The Environmental Protection Agency is considering a rule that would change the way power plants operate in America—but without significant adjustments, it could have devastating consequences.
The background: Right now, about 60% of America’s power generation comes from a combination of coal and natural gas.
- The EPA’s proposed rule would require coal and natural gas–fired power plants to deploy either carbon capture technology or hydrogen power within 10 years to lower emissions.
- If unable to deploy these technologies at the scale required in that timeframe, these power plants would be forced to shut down.
The problem: While carbon capture and hydrogen power technologies are vital to decarbonization, the required scale and timeline make implementing this rule difficult.
- “Carbon capture and hydrogen are tremendously promising—and manufacturers are leading the way in developing these technologies. But neither have been deployed at the scale needed to support 60% of our entire power generation within a short timeframe,” said NAM Vice President of Domestic Policy Brandon Farris.
The timeline: The EPA’s proposed 10-year timeline leaves little room for flexibility when it comes to implementing the order. According to Farris, environmental impact studies alone could take more than four years.
- “We’re talking about 10 years to essentially retrofit more than half of our power generation,” said Farris. “You would need this permitted, installed and operational within those 10 years, which would be difficult even if the technology was available today at scale.”
The impact: The rule would require plants that do not meet the new standard in 10 years to shut down entirely. As a result, many plants would have to shift resources immediately to plan for a likely shutdown.
- “The big hammer is these plants having to shut down in 10 years if these technologies are not installed,” said Farris.
- “So you’ll see a lot of money spent and not a lot of progress made because this technology isn’t ready at scale, and we have only a few years to permit, install and operate.”
The next steps: The NAM has submitted comments on the rule, and the EPA is working on a final version now.
- “We’ve emphasized that the timeline is not workable,” said Farris. “You would need to have a longer off-ramp and a way to ensure that the technologies required are proven at scale.”
The world must add or replace nearly 50 million miles of transmission lines in the next 17 years to allow countries to meet climate goals and achieve energy security, according to a new report by the International Energy Agency covered by CNBC.
What’s going on: The amount of transmission line needed—49.7 million miles—“is roughly equivalent to the total number of miles of electric grid that currently exists in the world, according to the IEA.”
- The undertaking “will require the annual investment in electric grids of more than $600 billion per year by 2030,” double current global investment levels in transmission lines.
- Countries must also make changes to the way they operate and regulate their grids.
Why it’s important: Investment in global transmission lines has not kept pace with the growing appetite for renewables, and without replacements and additions to transmission lines, power bottlenecks will become “ever larger.”
Growing gridlock—and demand: “There are currently 1,500 gigawatts of renewable clean energy projects in what the IEA calls ‘advanced stages of development’ that are waiting to get connected to the electric grid around the world.”
- Meanwhile, demand for electricity will only rise as more of the globe moves to electric power.
- But building new transmission lines takes time, owing to lengthy permitting processes—which is why the NAM has long advocated speeding the process in the U.S.
Our view: “The NAM has identified building additional transmission lines as a top priority for the next round of permit reform negotiations,” said NAM Vice President of Domestic Policy Brandon Farris.
- “We will continue to fight to break down barriers to building new projects, including manufacturing facilities, energy generation, transmission lines, bridges, roads and more.”
A planned offshore wind farm whose developers are billing it as the largest in the world has produced electricity for the first time, according to CNBC.
What’s going on: “Located in the North Sea, over 130 kilometers off England’s northeast coast, the Dogger Bank Wind Farm still has some way to go before it’s fully operational, but the installation and powering up of its first turbine is a major feat in itself. That’s because GE Vernova’s Haliade-X turbines stand 260 meters tall—that’s higher than San Francisco’s Golden Gate Bridge—and have blades measuring 107 meters.”
- Once the installation is complete, the ship will have 277 Haliade-X turbines.
