Air Pollution Prevention Forum Report to the Western Regional Air Partnership July 23, 2002 Denver, Colorado.

Air PollutionAir Pollution Prevention Forum Prevention Forum

Report to the Western Regional Report to the Western Regional Air PartnershipAir Partnership

July 23, 2002July 23, 2002

Denver, ColoradoDenver, Colorado

Outline of PresentationOutline of Presentation

• Regional Haze Rule: 309(d)(8)Regional Haze Rule: 309(d)(8)

• AP2 Forum CharterAP2 Forum Charter

• Organization and Work Plan of ForumOrganization and Work Plan of Forum• Renewable and Efficiency RecommendationsRenewable and Efficiency Recommendations

• Economic and Emissions ImpactsEconomic and Emissions Impacts

• Next stepsNext steps

• Tribal RecommendationsTribal Recommendations

Section 309 (d) (8): Section 309 (d) (8): Pollution PreventionPollution Prevention

•Identify state RE and EE programsIdentify state RE and EE programs

•Progress meeting 10/20 renewable goalProgress meeting 10/20 renewable goal

•Projections of short and long term:Projections of short and long term:•Energy costs and savingsEnergy costs and savings

•Emissions reductionsEmissions reductions

•Secondary economic benefitsSecondary economic benefits

•Visibility ImprovementsVisibility Improvements

AP2 CharterAP2 Charter

Recommend legislative actions, economic Recommend legislative actions, economic incentives and regulatory policies states can incentives and regulatory policies states can adopt to meet the GVCT 10/20 renewable adopt to meet the GVCT 10/20 renewable energy goal and increase the use energy energy goal and increase the use energy

efficiency technologies in the region.efficiency technologies in the region.

ObjectivesObjectives

• Identify market barriers,Identify market barriers,• Examine policies that can overcome Examine policies that can overcome

market barriers,market barriers,• Quantify emissions reductions, and Quantify emissions reductions, and

economic impacts, and economic impacts, and • Recommend a portfolio of policies and Recommend a portfolio of policies and

“best practices” to help states meet SIP “best practices” to help states meet SIP requirements.requirements.

AP2 Forum MembersAP2 Forum Members

• Robert “Hap” Boyd, Co-ChairRobert “Hap” Boyd, Co-Chair• Jeff Burks, Co-ChairJeff Burks, Co-Chair• Bill Becker, Federal gov.Bill Becker, Federal gov.• Trisha Frank, Tribal RepTrisha Frank, Tribal Rep• Rich Ferguson, EnvironmentlRich Ferguson, Environmentl• Bob Green, IndustryBob Green, Industry• Brian Hedman, IndustryBrian Hedman, Industry• Tom Hines, IndustryTom Hines, Industry• Van Jamison, PublicVan Jamison, Public• Ursula Kramer, Local govUrsula Kramer, Local gov

• John Nielsen, EnvironmentalJohn Nielsen, Environmental• Terry O’Connor, IndustryTerry O’Connor, Industry• Stan Price, Small BusinessStan Price, Small Business• John Savage, State gov.John Savage, State gov.• Rachel Shimshak, EnvironmentalRachel Shimshak, Environmental• Julie Simpson, Tribal RepJulie Simpson, Tribal Rep• Rich Sperberg, IndustryRich Sperberg, Industry• Barrett Stambler, IndustryBarrett Stambler, Industry• Dick Watson, State gov.Dick Watson, State gov.• Chris Wentz, State gov.Chris Wentz, State gov.

WIEB StaffDoug Larson

Tribal Work GroupJulie Simpson, Lead

N. Arizona Univ

AP2 ForumJeff Burks, “Hap” Boyd

Co-Chairs

Modeling Work GroupJohn Nielsen, Lead

ICF Tellus Inst.

AP2AP2 Work PlanWork PlanRenewable Energy Recommended Policies

(January 2000)

Energy Efficiency

Policies and “Best-Practices

(August 2001)

IPM Model•Demand•Fuel Costs•Gen Capacity•Electricity Costs•Gen Output•Emissions

(June 2002)Model Visibility

Impacts

•Nox

REMI Model•Employment•Income• GRP

(July 2002)

AP2 ReportsAP2 Reports• Recommendations to Increase Generation of Recommendations to Increase Generation of

Electricity from Renewable ResourceElectricity from Renewable Resource• Energy Efficiency Issues and TechnologiesEnergy Efficiency Issues and Technologies• Tribal Renewables ReportTribal Renewables Report• Tribal Energy Efficiency ReportTribal Energy Efficiency Report• Economic Assessment of the 10/20 Renewable Economic Assessment of the 10/20 Renewable

