Energy Policy In The South Progress, Decision, Transition

1. Energy Policy In The SouthProgress, Decision, Transition Presented to the: Eastern Coal Council Abingdon, Virginia December 8, 2008 Presented by: Kenneth J. Nemeth, Secretary Southern States Energy Board

2. Southern States Energy Board Through innovations in energy and environmental policies, programs and technologies, the Southern States Energy Board enhances economic development and the quality of life in the South. - SSEB Mission Statement • Established 1960, expanded in 1978 • 16 U.S. States and Two Territories • Each jurisdiction represented by the governor, a legislator from the House and Senate and a governor’s alternate • Federal Representative Appointed by U.S. President

3. Key Energy Policy Issues in the Southern Region • Coal • Climate Action Plans • Energy Efficiency/Conservation • Energy Security • Water for Energy • Biomass • Nuclear • Natural Gas • CO2 Pipelines and OCS Storage • State Energy Planning/Regulation • Transmission

4. Key Energy Policy Issues in the Southern Region • Coal • Exports – world markets • Clean Coal Technologies - 48,000 JOBS in Southern States • Carbon Capture, Storage, Sequestration, Use, Pipelines, Offshore • Coal to Liquids • Greenhouse Gas Reductions – EPA Regulation • Power Plant Siting

5. Number of CCT Projects In Southern (SSEB) states Number of Projects in SSEB States Over 80% of U.S. DOE Clean Coal Tech. projects are located in SSEB states

6. Carbon Sequestration Enhances The Future of Coal DOE: Storage Potential of 3.5 Trillion Tons

7. SECARB Partnership Objectives • Characterize the potential carbon sequestration sinks in the Southeast; • Conduct field verification studies in the most promising geologic formations in the region; • Advance the state of the art in monitoring, measurement and verification techniques and instrumentation; and • Develop sequestration technologies and characterize geologic sinks for future readiness.

8. Coal and Advanced Power Systems Domestic Issues • Training and Educating the Mining Workforce of the Future • Coal-to-Liquids • CO2 Pipelines and outer continental shelf study proposals • American Clean Coal Coalition Outreach & Education International Outreach • Carbon Sequestration Leadership Forum (CSLF) • Thailand – Eco-industrial Development • Brazil – Financing Clean Coal Projects

9. Climate Issues in the South • 2009 SGA Chairman’s Initiative - Governor Tim Kaine, VA • “Energy Sustainability and Climate Change” • Basis- Southern State Commonalities • Unique Domestic Raw Energy Production • Similar Regional Climate Change Risks • Regional Voice in the national discussion • Share Success Stories and consolidate efforts • Southern States Energy Board • State Best Practices for Clean Energy Policies and Technologies • Technical Support • Regional High Level Technology Deployment Plan?

10. Outcomes of Energy Sustainability and Climate Change Initiative • Conduct a dialogue about energy sustainability and climate change unique to the South. • Create a Regional Strategy • Give the South a strong voice in the national debate • Identify issues appropriate for state action: • Energy Independence • Conservation and Efficiency • Clean Technology Development • Climate Change Adaptation

11. Energy Efficiency • To delay/avoid supply-side resource projects, new incremental energy efficiency measures required • Measures depend upon changing consumer behavior by providing financial incentives/subsidies • Limit to effectiveness of these energy efficiency measures • Energy efficiency investments must be approved by Public Utility Commissions, Cooperative Members or Publicly-Owned Utilities. Public Utility Commissions approve only cost-effective measures to be included in utility rate base. Balance program cost vs. performance effectiveness • Portion of market (15%) is outside Public Utility Commission jurisdiction & control • Rural Electric Cooperatives • Municipal/Public Utilities

12. Efficiency Improvements of Power Plants in Southern States Reduces CO2 Emission Rates Source: EPA Title IV State Levels CO2 Source: EIA/DOE State Net Generation

13. American Energy Security Study II • Initiated August 2008 by West Virginia Governor Joe Manchin (Chairman-Elect of the Southern States Energy Board) • Strategic Action Plan – Energy Supply Blueprint • Focus on 4 areas impacting American economy: • Energy Resources • Electricity • Climate • Transportation Fuels

14. Water for Energy in the South • Water for Utilities • New Generation • Continued Operation of existing capacity • New Technologies • Waste Water Systems • Emergency Guidelines for Disasters and Table-top Exercise

