Debates are being had around the globe on how to reduce carbon emissions most efficiently and economically. Whether though a carbon tax or carbon trading program, or through wholesale market pricing schemes, carbon mitigation strategies for reducing carbon dioxide emissions in the electricity sector are gaining traction. With the aggressive fiscal and monetary policies and stimulus programs in place across the globe, attempting to soften a global economic downturn and speed the economic recovery from the COVID‐19 pandemic, governments and businesses alike are voicing concerns about pending large budget deficits and their potential to slow and prolong economy recovery. Governments around the world will be forced to reduce spending in coming years or find ways to raise revenues. The tax code is a very efficient and effective way to steer investments toward innovative and transformative capital projects, including projects that support decarbonization.
When I began this series of columns in 2015, one of the first was a reflection on the problems of assessing and characterizing international energy.1 Local customs, terms, and methods of regulation are rarely comparable. There are few international energy markets and almost no international legal or political standards for practical energy regulation. What is more, the reasons why democratic governments regulate as they do often reflect legislative, policy, or regulatory reactions in response to strong public opinion stemming from long‐forgotten sources of public frustrations.
Existing technologies that produce blue hydrogen with carbon capture, use, and storage (CCUS) could be a bridge to widespread production of green H2, which is produced with renewable energy without carbon dioxide (CO2) emissions. By incenting and encouraging higher production of blue H2, which primarily uses natural gas, and green H2, the transportation sector could be decarbonized to combat the adverse effects of climate change. Such a program would require tax incentives for blue H2 production and help decarbonize natural gas by blending it with H2 for use in the heating and power sectors. Tax incentives on green H2 production would also encourage more companies to use and improve alkaline and proton exchange membrane electrolyzers. One of the advantages of such an approach is that residential and industrial consumers in various countries could be given a choice in selecting an electric vehicle (EV) with H2‐powered fuel cells or battery‐powered EVs.
New York's Climate Leadership and Community Protection Act (CLCPA) establishes a legally binding commitment to reduce greenhouse gas (GHG) emissions 80 percent by 2050. There is also an interim goal of installing 9 gigawatts (GW) of offshore wind capacity by 2035. To date, no offshore wind projects are operating in New York; however, several market enablers have been active in pushing compliance with this offshore wind target. Key enablers include the competitive auction of federal leases for project development, the presence and interest of experienced international developers, and the market trend of decreasing costs of offshore wind. From a policy perspective, enablers include phased and deliberate policy initiatives, known procurement and contracting procedures, and coordination amongst multiple state and local entities by the New York State Research Development Authority (NYSERDA). While progress has been made, there are also competing interests and potential policy changes that might require additional coordination to meet all of the objectives of the CLCPA.
Policy discussions continue across the country over which power‐generation sources and technologies will be the “silver bullet” needed to ensure electric system reliability and meet future energy demands while also reducing carbon emissions, and mitigating the increasing impacts of climate change. Many states are setting aggressive climate‐mitigation goals, which include the rapid deployment of renewable energy generation over the next 10 to 20 years to achieve these goals. As these discussions and policy initiatives unfold, one significant issue remains—the exiting transmission and distribution (T&D) in the United States needs significant investment to accommodate increased intermittent resources. This is increasingly important to ensure grid reliability resiliency as “100‐year‐storms” occur with greater frequency. And, as transmission projects are proposed, outreach to host communities by utilities, project developers, and policymakers will be paramount to successful project completion.