Energy Goals and Energy EfficiencyEnergy Goals and Energy Efficiency• In Draft final report to the WRAPIn Draft final report to the WRAP

Renewable Renewable RecommendationsRecommendations

•Enact RPS or SBC Enact RPS or SBC

•State and local tax incentivesState and local tax incentives

•GovtGovt “Green”“Green” purchase requirements purchase requirements•Policies supporting efficient marketsPolicies supporting efficient markets

–Transmission ReformTransmission Reform

–Labeling/DisclosureLabeling/Disclosure

–GreenGreen Tags Tags

–GreenGreen Pricing Programs Pricing Programs

–Net MeteringNet Metering

WI: 2.2% by 2011

IA: ~250 MW by 1999

MN: 550 MW by 2002 + 400 MW by 2012

NV: 15% by 2013

TX: 2880 MW by 2009 (2000 MW new)

PA: varies by utilityNJ: 6.5% by 2012

CT: 13% by 2009

MA: 4% by 2009

ME: 30% by 2000

NM: 5% of standard offer in 2007, as available

AZ: 1.1% by 2007, 60% solar

State RenewableState Renewable Portfolio StandardsPortfolio Standards

States with System Benefits States with System Benefits Charge for RenewablesCharge for Renewables

.

• 16 states with SBCs for 16 states with SBCs for renewable energyrenewable energy

• $3.6 billion collected $3.6 billion collected through 2012through 2012

Source: Lawrence Berkeley National Laboratory

States with Tax Incentives States with Tax Incentives for Renewablesfor Renewables

.

Source: Lawrence Berkeley National Laboratory

States with GovernmentStates with Government““Green PurchaseGreen Purchase”” RequirementsRequirements

.

Source: Lawrence Berkeley National Laboratory

States with “States with “Green PricingGreen Pricing” ” ProgramsPrograms

.

Source: Lawrence Berkeley National Laboratory

States with Labeling and States with Labeling and Disclosure RulesDisclosure Rules

.

Source: Lawrence Berkeley National Laboratory

•Full Disclosure•Partial Disclosure•Proposed

Energy EfficiencyEnergy Efficiency

“Best Practices”“Best Practices”

RESIDENTIALRESIDENTIAL

Efficient Cooling SystemsEfficient Cooling Systems

CFL LightingCFL Lighting

Energy Star AppliancesEnergy Star Appliances

Appliance Recycling Appliance Recycling

Building EnvelopeBuilding Envelope

COMMERCIALCOMMERCIAL INDUSTRIALINDUSTRIAL

Efficient Cooling Equip Efficient Motors Efficient Cooling Equip Efficient Motors

Retro Commissioning Motor Drive SystemsRetro Commissioning Motor Drive Systems

Commercial Lighting ( Commercial Lighting ( Fans, Pumps, CAir)Fans, Pumps, CAir)

Efficiency Standards Ind. TransformersEfficiency Standards Ind. Transformers

Efficient RefrigerationEfficient Refrigeration

Fuel Switching Fuel Switching

Commercial AppliancesCommercial Appliances

Policy Recommendations for Policy Recommendations for

Energy EfficiencyEnergy Efficiency •Tax IncentivesTax Incentives•Public purpose funding (ratepayer, SBC)Public purpose funding (ratepayer, SBC)•Improved Information (accurate load data, Improved Information (accurate load data, forecasting)forecasting)•Price signals (real time pricing, inverted Price signals (real time pricing, inverted block)block)•Markets for demand side resources Markets for demand side resources •Government “leading by example”.Government “leading by example”.

States with System Benefits States with System Benefits Charge for EfficiencyCharge for Efficiency

.

Source: Lawrence Berkeley National Laboratory

Economics of RenewablesEconomics of Renewables

• Market barriers exist to renewablesMarket barriers exist to renewables

• 20,264 MW needed to meet 10/20 goal 20,264 MW needed to meet 10/20 goal

• Costs of meeting 10/20 goal is $256 millionCosts of meeting 10/20 goal is $256 million

• Less than a 2% increase in regional Less than a 2% increase in regional electricity costs over BAUelectricity costs over BAU

• Impact on average residential customer is Impact on average residential customer is about 78 cents per month.about 78 cents per month.

Economics of EfficiencyEconomics of Efficiency

• Implementation of the energy efficiency Implementation of the energy efficiency recommendations would reduce power demand in recommendations would reduce power demand in the Western states by 1.5 % in 2005 and 8% in the Western states by 1.5 % in 2005 and 8% in 2018.2018.

