Uncategorized – Page 2 – Global Power Law & Policy

Ensuring Energy Security Section in the Inflation Reduction Act of 2022

Aug 10 2022

On 27 July, Senators Manchin and Schumer announced a deal on the successor to the Build Back Better Act, which is expected to pass in the Senate on Saturday (6 August 2022) and the House the following Friday. This new legislation, called the Inflation Reduction Act of 2022, includes US$370 billion in programs and tax credits to boost renewable energy production in the United States.

That said, page 644 of the draft includes language that ties federal solar, wind and offshore wind development to federal lease sales for oil and gas.

The Details

The section of the bill titled “Ensuring Energy Security” prohibits the Bureau of Land Management (BLM) from issuing rights-of-way (ROW) for wind or solar development on federal land unless an onshore oil and gas lease sale has occurred within 120 days before the wind or solar lease issuance. In addition, these wind and solar ROWs would not be allowed unless, in the previous year, BLM completed onshore oil and gas lease sales covering 2,000,000 acres or 50% of the acreage in which interested parties have expressed interest, whichever is lower. (Note: Wind and solar projects that impact federal land are authorized by ROWs.)

Offshore wind (OSW) is similarly impacted by this provision, as it prohibits the Bureau of Ocean Energy Management (BOEM) from issuing an OSW lease unless an oil and gas offshore lease sale of at least 60 million acres is held during the year before the OSW lease issuance.

The Impact

This section of the agreement is intended to force the Biden Administration to restart the regularly scheduled oil and gas lease sales that it has been cancelling since 2021, while at the same time allowing the Biden Administration to conduct fewer annual oil and gas lease sales than currently required.

The Mineral Leasing Act requires four onshore oil and gas leases per year; the language in this bill requires three onshore oil and gas leases per year, as a prerequisite to solar and wind development on federal land. BOEM offshore oil and gas five-year leasing programs require two offshore oil and gas lease sales in most years; this bill requires one sale per year, in order to allow solar and wind development on federal land.

Furthermore, the acreage requirements for oil and gas sales outlined in the bill are in line with previous sales. And for the onshore oil and gas lease sales, just in case BLM falls shore of the 2,000,000 acre requirement, they can sell leases for 50% of the acreage that parties are interested in.

The Compromise

This Inflation Reduction Act of 2022 is a compromise forged by Senate Democrats with the slimmest of majorities. The Ensuring Energy Security section is Energy and Natural Resources Committee Chair Joe Manchin’s way of requiring an all of the above energy policy for the country.

Declaration Of Emergency And Authorization For Temporary Extensions Of Time And Duty-Free Importation Of Solar Cells And Modules From SE Asia

Jun 08 2022

By Stacy J. Ettinger

On June 6, 2022, President Biden issued a declaration of emergency and authorization for temporary extensions of time and duty-free importation of solar cells and modules from SE Asia under 19 USC 1318(a). The basis for the declaration of emergency is the need to ensure electric resource adequacy and address the unavailability of solar cells and modules that is jeopardizing new, planned solar installations.

In short, there is an emergency because the US is unable to import solar modules in sufficient quantities to ensure solar capacity additions necessary to achieve US climate and clean energy goals, ensure electricity grid resource adequacy, and help combat rising energy price.

Statutory authority. The statutory authority cited in the declaration (19 USC 1318(a)) is a catch-all provision that allows the president to authorize CBP to permit duty free entry of certain items if the president declares the existence of an emergency.

Specifically, the statute provides for “the importation free of duty of food, clothing, and medical, surgical, and other supplies for use in emergency relief work.” Expect arguments from stakeholders that solar products don’t fit within the list, but this law is about as good as gets if you want to find a way to stop the application of antidumping and/or countervailing duties (“ADCVDs”).

Here’s how this is going to work—

New Commerce regulation. Commerce likely will publish an interim final regulation – before the date of the preliminary determination in the solar circumvention proceedings – that will allow Commerce to instruct CBP to not collect duties on cells/modules from the four SE Asian countries for a period of 24 months (starting from the date of the proclamation). The new regulation will not apply to the current ADCVDs on imports of Chinese or Taiwanese solar cells/modules.

Current regulations (19 CFR Part 358) set forth the procedures for importation of supplies for use in emergency relief work free of ADCVDs, as authorized under 19 USC 1318(a). These regulations were published in 2006 (71 FR 63230 (October 30, 2006)).

Commerce will continue with the circumvention inquiries. Commerce officials put out a press release on June 6 clarifying that the agency will continue the ongoing circumvention inquiries. The release states that “whatever conclusion Commerce reaches when the [circumvention] investigation concludes will apply once this short-term emergency period [24 months] is over. In accordance with the President’s declaration, no solar cells or modules imported from Cambodia, Malaysia, Thailand, and Vietnam will be subject to new antidumping or countervailing duties during the period of the emergency. Existing duties on Chinese and Taiwanese imports of solar cells and modules remain in effect.”

