Clean Air Act 111(d) VAEEC Spring Meeting Thursday, May 29 Richmond, VA

1. Clean Air Act 111(d)VAEEC Spring MeetingThursday, May 29Richmond, VA • Kara Saul Rinaldi • National Home Performance Council/ • Home Performance Coalition 1

2. The National Home Performance Council • National, non-profit, 501c3 organization • Supports whole-house upgrade programs through research and convening projects • Addresses challenges and barriers to advancing the home performance industry and whole-house, energy efficiency programs. 2

3. Emergence of the Home Performance Coalition Merged with ACI • State energy offices • Program implementers • Utility Sector • Manufacturers • Non-profit stakeholders • Contractor Connection: Efficiency First 3

4. The Development of the rulE • 2007 Supreme Court ruling in Massachusetts v. EPA, which said the agency has the authority under the Clean Air Act to limit emissions of greenhouse gases from vehicles • 2009 - American Clean Energy and Security Act of 2009 (ACES) Waxman-Markey Legislation – passed house, not Senate • December 7, 2009 – The U.S. Environmental Protection Agency (EPA) announced that greenhouse gases (GHGs) threaten the public health and welfare of the American people • 2012, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit concluded that the EPA was "unambiguously correct" in using existing federal law to address global warming.

5. Copenhagen accord 2009 Copenhagen Conference of the Parties of the United Nations Framework Convention on Climate Change to reduce U.S. emissions of greenhouse gases by about: 17% below 2005 levels by 2020, 42% by 2030, 83% by 2050 15th session of the Conference of the Parties (COP 15) to the United Nations Framework Conventions on Climate Change (UNFCCC) and the 5th session of the Conference of the Parties serving as the meeting of the Parties (CMP 5) to the Kyoto Protocol

6. THE ADMINISTRATION’S CLIMATE ACTION PLAN (JUNE 25, 2013) • limiting carbon emissions from both new and existing power plants; • continuing to increase the stringency of fuel economy standards for automobiles and trucks; • continuing to improve energy efficiency in the buildings sector; • reducing the emissions of non-CO2 greenhouse gases through a variety of measures; • increasing federal investments in cleaner, more efficient energy sources for both power and transportation; and • identifying new approaches to protect and restore our forests and other critical landscapes, in the presence of a changing climate.

7. Third National Climate Assessment(May 2014) • May 2014 : effects of global warming had "moved firmly into the present.“ • The recent U.S. contribution to annual global emissions is about 18%, but the U.S. contribution to cumulative global emissions over the last century is much higher. • There is no "one-size fits all” adaptation, but there are similarities in approaches across regions and sectors. Sharing best practices, learning by doing, and iterative and collaborative processes including stakeholder involvement, can help support progress. • Carbon dioxide is removed from the atmosphere by natural processes at a rate that is roughly half of the current rate of emissions from human activities. Therefore, mitigation efforts that only stabilize global emissions will not reduce atmospheric concentrations of carbon dioxide, but will only limit their rate of increase. The same is true for other long-lived greenhouse gases. • To meet the lower emissions scenario (B1) used in this assessment, global mitigation actions would need to limit global carbon dioxide emissions to a peak of around 44 billion tons per year within the next 25 years and decline thereafter. In 2011, global emissions were around 34 billion tons, and have been rising by about 0.9 billion tons per year for the past decade. Therefore, the world is on a path to exceed 44 billion tons per year within a decade. • Carbon dioxide accounted for 84% of total U.S. greenhouse gas emissions in 2011.

8. What is 111D Clean Air Act Section 111(d) • Regulate carbon emissions from existing power plants • “best system of emissions reductions” - EPA can deploy a systemic approach to reducing pollution from power plants • Flexibility: EPA can look beyond each individual source in isolation to find the "best," most cost-effective system for reducing pollution. • Location Matters: Inside and Outside “the fence”

9. Will it work? • EPA and the states used section 111(d) to implement emission guidelines for fluorides from phosphate fertilizer plants (1977), sulfuric acid mist from sulfuric acid plants (1977), sulfur from kraft pulp mills (1979), and fluoride from primary aluminum plants (1980). • Results were reductions in emissions from the sources of 75% fluoride emissions, almost 80% of sulfuric acid emissions, 82% of sulfur, and up to 78% of fluoride emissions. • Carbon is different. But it can be done.

