Daily on Energy: State officials worry electric car expansion could hurt low-income people

  • Jun 11, 2020
  • Washington Examiner

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ELECTRIC CARS’ EQUITY PROBLEM: Top energy officials from New York and Massachusetts are raising the fear that requiring increasing use of electric cars could impose financial hardships on poor people.

That is especially if utilities bear the cost of building out charging infrastructure and pass that onto ratepayers, said Richard Kauffman, board chair of the New York State Energy Research and Development Authority. Such additional charges are “disproportionately born by people of lower income,” he added, during remarks Wednesday on a webinar hosted by OurEnergyPolicy.

Those low-income communities are also unlikely to benefit initially from increasing access to charging stations because electric cars are out of their price range. Incentives and rebates offered for purchasing EVs, too, help the higher-income first buyer of the car, but those often don’t extend to the used car market.

Massachusetts is looking at offering rebates for second-hand electric cars, a step New Jersey has already taken, said Kathleen Theoharides, the state's energy and environmental affairs secretary.

That’s important from an environmental justice perspective, she added. “We have to consider how to get those vehicles” into the hands of lower-income customers.

State officials are grappling with these equity questions as they craft a region-wide cap-and-trade program for transportation fuels this year. They’re hoping to mimic the success of their Regional Greenhouse Gas Initiative program, which targets power sector carbon emissions, in the transportation sector, which is the biggest emitter in the U.S.

Charging’s chicken-or-the-egg problem: The U.S. has struggled to build out an electric car charging network at the scale and speed of Europe, Kauffman said. While Europe has about 180,000 charging stations, the U.S. only has around 25,000, despite big pushes from California, New York, and other states to increase electric car adoption.

Part of the problem, Kauffman said, is paying for the infrastructure. Utilities say they’ll chip in (electrification is a demand boon for them), but that means they’ll ultimately put those costs into their rate base, raising costs for consumers.

Other large financiers are hesitant to put down capital unless they know the infrastructure will be readily used, but consumers are still anxious to buy electric cars if they feel like there aren’t enough places to charge them.

Can oil companies fill the gap? So far, some oil majors like BP and Shell have only dipped their toes in the water. But that may change as those companies weigh diversifying their investments to become net-zero energy companies by 2050.

BP, for example, is looking at trials for fast charging stations in New York, as well as exploring other opportunities in the U.S., said Bob Stout, vice president and head of U.S. policy for BP America. The oil major already owns the largest EV charging network in the United Kingdom, and it strongly backs the Northeast’s regional transportation climate policy.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

TRUMP ADMINISTRATION GETS THE DRIFT ON OFFSHORE WIND: The Trump administration moved closer to approving the nation’s first major offshore wind farm, with the Interior Department releasing Wednesday what supporters called a favorable environmental review for the proposed Vineyard Wind project in Massachusetts.

The Interior Department’s Bureau of Ocean Energy Management had previously delayed release of the review in order to consider the concerns of commercial fishermen.

The agency also decided to wrap its Vineyard Wind review into a broader study on the cumulative impact of offshore wind projects planned off the East Coast.

The decision to delay the review was a setback to construction for the project, causing its developer to say the Vineyard Wind project “is no longer expected” to become operational by 2022 and is instead targeting 2023. The 800-megawatt wind farm, planned off Martha’s Vineyard, is expected to provide enough power for more than 400,000 homes.

Where Trump stands on offshore wind: Industry groups at the time criticized the Interior Department’s delay of the project, noting that it could interfere with the Trump administration’s claim that it is not neglecting renewables as part of its “energy dominance” agenda, and is supportive of offshore wind.

But those same groups gave supportive statements to Interior’s new environmental review, even if delayed.

“The Vineyard Wind Supplemental EIS brings us a step closer towards thousands of jobs and billions of dollars in economic growth and a step further away from unexpected and unintended bottlenecks and holdups,” said Erik Milito, president of the National Ocean Industries Association.

Research group ClearView Energy said the environmental review “reinforces” its view that the Trump administration will approve the project by mid-December.

GLOBAL SPENDING BY OIL PRODUCERS SET FOR 15-YEAR LOW: Spending around the world by the upstream oil and gas industry is expected to fall to its lowest level in 15 years, the research group Rystad Energy projected Thursday.

Global spending will be $383 billion this year, a 29% decrease.

Spending is also expected to be largely flat in 2021, only marginally higher than 2020 at $386 billion. Before the pandemic, Rystad expected total upstream investment to maintain last year’s levels, both in 2020 and 2021.

“As the impact will be more severe than in the previous downturn, companies are fiercely defending shareholder value and pivoting towards more conservative spending strategies in the near-term,” said Rystad’s upstream analyst Olga Savenkova.

Watch for this: Energy analysts say upstream investment is likely to be insufficient to meet future demand, which could put upward pressure on prices in future years.

SENATE ON TRACK TO PASS CONSERVATION BILL: Senate Majority Leader Mitch McConnell filed cloture Wednesday on the “Great American Outdoors Act,” cutting off votes on amendments to it despite the concerns of coastal lawmakers who say it favors inland states.