Commerce could still go negative at the prelim or final. Commerce is proceeding with the circumvention inquiries related to imports of cells/modules from the four SE Asian countries. Commerce’s preliminary determination is due no later than August 29, 2022; Commerce’s final determination is due by January 26, 2023. Commerce could still issue a negative determination at the prelim or final stage of the circumvention inquiries.

What happens if Commerce goes affirmative? If Commerce goes affirmative, per its regulations it must direct CBP to suspend liquidation and require a cash deposit of estimated duties. Pursuant to the emergency declaration and new regulation, Commerce would have the authority to not follow its regulations. In other words, Commerce would instruct CBP to not suspend liquidation or collect cash deposits for imports of solar cells/modules from the four SE Asian countries.

What could go wrong with this plan? Possible risk is that an interested party to the circumvention inquiries (such as the domestic manufacturer that requested the inquiries) will sue on the new regulation and/or Commerce’s application of the current regulation (19 CFR Part 358), arguing duty free treatment of solar cells/modules is beyond the scope of products covered under the statute (19 USC 1318(a)). The litigation could take at least a couple years to play out.

If the plaintiff were to prevail (and assuming an affirmative final regarding circumvention), suspension of liquidation and estimated duty payments would kick in. It is unclear whether suspension/duty payments would be retroactive (ie, to date of affirmative preliminary determination) or prospective (eg, from the effective date of the final court decision). The latter seems more likely.

The bottom line. Implementation of the Declaration should provide a two year window during which developers and other solar system providers should be able to import panels from Cambodia, Malaysia, Thailand and Vietnam without the risk of retroactive tariffs.

Relevant documents

Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia | The White House

FACT SHEET: President Biden Takes Bold Executive Action to Spur Domestic Clean Energy Manufacturing | The White House

President Biden Invokes Defense Production Act to Accelerate Domestic Manufacturing of Clean Energy | Department of Energy

Department of Commerce Statement on President Biden’s Proclamation on Solar Cells and Modules | U.S. Department of Commerce

MCE Clean Energy: Green Hydrogen Expert Roundup

Mar 22 2022

MCE Clean Energy asks green hydrogen experts, including K&L Gates Partner Elizabeth Crouse, the following question: “Do you foresee green hydrogen playing a key role in grid stability in the transition to 24/7 100% renewable electricity?“

Read Elizabeth’s insight and more at MCE’s website.

To learn more about our Hydrogen practice, please CLICK HERE.

Energy Storage Handbook 2022

Jan 27 2022

By: Buck B. Endemann, Matthew P. Clark, Elizabeth C. Crouse, Kimberly B. Frank, Elias B. Hinckley, William H. Holmes, Nathan C. Howe, Jennifer L. Mersing, Michael L. O’Neill, Charles H. Purcell, Shab Puri, Natalie J. Reid, John C. Rothermich, Jonathan G. Shallow, Ruta K. Skucas, Elizabeth Thomas, Maeve C. Tibbetts

The K&L Gates Power practice is pleased to present the latest edition of the Energy Storage Handbook.

This handbook is an annually updated primer on what energy storage is, how it is regulated by U.S. federal and state governments, and what sorts of issues are encountered when such projects are financed and developed.

We will continue to update this handbook periodically as additional states and stakeholders continue to address the implementation of energy storage resources in the marketplace.

We hope you find it useful and welcome your feedback.

NEW IN 2022

Reorganized FERC and ISO/RTO sections
Battery Reuse and Recycling
Avoiding disputes in battery supply agreements

To view the latest edition of the Energy Storage Handbook, please click here.

Commerce Extends Initiation Deadline in Solar Circumvention Inquiries & USTR to Start Targeted China 301 Tariff Exclusion Process

Oct 12 2021

By: Stacy J. Ettinger

COMMERCE EXTENDS INITIATION DEADLINE IN SOLAR CIRCUMVENTION INQUIRIES – NEW DEADLINE LATE NOV

On September 29, 2021, Commerce determined to delay a decision on initiation in the solar circumvention inquiries. Commerce instead asked the US solar manufacturers – A-SMACC (the so-called American Solar Manufacturers Against Chinese Circumvention) – for additional information. In particular, Commerce requested additional information related to why the A-SMACC companies have requested anonymity in the circumvention proceeding. Commerce also requested information regarding the A-SMACC companies’ ties to business interests in China or Southeast Asian countries.

Oregon Passes Law to Explore Opportunities for Renewable Hydrogen Development

May 25 2021

By: Gabrielle E. Thompson and William H. Holmes

On 19 May 2021, Governor Kate Brown signed Senate Bill 333 into law, which directs the Oregon Department of Energy to study the potential for development of renewable hydrogen production and use in Oregon. The results of the study are due to the Legislature by 15 September 2022.

