Sustainability Law Blog

In pushing past the 20 gigawatt milestone (that's 20,000 megawatts), the U.S. wind industry doubled its wind energy output in two years. The first 10 gigawatts took over two decades. The U.S. is now the world's largest generator of electricity from wind energy, and next year will bypass Germany as the nation with the most wind energy generating capacity (expected to be about 24.3 gigawatts).

Today, windpower generates about 1.5% of the nation's electricity. However, the U.S. Department of Energy believes the nation has the capacity to provide 20% of the nation's electricity needs with wind energy by 2030. That would support 500,000 new jobs and reduce greenhouse gas emissions by the equivalent of 140 million cars. Recently, both the Democratic and Republican National Conventions were powered by wind energy.

The benefits and potential of wind energy strongly justify renewal of the production energy tax credit before it expires at the end of 2008. Hopefully Congress will, in its last session before the election, finally achieve this important milestone.

Post authored by David J. Petersen, partner practicing in the Sustainability and Real Estate and Land Use Practice Groups.

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In November 2007, the federal Minerals Management Service (MMS) announced an interim policy to lease offshore areas on the Outer Continental Shelf for information-gathering on the potential for wind, wave and tidal renewable energy development. Sixteen specific lease areas were identified, each inviting proposals to enter into five-year leases.

In July 2008, MMS announced that leasing would proceed on twelve of the sixteen sites off the coasts of New Jersey, Delaware, Georgia, Florida and California. The four other sites received competing bids, but due to budgetary and time constraints at MMS, further action on those leases will be delayed. Now, MMS will proceed with environmental review under NEPA and consultation with federal agencies for issuance of the leases.

In related news, the MMS formed a new Office of Offshore Alternative Energy Programs to handle alternative energy issues within MMS's jurisdiction.

These actions by MMS are hopeful signals, as MMS has previously been viewed as an extraction-oriented agency with little appetite or enthusiasm for renewable project development of areas under its jurisdiction. Further, confusion and tension has long reigned as to the demarcation of authority for offshore energy development between MMS and the Federal Energy Regulatory Commission (FERC), which has been viewed as much more receptive to alternative energy development offshore. Perhaps the logjam is clearing and these important agencies are moving toward an era of cooperation and mutual advancement of offshore renewable energy development.

For more information on MMS's interim policy click here. For more information on MMS's announcement, see its press release here.

Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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GE Energy Financial Services recently released a study showing that the tax revenues lost due to the federal production tax credit (PTC) for wind energy are more than made up by increased tax revenues from other sources. These additional taxes come in the form of taxes on project income, vendors' profits and individual worker wages, and future tax revenue after the PTCs expire in 10 years. In fact, GE's study estimates that the U.S. Treasury saw a net present value benefit of $250 million in increased tax revenues just from wind projects built in 2007. In addition, the study estimates those wind projects coming online in 2007 generated $6 million per year in local property taxes, $15 million in state income taxes, and operating tax revenue of about $1.5 million per year.

It is critical for the health of renewable energy development in the U.S. that Congress pass long-term extensions of both the PTC for wind energy projects and the related investment tax credit for solar projects this year. Much of the debate in Congress holding up renewal of the PTC is how to pay for the lost revenue. Congress perhaps could avoid this thorny issue by realizing that the tax credits more than pay for themselves.

Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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Oregon Governor Ted Kulongoski recently outlined his policy proposals for boosting energy efficiency (Click here for a summary of the Governor's remarks). His proposals include net-zero greenhouse gas emissions by 2030 for all new residential and commercial buildings, energy performance certificates on all homes sold in Oregon, a new public awareness campaign, and expansion of the Oregon Business Energy Tax credit (BETC) and the State Energy Efficient Design program (SEED) .

The net-zero energy emissions goal is likely the most important of the Governor’s proposals because buildings are big energy consumers and have a big impact on the environment. The National Renewable Energy Laboratory (NREL) reports that commercial and residential buildings use almost 40% of the primary energy and roughly 70% of the electricity in the U.S. Energy demand is also on the rise, with commercial sector demand doubling in size between 1980 and 2000 and expected to grow another 50% by 2025.

