1. Energy Choice Simulator : BTAG Results Great Plains Institute Midwest Governors Association August 05, 2009

2. Agenda BTAG Process, now through October Energy Roadmap – Review Executive Summary priority policies – Review process Modeling results Review graphs for Energy Roadmap BTAG chapter

3. BTAG Process Policy Options Document – Very close to sending out final version for full AG approval – Cluster approval of BT 2 occurring – Finalizing BT 1 and cluster approval will occur next week Energy Roadmap Review of modeling results

4. MGA Jobs & Energy Summit, October 6-7, 2009 Detroit, Michigan www.midwestgovernors.org

5. Roadmap Action Item#1 for BTAG Low Carbon Fuel Standard Establish detailed design considerations for a regional low carbon fuel standard, by working with impacted stakeholders, that will decrease the life cycle GHG intensity of transportation fuels by 10% in ten years from the start of the program. Change to: Develop a model regional low carbon fuel standard, by working with impacted stakeholders, that will decrease the life cycle GHG intensity of transportation fuels by 10% in ten years from the start of the program.

6. Roadmap Action Item #2 for BTAG Reduce Vehicle Miles Traveled MGA states should adopt a goal of reducing vehicle miles driven per capita 15% by 2020, 28% by 2035, and 40% by 2050, and adopt a range of strategies including investment in transit, bike and pedestrian infrastructure, building the Midwest Regional Rail and changing development patterns in order to meet those goals. Change to: MGA jurisdictions should adopt a goal of reducing vehicle miles driven per capita 15% by 2020, 28% by 2035, and 40% by 2050, and adopt a range of strategies including investment in transit, bike and pedestrian infrastructure, building the Midwest Regional Rail and changing development patterns in order to meet the goal.

7. Roadmap Action Item #3 for BTAG Pay-as-you-drive Insurance Endorse a process for MGA states to study their laws and regulations to determine what barriers exist that prevent insurers from offering mileage-based insurance, and take steps to eliminate those barriers. Change to: MGA jurisdictions should commit to eliminate regulatory barriers that prevent insurers from offering mileage-based insurance.

8. Roadmap Action Item #4 for BTAG Increase Regional Biomass Supply Adopt strategies to increase biomass supply in the region such as conducting an inventory of biomass resources, identifying sustainability guidelines for production and harvest and regional demonstration opportunities, funding research development at land grant colleges and leveraging funding to the region to increase the amount of the biomass produced. Change to: MGA jurisdictions should commit to enacting all needed strategies to increase the market for sustainable, renewable, biomass for utilization by a variety of energy technologies.

9. Advisory Group Roadmap Review Process Draft BTAG chapter ready for review – Draft sent out August 5 th COB – Feedback from AG members due August 13 th COB – Feedback from AG member incorporated – Energy Roadmap sent to steering committee for review August 24 th MGA steering committee conducts final review and editing of roadmap (August 24- September 24)

10. Assumptions How we are going to use the model results (not a delphic oracle) Illustrate the impact of policies in a relative sense and show broad dynamics Not for calculating exact numbers or quantitative results Oil Sands: 20% of regional oil production in 2005

11. Overview of 7 BTAG Policies Low Carbon Fuel Standard – 10% reduction by 2020 – 30% reduction by 2030 VMT Policies – VMT Goal – Pay as you drive (PAYD) – Ecodriver – Fleet Modernization Blend Wall – 10%, 15%, None

12. Modeling Baseline Capital and O&M costs based on: – ICF assumptions, EIA – Biodiesel Board, NETL, CenterPoint Energy Fossil Fuel and Biomass Feedstock Prices: – EIA AEO 2009, ICF biomass curves Existing and Currently Proposed Policies: – CAFE/Clean Car (35.5 mpg by 2016) – Federal RFS – Blend Wall: enough to meet Federal RFS