Why it’s a game-changer: “Described by Dogger Bank as the ‘largest offshore jack-up installation vessel ever built,’ in many ways, it’s the pinnacle of an extensive supply chain involving numerous businesses and stakeholders.”
- Thanks to four legs that allow the vessel to lift itself above the water’s surface, the wind farm will be able to operate in depths of up to 80 meters—some 30 meters deeper than fixed-foundation wind farms.
Power producer: Once fully up and running, project developers say the Dogger Bank Wind Farm will have a capacity of 3.6 gigawatts, enough “to power as many as 6 million homes per year.”
- For the sake of comparison, the U.K.’s fully operational Hornsea 2—considered a major wind farm—has a capacity of just over 1.3 GW, according to another CNBC piece.
A complex project: The totality of the undertaking is “huge,” according to one source, and being made more complex “by the use of next-generation turbines and a next-generation installation vessel.”
- Given the immense size of the Haliade-X turbines, “we use a number of specially designed pieces of equipment to transport” them, a GE Offshore Wind spokesperson said.
The NAM’s view: “Offshore wind can be an important part of an all-of-the-above energy strategy that helps meet energy security and decarbonization goals,” said NAM Vice President of Domestic Policy Brandon Farris. “Manufacturers keep leading the way with investments in the next generation of energy technologies—and the NAM will continue to advocate energy policies that provide manufacturers affordable, reliable energy.”
U.S. producer prices for final demand goods and services rose more than expected last month, largely owing to higher energy costs, Reuters (subscription) reports.
What’s going on: “The producer price index for final demand rose 0.5% last month, the Labor Department said on Wednesday. Data for August was unrevised to show the PPI accelerating 0.7%.”
- Reuters-polled economists had expected the PPI to increase 0.3%.
- “In the 12 months through September, the PPI increased 2.2% after advancing 2.0% in August.”
Core PPI: Core producer prices—prices excluding food, energy and trade services components—rose 0.2%, the same increase seen in August.
- “In the 12 months through September, the … core PPI increased 2.8% after climbing 2.9% in August.”
Coming up: The Federal Reserve is expected to leave current interest rates unchanged when it meets Oct. 31 and Nov. 1, according to Reuters.
An energy startup that just hit the $1 billion investment mark thinks it holds the key to finally producing large quantities of “green” hydrogen, according to The Wall Street Journal (subscription).
What’s going on: “Electric Hydrogen believes the secret to success is finding a better way to split a [water] molecule. … Splitting it to create green hydrogen requires devices called electrolyzers. They are expensive and consume vast amounts of renewable electricity to make a small amount of hydrogen, making most projects uneconomical. Electric Hydrogen says its electrolyzer can produce much more hydrogen.”
- The company says its method of hydrogen production combined with “the generous tax subsidies on offer” from last year’s Inflation Reduction Act could finally make green hydrogen a market-competitive energy source.
Investors go all in: The company “recently raised $380 million from backers including BP, United Airlines, Microsoft and iron-ore producer Fortescue Metals,” helping it pass $1 billion in total investments.
Why it’s important: Green hydrogen “is one of the few options to eliminate emissions from trucks, planes, steel mills and chemical plants where renewable power and batteries alone can’t get the job done.”
- “Hydrogen is one of the few ways to move green power long distances. Potential demand is so great that the winner of the race for green hydrogen could dominate a market worth as much as $1 trillion in the coming decades.”
Cracking the code: While electrolyzers have been typically small devices used in the aerospace and chemical industries, Electric Hydrogen thinks it can make the devices both larger and more affordable “by starting from scratch and using new plate engineering focused on the performance of bigger electrolyzers.”
The NAM’s take: “Clean hydrogen is critical to decarbonizing hard-to-abate industries, and manufacturers are leading the way in developing and scaling it for widespread use,” said NAM Vice President of Domestic Policy Brandon Farris.
- “The NAM is working to ensure that the incentives available for clean hydrogen help create the right market incentives for producers—as well as manufacturers and other end users—to meaningfully contribute to decarbonization while boosting domestic job growth and global competitiveness.”
