Salem Gas Plant Settlement: True Success Will Lie in Setting Required Emission Limits for Future Projects

Feb 24, 2014 by  | Bio |  2 Comment »

By unanimous vote, the Massachusetts Energy Facilities Siting Board has adopted a groundbreaking settlement agreement between Footprint Power and CLF regarding the New Jersey–based developer’s proposed natural-gas-fired power plant in Salem. That agreement requires an approximately 80% reduction in allowable greenhouse gas (GHG) emissions from the proposed natural gas-fired power plant by 2050, and the plant’s mandatory retirement by January 1, 2050. The agreement will be incorporated into the Siting Board’s final order and rendered enforceable.

The key to the agreement’s success in moving the needle toward the required sector-wide reduction in greenhouse gas emissions, however, is not the legal proceedings that led to the agreement, or even its first-of-its-kind terms defining the size and endpoint of the natural gas “bridge.” The broader success of the agreement rests on what happens in the future relating to Footprint, any new gas infrastructure, and Massachusetts’ Global Warming Solutions Act (GWSA).

Footprint and CLF are in agreement that, in order to meet the GWSA’s deep reduction requirements, the Siting Board and Commonwealth must faithfully apply the GWSA to future proposals for natural gas infrastructure. Ultimately, if the Siting Board approves proposals by future applicants with less stringent greenhouse gas limits than provided for in this landmark agreement, then that would potentially modify and weaken the agreement – unless CLF again successfully steps into the void created by the Commonwealth’s failure to fully implement the GWSA. And, even if a future power-plant project is permitted with conditions as stringent as those agreed between CLF and Footprint, the Commonwealth’s ability to meet the GWSA’s reduction targets could still be undermined if, for example, that new plant displaces low- or zero-emissions power sources – a challenge that will only increase as the region’s aging nuclear power fleet continues to edge toward retirement.

All developers of new power plants undertake “market simulation modeling.” The models seek to predict the commercial position of the proposed facility within the market in the future. The models project, on an annual basis, a facility’s energy production, fuel combusted, and capacity factor for at least 30 years, in effect predicting what the proposed facility’s GHG emissions will be in each year throughout its useful life. If the model predicts that a unit will remain a baseload facility through the 2030–2050 timeframe – meaning that it would continue to emit GHGs at or near the maximum allowable levels – then we know the applicant has a problem demonstrating conformity with the GWSA (and we have a problem because those levels of GHG emissions are far too high to meet the climate imperative).

And this is the critical point: unless and until the Siting Board establishes protocols that require applicants to provide this data from their modeling, and unless and until the Commonwealth adopts the declining annual emission limits for the power sector required under the GWSA, then these commercial models relied upon by applicants and their financiers will not internalize the GWSA limits and the costs associated with GHG emissions.

The bottom line is that in the absence of adopting limits for the power sector required by the GWSA to meet its emission reduction mandate, that mandate cannot be achieved. Simply put: without enforceable GHG reduction requirements, the commercial realities of the energy sector are not aligned with the climate change imperative to safeguard public welfare. No matter how hard CLF, our allies, and even power developers like Footprint may want to provide the means to achieve the required GHG reductions, they will not be met unless and until the state of Massachusetts acts to fully internalize the GHG emission limits into the market and the market is refined to reflect those limits and the actions necessary to get there.

At the regional level, the New England Governors have asked ISO-New England (the region’s electricity grid operator) to develop a construct for funding new natural gas pipelines and supplies to be paid for by electricity consumers – in other words, using public money. CLF’s settlement agreement with Footprint Power contains conditions and provides for actions to ensure that their gas fired–electric facility contributes to decarbonization and to the transformation of our energy system to one made up renewable resources, not carbon-based ones. CLF will now seek to ensure that the same sorts of conditions and actions accompany any proposals to expand pipelines and gas supplies into the region. Once again the question is framed: will the region’s policymakers ensure an energy market design that helps provide climate change solutions through new natural gas infrastructure, or will the clean energy and climate mandates they have worked so hard to create become empty laws – unimplemented and unenforced?

2 Responses to “Salem Gas Plant Settlement: True Success Will Lie in Setting Required Emission Limits for Future Projects”

  1. Linda Haley

    CLF- Great goals & commitment. A question: What is meant in the last paragraph by “an energy market design that helps provide climate change solutions through new natural gas infrastructure?”

  2. Jeff Brooks

    The CLF has mentioned in its “ground-breaking settlement agreement that the Massachusetts Executive Office of Energy and Environmental Affairs
    has made certain commitments to CLF related to continuing its efforts to achieve the GWSA. As mentioned by your organization these commitments were to be outlined in a “commitment Letter”. Has the Massachusetts Executive Office of Energy and Environmental Affairs produced such a letter prior to the settlement? When and if this letter is produced, will it be made available for public access and viewing?

    objectives, as embodied in a “Commitment Letter” enumerating future actions by Massachusetts.

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