Anna Garcia Air Innovations Conference August 2004 Energy Efficiency, Renewable Energy and Distributed Generation: Clean & Profitable Ways to Reduce Emissions Anna Garcia Air Innovations Conference August 2004

Overview Energy efficiency is fastest, most cost effective remedy to satisfy both power needs and environmental quality concerns Renewable energy and clean distributed generation provide cleaner energy that reduce stresses on the electricity grid. States, cities and businesses are using these technologies to save money and improve the environment and their local economies through innovative partnerships and strategies

Why EE and RE Makes Sense Improves the Environment Reduces multiple emissions (NOx, SO2, CO2, Pb, Hg) by up to 100% for displaced generation at lower cost Boosts the Local Economy Saves money, lowers compliance costs, creates jobs and raises productivity Efficiency $ turns over an average 7X in local economy Enhances Electricity Reliability Lowers electricity demand and relieves transmission load in constrained markets

EE Offers Critical Environmental Benefits Energy Innovations, 1997: “Innovations Path” reduces energy consumption by over 40%, and by 2010 reduces the following pollutants: NOx to 24% below 1990 levels SO2 to 64% below 1990 levels CO2 to 10% below 1990 levels Clean Energy Futures, 2000: Efficiency programs reduce demand growth by 20 to 47% avoid need for ~250 - 600 big 300 MW power plants and their associated emissions

EE Reduces Emissions Cost-Effectively Source: Analyzing Electric Power Generation Under the Clean Air Act, US EPA, March 1998

Source: STAPPA/ALAPCO, 1999.

Source: The Center for Applied Research, 1997.

GHG Emissions Increasing 60 Percent by 2025 Projected U.S. carbon emissions by sector and fuel, 1990-2025 (million metric tons) Energy Information Administration, Annual Energy Outlook 2004 with Projections to 2025, January 2004

Energy Efficiency Helps Economic Development Conventional power supply = 4 - 10 cents/kWh Energy Efficiency = <1.5 - 2 cents/kWh Energy efficiency can reduce base loads and peak demands, enhancing system security Energy efficiency increases reliability and supply If we help our businesses reduce the cost of operation, our products can be more competitive, and we can create more jobs If we install energy improvements and renewable energy applications we create good new jobs 14

Economic Benefits of EE Savings for facility owners, consumers One NJ program: $200M to ratepayers over 5 years Increased local employment Construction, engineering and maintenance Full-time, long-lasting jobs Avoided cost of additional T&D, upgrades Avoided cost of power or generation, and elimination of line losses

Reliability Benefits of EE Deliver new resources faster than generation, transmission, pipelines, wells Support weak points on grid Capacity Energy CA re-targeting EE programs to reduce peak 14 % of peak is residential use another 14% is commercial use

Electricity reliability & transmission Electricity Generation by Fuel, 1970-2025 (billion kwh) Energy Information Administration, Annual Energy Outlook 2004 with Projections to 2025, January 2004

By 2011, generating capacity anticipated to increase 30%... …compared to a 5% increase in transmission

Aspects of air quality planning processes that are disincentives to energy efficiency: Input-based limits and budgets rather than output-based Focus on end-of-pipe, single pollutant fixes No economic value attributed to prevention of multiple pollutant emissions achieved through efficiency

Why It Makes Sense Improves the Economy Improves Air Quality Reduces air pollution more effectively than many end-of-pipe controls Prevents emissions of NOx, SO2, PM, CO2, and Hg Accelerated adoption of EE/RE technologies can improve a state/local area’s air quality Emissions reductions are cost-effective Improves the Economy Saves money by reducing energy use and bills, and lowering compliance costs Creates jobs and increases productivity, resulting in higher Gross State Product Greater economic growth & more $ in state’s budget Increases comfort & productivity

What’s going on in the states? $ R $ R $ Regional GHG Initiative (RGGI) – not including MD and Regional GHG Registry (RGGR) $ $ $ R $ $ R $ $ $ R $ $ R $ $ $ $ $ $ R $ Climate Action Plans $ Net Metering $ $ Public Benefit Funds Renewable Energy Mandates West Coast Governors Initiative Completed GHG inventory Mandatory Reporting or Voluntary Registries for GHG R GHG inventory in progress Note: Data from Pew Center, www.pewclimate.org/what_s_being_done/in_the_states