In a milestone for the logistics sector, Danish shipping firm Maersk recently unveiled “its first container vessel moved with green methanol,” CNBC reports.
What’s going on: “The new container ship, ordered in 2021, has two engines: one moved by traditional fuels and another run with green methanol—an alternative component, which uses biomass or captured carbon and hydrogen [for] renewable power. Practically speaking, the new vessel emits 100 tons of carbon dioxide fewer per day compared to diesel-based ships.”
- The ship is the first of a larger order of 25 due for delivery next year.
- Other shipping firms have placed orders for similar vessels.
Why it’s important: Because it’s a global industry—with approximately 90% of the world’s traded products traveling by sea—ocean shipping has typically been less receptive to transitioning to new energy sources, Danish Minister of Industry Morten Bodskov said, according to the article.
- For example, “[i]n June, a group of 20 nations supported a plan for a levy on shipping industry emissions. But China, Argentina and Brazil were among the nations pushing back against such an idea.”
Climate goals: Maersk aims to be “climate neutral” by 2040, making the green-methanol vessels a key part of its approximately 700-ship fleet.
However … “[A]nalysts are worried that Maersk and its competitors might struggle to find enough supply of green methanol. The fuel is scarce and costly to transport.”
The last word: “Manufacturers are leading the way on developing and scaling up new clean energy sources,” said NAM Vice President of Domestic Policy Brandon Farris. “The NAM continues to advocate for policies and programs that foster and encourage that innovation.”
A measurement of wholesale inflation rose more than expected in August, according to data from the Bureau of Labor Statistics.
What’s going on: The Producer Price Index for final demand goods and services rose a seasonally adjusted 0.7% last month, and 1.6% on a year-over-year basis.
- The increase was the strongest monthly gain since June 2022.
- Core producer prices rose 3.0% year-over-year, an increase from July’s 2.9%.
Final demand goods: Producer prices for final demand goods jumped 2.0% in August, buoyed largely by a 10.5% rise in energy costs.
- Excluding food and energy, producer prices for final demand goods inched up 0.1% last month.
Final demand services: Producer prices for final demand services, meanwhile, increased 0.2%, with transportation and warehousing prices rising 1.4%.
Our take: “Despite the uptick in wholesale inflation in August, the overall trend remained encouraging,” said NAM Chief Economist Chad Moutray. “The data continue to reflect moderation in pricing pressures year to date, particularly as core producer prices continued to moderate. The deceleration in producer prices will likely take some pressure off the Federal Reserve, even as it remains concerned about lingering inflationary pressures overall.”
Chevron Corp. has bought a majority stake in a federal government–supported “green” hydrogen project in Utah that, once completed, will “produce massive volumes” of the renewable energy source, according to E&E News’ ENERGYWIRE (subscription).
What’s going on: Chevron said on Tuesday that it had completed a deal with fuel-storage developer Magnum Development LLC to take over full ownership of the Utah salt caverns where green hydrogen production and storage is set to take place.
- This purchase gives the energy giant “a majority interest in the joint venture that is developing the [Advanced Clean Energy Storage] project.”
- ACES—in which Mitsubishi Power Americas Inc. and private-equity firm Haddington Ventures LLC are also partners—won a $504 million loan guarantee from the Department of Energy in 2022.
- The project is part of a larger effort by Chevron to develop emerging energy technologies through 2028.
Why it’s important: “We seek to leverage the unique strengths of each partner to develop a large-scale, hydrogen platform that provides affordable, reliable, ever-cleaner energy and helps our customers achieve their lower carbon goals,” Chevron New Energies Vice President Austin Knight said in a statement.
- The plan is to make the hydrogen in the salt caverns in Delta, Utah, “for use at a nearby power plant” looking to diversify its energy mix—and aiming to run entirely on hydrogen by 2045.
