April 2024 Energy Regulation Round Up

The “Global Energy Regulation Roundup” is dedicated to capturing and understanding emerging climate, energy, and reporting measures. Currently, international governments are increasingly establishing stricter policies on emissions reporting, trade, and energy. The purpose of this monthly blog is to highlight approaching regulations and educate key stakeholders about their effects on a range of industries.

The United States

It has taken California regulators, utilities, and clean energy advocates roughly four years to work out conflicting ideas to solve the pressing issue of inputting massive amounts of intermittent clean energy sources onto the state's grid. 

The commission approved new interconnection rules that will ease the concerns of utility operators about adding solar and solar plus battery systems onto the grid. These new rules will allow distributed energy resources to be designed in a fashion that aligns with the dynamic needs of a grid. Approved by the CPUC, the “Limited Generation Profile Option” is a complex set of regulations that determine how solar and solar battery systems interact with lower voltage grids operated by California CPUC-regulated utilities. The traditional thought process utilities use to consider the impacts of a power project usually looks at the peak output at the time of least electricity demand from customers. This strategy is how much of all U.S utilities calculate the risk of new generation connecting to the grid. 

The CPUCs new policy takes a different approach and will allow solar and battery projects to modulate how much power they can send to the grid with the assistance of solar inverters, which can reduce power output. Limited Generation Profile projects would be able to use these capabilities to alter their grid injections during different periods of the day, based on a set of schedules they can choose from.

The Environmental Protection Agency announced four rules that target reducing pollution from fossil-fueled power plants including coal and natural gas. In addition to limiting carbon pollution, the rules further restrict mercury releases, coal ash, and the use of water to wash away contaminants. 

To target coal plants, the rule is a multi-tier and broken down into three categories. Any plant that will cease operations before 2032 will get an exemption. Those that will shut prior to 2039 will have to meet less stringent requirements, equivalent to replacing 40 percent of their fuel with natural gas. Anything operating past 2039 will have to eliminate 90 percent of its carbon emissions.

Natural gas plants will face similar tiers of stringency, but this time based on how often they're in use. Plants that operate at less than 20 percent of their capacity, such as those that simply fill in during periods of low renewable energy production, can meet regulations simply by adopting low-emissions fuel. Those that run between 20 and 40 percent of the time have to meet operational efficiency standards, while anything that's operational over 40 percent of the time will have to eliminate 90 percent of its emissions.

Additionally, there were rules strengthening the restrictions on the release of mercury and the use of water in coal operations. 

The European Union

The Corporate Sustainability Due Diligence Directive (CSDDD) moved one step closer to being signed into law after the EU Parliament approved the legislation on April 24th. Following last month's approval in the EU Council, the CSDDD has cleared another legislative hurdle. The CSDDD will now move to the Committee of the Permanent Representatives of the Governments of the Member States to the European Union, known as COREPER, for a vote on May 15. Then a final vote will be held by the Competitiveness Council, known as COMPET, for a vote on May 23. Once adopted by the EU, the member states will have two years to integrate the directive at the national level.

Additionally, the EU Parliament gave consent for the EU to exit the Energy Charter Treaty, an international agreement that protects energy investments. The 1998 Energy Charter Treaty allows energy companies to sue governments over policies that damage their investments. The European Union wants to leave the treaty as it feels that it creates an obstacle to fighting climate change and the energy transition. The final decision to exit the treaty is expected to come in May, if successful this would halve the treaty's current 50 signatories. 

Asia

After 18 years, China's top legislature has finally been given the proposed energy law which provides the framework to secure supplies and shift to low-carbon power. The national legislature will now be reviewing the energy law to govern security, innovation, and corporate behavior. The legislation is a sweeping law that covers aspects of the industry from planning, distribution, conservation, rural development, and pricing. Yan Heqing, the Legislative Affairs Commission said that the energy law is meant to improve energy planning, development, and emergency response, and encourage innovation in energy technology. The law was originally drafted in 2006 and it has been one of the longest journeys for any piece of Chinese legislation. China leads the global economy in emissions but also the development and build-out of renewables such as solar and wind. This law will hopefully continue to drive China's decarbonization journey and maintain its aggressive stance.