Under the new law, the study will evaluate the benefits, as well as any barriers, to the production and use of renewable hydrogen in Oregon. The study will utilize existing data, studies, or other publicly available materials to analyze how “renewable hydrogen may support existing renewable energy and greenhouse gas reduction policies and goals in Oregon.”¹

Specifically, the study will identify the total hydrogen volume currently used each year in Oregon by various industries and the potential applications of renewable hydrogen in Oregon by 2030 by sectors such as transportation, industry, electricity generation, and energy storage. The study will also include an assessment of the potential for using renewable hydrogen in conjunction with other renewable electricity generation to increase resiliency or to provide flexible loads.

Additionally, the study will look at the forecasted costs of renewable hydrogen and how those costs may affect its adoption in Oregon. Finally, the study will consider and identify any technological, policy, commercial, or economic barriers to the adoption of renewable hydrogen in Oregon.

The study represents an important first step in determining the opportunities for developing renewable hydrogen production and development in Oregon, which has adopted a Renewable Portfolio Standard that requires 50 percent of the electricity Oregonians use come from renewable sources by 2040. Renewable hydrogen is another potential source that could be used to meet those renewable energy requirements.

The bill, which was sponsored in the Senate by Senator Lee Beyer (D – Springfield), received a unanimous vote in favor by the House Energy and Environment Committee and received bipartisan support from Representative Helm (D – Washington County) and Representative Brock-Smith (R – Port Orford), who carried the bill to the House floor where it passed unanimously.

The bill was drafted by Renewable Hydrogen Alliance (RHA), a trade association based in Portland, Oregon, with more than 70 members in the United States and worldwide dedicated to the mission of using renewable electricity to create clean fuels.

¹Senate Bill (SB) 333 Enrolled (2021).

We Have ESG Down to the Letter

May 13 2021

Our integrated environmental, social, and corporate governance (ESG) approach is designed to help our clients navigate ever-evolving standards and add value to their companies. We’ve structured our broad scope of ESG services within coordinated and collaborative areas of focus, including corporate governance, investing, energy, and agriculture. These global teams span regions and industries to address an array of issues, from legislative, regulatory, and policy matters, to fund launches and environmentally responsible corporate initiatives.

We can evaluate and advise your business from E to S to G.

For more on our ESG practice, please click here.

The Service’s CO-Balancing Act: Final Carbon Capture Credit Regulations Target Broad Taxpayer Implementation and Administrability

Jan 08 2021

By: Elizabeth C. Crouse, Aaron C. Meyer, and Mary Burke Baker

Amid the headline-grabbing events of 6 January 2021, the U.S. Department of Treasury released final regulations under Code Section 45Q. Code Section 45Q provides for a U.S. federal income tax credit at varying rates to taxpayers that participate in various aspects of the process of sequestering carbon oxide and disposing of it in secure geologic storage, use it as a tertiary injectant in a qualified enhanced oil or natural gas recovery project, or utilize it in certain processes.

READ FULL ALERT

Join Us for a Webinar: The Promise of Fusion Energy May Be Closer Than You Think

Sep 24 2020

Join us on 1 October 2020 for a webinar on fusion energy.

For nearly 100 years, scientists and engineers, as well as science fiction authors and fans, have dreamt of harnessing fusion reactions to power our economy. Despite daunting technical challenges, fusion energy may become a technically viable and economic energy source in the coming years, as an attractive carbon-free baseload alternative to conventional energy sources.

As the energy sector progresses towards commercial fusion, governmental regulators around the world are considering how they should treat fusion facilities. Two of the most active jurisdictions for commercial fusion development are the United States and the United Kingdom. Along with Fire Energy and Prospect Law, members of our K&L Gates fusion energy team will provide an update on the regulatory approaches to fusion that the US and UK are taking, the prospects for differentiating regulations for future fusion facilities from those applicable to existing fission-powered nuclear plants, next steps in developing regulatory certainty for the emerging fusion power sectors in these nations, and include a section on risk and the management of risk through insurance.

For more information and to register, please click here.

FERC Issues Landmark Order No. 2222 To Facilitate the Participation of Distributed Energy Resources in Wholesale Markets

Sep 23 2020

Authors: Buck Endemann, Kimberly Frank, Elias Hinckley, and Patrick Metz

In a landmark order issued on September 17, 2020, the Federal Energy Regulatory Commission (FERC) adopted rules aimed at removing barriers to the participation of distributed energy resources (DERs) in the organized markets for electric energy, capacity, and ancillary services operated by Regional Transmission Organizations and Independent System Operators (RTOs). Order No. 2222 builds on reforms previously undertaken by FERC and, once fully implemented, should be a major step toward opening up RTO markets to competition, facilitating new entry of resources, and fostering business model innovation.

Order No. 2222 envisions “aggregations,” which are groups of small DERs participating in the RTO markets as a single resource represented by their aggregators. According to FERC, these aggregations will permit DERs to provide a variety of products and services that will compete with more conventional resources in the RTO markets. FERC expects that this will, in turn, ensure that rates remain just and reasonable.

Catagory:Uncategorized

NEW IN 2022