The Biden-Harris administration and the Democratic majority in Congress have an important backer in their quest to achieve an ambitious climate agenda: corporate America and its increasing hunger for carbon-free energy.
On Monday, a notable subset of the largest U.S. corporations signed on to a statement from the Renewable Energy Buyers Association (REBA), laying out the top federal policy priorities that will help them meet their own aggressive decarbonization goals.
Among the 36 signatories are tech giants Amazon, Facebook, Google and Microsoft, manufacturing heavyweights including Cargill, Clorox and General Motors, and global retail and consumer brands like Disney, Johnson & Johnson, McDonald’s, Target and Walmart.
Many of these companies have already pledged to zero out their carbon footprints in the next decade or two, whether internally or across their supply chains. They’ve also been procuring and bankrolling clean energy at gigawatt scale, becoming a primary driver of U.S. renewable energy growth.
But hitting the decarbonization targets needed to forestall the worst impacts of climate change will require even faster and deeper cuts in power-sector carbon emissions. President Joe Biden has laid out a long list of efforts on this front, including a raft of executive actions and a promised $2 trillion energy and climate plan aimed at cutting U.S. electricity sector emissions to zero by 2035.
“Our members have ideas about what policy and regulatory changes should be made to leverage their buying power to get there as quickly as possible,” REBA CEO Miranda Ballentine said in an interview.
Expanding and enhancing wholesale energy markets
The first priority is to improve the workings of the country’s wholesale energy market and expand similar markets to the rest of the country, she said.
Regional transmission organizations (RTOs) and independent system operators (ISOs) have improved the efficiency and lowered the cost of generating and transmitting electricity to the roughly two-thirds of the U.S. population they serve.
But under the Trump administration, the Republican majority at the Federal Energy Regulatory Commission (FERC) made decisions that are expected to weaken the competitiveness of state-subsidized wind, solar and nuclear power in the capacity markets of mid-Atlantic-to-Illinois grid operator PJM, New York grid operator NYISO and ISO New England.
“We agree that’s got to be fixed before you can talk about expanding markets,” REBA Policy Director Bryn Baker said. It’s likely that FERC, now led by Democrat Richard Glick, will focus on that “right out of the gate.”
FERC can also take steps to modify the thicket of regulations that govern transmission development in and between ISOs and RTOs to unblock bottlenecks that have constrained new transmission build-out and imposed high costs on clean energy interconnection, she said.
Beyond that, “there’s certainly a view that FERC has the authority today to do a lot to reform and expand organized markets” in the U.S. West and Southeast where they don’t exist today, she said.
The U.S. West has expanded real-time energy trading between utilities, and Southeast utilities are proposing a similar plan to FERC this year. But broader market integration that encompasses day-ahead energy trading, aligns transmission planning and shares capacity across regions will require a complicated and lengthy process of enlisting utilities, state lawmakers and regulators to agree on the form these new entities will take.
FERC can convene initial efforts, supply technical assistance to stakeholders and take other steps on this path, she said. But “a big part of this is about Congress directing and enabling FERC to [undertake more significant] action on expanding markets.” This could include amending the Federal Power Act, which gives FERC its foundational authority over interstate electricity transmission.
Biden’s proposed clean energy standard — the policy vehicle for reaching zero-carbon emissions by 2035 — could also lay the groundwork for expanding wholesale energy markets, she noted. Between California’s integrated market and the Plains states that are part of the Southwest Power Pool, six states have set 100 percent clean energy goals, and “the modeling has already shown that achieving them at least cost requires an organized market.”
REBA is also working with members to expand their role as stakeholders in how markets are structures, said Ballentine, who previously led sustainability efforts at both Walmart and the U.S. Air Force under the Obama administration.
“It starts with having customers part of the operations and governance of the RTO, rather than having a limited nonvoting role as customers do in many of these markets,” she said. That’s already starting to happen, as Google’s membership status in grid operators MISO and SPP indicates.
Harmonizing clean-energy procurement and standards
The second priority is to “harmonize and update” the largely state-by-state policy patchwork that governs clean energy procurement and sets values on the decarbonization potential of different technologies and investments, Ballentine said. That’s a broader mandate, but it can be boiled down to a few more concrete steps.
First, “the federal government, as the largest procurer in the nation, could set priorities by buying clean energy itself,” she said. A mandate to direct federal agencies to set clean energy procurement targets is already on the Biden-Harris administration’s policy agenda, with an executive order on the matter expected as early as this week, according to Ballentine.
But these policies must look beyond renewable energy targets to include the technologies that will allow wind and solar to be integrated into the grid, she said. “How do we store that wind and solar in hydrogen, or batteries, or another format? There aren’t procurement incentives today” that include those technologies.
Ballentine pointed to the Obama administration’s 2015 executive order on federal agency sustainability as a model for how the Biden-Harris administration could change that. That executive order “goes beyond renewable energy mandates to look at clean energy and carbon generally,” and set the groundwork for policies such as integrating energy storage in federal buildings — before it was undone by the Trump administration.
Federal standards on this front could help set standards that “could support the private-sector transformation as well,” she said. That’s important, because “companies are starting to achieve procuring 100 percent renewable energy on an annual net basis,” but they need additional policy levers to go beyond that.
That could help undergird existing corporate efforts like Apple’s pledge to zero out the carbon footprint of its supply chain and products by 2030, and Google’s promise to power its data centers with round-the-clock clean energy.
This could also lay the groundwork for solving “a whole bunch of data challenges that prevent energy customers from being holistic” about how they measure the value of their decarbonization investments, Ballentine said. That could range from renewed work on setting a federal “social cost of carbon” to mandating the open sharing of emissions data from power plants across the country.
REBA’s Baker noted that among the clean energy benefits contained in the omnibus federal spending and coronavirus relief bill passed in December is a mandate directing the U.S. Energy Information Administration to “be at the helm of collecting all the data” that connects the carbon emissions of the power plants providing grid electricity with the loads that consume it.
Today, this kind of information is being collected and connected by private-sector work from groups such as Rocky Mountain Institute subsidiary WattTime and Google partner Tomorrow, but “they’re workarounds for the fact that you can’t get the real-time data from utilities,” she said.
Getting from energy R&D to commercialization
The third priority centers on moving federal clean energy research and development to commercial application. The Energy Department’s national labs in particular have been major hubs of research, and budgets for this work have escaped largely unscathed from the Trump administration’s attempts to slash federal support for clean energy, Ballentine said.
December’s spending and relief bill does contain billions of dollars for these types of commercialization efforts, from core energy technologies to applications in manufacturing and construction.
But proving the cost-effective applications of these technologies will require more testing in real-world environments, she said. “For large energy customers, the biggest barriers they face today are their own internal barriers — how do I convince my CFO?” she said.