The public lands package, which would fully fund the popular Land and Water Conservation Fund with $900 million annually, is expected to pass the Senate early next week, supporters say, as procedural votes so far have been cleared with a large bipartisan majority. The bill would also create a fund to pay for a massive maintenance backlog in national parks and other federal lands.

Republican Sen. Cory Gardner of Colorado, one of the bill’s chief backers, said on the Senate floor Wednesday that the legislation would create more than 100,000 jobs and could provide a lifeline to western states with public lands whose recreation economies have been harmed by the coronavirus pandemic.

“We can restore faith in our government to come together, work together, and inspire each other,” Gardner said.

Sen. Bill Cassidy, Republican of Louisiana, is refusing to let the bill pass without a fight, continuing to press his case to amend the bill by removing a cap on how much offshore oil and gas revenue can go to Gulf Coast states, to allow for more funds to buffer land loss and resilience protection against worsening hurricanes.

“We’re going to spend billions, but we’re going to spend billions in the wrong way, repairing damage on the coast that could have been prevented if we’d spent millions now,” Cassidy said, adding he was “disappointed” McConnell won’t allow his amendment.

EPA BUSTS AMAZON AND EBAY: The agency is ordering the two major online retailers to stop selling dozens of unregistered pesticides, including products falsely claiming to combat the coronavirus.

The EPA’s so-called “stop sale” orders come after multiple warnings to both companies to better police their online platforms, agency enforcement chief Susan Bodine told Abby. That included a meeting in April during which Administrator Andrew Wheeler pressed the two companies and other major online retailers about the issue.

eBay was allowing sale of restricted chemicals, too: One of the listings discovered by EPA investigators was for 55-gallon drums of methylene chloride, a potentially deadly chemical found in paint strippers that the EPA banned consumer sale of last year. The eBay listing had marketed it as a coronavirus disinfectant.

DOE’S MINI SPR TEST RUN: The Department of Energy bought 126,000 barrels of oil for the Strategic Petroleum Reserve, the agency announced Wednesday, an amount well short of the 1 million barrel “test” purchase it planned to test market conditions.

DOE purchased the oil from Shell Trading Company, a U.S.-based affiliate of Shell that sources its crude from small to midsize U.S. producers. The purchase is part of a solicitation for bids DOE made last month to purchase up 1 million barrels of oil for the SPR. DOE did not say whether it plans to buy the remaining barrels.

Energy analysts say the DOE initiative is a test run to understand the quality of light crude used by small U.S. producers in the event DOE can do a bigger SPR fill through funding from Congress, which Democrats have rejected so far.

“Lawmakers sympathetic to the SPR might be inclined to view the small purchase as proof of a functioning acquisition pathway, and perhaps also as a clear and present case for appropriations to make a bigger buy,” ClearView Energy said in a note. “Critics of new SPR spending might argue that a single seller indicates a dysfunctional market, even if available funding (rather than inadequate interest) constrained the size of the purchase.”

SOLAR HAS BRIGHT Q1 DESPITE DIMMER 2020 FORECASTS: The U.S. solar industry had its best-ever first quarter in 2020, installing 3.6 gigawatts, and the sector is still expected to grow 33% this year, despite facing challenges from the coronavirus-related downturn, according to new data released Thursday by the Solar Energy Industries Association and Wood Mackenzie.

Nonetheless, the solar market will still take a hit this year, compared to the growth it was expected to see. The 33% growth forecast is 9% lower than prior market outlooks, which had projected 20 GW of installations this year.

The residential market will see a 25% decrease in year-over-year installation volumes, and the non-residential market will experience a 38% decline, according to the report. Distributed solar has been particularly hard hit amid the pandemic, with 31% fewer installations expected in 2020 than in 2019, the report says.

DEMOCRAT PRESSES DEFENSE DEPARTMENT ON RENEWABLES GOAL: New Hampshire Sen. Maggie Hassan wants to know why the Department of Defense still hasn’t met a requirement set in the 2005 Energy Policy Act to consume 7.5% of its electricity each year from renewable sources.

The Defense Department was supposed to have met the goal by fiscal year 2013, but by then it had only reached 5% renewable power, Hassan wrote in a Wednesday letter to Lisa Jung, the department’s assistant secretary of defense for energy. That amount has only ticked up slightly since then, to 5.9% renewable consumption in fiscal year 2018, Hassan said, adding the Defense Department’s failure to reach its goal significantly affects the government’s total energy use.

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The Senate meets to continue consideration of the “Great American Outdoors Act.”

10 a.m. 366 Dirksen. The Senate Energy and Natural Resources Committee holds a hearing to examine the impacts of COVID-19 on the energy industry.

12 p.m. The House Energy and Commerce Committee’s Subcommittee on Energy holds a remote hearing entitled, “Reviving our Economy: COVID-19's Impact on the Energy Sector.”

10 a.m. 106 Dirksen. The Senate Environment and Public Works Committee holds an oversight hearing entitled, “Responding to the challenges facing recycling in the United States.”