Renewable Energy Policy and Markets Metropolitan Washington Council of Governments June 22, 2005

1. Renewable Energy Policy and MarketsMetropolitan Washington Council of GovernmentsJune 22, 2005 Carol Werner, Executive Director Environmental & Energy Study Institute 122 C St. NW, Suite 630 Washington, DC 20001 Phone: (202) 662-1881 Fax: (202) 628-1825 www.eesi.org

2. Environmental & Energy Study Institute (EESI) Seeking Innovative Environmental and Energy Solutions • Dedicated to promoting sustainable societies through innovative policies on energy, climate, transportation, agriculture, and smart growth • Founded in 1984, by a bipartisan Congressional Caucus • Provides timely information regarding science, policy, and technologies • Organizes ~20 Congressional briefings a year • Builds coalitions and networks • Publishes 3 electronic newsletters • EESI Associates Program allows companies and individuals to participate

3. Changing Policy Landscape – Local and State Actions • Nineteen states have Renewable Portfolio Standards (RPS) • Texas considering strengthening its RPS, California considering accelerating its RPS timetable • Fifteen states have Public Benefit Funds (PBF) for renewable energy • 165 Mayors calling for action on climate change, Climate Protection Agreement endorsed by US Conference of Mayors . • West Coast Governors’ (WCG) Global Warming Initiative sets goal for west coast states to become “global leaders in the development of renewable energy and energy efficient technologies” • Western Governors’ Association (WGA) – 18 states joined by tribal groups, Mexican border states, and Canadian provinces – goal to develop 30,000 MW of clean energy by 2015 and a 20 percent improvement in energy efficiency by 2020. • Northeast Regional Greenhouse Gas Initiative (RGGI) program design underway – nine states • New England governors and Eastern Canadian Premiers Climate Change Action Plan began August 2001 – six states and six provinces

4. ME: 30% by 2000 NY: 24% by 2013 MA: 4% by 2009 + 1% annual increase MN: 1,125 MW wind by 2010 WI: 2.2% by 2011 RI: 15% by 2020 CT: 10% by 2010 IA: 105 MW CA: 20% by 2017 *NJ : 6.5% by 2008 *NV: 15% by 2013 *CO: 10% by 2015 *PA: 18%¹ by 2020 *MD: 7.5% by 2019 *DC: 11% by 2022 *AZ: 1.1% by 2007 *NM: 10% by 2011 State RPS TX: 2,880 MW by 2009 Non-punitive goal HI: 20% by 2020 Renewable Portfolio Standardsin 19 States May 2005 *Minimum requirement and/or increased credit for solar ¹ PA: 8% Tier I, 10% Tier II (includes non-renewable sources Source: North Carolina Solar Center and IREC

5. CA - $135 mil./yri CT - $30 mil./yr DE - $1.5 mil./yr IL - $50 mil./10 yrsii ME - ~$100,000* MA - $150 mil./yr (over 5 yrs.) MN - $16 mil./yr MT - $14.9 mil./yriii iexpires 1/1/07 iiexpires in 2007 *dependent on voluntary contributions iiiexpires 12/31/05 NJ - $69 mil.** NY - $208 mil./5 yrsiv(R&D) OH - $100 mil./10 yrs.v OR - $10 mil./yr. PA - Utility level Sustainable Energy Funds RI - ~$3 mil./yrvi WI - ~$2.5 mil./yr*** **6 months, Jan-June 2004, $358 mil. From 2001-2003 ivexpires 6/30/06 vexpires 2011 viup for review 2006 ***varies per yr., $RE is 4.5% of $EE collected Public Benefit Funds for Renewable Energy in 15 States $4 Billion by 2017

6. Federal Policies: 2005 Senate Finance Committee Tax Package • Extends Section 45 Renewable Production Tax Credit (PTC) three years to 12/08. • Drops solar PTC and adds solar Investment Tax Credit (ITC). • Creates 30% ITC for residential solar hot water, photovoltaics, and fuel cells. Capped at $2000 for solar. • Increases business solar ITC from 10% to 30%. • PTC for wind and closed-loop biomass, for eligible producers, will continue for 10 years. PTC for geothermal, open-loop biomass, small irrigation hydropower and MSW will last for 5 years. Adds fuel cell PTC for 5 years. • The JOBS Bill created volumetric excise tax credits for ethanol and biodiesel. Tax package expands credit to other alternative fuels, including all biomass-derived fuels. • Extends biodiesel tax credit four years through 2010.

7. Federal Policies: 2005 Renewable Portfolio Standard (RPS) • Sen. Bingaman (D-NM) offered an amendment for an RPS of 10% renewable power by 2020 (passed Senate 52-48) • Sens. Kerry (D-MA) and Jeffords (I-VT) have filed an amendment for a RPS of 20% renewable power by 2020. Renewable Fuels Standard (RFS) • 5B gallon RFS by 2012 (approved in House Energy bill) • 8B gallon RFS by 2008 in Senate Energy bill Renewable Resource Assessment • $10 million/yr in the House and Senate Energy Bills Diesel Emission Reduction • Biodiesel is an eligible fuel in the Diesel Emissions Reduction Act of 2005, which funds diesel emission reduction strategies.

8. Federal Policies: 2005 Other Biofuel Incentives • Sen. Obama (D-IL) introduced the E-85 Incentives Act (S. 918) as an amendment to transportation bill, passed Senate May 17 • Rep. Kaptur (D-OH) amendment to require the Department of Defense to conduct a study on the use of biodiesel and ethanol fuels by the armed forces and defense agencies adopted in National Defense Authorization Act for FY 2006 (HR. 1815) Agricultural Appropriations • House approved full $23 million for Sec. 9006, on floor June 2005. • Full funding to the Sec. 6401 Value-Added Producer Grant Program was restored to $40 million on the House floor Energy & Water Appropriations for EERE • House recommendation for DOE EERE FY06 is $25.4 million above request, but $23.1 millionbelow FY05 enacted.

9. Changing Policy Landscape - State Sample of State Actions • Minnesota Governor Tim Pawlenty signed into law a statewide mandate for 20 percent ethanol use on May 10, 2005, up from the existing 10 percent requirement. • Washington Governor Christine Gregoire signed into law SB 5101 to provide a 15¢ per kilowatt-hour incentive for small scale renewable energy producers using solar, wind, or anaerobic digester technology. ( May 10, 2005) • Montana Governor Brian Schweitzer signed the State’s first biofuels mandate for a ten percent ethanol blend in all gasoline sold by 2006. • North Dakota Governor John Hoeven signed a number of bills on April 22, 2005, including incentives for ethanol production include $3.25 million for new and existing ethanol plants in the State, $1.35 million for the expansion of existing plants, and a 20¢ per gallon tax credit for retail sales of E85 (HB 1478), and (SB 2281) allowing ethanol and biodiesel plants to earn a 30 percent investment tax credit . • Indiana Governor Mitch Daniels signed the biofuel bill, HB 1032, on April 1, 2005 which instructs the state government to run all state agency vehicles on bio-based fuels, such as biodiesel, ethanol, or gasohol, when possible.

10. Changing Policy Landscape – New Technologies and Public Awareness Plug-in Hybrid Vehicles • Plug-in hybrid vehicles can charge batteries using off-peak base-load power, such as geothermal. When used with biofuels these can drastically reduce imported oil demands while cleaning the air.

11. For more information Contact: Carol Werner (202) 662-1881 cwerner@eesi.org or Fred Beck (202) 662-1892 fbeck@eesi.org www.eesi.org