13. LCFS Results Corn Improvements: 30% reduction of LCA ILUC: Indirect Land Use Change

14. Discussion How are you accounting for ILUC? – Numbers for biodiesel, cellulosic and corn grain ethanol are from CARB – California is revising those numbers – Data can be updated as more current data becomes available How are you handling technological innovation? – Adjustments can be made to the assumptions to account for technological innovation – POET can provide numbers on technological improvements in ethanol production

15. LCFS Results (UPDATED) *Any of these data series can be omitted on the final graph

16. LCFS Results

17. LCFS Results UPDATED

18. LCFS Results

19. Discussion How will you be accounting for advanced biofuels that will be coming online in 2010- 2015 – Biogasoline – Biobutunol – Renewable diesel ect. We will talk offline about how to account for those fuels.

20. VMT Policies Overall VMT goal Reduce 15% by 2020, 28% by 2035, 40% by 2050 ~$1 billion/year toward each policy Pay as you drive 15% market penetration by 2015, 75% by 2025 Ecodriver program 10% Emission Reduction 1% per year adoption Fleet modernization Average vehicle life Reduce from 13 years to 9 years from 2010-2015

21. Discussion Does fleet modernization take into account emissions from vehicle production? – Model accounts for tailpipe and fuel production emissions What policy drives the accelerated turn over rate of vehicles? – Not a specific policy tied to the fleet modernization mechanism in the model – Wanted to explore how we might model this type of policy to set up a structure for future runs

22. Cost Assumptions Transit:$2.20 / mile reduced Bike Lanes:$0.71 / mile reduced Van Pools:$0.48 / mile reduced High Speed Rail:$0.16 / mile reduced Intercity Rail:$0.16 / mile reduced Source: Transportation Research Record 1641, Paper No. 98-1100 $1 Billion invested in EACH area, every year

23. Discussion Numbers seem to be a little high compared to other sources that are out there – Lynne Bly could provide some updated numbers – Need to add some discussion in the text that messages cost savings associated with implementing transportation infrastructure improvements – Modeling purposes need to have investments rates

24. VMT Policy Results

25. VMT Policy Results UPDATED

26. VMT Policy Results

27. VMT Policy Results UPDATED

28. VMT Policy Results

29. Discussion PAYD should affect the amount of driving you do and not necessarily the type of vehicle you drive – Not sure this result is particularly useful

30. Blend Wall

31. Roadmap Graphs We can choose 4 charts to illustrate 4 policies: – LCFS – VMT-reduction – PAYD – Biomass (no good data chart exists) – Add Eco-driver? Do these 4 charts illustrate BTAG’s priorities?

32. Fuel Mixture – 10% LCFS

33. Discussion This slides shows fuels and not emissions This is not meant to show the exact amount of fuel that will be produced This is illustrative of the type of fuel mix that might exist LCFS policy goal was meant over a 10 year period and projecting out to 2050 might be misleading. – More likely to use graphs running out to 2030 – Might want to consider adding when the policy starts and when it would end – Use a caption in the roadmap to help illustrate the point the chart is trying to make Space limitation of 4 charts – Emission charts might be more interesting than speculative fuels charts

34. LCFS Emissions

35. Annual Emissions UPDATED

36. Emissions UPDATED

37. Annual VMT/vehicle

38. Annual VMT/vehicle UPDATED

39. Annual Emissions

40. Discussion Fleet modernization and eco-driver might just confuse the issue and we should consider taking them out (need paper on eco-driver and fleet modernization) Including other top action items (LCFS) would illustrate at a very high level what we are proposing Consider a stacked chart

41. BTAG Charts Are these the right charts for the roadmap? What would you change?

42. Next steps (reminder) Draft BTAG chapter ready for review – Draft sent out August 5 th COB – Feedback from AG members due August 13 th COB – Feedback from AG member incorporated – Energy Roadmap sent to steering committee for review August 24 th MGA steering committee conducts final review and editing of roadmap (August 24- September 24)