Another effort: In partnership with ExxonMobil Corp. and Shell PLC, Chevron is also part of a Texas industry group asking for $1.25 billion in 2021 Bipartisan Infrastructure Law funds to construct hydrogen “hubs,” large-scale demonstrations of hydrogen production, transportation, usage and storage.
A model project: “Currently under construction, the ACES project could become one of the western U.S.’s most important demonstrations of what a low-carbon hydrogen industry might look like,” ENERGYWIRE reports.
The NAM’s take: “Manufacturers view clean energy solutions, such as hydrogen, as an important part of our country’s energy present and future—and the industry is used to leading the charge in developing and scaling hydrogen projects for widespread use,” said NAM Vice President of Domestic Economic Policy Brandon Farris.
- “The NAM is committed to ensuring that the hydrogen tax credit and other incentives help build the appropriate market conditions for hydrogen projects to succeed.”
Real estate companies are turning to artificial intelligence to help cut emissions from commercial buildings, according to The Wall Street Journal (subscription).
What’s going on: While developers and builders have begun using more energy-efficient design and building methods in recent decades, and governments are introducing stricter energy-use codes for commercial spaces, “more than 80% of buildings don’t have smart systems to efficiently manage their energy use.”
- Commercial real estate manager JLL “has been making a string of investments to bring AI systems to companies looking to cut their emissions. … JLL says it expects 56% of organizations to pay a premium for sustainable spaces by 2025.”
- One of its investments is in a firm that installs electric motors and small computers into building systems to better control heating and cooling.
Why it’s important: “AI building systems learn from historical patterns and the daily habits of occupants to predict and power things on and off.”
- “For instance, software and hardware that automatically manages lights, heating and cooling can help buildings cut 20% or more of their yearly energy use.”
A caveat: Just 10–15% of buildings have systems in place to collect the data needed to make these predictions.
- As one source told the Journal, “Bad data means you can’t do any kind of schedules, rules or more sophisticated use cases around artificial intelligence. You have to have the data.”
Check it out: Speaking of data collection, the Manufacturing Leadership Council (the NAM’s digital transformation division) is hosting an event in December that will help manufacturers envision what a data-driven industry might look like by 2030. Learn more and register here.
The federal permitting process for major transmission lines should soon get a lot easier to navigate, according to POLITICO’s ENERGYWIRE (subscription).
What’s going on: Last Thursday, the Department of Energy proposed “completing environmental reviews and other federal approvals for electric power lines within two years.”
- In addition, “DOE would be the lead agency conducting environmental impact statements and other federal reviews for transmission projects so that developers wouldn’t need to go through multiple federal agencies.”
- Once finalized, the framework will be called the Coordinated Interagency Transmission Authorization and Permits Program.
Why it’s important: The draft revision—a response to the recent debt-ceiling deal—could slash the time it takes to get long-distance power lines built and operational.
- This “could help integrate more solar and wind into the U.S. energy resource mix,” according to ENERGYWIRE.
- Though Congress authorized the DOE as lead federal agency in reviewing electric power lines, this proposal marks the first time the authority has been “formally proposed,” a source told the news outlet.
Developers’ role: The proposal details what developers would have to do under the new process.
- “For example, DOE would require developers to complete resource reports about potential environmental impacts from construction or operation of their projects. Applicants would also need to submit plans for engaging with communities affected by a new transmission line.”
However … CITAP wouldn’t cancel the need for local and state permits.
- “Rather, the goal is to ensure that developers have a clearer and smoother process for obtaining necessary federal permits.”
The NAM’s take: “This is a step in the right direction,” said NAM Vice President of Domestic Economic Policy Brandon Farris. “As part of our push for permitting reform, the NAM has long advocated for a lead federal agency to run point and streamline the permitting process.”
- “The NAM will continue to work with Congress and the administration to make the permitting process more predictable and consolidate the many complex layers of review so the U.S. can continue to build on our shared goals of boosting domestic manufacturing.”