Climate & Energy Roundup

Environment + Government + International + Litigation + Public
April 14, 2013
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In its 2013 session, Kansas saw the proposal of H.B. 2366, “an act concerning the use of public funds to promote or implement sustainable development.” The leaning is disguised by that summary, though. Here’s the key language telling us what would, and as tellingly, it seems, what would not be covered:

§1(a) No public funds may be used, either directly or indirectly, to promote, support, mandate, require, order, incentivize, advocate, plan for, participate in or implement sustainable development.


§1(c)(2) “[S]ustainable development” means a mode of human development in which resource use aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come, but not to include the idea, principle or practice of conservation or conservationism.


§1(b)(2) Nothing in this section shall be construed to prohibit the use of public funds outside the context of sustainable development to support, promote, advocate for, plan for, enforce, use, teach, participate in or implement the ideas, principles or practices of planning, conservation, conservationism, fiscal responsibility, free market capitalism, limited government, federalism, national and state sovereignty, individual freedom and liberty, individual responsibility or the protection of personal property rights.

The definition of sustainability is nearly lifted from United Nations General Assembly 42nd Session Resolution No. 187 (Report of the World Commission on Environment and Development), which reads in pertinent part:

[S]ustainable development … implies meeting the needs of the present without compromising the ability of future generations to meet their own needs.

The obvious curiosity is the protection of conservation alongside the outlawing of public funding for sustainability. Of course, the bill is unlikely to gain traction, but it’s noteworthy no less.

Ecuador and Greenland, among others, are negotiating the challenges of foreign investment in the extraction of their natural resources. In June 2012 the Inter-American Court of Human Rights found in Pueblo Indígena Kichwa de Sarayaku v. Ecuador that the State of Ecuador failed to timely consult the indigenous Sarayaku on concessions for oil exploration granted to an Argentinian company, Compañía General de Combustibles (CGC), despite the fact that Ecuador had previously recognized the Sarayaku’s ancestral title.

The court found that the state’s consultation duty is a general principle of international law, is non-delegable, and precedes the requirement to obtain free, prior and informed consent from indigenous groups—according to their customs and traditions—before proceeding with development and large-scale investment that would significantly impact their territory. A central issue contended in the case was when the duty to consult first arose in Ecuador, i.e. whether that was in 1996 when the state signed its contract with CGC or c. 1998 when it ratified International Labor Organization Convention No. 169 and constitutionally recognized the right to consultation. The former position was premised more on custom while the latter was premised more on codification, namely the Vienna Convention on the Law of Treaties.

A more granular analysis was posted by the ASIL. It’s been reported that China is now courting land, and the Confederation of Indigenous Nationalities of the Ecuadorian Amazon (CONFENIAE), along with a host of groups that includes the Sarayaku, have issued an open letter expressing disapproval with continued processes.

In Greenland, the government led by Prime Minister Kuupik Kleist fell to the Siumut party, led by Aleqa Hammond. Greenland’s tiny population (appx. 57,000, mostly spread out along the southwestern shore) had feared that its interests were being subordinated to foreign investment from multinational corporations and state parties seeking natural resources in the Arctic (e.g. China).

More than 80% of Greenland is covered by an ice sheet. It is the least densely populated nation on Earth, and it is home to the Northeast Greenland National Park, the world’s largest national park. The thawing of sea ice has opened desirable patches for offshore drilling and onshore mining for ore and minerals highly demanded by the consumer electronics industry. The thawing arctic is also giving Chinese shipping companies hope that a new route for commercial container traffic will soon be passable.

Ms. Hammond’s government developed a coalition agreement—dated March 26, 2013 and focusing on a return to cultural values—that states Greenland will be “reluctant” to award new mining and exploring licenses, though current permits will stand.

Further on sea ice, NOAA released a paper in February 2013 warning that previous models predicting an ice free summer by 2070 should be revised to reflect a “very likely timing for future sea ice loss to [occur in] the first half of the 21st century, with a possibility of major loss within a decade or two.” Also check out a video on the Arctic ice thaw narrated by Ken Dunton, professor at the UT Marine Science Institute, here.

Now on the other side of things. Portugal reported that 70% of its energy consumption was fueled by renewables, and that it had significant year-over-year gains in hydroelectric and wind production. Denmark recently brought its connected offshore wind to 1 gigawatt and continues to be a leader in that domain. It receives 25% of its electricity from wind and hopes to increase that to 50% by 2020.

On the domestic front, the Block island Deepwater Wind project is still vying to be the first of its kind in U.S. waters. Not surprisingly, it’s controversial, as a news query might reveal. Read a Slate piece here, or some back-and-forth between the Deepwater Wind CEO and a town councilman here.

The Edison Electric Institute (EEI) released a report in January warning the utilities industry about “disruptive challenges.” Through a thin haze of jargon comes a message relatively clear: this will blindside us. Parse it, though.

The regulatory paradigm that has supported recovery of utility investment has been in place since the electric utility industry reached a mature state in the first half of the 20th century. Until there is a significant, clear, and present threat to this recovery paradigm, it is likely that the financial markets will not focus on these disruptive challenges, despite the fact that electric utility capital investment is recovered over a period of 30 or more years (i.e., which exposes the industry to stranded cost risks). However, with the current level of lost load nationwide from DER being less than 1 percent, investors are not taking notice of this phenomenon, despite the fact that the pace of change is increasing and will likely increase further as costs of disruptive technologies benefit further from scale efficiencies.

Distributed energy resources are energy systems located in or near where the energy is consumed, like solar panels on a residential home. EEI is the industry association for shareholder-owned electric power utilities. In the report, EEI likened electric utilities to the airlines and telecommunications companies that failed after deregulation took hold in the 70s. It’s asking its members to think about the day when a connection to the grid is anachronistic.

Due to the variable nature of renewable DER, there is a perception that customers will always need to remain on the grid. While we would expect customers to remain on the grid until a fully viable and economic distributed non-variable resource is available, one can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent. To put this into perspective, who would have believed 10 years ago that traditional wire line telephone customers could economically “cut the cord?”

We were dealing with litigation between an electricians’ union and distributed solar systems installers two years ago (i.e. what of such projects is electrical, and what is not). There is more friction in the form of competition to come.

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