LPDD January Newsletter

The LPDD team is encouraged by the results of the recent Georgia runoff elections, and what they mean for the prospects of climate legislation nationally, as well as for cabinet and judicial appointments under the Biden Administration. We also acknowledge that strong federal support for climate action often raises the ambition level of states and localities. At this momentous time, we renew our call to lawyers and law firms to participate in the LPDD project, crafting the type of strong model legislation that every level of government in the United States will be calling for in the years ahead. Contact us to get involved here. 

New Model Laws from the LPDD Team

Since the last newsletter update, the LPDD team has published three new model laws. They are listed below:

• Model State Statute Providing Rebates for Hydrogen Fuel Cell Vehicles and Hydrogen Refueling Stations: This model statute would offer state rebates for the purchase of new hydrogen fuel cell vehicles, which would be available for a ten year period.  In addition, the model statute would provide state support for the development of a network of equitably located hydrogen refueling stations, with preference given to locations along heavily traveled corridors. The statute does not specify the amount of either the vehicle rebate or the network development subsidy, since the legislature of the enacting state is best suited to fix those amounts in light of the state’s particular fiscal circumstances and sources of available funding. Under the model statute, the state would fund the vehicle rebates and network development subsidies each year for ten years, devoting 4% of the state’s gasoline excise tax, generally known as the Motor Fuels Tax, or its alternative fuels tax, to doing so.
• Model Local Resolution Supporting a Circular Economy: This model resolution is intended to assist local governments in initiating deliberate steps along the path towards a circular economy.  Most cities and towns already engage in one or more practices that are considered circular – actions such as composting yard waste, recovering electronic waste products, banning or imposing fees on single use plastic bags, considering product lifespan in procurement decisions, and so on.  This model resolution sets out a general commitment to a transition to a circular economy, designates a lead department or official, calls for an initial assessment of resource and waste in-flow and out-flow and for a more comprehensive emissions analysis, encourages support for and exploration of business and job creation opportunities, and provides for a report on initial activities and consideration of follow up steps and new policies after the resolution has been in place for one year. It is accompanied by a memorandum that explains potential local actions in support of a circular economy in more detail.
• Model Federal Arctic Shipping Tax Act. As thinning polar sea ice opens new Arctic shipping routes, voyages through Arctic waters will emit GHGs and other pollutants directly into the Arctic environment and disturb the sea-ice cover, reducing the albedo effect and thus perpetuating and accelerating dangerous cycles of global warming through positive feedback loops. This proposed Arctic Shipping Tax Act would impose a tax on the greenhouse gas content of fossil fuels used by commercial shipping vessels engaged in international shipping in Arctic Circle waters in the thirty days prior to calling at a United States port. The amount of the tax is calculated as the greenhouse gas content of the covered fuel used multiplied by the carbon tax rate, rising from $10 to $30 over a ten year period. The Bill also sets out provisions relating to enforcement, including recordkeeping and penalties.

Highlighted New External Resources

HFC Cuts in COVID Relief Bill: In the recent COVID relief bill, Congress included specific measures for the reduction of hydrofluorocarbon emission. The bill effectively requires American companies to comply with the 2016 Kigali Amendment to the Montreal Protocol, and reduce production and consumption of hydrofluorocarbons (HFCs) to about 15% of 2012 levels by 2036.

Hawaii’s Finalized Performance-Based Ratemaking Framework: Culminating a process that began in 2018 with Senate Bill 2939, this past month Hawaii concluded a process instituting Performance-Based Ratemaking (PBR) with its utilities. On December 23, 2020, the Commission issued Decision and Order No. 37507 establishing a PBR Framework to reform Hawaiian Electric’s business model to the transition away from traditional cost-of-service regulation, under which rates are driven by system costs, towards a system that rewards the utility for exemplary performance. Financial rewards for exemplary performance in key areas will drive improvements in the integration of renewable energy into the utility’s system, increase customer choice, and accelerate the achievement of the State’s clean energy goals. An expedited pilot process will support the development of innovative new projects and service offerings, while encouraging collaboration between Hawaiian Electric and local businesses. This Order makes Hawaii one of the first states in the country to transition away from traditional ratemaking models, and to incentivize utilities to lead the energy transition instead.

Pathway Highlight: Equitable Access to Community Renewables. As states, utilities, and public service commissions have pushed forward community solar programs and other shared renewables models, many jurisdictions over the last several years have seen an opportunity to advance community energy into the low-and moderate-income (LMI) market. In this pathway, we highlight growing efforts to achieve social equity goals while advancing local clean energy by subscribing LMI customers a tranche or the entirety of community energy projects, in effect reducing customer solicitation costs for projects, sharing that and other savings with LMI customers, and giving projects a long-term stable subscriber base.