10. Stakeholder positions • State Air and Utility Regulators from CA, CO, CT, DE, IL, ME, MD, MA, MN, NH, NY, OR, RI, VT and WA: …We encourage EPA to develop a stringent but flexible framework that equitably achieves meaningful reductions in carbon pollution from the electricity sector while recognizing that states may employ a variety of strategies, including successful state programs already in force, to achieve these goals. • Kentucky • NASEO/NARUC/NACAA (3Ns)

11. Big questions • What is the amount of reductions required? By When? Compared to What Baseline? • New York Times, 20% • Cap and Trade • Auction • Registry • Where Measured • By Ton or by Rate • Compliance Mechanisms • Flexibility

12. compliance

13. Challenges for Energy Efficiency • Compensation Model May Change Deemed and Modeled Savings Metered and Measured Savings • QA and QC will be more vigorous Professions Certifications, Third Party Inspections, Annual Performance • Large Aggregations will be Vetted • Convincing States Energy Efficiency Works!

14. OPPORTUNITIES FOR ENERGY EFFICIENCY $$$

15. timeline “the most significant opportunity for energy efficiency advancement in our lifetime” • Timeline: • June 2014 Comment Period • June 2015 Final Rules Released • June 2016 State SIPs Developed • June 2017 Compliance.

16. Cost-Effectiveness Test Reform • Current Five tests (CA SPM): • Societal Cost Test (SCT) • Total Resource Cost Test (TRC) • Program Administrator Cost Test (PACT) • Ratepayer Impact Measure Test (RIM) • Participant Cost Test (PCT) 16

17. WHAT’S WRONG WITH CURRENT COST-EFFECTIVENESS TESTING? • Systematically unbalanced: often all costs, but not all benefits, considered • Wide variation in methods, not all in accordance with best practices • No systematic consideration of public policy goals • Result: inaccurate information that is used as the basis for decisions

18. recommendations Recommendations for Reforming Energy Efficiency Cost-Effectiveness Screening in the United States • Frames tests with key question: is a program in the Public Interest? • RVF principles recommend that all tests: • Address energy policy goals • Account for hard-to-quantify benefits • Ensure transparency and balance • Use best practices 18

19. Transparency and Symmetry Test Your Test! Use a worksheet to make assumptions and inputs explicit Ensure that if a category of costs is considered, that the corresponding benefits are also considered • Incorporate hard-to-quantify benefits • Take public policy into account • Address the public interest

21. Incorporate hard-to-quantify Benefits If it’s clear that a particular type of benefits exist, they should be adequately accounted for Range of methods: • Monetization • Quantification • Proxy adders • Alternative screening benchmarks If benefits clearly exist but are not accounted for, the corresponding costs should not be considered. You may be using the wrong test.

22. Ensure that policy goals are considered Most (all) states have goals policy goals affected by energy efficiency programs • Assisting low-income customers • Diversifying energy resources • Reducing price volatility • Water savings • Job creation • Carbon reduction May be in the form of executive orders, statutes, regulations, etc. These policies should be taken into account in the test

23. Implementing the RVF • Decide which overall perspective is appropriate for the state: a utility perspective or a societal perspective • Identify the state’s energy policy goals that are relevant to, and might be affected by, energy efficiency resources. • Identify a method of accounting for those energy policy goals in the state’s screening test. • Develop a standard template to explicitly identify the components of its screening test, and to document the assumptions and methodologies used to account for those components

24. Best Practices also important • Ensure avoided costs are fully accounted for • Use an appropriate discount rate • Use appropriate measure lives • Test at the appropriate level

25. Cost Effectiveness Test campaign • NHPC Launched national campaign in support of recommendations at NARUC 2013 • Build the national Energy Efficiency Screening Coalition (http://www.nhpci.org/campaigns.html) • Target states for adoption of recommendations • NY, MD, OR, ??

26. Thank you! National Home Performance Council (Home Performance Coalition) Kara Saul-Rinaldi Executive Director kara.saul-rinaldi@nhpci.org 202.276.1773 www.nhpci.org http://www.nhpci.org/campaigns.html 26