Clean Energy Opportunities for Environmental Officials

1. Clean Energy Opportunities for Environmental Officials State-EPA Symposium on Environmental Innovation and Results        January 24, 2006 Steve Dunn, Policy Analyst Clean Energy-Environment State Partnership

2. Overview • Clean energy as a resource • EPA’s Clean Energy-Environment Guide to Action • Opportunities for Environmental Officials • State and Regional Energy Planning • Air Quality Planning • Enforcement and Permitting • Quantification, tracking and reporting • Resources for More Information • Web sites • Staff contacts

3. What is Clean Energy? • Clean Energy provides a clean, low-cost, reliable way to meet energy demand and reduce peak electricity system loads. • Energy efficiency • Renewable energy • Clean distributed generation / combined heat and power (CHP)

4. Source: E-GRID (US EPA) Clean Energy as a Resource: Opportunities for States • Clean energy offers multiple benefits: • Reduced air emissions • Multimedia benefits (e.g. water, waste) • Economic benefits (reduces energy costs, create jobs) • Strong interest from some states to better integrate clean energy into energy and air quality planning (TX, MD, NJ, GA) • A key component of a number of state innovations, including • air quality programs (GA, MA, MD, NJ, NY, TX) • sustainability initiatives (IL, PA, WA), • climate action plans (CT, CA, NJ, NM)

5. NEWREPORT EPA Clean Energy-Environment Guide to Action • The Clean Energy-Environment Guide to Action describes 16 cost-effective clean energy policies that states have successfully implemented • Builds on established state models and experiences in designing, implementing, and evaluating clean energy programs. • includes specific action steps, best practices and lessons learned • Designed to help states develop new clean energy programs or enhance existing ones • Designed for use by state energy and environmental policymakers. • Identifies action steps for air and energy officials and utility regulators • Describes role of state legislatures, executive branch and other state agencies • Includes numerous state examples and federal, state and nonprofit resources • Available soon (February 2006) on EPA’sClean Energy Web site • http://www.epa.gov/cleanenergy/stateandlocal/

6. Policy Description: Lead By Example • Describes how states design and implement lead by example programs, including: • Comprehensive state programs (NY, CA) • Energy savings targets for existing buildings (NH, NY) and performance standards for new buildings (OR, MA) • Green power purchasing targets (CA, MA, NJ, NY) • Performance contracting for state facilities (CO, TX) • Purchasing ENERGY STAR products (NH, NY) • Financing programs (IA, OR, TX) • Each policy description in the Guide to Action includes: • A concise summary and description of objectives and benefits • Details on design, implementation and evaluation issues, and best practices • Description of state agencies and stakeholders involved • Information on related federal and state programs and policies • State examples • Action steps for states • Resources for more information

7. Clean Energy-Environment Guide to Action: Opportunities for Environmental Officials • State and regional energy planning • Air quality programs and planning • SIPs • Cap-and-trade programs • Enforcement settlements • Permitting • Quantifying, tracking and reporting emissions • Multiple purposes and applications • e.g., air quality planning, program evaluation, cost-benefit analyses, documenting and reporting environmental benefits

8. State and Regional Energy Planning • A strategic effort to develop energy-related goals and objectives and formulate related policies and programs. • Lays the ‘groundwork’ for achieving a broad set of energy, economic, and environmental policy goals. • Provides means for incorporating clean energy as a cost-effective resource option • States energy and environmental officials can work together to incorporate clean energy within state and regional energy plans • For more information • See Section 3.2 of the Guide to Action, State and Regional Energy Planning

9. Clean Energy Opportunities Air Quality Planning: SIPs • States are incorporating clean energy into air quality planning • As part of emission baseline/projections, or • As an emission reduction measure • EPA provides guidance to states • Guidance on SIP Credits from Energy Efficiency and Renewable Energy Measures (August 2004) • Flexible framework for quantifying AQ benefits • State examples: • Dallas-Fort Worth, Texas; Montgomery County, Maryland; Shreveport, Louisiana • Other states are performing ground work for SIP credit For more information, see Section 3.3 (Determining the Air Quality Benefits of Clean Energy) of the Guide to Action

10. Clean Energy Opportunities Air Quality Planning: Cap-and-Trade • Set asides for EE/RE under cap and trade programs • States can distribute allowances to clean energy under the NOx trading program and CAIR in two ways: • As a set-aside for energy efficiency and renewables • As a direct allocation • Allocating allowances to EE/RE can provide incentives and reduce compliance costs by displacing polluting generators • State examples • Massachusetts, Indiana, New Jersey, New York, Ohio • EPA Tools to help • Guidance for establishing set-aside • Report on state NOx set-aside programs • Model rule under CAIR For more information, see Sections 3.3 (Determining the Air Quality Benefits of Clean Energy) and 3.4 (Funding and Incentives) of the Guide to Action

