U-M’s allies in carbon neutrality effort have cloudy record on clean energy

Sunday, March 10, 2019 - 9:47pm

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Design by Alice Huth

By its own admission with data from 2017, the University of Michigan consumes a “substantial” amount of energy, making a net-zero carbon footprint a tall order, especially given the University’s relatively late arrival to tackling climate change.

After announcing plans to pursue a path to carbon neutrality in October, University President Mark Schlissel launched a commission on Feb. 4 to develop recommendations for achieving sustainability. Campus climate activists welcomed the commission, which is composed of faculty, students and administrators, as well as local officials and environmentalists.

Engineering junior Logan Vear, president of the Climate Action Movement, supported the creation of the commission, but worried about conflicts of interest presented by the involvement of certain members of the newly selected group. Vear, who was named to one of the commission’s two student spots, expressed concern about the inclusion of Brandon Hofmeister, senior vice president of governmental, regulatory and public affairs at CMS Energy and Consumers Energy, as well as Camilo Serna, vice president of corporate strategy at DTE Energy.

“(It was) highly disappointing that DTE and Consumers Energy were given spots on the commission itself instead of potentially in an advisory panel, given their history of fighting against climate policy, their advocating for natural gas expansion and particularly their direct conflict of interest being financially dependent upon U of M,” Vear said.

University spokeswoman Kim Broekhuizen said the commission sought to include diverse perspectives from various fields of expertise in its mission to achieve carbon neutrality, noting DTE and Consumers’ pledge to incorporate more renewable energy sources into their portfolios.

“It is absolutely critical for the energy industry to be a part of U-M’s exploration of scalable and transferable solutions given the fact that these companies are the number one energy providers/sources for our region and state,” Broekhuizen wrote in an email. “In addition, they have each made their own renewables commitment and are engaged in strategy development that will be useful to our own efforts.”

The first town hall of the President's Commission on Carbon Neutrality on is expected to draw a capacity crowd at Rackham Auditorium on Monday night. Broekhuizen said the commission is intent on getting feedback from the University community.

“Community input also is critical to the development of the recommendations,” Broekhuizen wrote. “The commission is creating several advisory panels – representing students, faculty, university partners and external stakeholders – to provide various perspectives and expertise, and to serve as a forum for connecting with key stakeholder groups.”

Hofmeister and Serna, on the other hand, see their roles on the commission in a positive light, saying they feel they can work to ensure the commission is able to not only plan but achieve and carry out their carbon neutrality goals.

Both are well-versed in the energy industry.A former law professor at Wayne State University, Hofmeister published an article in the Michigan Journal of Environmental and Administrative Law in 2012 discussing the benefits and drawbacks of state energy regulators acting as “potential climate change regulators.”

Serna was previously vice president for strategic planning and policy for Eversource Energy, New England’s largest utility company, and before that, Serna worked for Oliver Wyman’s Energy & Utilities management consulting practice, consulting utility and energy companies in Europe, Latin America and North America.

Serna said the University’s relationship with DTE would enable the utility to be a crucial partner in achieving carbon neutrality. He said Schlissel recognized this dynamic.

“As I understand, the President was thinking about this goal of carbon neutrality and what that might mean for the University when he started interacting with different folks here within DTE,” Serna said. “He understands that we as an energy provider to the University are going to be a critical partner as he thinks through how to reach this goal of carbon neutrality, so in those discussions he solicited for help through DTE.”

Serna said his experience in the energy industry perspective would offer the commission a valuable perspective.

“I can imagine we’ll provide our perspective on where we as a company, DTE, (are) headed, what type of programs we have now or we might have in the future that could support the University in achievement of this goal,” Serna said. “I see my role … as being able to provide that industry perspective as to what’s happening in the energy landscape, what’s happening with DTE and how those could be of help to the University in achieving its ultimate goal of achieving carbon neutrality.”

Hofmeister said Consumers’ drive for environmental sustainability is one of the  forces behind his motivation to aid the Commission in its goals for carbon neutrality.

“The University is an important stakeholder in the state of Michigan,” he said. “Consumers Energy cares a lot about the state of Michigan; we care about our customers ... Whether it’s greenhouse gas or other sustainability missions, we want to work as partners to enable the customers vision. We ourselves have a pretty strong commitment to environmental sustainability and are pretty well versed in energy related issues to the extent we can help partner with any customer or stakeholder, particularly a great Michigan institution like the University, achieve whatever its goals are.”

According to a 2015 report from the President’s Greenhouse Gas Reduction Committee, the University purchases more than 60 percent of its electricity needs from DTE. CAM founder Julian Hansen, an LSA junior, said the utilities had a financial stake that could negatively affect the outcome of the commission.

“A swift transition to U of M carbon neutrality would most likely decrease this reliance that we have with DTE and therefore that causes DTE and Consumers Energy to have a financial incentive to slow down the transition to carbon neutrality,” Hansen said.