In contrast, net-zero energy buildings produce the majority of their own energy needs over the course of a year. Designed to be exceptionally energy efficient, these buildings are powered by renewable energy sources such as solar panels or wind turbines located on site. Ultimately, net-zero energy buildings could result in less energy consumption despite an expected boom in demand.

Nevertheless, the Governor’s plan will encounter challenges beyond his worries of how to finance the policies. To begin with, there is no single definition of net-zero energy efficient building.

Another concern is that a net-zero energy buildings are not necessarily green or sustainable structures. Builders are not required to use green building methods, such as reducing waste or using recycled building materials, to earn a net-zero structure certification.

All this goes to show that gaining energy efficiency isn't easy. Oregon will have many choices to make, on energy efficiency and other green options, as it marches into a sustainable future.

Posted by Marc Sanchez, Summer Associate at Tonkon Torp LLP.

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The ethanol strategy is intended to displace some of the U.S.'s use of foreign oil, right? Does it strike anyone as odd that we are spending trillions of defense dollars in the Middle East, prompted to some degree by a perceived need to stabilize U.S. access to petroleum resources, while we debate relative minutia related to the possible global effects of our ethanol production? We appear to be taking it as an inescapable given that U.S. petroleum policy will have massive consequences throughout the world, but we scrutinize any competitive product for each and every tenuous connection to adverse impacts on the international economy.

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David Petersen and I recently returned from Las Vegas where Tonkon Torp was an exhibitor at the Power Gen Renewable Energy & Fuels expo held February 19-21. I was impressed by the scope and diversity of exhibitors and attendees at the event. We met people from all over North America, Europe, Asia, and Australia involved in wind, solar, biofuels, geothermal, and wave energy as developers, manufacturers, investors, and economic development agencies. The Northwest was well-represented, too. Tonkon Torp exhibited with fellow members of the Northwest Energy Technology Collaborative, a group made up of a mix of industry, service providers, and governmental agencies. At the show, we were able to highlight some of the unique incentives, such as Oregon’s Business Energy Tax Credit, that make the Northwest such a great place to locate renewable energy projects and businesses. In all, it was a great trip, and I came back feeling energized and excited about renewable energy here in the Northwest and around the world.

Posted by Kimberlee A. Stafford, attorney practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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On January 14, the federal Minerals Management Service released a draft environmental impact statement on the Cape Wind offshore wind energy project in Nantucket Sound off the coast of Massachusetts. The DEIS found the proposed site to be environmentally and economically superior to alternative sites. Critics were quick to point out that the DEIS (Draft Environmental Impact Statement) does not declare Cape Wind as the "preferred alternative for offshore wind development in New England." Methinks they protest too much; NEPA (National Environmental Policy Act) only requires an evaluation of a reasonable range of alternatives (of which Cape Wind was superior), not every conceivable alternative for an offshore wind project in all of New England. Opponents also trotted out previously discredited arguments that Cape Wind was unsafe and would increase the cost of power for Massachusetts customers.

I wrote previously on this blog about the Cape Wind project (see January 19 post), and I think it is a well-conceived, pioneering project that should be built. Hopefully, the political shenanigans that have slowed the project so far are a thing of the past and construction can begin in 2010 as currently planned. To review and comment on the DEIS click here.

Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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A recent analysis by the Renewable Northwest Project (RNP) shows that the northwestern states of Oregon, Washington and Montana are well on the way to meeting the requirements of their respective renewable portfolio standards (RPS) for 2025. As shown in this chart from RNP, the RPS's for the three states collectively require the development of 2,969 MW of renewable power by 2025. To date, 586 MW of renewables are online in these three states, which is about 20% of the 2025 requirement. Note that since most of the northwest's renewables are wind energy, the 586 MW figure is determined by applying an average capacity factor of 33% to the region's 1,758 MW of installed wind power capacity.

Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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In furtherance of efforts to promote Oregon as a hub for wave energy technology R&D, the 2007 Oregon Legislature allocated $4.2 million to support the Oregon Wave Energy Trust, which is tasked with promoting education and outreach around wave energy and to study its potential effect on the marine environment. The Trust recently received the first $1 million installment from the Oregon Innovation Council. According to the Trust, the monies will be used to support education and outreach along the coast, to conduct a whale migration study by Oregon State University's Marine Mammals Institute, and to support wave energy research at OSU.

Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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I just finished reading Cape Wind by Wendy Williams and Robert Whitcomb. For anyone interested in the challenges facing domestic development of clean, renewable energy, the book is a must-read. Knowing a little bit about the Cape Wind saga before I started the book, I began with a bit of trepidation – the last thing I needed was to raise my blood pressure reading about how the rich and powerful put their own interests above those of the rest of the American people. But as I turned the last page, I was buoyed rather than frustrated. The Cape Wind story ultimately is about how grassroots organization and open-government principles can thwart back-room political deals to benefit the wealthy few. Although no turbine has gone into Nantucket Sound yet, the developer currently plans to start construction in 2010, and the forces opposing the project, while not gone entirely, are substantially weakened.

Many of the Cape Cod yachting set come off poorly in the book, especially Alaska Congressman Don Young, Massachusetts Senator Ted Kennedy, and former Massachusetts Governor and current presidential candidate Mitt Romney. While renewable energy advocates don't expect much from Young, the hypocrisy of Kennedy and the blatant pandering of Romney are especially eye-opening. If you are inclined to believe anything Romney is saying on the campaign trail about supporting the fight against global warming, you might not after reading Cape Wind.

Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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What do you think would happen if a local Nordstrom store decided not to accept return merchandise from customers, or if a local Starbucks decided not to honor the company’s diversity policy? Do you think the folks at headquarters would demur, and say that local activism is a source of the company’s strength, or that the company did not like to take a Stalinist approach in dealing with local issues? No. Yet, the Sierra Club and the Audubon Society are both spending lots of their donors’ money lobbying congress to require utilities to use more renewable energy while their local affiliates simultaneously oppose wind and solar projects because wind turbines threaten birds or transmission lines run through deserts. When asked to explain these apparently contradictory efforts, representatives use the “local activism” or “Stalinist” excuses. See "Green Projects Generate Splits in Activist Groups," WSJ December 13, 2007 p. B1.

I don’t think asking for a bit of consistency is Stalinist. Perhaps Audubon and The Sierra Club (both organizations I have contributed to in the past) should employ something like the Natural Step Framework to evaluate energy projects before they allow their local chapters to take a stand. Then they could defend what may appear to be inconsistent positions rationally, rather than claiming that requiring local affiliates to act consistently would be Stalinist.

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The Energy Trust of Oregon recently introduced a new program to encourage greater development of wind energy. The Small Wind Program provides cash incentives of up to $35,000 for residential customers and $60,000 for commercial customers who install personal wind turbines of up to 50 kilowatts (KW). When combined with the available state tax credit, this program enables Oregonians to offset up to 50 percent of the cost of a turbine. To participate in the Small Wind incentive program, an applicant must be a customer of Portland General Electric or Pacific Power and own at least one acre with no obstructions where annual wind speeds average least 10 miles per hour. Turbine towers must be at least 60 feet high.

We hope this program will make self-generated renewable power financially feasible for more rural Oregonians. It also may help PGE and Pacific Power get closer to acheiving the new Oregon Renewable Portfolio Standard mandates and increase the market for Northwest small wind developers, contractors and manufacturers such as Portland-based Oregon Wind Corp. The program is one more example of how Oregon is on the leading edge of renewable power incentives in the U.S.

Posted by David J. Petersen, partner practicing in the Sustainability and Real Estate & Land Use Practice Groups.

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