• Represents 54,000 GWH of saved energy and Represents 54,000 GWH of saved energy and 6,100 MW of capacity.6,100 MW of capacity.

• Net savings in electricity production costs range Net savings in electricity production costs range from $200 million in 2005 to $1.6 billion in 2018.from $200 million in 2005 to $1.6 billion in 2018. 

25

Energy Efficiency SavingsEnergy Efficiency Savings

Estimated Total Energy Efficiency (EE) Savings by Region, AP2 Forum Recommendations

-

10,000

20,000

30,000

40,000

50,000

60,000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

An

nu

al G

Wh

Sav

ing

s

CA/Las Vegas-EE

OR w. ID-EE

Interior West EE

SOSO2 2 EmissionsEmissions

200

400

600

800

2005 2007 2010 2015 2018

SO2 ('000 tons)

Because of the trading program, there will be no changes in SO2 emissions under the 10/20 goals or EE

Emissions limited through the regional SO2 trading program

NONOx x EmissionsEmissions

2

4

6

8

10

12

14

16

2005 2015 2018

Th

ou

san

d T

on

s o

f N

Ox

Sav

ed

Under 10/20 Goals With EE Under 10/20 Goals + With EE

-

2

4

6

8

10

12

14

16

2005 2015 2018

Under 10/20 Goals With EE Under 10/20 Goals + With EE

COCO2 2 EmissionsEmissions

-

10

20

30

40

50

60

2005 2015 2018

Mill

ion

Me

tric

To

nn

es

of

CO

2

Sa

ve

d

-

2

4

6

8

10

12

14

16

2005 2015 2018

Under 10/20 Goals With EE Under 10/20 Goals + With EE

Lowers Compliance CostLowers Compliance Cost

• 10/20 goals will lower compliance cost of 10/20 goals will lower compliance cost of meeting SOmeeting SO22 Annex milestones by $ 10 Annex milestones by $ 10

million in 2018million in 2018

• Represents 7% of the compliance cost of Represents 7% of the compliance cost of meeting the SOmeeting the SO22 Annex milestones without Annex milestones without

10/20 goals)10/20 goals)11

1 Compliance cost of SO2 Annex milestones without 10/20 goals based reported cost in “Economic Impacts of Implementing a Regional SO2 Trading Program in Grand Canyon Visibility Transport Region, Volume II” WRAP/MTF, 2000

Hedge Against Natural Gas Hedge Against Natural Gas Price Volatility Price Volatility

• LBL estimates $.05 kWh is the “hedge” LBL estimates $.05 kWh is the “hedge” value that investments in renewable energy value that investments in renewable energy provide consumers who prefer stable over provide consumers who prefer stable over volatile natural gas prices.volatile natural gas prices.

• ““Hedge” value of investments in renewable Hedge” value of investments in renewable energy more than offsets increase in energy more than offsets increase in regional electricity costs attributed to regional electricity costs attributed to meeting the 10/20 goal. meeting the 10/20 goal.

WGA Energy PolicyWGA Energy Policy

Regional PoliciesRegional Policies

•Renewable Portfolio StandardRenewable Portfolio Standard

•Regional “green tags” market.Regional “green tags” market.

•Western generation tracking system.Western generation tracking system.

•Regional forum for energy and air Regional forum for energy and air quality decision-makers.quality decision-makers.

Summary of AP2 WorkSummary of AP2 Work

• How has the work of the AP2 Forum helped How has the work of the AP2 Forum helped states meet 309(d)(8) requirements of states meet 309(d)(8) requirements of regional haze rule?regional haze rule?– Identified policies and best practices.Identified policies and best practices.– Short term and long term projections:Short term and long term projections:

• Energy savingsEnergy savings• Emissions reductionsEmissions reductions• State economic impactsState economic impacts

– Dialogue between energy and air agenciesDialogue between energy and air agencies

Next StepsNext Steps• Finish REMI economic modeling Finish REMI economic modeling • Issue final summary reportIssue final summary report• SIP Guidebook workshop (fall)SIP Guidebook workshop (fall)• WRAP action on final AP2 report WRAP action on final AP2 report

(December)(December)• What future activities are needed of AP2?What future activities are needed of AP2?

– Outreach activities?Outreach activities?– Technical assistance to states?Technical assistance to states?– Promoting recommended regional actions?Promoting recommended regional actions?– Monitoring new energy/air developments?Monitoring new energy/air developments?