Financial incentives have played a major role in power utilities’ responses to clean energy across the country, which have varied from lukewarm to outright opposition. In Michigan, DTE and Consumers Energy have a mixed record on their approach to renewable energy. Both have pledged to get 25 percent of their energy from renewable sources by 2030, with Consumers announcing plans in February 2018 to stop using coal to generate electricity by 2040, by which time DTE plans to retire all of its coal-fired plants.

DTE aims to reduce carbon emissions by 80 percent by 2050, while Consumers Energy intends to cut its emissions by 90 percent by 2040, in addition to getting 40 percent of its energy from renewable sources and energy storage by the same year. However, despite these commitments, environmental groups see room for improvement when it comes to DTE and Consumers Energy’s track records on clean energy, taking issue in particular with the utilities’ reliance on fossil fuels.

Hofmeister said when Michigan set out to pass an energy efficiency laws in 2008, the landscape for renewable energy was markedly different than it is today.

“At that time, renewable energy did come at a potentially higher cost than other forms of generation,” Hofmeister said. “The cost declines we’ve seen in renewable energy over time, particularly when we compare with new resources, not necessarily existing, renewables have significantly closed the gap. I do think that was a historical barrier that renewables faced that I think has become much less so. When we look to the future, our plans to add new generation are entirely through energy efficiency and solar generation and wind. We’re not planning to add any new fossil fuels to our mix going forward.”

According to Earthjustice, the nation’s largest nonprofit environmental law organization, Consumers Energy’s J.H. Campbell Generating Complex in West Olive is the third largest source of carbon pollution in Michigan, after DTE’s Monroe and Belle River plants.

In 2017, the U.S. Supreme Court denied DTE’s petition to review an ongoing enforcement action regarding air pollution from the Monroe plant. The Sierra Club and Earthjustice alleged DTE chose not to install pollution control technology even though the utility’s own projections showed pollution would increase after DTE overhauled the plant for $65 million in 2010.

Shannon Fisk, the managing attorney for Earthjustice’s Coal Program, said the litigation fell under the New Source Review Program, which requires existing coal plants undergoing modification to install pollution controls. According to Fisk the Monroe plant has since installed controls, but the Belle River plant has not, and as a result, it continues to emit thousands of tons of pollutants every year.

“A lot of big old coal plants still lack modern pollution controls because they were not required to install them until they were modified,” Fisk said. “We and the Department of Justice both allege that a number of DTE coal units, especially at the Monroe plant and the Belle River plant, undertook modifications but didn’t install the pollution controls that were required and as a result these plants are continuing to operate and continuing to be highly polluting. The Monroe plant has since, for unrelated reasons, finally installed controls. The Belle River plant has not. As a result, that plant continues to emit thousands and thousands of tons of harmful pollutants every year that they shouldn’t be emitting.”

Fisk said the utilities were part of the reason why clean energy in Michigan was not growing at a faster pace because they were not fully taking advantage of the opportunities available to them.

“We believe the utilities should be maximizing their use of those things and unfortunately DTE especially seems to be kind of slow walking their transition to those new clean energy options,” Fisk said. “We would like to see them move much more quickly, which would be both in the best interest of their customers and would help address the looming threat of climate change.”

Fisk blamed the utilities’ fossil fuel dependence on inertia.

“Some of it is that they have large investments in old infrastructure that they still want to charge their customers for, and they get a profit off of having lots of capital in the form of coal plants, gas plants, etc.,” Fisk said. “They’re continuing to try to collect the investment that they’ve made from their customers and that creates an incentive for them to try to keep old coal plants around and to build new gas plants. I hope that they will see the path forward to clean energy as being in both the best interest of the customer and the utility. I think Consumers is starting to see that and we hope DTE will come along also.”

According to Serna, while renewable energy sources can be beneficial, they alone are not enough to assure energy production meets customer demand.

“Renewables are important and over time they’re going to continue to increase their share of the total generation mix, but it’s important also to have resources that can act as that baseload that have much, much lower carbon content than coal,” Serna said. “...When we have a lot more renewables the system is going to have to adjust to days where you don’t have a lot of wind, where you don't have a lot of sun, but especially think about the polar vortex and situations where you have very extreme weather situations.”

Fisk praised Consumers Energy for being more receptive of renewable energy, pointing to the long-term energy plan the utility filed with the Michigan Public Service Commission in June of 2018. Fisk said he was excited by a “number of good things” in Consumers Energy’s integrated resource plan, including investments in large-scale solar energy production and energy efficiency. In a September 2018 op-ed in The Detroit News, Hofmeister defended the plan, saying while the “transition toward a greener future will be gradual,” Consumers Energy’s plans would “provide clear reliability, affordability and environmental benefits for Michigan.”

