Puerto Rico's search for stability

Mar 28, 2023 View in browser   By Debra Kahn THE BIG IDEA Can Puerto Rico have it all — renewables, reliability and affordability? | Gerald Herbert/AP Photo BALANCE OF POWER — If you hear about Puerto Rico going through a third round of hurricane-induced blackouts in a few months, don't be surprised. Think back to this story by Gloria Gonzalez, which details the territory's struggles to shore up its power grid, keep electricity prices under control and transition to renewables, all at the same time. Six months after Hurricane Fiona and nearly six years after Hurricane Maria, Puerto Rico's grid is still fragile. Energy Secretary Jennifer Granholm is there this week, touring a technical college and meeting local homeowners, businesses using solar power and a community solar project. “Will the grid be totally ready for the next hurricane season? In all candor it will not,” Granholm told Gloria. “But will it be better than it was last time? Will there be a quicker response than there was last time? That’s exactly what we are all striving for, that people will not be without power for months.” Local officials are still coming under fire for their management of the system, as well as their attempts to increase reliance on natural gas as a way to avoid future outages — a strategy that clean energy advocates and community group leaders say flies in the face of the territory’s quest to shift to 100 percent renewable energy. Puerto Rico Gov. Pedro Pierluisi (D) argues that increasing natural gas use in the short term will help with the long-term transition. “In order to avoid blackouts and major interruptions, you need to have this new generation for the next couple of decades,” he said. “We need stability and flexibility while we transform.” Perhaps the one inevitability of Puerto Rico's situation is higher costs for consumers. Territory residents already pay more on average for electricity than any U.S. state except Hawaii, because of Puerto Rico's reliance on petroleum for electricity generation, according to the Energy Information Administration. The new executive director of the board overseeing the territory's finances, Robert Mujica, says he's keenly aware of the basic need for reliable and affordable power as the board tries to restructure more than $10 billion of debt and other claims owed by the Puerto Rico Electric Power Authority. Even if a judge approves the plan to cut the debt nearly in half, to $5.7 billion, higher prices will result. “The energy sector is probably the number one thing that you need to fix,” said Mujica, who previously served as former New York Gov. Andrew Cuomo's longtime budget director. “We don’t have real economic growth. We don’t have a reliable energy sector.”   GO INSIDE THE 2023 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is proud to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage, insider nuggets and unparalleled insights from the 2023 Global Conference, which will convene leaders in health, finance, politics, philanthropy and entertainment from April 30-May 3. This year’s theme, Advancing a Thriving World, will challenge and inspire attendees to lean into building an optimistic coalition capable of tackling the issues and inequities we collectively face. Don’t miss a thing — subscribe today for a front row seat.     BUILDING BLOCKS Carbon marketers are carefully watching California and Washington's courtship. | Debra Kahn/POLITICO LINK LATER — A truth universally acknowledged among climate wonks: A carbon market with a tight cap and robust demand must be in want of a trading partner. One would think that Washington state would be in the position of sought-after suitor with its inaugural carbon auction earlier this month fetching a price of $48.50 per ton — way higher than California's $27.85. Washington's so-far-successful foray into carbon trading is reviving eternal dreams of linked carbon markets. The 2009 Waxman-Markey bill and the 2015 Clean Power Plan both held out the promise of economists' dream of the most-efficient climate policy: A spreading zone of economy-wide carbon caps, where businesses could choose to lower their own emissions or pay others to do it for them. Washington politicians are open to linking, in theory. The state has a similar profile to the Canadian province of Quebec — California's steady trading partner since 2014 — with a hydro-heavy power mix, lots of forests and some hard-to-decarbonize industry. "There's no question that bigger markets are better," former state Sen. Reuven Carlyle (D), the author of Washington's 2021 bill authorizing the creation of the state's market, said on the sidelines of last week's North American Carbon World conference in Los Angeles. California carbon market participants are a little warier of commitment. They point to differences between the programs about the structure of reserve sale auctions, which are meant to temper prices as they rise, as well as a lack of rules to prohibit "resource shuffling," or swapping high-emitting power for lower-carbon resources in order to spend less on permits. "There's fundamental differences between the two regulations," said one carbon trader, who requested anonymity to discuss market dynamics. "Do those create problems?" (Another eternal truth is that the most interesting conversations at conferences happen on the sidelines.) Carlyle said he was confident any discrepancies could be resolved with state regulators. "We're on the first base in the first inning," Carlyle said. "All of these issues are fixable." CORPORATE PROMISES A FROG IN EVERY POT — Climate litigation risk is becoming material for a broader swath of companies than just the fossil fuel sector, Corbin Hiar reports for POLITICO's E&E News. Climate lawsuits began appearing last year as risk factors in SEC filings of companies such as China Eastern Airlines, JetBlue Airways Corp. and Royal Caribbean Cruise Ltd, whose businesses rely heavily on fossil fuels. Lockheed Martin — which produces combat ships, helicopters and tanks — disclosed its global warming risks for the first time this January. Legal observers pointed to the Securities and Exchange Commission's pending rule on climate risk disclosure, plus the SEC's already ramped-up oversight of disclosures. China Eastern was one of the companies the agency pressed for more information on why it didn’t consider climate litigation a major risk to its lines of business. “This is a product of companies in vulnerable industries and their lawyers reading the tea leaves,” said Emily Strauss, who teaches securities litigation and enforcement at Duke University School of Law. It's unclear to what extent the new disclosures signify greater climate litigation risk for the individual companies. But they're becoming "part of the zeitgeist," said Emory Law professor George Georgiev. “You don’t want to be the one not disclosing this risk because, if everybody else is disclosing it, maybe there is something to this,” he said. YOU TELL US GAME ON — Welcome to the Long Game, where we tell you about the latest on efforts to shape our future. We deliver data-driven storytelling, compelling interviews with industry and political leaders, and news Tuesday through Friday to keep you in the loop on sustainability. Team Sustainability is editor Greg Mott, deputy editor Debra Kahn and reporters Jordan Wolman and Allison Prang. Reach us all at gmott@politico.com, dkahn@politico.com, jwolman@politico.com and aprang@politico.com. Want more? Don’t we all. Sign up for the Long Game. Four days a week and still free! WHAT WE'RE CLICKING — An Australian coal mine is using captured methane to produce electric power in what environmentalists say could be a game-changer for the fossil fuel sector, Bloomberg reports. — We’re going to need a lot more wind and solar power plants by 2030 to meet global climate goals, according to the International Renewable Energy Agency. The AP has the story. — The New York Times has produced a short film distilling Partha Dasgupta’s research on the value of nature.   LISTEN TO POLITICO'S ENERGY PODCAST: Check out our daily five-minute brief on the latest energy and environmental politics and policy news. Don't miss out on the must-know stories, candid insights, and analysis from POLITICO's energy team. Listen today.       Follow us on Twitter Debra Kahn @debra_kahn Greg Mott @gwmott Jordan Wolman @jordanwolman Allison Prang @AllisonPrang   Follow us

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings This email was sent to rouf@idiot.cloudns.cc by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA Please click here and follow the steps to unsubscribe.