How Industrial Efficiency Increases Competitiveness ......World’s leading environmental services company No. 1 largest environmental firm No. 1 in water partnerships 220,000 employees

Jennifer Kefer, Alliance for Industrial EfficiencyElinor Haider, Veolia North America

Bree Raum, American Gas AssociationJessica Lubetsky, Pew Charitable Trusts

How Industrial Efficiency Increases Competitiveness, Reduces Emissions, & Enhances Reliability

What Is Combined Heat and Power

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Current CHP Projects

3Source: CHP Installation Database, March 2014

ArcelorMittal (Indiana)

Energy recovery and reuse 504 boiler project

$63.2 million total project cost

$31.6 million DOE grant

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$20 million in energy cost savings

Payback (with DOE grant): 1.58 years

Generates 90 MW

Provides 20% of energy needs

CHP Technical Potential

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Remaining Potential for CHP

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Findings

Save 396-million megawatt-hours of electricity in 2030

Save businesses $298 billion in avoided electricity purchases (cumulative cost savings 2016-2030)

Reduce annual CO2 emissions by 174.5-million tons in 2030

Achieve nearly one-third (29 percent) of the reductions called for under the Clean Power Plan (CPP)

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U.S. Energy Use By Sector (2015)

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Source:ACEEE,2014

Energy Efficiency Is the Cheapest Energy Resource

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Industry Has Lowest Cost of Saved Energy

Source:DOE,2013

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The Opportunity: Potential Reduction By Region

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State Ranking of Potential Reductions

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World’s leading environmental services companyNo. 1 largest environmental firmNo. 1 in water partnerships220,000 employees

Veolia North America8,000 employeesHeadquartered in Boston500 MW+ of CHP owned or operatedLargest customers are oil & gas, citiesNo.1 district energy portfolio in the USNo. 1 water services company in the US

Veolia - Global Leadership

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TheCHPOpportunityfortheNaturalGasIndustry

October 17 , 2016

BreeA.Raum|SeniorDirector,FederalAffairs

www.naturalgashome.org

Werelyonnaturalgas

everyday ExploretheInteractiveNaturalGasHome

Cars,Trucks,Vans&SUVs

Fireplaces

Lighting

ClothesDryers

www.naturalgashome.org

Werelyonnaturalgas

everyday ExploretheInteractiveNaturalGasHome

WaterHeaters

GasRanges,Ovens,&Cooktops

Furnaces

StandbyGenerators

OutdoorLivingSpaces

GASUTILITYSUPPORTFORCHP

“AGAmembersrecognizethatthepursuitandadoptionofnaturalgas

DG/CHPapplicationscouldcreatepotentialbusinessopportunitiesfortheir

companyand/orthenaturalgasindustryandbenefitmanyconsumers.”

- AGAPolicyPrinciplesonNaturalGasDistributedGenerated/CombinedHeatandPower

NaturalGasStableandaffordablesupplieswellintothefuture

Technologicaladvances,anaccessibleandabundantdomesticresource,andtheworld’smostextensiveandreliabledeliveryinfrastructurehavecreatedafundamentalshiftinthenaturalgasmarketplace.

Recentproductiongrowthhasslowed

24Source:BentekEnergyLLC.

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35

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50

55

60

65

70

75

80

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Bcfd

DailyDryNaturalGasProductionUSLower-48

Four-YearRange2007-2010

2016

NewrecordFeb’16

Productionslows

However,wehaveseenandcontinuetoexpectrelativelylowandstablenaturalgasprices

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Source:EnergyInformationAdministration

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$/MMBtu NaturalGasPricesPrompt-MonthFuturesatHenryHub

PriceRange2005-2009

2016 2015

2014

NaturalGasPriceOutlookOurnation’sstrongnaturalgassupplyfundamentalsandrobustandreliablenaturalgasdeliveryinfrastructuresuggestthatoverthenextdecade,arangeofdemandscenarioscanbemetbyadiverseandresponsivesupplymarketwithinanestimatedpricebandof$4.00-$6.50perMMBtu— alevelwellbelowthepeakmarketpricesoftheprecedingdecade.

Source: RethinkingNaturalGas,AFutureforNaturalGasintheU.S.Economy, p.6,AmericanGasAssociation,©2012,CitingSource:WoodMacKenzie Spring2012.Seepaperforoutlooklimitations.

• Naturalgasresources:abundantandcost-effective.

• OpportunitytosupportU.S.manufacturingandindustrialbase.

• Near-term,affordablereductioninairemissions.

• Deliverefficientenergysolutionsandprovidecustomersvalue.

• CHPasgrowthopportunityforutilities.• Anefficient,lowcarbonsolutiontocomplywithEPAregulations.

WhyCHP?Whynow?

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EconomicPotentialof41.6GW(PotentialWithLessThan10YearPayback)

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<100MW

100– 399MW

400– 999MW

1,000– 1999MW

>2,000MW

AGAactivities

•DevelopValuePropositionforLDC’s&Stakeholders

•Educate&Communicate•Expose&EliminateObstacles

•OrganizetheLDCCommunity

•EngageCHPStakeholders•AssistinPolicyDevelopment

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Industrial Energy EfficiencyMaking America's power more efficient, resilient, and increasing our global competitiveness

Industrial energy efficiency in the U.S.TheProblem

Financeisneededtohelpenergyuserscovercapitalcosts.

Theavailabletaxcreditmakesitdifficultforprojectstoqualify.

ContinuetheInvestmentTaxCreditsoastoensurecleanandefficientpowergeneratingtechnologieslikecombinedheatandpower(CHP)andwasteheattopower(WHP)haveparity withothercleanandefficienttechnologiesintheavailableenergytaxincentives.