“By relying on a mix of resources – energy efficiency, wind, solar, natural gas and energy storage – we will ensure Michigan’s needs are met in an affordable, reliable and low-risk manner,” Hofmeister wrote.

While Fisk applauded Consumers’ efforts, he said it was “unfortunate” the utility planned to continue operating parts of the Campbell plant until 2031, keeping the complex’s largest unit in use until 2040. Fisk also criticized DTE’s construction of a $1 billion natural gas plant in St. Clair County.

“Reducing carbon emissions by replacing one fossil fuel with another just doesn’t make any sense, either as a strategy for reducing carbon or as a cost-effective strategy,” Fisk said. “Rather than spending $1 billion on a new gas plant, they should be investing in clean energy and in solar and wind and storage and efficiency. That would be the way to reduce carbon and save money for customers. We remain disappointed that DTE apparently is proceeding with its new gas plant.”

In an interview with The Daily State Rep. Yousef Rabhi, D-Ann Arbor, said despite DTE’s claims the plant would help reduce its carbon footprint, natural gas still produces harmful emissions and contributes to climate change.  

“They’re phasing out, you know, carbon intensive energy production in favor of natural gas plants, which many including myself do not consider clean energy, but they are trying to market it as clean energy,” Rabhi said. “While they are technically reducing carbon emissions, they are increasing emissions from other greenhouse gas emissions that, in the case of methane for example, are more volatile and damaging than carbon is, so it’s actually not a positive move to go to natural gas.”

Rabhi said both Consumers and DTE have been opposed to a “number of good pieces of legislation that would move the state in the right direction in terms of expanding alternative energy and renewable energy.”

In 2018, a bipartisan group of state lawmakers, including Rabhi, introduced a set of bills called the Energy Freedom Package. A variety of environmental groups supported the legislation, arguing it would promote access to renewable energy and reduce barriers to residential solar power production, among other things.

Speaking on behalf of DTE, Serna testified before the committee on May 22, 2018 in opposition of the bills. DTE said it was against the legislation in part because of provisions in the bills to promote fair value pricing and expand what the sponsors called “sensible” policies for net metering, a pricing system that offers solar panel owners credit for any extra energy they produce and send to the grid.

DTE has argued net metering customers — residents who own solar panels and are compensated for returning energy to the grid — are subsidized by other ratepayers, a claim Serna reiterated in his testimony.

“Net metering passes along the costs of the customer’s fair share of maintaining the grid to his or her neighbors, creating a subsidy of about $780 per year, or approximately $65 per month,” Serna said. “To be clear, this is not lost revenue to the energy company. It is the fixed costs of infrastructure shifted to non-net metered customers … In totality, under these policies, the cycle of cost shifting and driving costs up for fixed infrastructure for non-distributed generation customers will expand, making energy more expensive for all customers over time in Michigan.”

In April 2018, the MPSC replaced net metering with an inflow/outflow system, under which customers with solar panels pay full retail rates for the electricity they use but receive less for electricity they produce to make up for costs associated with maintaining the grid. Solar advocates said the decision “could kill the state’s distributed solar market in its cradle.”

Serna reiterated to The Daily what he said in his testimony, saying non-solar customers would bear the costs of rooftop solar.

“The main issue with net metering is there are costs that are not being paid by the solar customers that are being shifted to others, so me and all the utilities and other states are looking for different alternatives to address that issue,” Serna said.

DTE’s proposed alternative program has been criticized for undervaluing rooftop solar. Pro-solar groups disagree with contentions that net metering increases costs for non-solar customers, arguing instead that because solar panels generate power during the day when usage is highest, they can alleviate the need to invest in costly additional generation capacity to meet peak demand. A 2016 study from the Brookings Institution confirmed this, finding “net metering is a net benefit” as the practice “frequently benefits all ratepayers when all costs and benefits are accounted for.”

One of the sponsors of the legislation was State Rep. Gary Glenn, R-Williams Township, chair of the House Energy Policy Committee. According to Rabhi, Glenn’s position helped the package advance further than any other comparable pieces of legislation had previously.

“We actually got hearings,” Rabhi said. “The Chair Gary Glenn actually gave us hearings on the bill, but ultimately the bills did not get a vote in committee, so we got farther than we've ever gotten before with those bills. This was definitely a high-water mark for us in terms of actually getting a hearing out of them, but ultimately they did not move forward.”

Rabhi said including utility executives on the President’s Commission on Carbon Neutrality was not inherently problematic so long as there were other members from the environmental sector, but advised the University to keep in mind the impact of other emissions aside from carbon.

“We need to make sure that we understand what carbon neutrality means because again, the utilities have committed to reducing their carbon footprint by 80, 90 percent, and that sounds really good, but the fine print on that is we're still relying heavily on fossil fuels, on a nonrenewable energy resource,” Rabhi said. “...I’m just saying, I think that people need to understand what the University means when they say we want to go to carbon neutral.”