11. More Clean Energy Opportunities: Enforcement and Permitting • Enforcement: Supplemental Environmental Projects (SEPs) • An environmentally beneficial project that is a voluntary part of an enforcement settlement • EPA’s SEP Toolkit provides practical information, guidance, and resources for states to pursue EE/RE through SEPs • Permitting: Output-based environmental regulations • Promotes efficient production of energy by relating emissions to the output of energy • State examples: Connecticut, Indiana, Massachusetts, Texas • EPA provides assistance to air officials • Output-based Regulations handbook • In-house expertise and technical assistance • For more information, see Sections 3.4, Funding and Incentives, and 5.3, Output Based Environmental Regulations, of the Guide to Action

12. Emissions Quantification, Tracking and Reporting • States are quantifying energy savings, emissions reductions from clean energy for multiple purposes: • Support energy planning • Provide input to cost-benefit analyses • Track and report progress toward state goals • Communicate the environmental benefits of clean energy to policymakers and stakeholders • EPA provides Guidance, technical assistance and expertise to states • Provide peer exchange, communications, and tech. assistance • Technical forum on emissions quantification, M&V approaches • Working with Texas A&M’s Energy Systems Laboratory • Developing emissions quantification methods and tools (eCalc) For more information: • see Section 3.3 of the Guide to Action: Determining the Air Quality Benefits of Clean Energy

13. Quantification: Key Issues • Identify purpose • Level of rigor will vary depending on purpose (i.e., reporting progress reporting versus a SIP submittal) • Incorporating in a SIP • Determine what gets displaced, where, and how • When do emission reductions occur? • e.g., during the ozone season? • The location of reductions matters • emission reductions need to be reasonably applicable to the non-attainment area • Cap-and-trade areas • must retire allowances or obtain through other means (e.g., set-asides, voluntary agreement) to claim emissions reductions • Measure and verify emission reductions • Verify the expected energy savings and emissions reductions actually occurred

14. Summary • Clean energy provides many opportunities to meet energy, environmental and economic goals • States are developing innovative, integrated approaches • State Environmental Officials play an important role • Engaging in state and regional energy planning • Incorporating clean energy as part of air quality strategies • Promoting clean energy through enforcement and permitting activities • Quantifying emissions reductions • EPA HQ and Regions are providing tools, guidance and technical assistance to states

15. For More Information – Web sites • Clean Energy-Environment Guide to Action (available early February 2006) • http://www.epa.gov/cleanenergy/stateandlocal/ • EPA Guidance Documents • Incorporating EE/RE in SIPs • http://www.epa.gov/cleanenergy/stateandlocal/guidance.htm andhttp://www.epa.gov/ttn/airinnovations/ • Cap-and-trade / set-aside programs • Guidance: http://www.epa.gov/cleanenergy/pdf/ee-re_set-asides_vol1.pdf • Survey of state set-aside programs: http://www.epa.gov/cleanenergy/pdf/eere_rpt.pdf • Supplemental Environmental Projects • SEP Toolkit • http://www.epa.gov/cleanenergy/pdf/sep_toolkit.pdf • Output-Based Environmental Regulations • Handbook for Air Regulators and fact sheet • http://www.epa.gov/chp/state_resources/output_based_reg.htm

16. Additional Web sites • EPA Air Innovations Web site • http://www.cleanairinfo.com/airinnovations2005/ • EPA Clean Energy Technical Forum Materials • Quantification, M&V; NOx set-asides • http://www.keystone.org/html/documents.html • Energy Systems Lab, Texas A&M, College Station • Emissions calculator (eCalc): http://ecalc.tamu.edu/ • DOE Technical Assistance Program (TAP) • http://www.eere.energy.gov/wip/informationresources/Tap.htmlSIPs

17. EPA Staff Contacts • Clean Energy-Environment Guide to Action • Steve Dunn dunn.stevev@epa.gov • Quantification, SIPs: • Art Diem – diem.art@epa.gov • David Solomon, OAQPSsolomon.david@epa.gov • Jim Yarbrough, EPA Region 6yarbrough.jim@epa.gov • Cap and trade, NOx set-asides: • Edgar Mercado – mercado.edgar@epa.gov • Joe Bryson – bryson.joe@epa.gov • State and regional energy planning: • Sue Gander – gander.sue@epa.gov • Output-based environmental regulations • Katrina Pielli pielli.katrina@epa.gov

18. Which states might consider Clean Energy measures for AQ purposes? 2015: Projected areas of non-attainment after CAIR 8 hr Ozone non-attainment areas PM 2.5 non-attainment areas