15. Regional Biomass Energy Program • The Southern States Energy Board (SSEB) – Biomass Partnership • Facilitate increased use of Bioenergy and Biobased products • Co-host national webinars on cellulosic ethanol • SSEB’s unique structure - elevate program to policymaker level and engage key state officials and leadership • Southern States Biobased Alliance • Provide regional leadership to SSEB member states • advance research, development and demonstration of biobased technologies

16. Reduce CO2 emissions Reduce other pollutants such as SO2, NOx Reduce dependence on foreign sources of energy Economically competitive Uranium fuel is abundant Nuclear Power is a reliable power supply Public support is growing A few issues yet remain… The Nuclear Resurgence! Cornerstone of Southern Living

17. Nuclear Energy – Southern Region • SSEB states have 45 nuclear reactors in operation, more than any other region in U.S. • 50% of all nuclear energy is produced in the southern region • 15 new nuclear reactors have been applied for by power providers in the southern region • The South is the leader in new nuclear power development • SSEB states have passed more pro-active nuclear power legislation than any other region in the U.S.

18. Location of Projected New Nuclear Power Reactors Source: Nuclear Regulatory Commission

19. Natural Gas Price Risk from GHG Regulation • 5 SSEB states continue to depend heavily upon natural gas for power generation (FL, LA, MS, OK, TX). Natural gas price changes will significantly influence regional power prices • Increased shift toward natural gas based options from future GHG regulation will increase demand, increase market prices and cost for switching to natural gas based alternatives. • GHG demand increase in combination with depletion of conventional gas supplies (>10 TCF by 2030) creates significant natural gas supply risk. • Large new shale gas supplies will require capital and much higher prices to develop • US will become increasingly dependent upon LNG imports and arctic gas to meet increasing natural gas demand • Governmental studies have underestimated this market price risk by assuming significant gas market demand losses from higher prices and continued inter-supplier competition to keep cost-based pricing

20. State Energy Strategies • Over half states in South developing energy plans • Additionally, Climate Action Plans being developed • U.S. Virgin Islands • North Carolina • Kentucky • West Virginia • Texas • Georgia

21. Innovative Legislation/Governor’s Initiatives – SGA Region Gov. Sonny Perdue, GA: “Conserve Georgia” Initiative Gov. Tim Kaine, VA: Energy Sustainability and Climate Initiative Gov. Joe Manchin, WV: Declaration of Energy Independence Gov. Steve Beshear, KY: Comprehensive Energy Strategy Gov. Charlie Crist, FL: Greenhouse Gas Initiative Gov. Phil Bredesen, TN: Clean Energy Technology Summit Gov. Rick Perry, TX: Carbon Capture & Sequestration Governor Mike Easley, NC: Renewable Energy and Energy Efficiency Portfolio Standard More than 600 energy and environmental bills passed by legislatures in southern states in 2008

22. Electrical System Interconnections - Southeast

23. Planning Transmission Systems in the New World • Transmission & energy planning -more important and complex as intermittent resources & demand response programs increase • Planning must integrate deployment of sensor & automation technologies • Applications of electricity are changing • November 2008 NERC Report on Climate Policy & Grid Reliability • Broad Fuel-Switching from Coal to Natural Gas • Transmission Infrastructure & Planning Mechanism • Demand-Side Resources – Critical Component • National Climate Change Policy Needed- Regulatory Certainty • 2008 NERC Long Term Reliability Assessment • Transmission miles increase 9.5% from 2008-2017 (projected) • More Transmission needed for bulk system reliability & to integrate new generation (much remote) • Siting difficult: local opposition; time-consuming; expensive; state rules different • Smart grid technologies necessary for improved efficiencies

24. In Summary:2007 SSEB Electric Generation Mix Fossil fuels account for 78% of the 2007 regional power supply

25. In The Future:SSEB States Have Much Higher Costs to Reduce GHG Emissions than the Western and Northeastern States that Have a Higher Mix of Nuclear and Hydro Power 16 SSEB States 7 State Western Climate Initiative 10 State Regional Greenhouse Gas Initiative 6 State Midwest Regional Greenhouse Accord

26. Kenneth J. Nemeth, Secretary Southern States Energy Board nemeth@sseb.org (770) 242~7712 PLEASE VISIT: www.sseb.org www.americanenergysecurity.org www.secarbon.org