web site has information and resources for developers, industry, and anyone interested in renewable energy development on formerly contaminated land and mining sites.  Why develop renewable energy on formerly contaminated land?  U.S. EPA's web site provides the following list of reasons:

• Many EPA tracked lands, such as large Superfund and RCRA sites, and mining sites offer thousands of acres of land, and may be situated in areas where the presence of wind and solar structures are less likely to be met with aesthetic opposition.
• These EPA tracked lands have existing electric transmission lines and capacity and other critical infrastructure, such as roads, and are adequately zoned for such development. The avoided new infrastructure capital and zoning costs is often significant.
• Redevelopment of brownfields for "green" energy production can help reduce the stress on greenfields for construction of new energy facilities, and can provide clean, emission-free energy.
• Many EPA tracked lands are in areas where traditional redevelopment may not be an option because the site may be remote, or may simply be saddled with environmental conditions that are not well suited for traditional redevelopment such as residential or commercial.
• There are approximately 480,000 sites and almost 15 million acres of potentially contaminated properties across the United States that are tracked by EPA. Cleanup goals have been achieved and controls put in place to ensure long-term protection for more than 850,000 acres. This leaves open many potential opportunities to develop renewable energy facilities on these sites.

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