The Solution

Changes would make the tax credit more accessible

CurrentLaw ThePOWERAct(S. 1516,H.R.2657)

WHP2015Bill(S.913)

Section 48Extension(H.R.5167,H.R.5172,)

10%ITCforcombinedheatandpower

ExpandITCto30%,onparwithothertechnologiessuchassolar

Extend currentITCforcombinedheatandpower

Doesnotincludewasteheattopower

Includewasteheattopowerasqualifyingtechnologyfor30%credit

Includewasteheattopowerasqualifyingtechnologyfor10%

credit

Doesnotincludewasteheattopower

Appliestothefirst15MWofprojects whicharesmallerthan50MW

Applytofirst25MW,eliminateprojectsizecap

Applies toprojectswhicharesmallerthan50MW Same ascurrentlaw

ExpireDec.2016 ExpireDec. 2018 ExpireDec.2016 Expire Dec.2021

House bills in the 114th Congress H.R.2657,ThePowerEfficiencyandResiliency(POWER)ActCongressmenTomReed(R-NY)andEarlBlumenauer(D-OR)introducedinJune2015

ü Expandsinvestmenttaxcreditto30%ü Addswasteheattopowerasaqualifyingtechnologyü Appliestofirst25MW,eliminateprojectsizecapü ExtendsITCtoDecember2018

Rep.MarkE.Amodei (R-NV)Rep.JoyceBeatty(D-OH)Rep.DanBenishek (R-MI)Rep.MikeBishop(R-MI)Rep.EarlBlumenauer(D-OR)Rep.MattCartwright(D-PA)Rep.KathyCastor(D-FL)Rep.ChrisCollins(R-NY)Rep.GeraldConnolly(D-VA)Rep.JosephCrowley(D-NY)Rep.CarlosCurbelo (R-FL)Rep.RodneyDavis(R-IL)Rep.CharlieDent(R-PA)Rep.RobertDold (R-IL)

Rep.DanDonovan(R-NY)Rep.ChristopherP.Gibson(R-NY)Rep.JosephJ.Heck(R-NV)Rep.MikeHonda(D-CA)Rep.RonKind(D-WI)Rep.PeteKing(R-NY)Rep.AnnKirkpatrick(D-AZ)Rep.DarrinLaHood(R-IL)Rep.TedLieu(D-CA)Rep.DanielLipinski(D-IL)Rep.FrankLoBiondo(R-NJ)Rep.MiaLove(R-UT)Rep.TomMacArthur(R-NJ)Rep.TomMarino(R-PA)

Rep.BettyMcCollum(D-MN)Rep.DavidMcKinley(R-WV)Rep.CandiceMiller(R-MI)Rep.TimMurphy(R-PA)Rep.RichardNeal(D-MA)Rep.BillPascrell(D-NJ)Rep.ChelliePingree(D-ME)Rep.JaredPolis(D-CO)Rep.ThomasReed(R-NY)Rep.TimRyan(D-OH)Rep.MikeSimpson(R-ID)Rep.EliseStefanik(R-NY)Rep.SteveStivers (R-OH)Rep.MikeThompson(D-CA)

Rep.DinaTitus(D-NV)Rep.PaulTonko (D-NY)Rep.DaveTrott (R-MI)Rep.PeterWelch(D-VT)Rep.KevinYoder(R-KS)Rep.DonYoung(R-AK)

House bills in the 114th Congress H.R.5167,TechnologiesforEnergySecurityActCongressmenTomReed(R-NY)May2016

ü modifiestheITCtoextendthrough2021ü phasesoutthecurrentcreditrate(unlesscreditiscurrentlyat10%)

Rep.Blum,Rod[R-IA-1]Rep.Blumenauer,Earl[D-OR-3]Rep.Cardenas,Tony[D-CA-29]Rep.Cole,Tom[R-OK-4]Rep.Costello,RyanA.[R-PA-6]Rep.Cramer,Kevin[R-ND-AtLarge]Rep.Duncan,Jeff[R-SC-3]Rep.Emmer,Tom[R-MN-6]Rep.Esty,ElizabethH.[D-CT-5]Rep.Gallego,Ruben[D-AZ-7]Rep.Gibbs,Bob[R-OH-7]Rep.Gibson,ChristopherP.[R-NY-19]Rep.Guinta,FrankC.[R-NH-1]Rep.Higgins,Brian[D-NY-26]Rep.Huffman,Jared[D-CA-2]Rep.Kind,Ron[D-WI-3]

Rep.Larson,JohnB.[D-CT-1]Rep.Loebsack,David[D-IA-2]Rep.Love,MiaB.[R-UT-4]Rep.Lowenthal,AlanS.[D-CA-47]Rep.Meehan,Patrick[R-PA-7]Rep.Pocan,Mark[D-WI-2]Rep.Rangel,CharlesB.[D-NY-13]Rep.Reichert,DavidG.[R-WA-8]Rep.Renacci,JamesB.[R-OH-16]Rep.Smith,Lamar[R-TX-21]Rep.Stefanik,EliseM.[R-NY-21]Rep.Stivers,Steve[R-OH-15]Rep.Thompson,Mike[D-CA-5]Rep.Tonko,Paul[D-NY-20]Rep.Walz,TimothyJ.[D-MN-1]Rep.Zinke,RyanK.[R-MT-AtLarge]

Technologies need parityITCpercentdeductionsbytechnologyasofOctober2016

Jennifer Kefer, Alliance for Industrial EfficiencyElinor Haider, Veolia North America

Bree Raum, American Gas AssociationJessica Lubetsky, Pew Charitable Trusts