Air Pollution Prevention Forum Report to the Western Regional Air Partnership

1. Air Pollution Prevention ForumReport to the Western Regional Air Partnership July 23, 2002 Denver, Colorado

2. Outline of Presentation • Regional Haze Rule: 309(d)(8) • AP2 Forum Charter • Organization and Work Plan of Forum • Renewable and Efficiency Recommendations • Economic and Emissions Impacts • Next steps • Tribal Recommendations

4. Section 309 (d) (8): Pollution Prevention • Identify state RE and EE programs • Progress meeting 10/20 renewable goal • Projections of short and long term: • Energy costs and savings • Emissions reductions • Secondary economic benefits • Visibility Improvements

6. AP2 Charter Recommend legislative actions, economic incentives and regulatory policies states can adopt to meet the GVCT 10/20 renewable energy goal and increase the use energy efficiency technologies in the region.

7. Objectives • Identify market barriers, • Examine policies that can overcome market barriers, • Quantify emissions reductions, and economic impacts, and • Recommend a portfolio of policies and “best practices” to help states meet SIP requirements.

8. Robert “Hap” Boyd, Co-Chair Jeff Burks, Co-Chair Bill Becker, Federal gov. Trisha Frank, Tribal Rep Rich Ferguson, Environmentl Bob Green, Industry Brian Hedman, Industry Tom Hines, Industry Van Jamison, Public Ursula Kramer, Local gov John Nielsen, Environmental Terry O’Connor, Industry Stan Price, Small Business John Savage, State gov. Rachel Shimshak, Environmental Julie Simpson, Tribal Rep Rich Sperberg, Industry Barrett Stambler, Industry Dick Watson, State gov. Chris Wentz, State gov. AP2 Forum Members

9. AP2 ForumJeff Burks, “Hap” Boyd Co-Chairs WIEB Staff Doug Larson Tribal Work Group Julie Simpson, Lead N. Arizona Univ Modeling Work Group John Nielsen, Lead ICF Tellus Inst.

10. AP2Work Plan Renewable Energy Recommended Policies (January 2000) Energy Efficiency Policies and “Best-Practices (August 2001) • IPM Model • Demand • Fuel Costs • Gen Capacity • Electricity Costs • Gen Output • Emissions • (June 2002) • REMI Model • Employment • Income • GRP • (July 2002) • Model Visibility Impacts • Nox

11. AP2 Reports • Recommendations to Increase Generation of Electricity from Renewable Resource • Energy Efficiency Issues and Technologies • Tribal Renewables Report • Tribal Energy Efficiency Report • Economic Assessment of the 10/20 Renewable Energy Goals and Energy Efficiency • In Draft final report to the WRAP

12. Renewable Recommendations • Enact RPS or SBC • State and local tax incentives • Govt“Green” purchase requirements • Policies supporting efficient markets • Transmission Reform • Labeling/Disclosure • Green Tags • Green Pricing Programs • Net Metering

13. MN: 550 MW by 2002 + 400 MW by 2012 ME: 30% by 2000 WI: 2.2% by 2011 MA: 4% by 2009 NV: 15% by 2013 CT: 13% by 2009 NJ: 6.5% by 2012 IA: ~250 MW by 1999 PA: varies by utility AZ: 1.1% by 2007, 60% solar NM: 5% of standard offer in 2007, as available TX: 2880 MW by 2009 (2000 MW new) State Renewable Portfolio Standards

14. States with System Benefits Charge for Renewables . • 16 states with SBCs for renewable energy • $3.6 billion collected through 2012 Source: Lawrence Berkeley National Laboratory

15. States with Tax Incentives for Renewables . Source: Lawrence Berkeley National Laboratory

16. States with Government“Green Purchase”Requirements . Source: Lawrence Berkeley National Laboratory

17. States with “Green Pricing” Programs . Source: Lawrence Berkeley National Laboratory

18. States with Labeling and Disclosure Rules . • Full Disclosure • Partial Disclosure • Proposed Source: Lawrence Berkeley National Laboratory

20. RESIDENTIAL Efficient Cooling Systems CFL Lighting Energy Star Appliances Appliance Recycling Building Envelope COMMERCIALINDUSTRIAL Efficient Cooling Equip Efficient Motors Retro Commissioning Motor Drive Systems Commercial Lighting ( Fans, Pumps, CAir) Efficiency Standards Ind. Transformers Efficient Refrigeration Fuel Switching Commercial Appliances Energy Efficiency“Best Practices”

21. Policy Recommendations for Energy Efficiency • Tax Incentives • Public purpose funding (ratepayer, SBC) • Improved Information (accurate load data, forecasting) • Price signals (real time pricing, inverted block) • Markets for demand side resources • Government “leading by example”.

22. States with System Benefits Charge for Efficiency . Source: Lawrence Berkeley National Laboratory

23. Economics of Renewables • Market barriers exist to renewables • 20,264 MW needed to meet 10/20 goal • Costs of meeting 10/20 goal is $256 million • Less than a 2% increase in regional electricity costs over BAU • Impact on average residential customer is about 78 cents per month.

24. Economics of Efficiency • Implementation of the energy efficiency recommendations would reduce power demand in the Western states by 1.5 % in 2005 and 8% in 2018. • Represents 54,000 GWH of saved energy and 6,100 MW of capacity. • Net savings in electricity production costs range from $200 million in 2005 to $1.6 billion in 2018.

25. Energy Efficiency Savings Estimated Total Energy Efficiency (EE) Savings by Region, AP2 Forum Recommendations 60,000 50,000 CA/Las Vegas-EE 40,000 OR w. ID-EE Annual GWh Savings 30,000 Interior West EE 20,000 10,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

26. Emissions limited through the regional SO2 trading program SO2 ('000 tons) SO2 Emissions 800 600 Because of the trading program, there will be no changes in SO2 emissions under the 10/20 goals or EE 400 200 2005 2007 2010 2015 2018

27. NOx Emissions 16 14 12 10 Thousand Tons of NOx Saved 8 6 4 2 2005 2015 2018 Under 10/20 Goals With EE Under 10/20 Goals + With EE

28. CO2 Emissions

29. Lowers Compliance Cost • 10/20 goals will lower compliance cost of meeting SO2 Annex milestones by $ 10 million in 2018 • Represents 7% of the compliance cost of meeting the SO2 Annex milestones without 10/20 goals)1 1 Compliance cost of SO2 Annex milestones without 10/20 goals based reported cost in “Economic Impacts of Implementing a Regional SO2 Trading Program in Grand Canyon Visibility Transport Region, Volume II” WRAP/MTF, 2000

30. Hedge Against Natural Gas Price Volatility • LBL estimates $.05 kWh is the “hedge” value that investments in renewable energy provide consumers who prefer stable over volatile natural gas prices. • “Hedge” value of investments in renewable energy more than offsets increase in regional electricity costs attributed to meeting the 10/20 goal.

31. WGA Energy Policy

32. Regional Policies • Renewable Portfolio Standard • Regional “green tags” market. • Western generation tracking system. • Regional forum for energy and air quality decision-makers.

33. Summary of AP2 Work • How has the work of the AP2 Forum helped states meet 309(d)(8) requirements of regional haze rule? • Identified policies and best practices. • Short term and long term projections: • Energy savings • Emissions reductions • State economic impacts • Dialogue between energy and air agencies

34. Next Steps • Finish REMI economic modeling • Issue final summary report • SIP Guidebook workshop (fall) • WRAP action on final AP2 report (December) • What future activities are needed of AP2? • Outreach activities? • Technical assistance to states? • Promoting recommended regional actions? • Monitoring new energy/air developments?