1. Use of Renewable Energy and Energy Efficiency to Reduce Regional Haze in the West Air Innovations Conference Chicago, Illinois August 10-12, 2004 Rick Sprott Director Utah Division of Air Quality

2. Today’s Presentation: What is Regional Haze? What is Regional Haze? Grand Canyon Visibility Transport Commission (GCVTC) and the Western Regional Air Partnership (WRAP)Grand Canyon Visibility Transport Commission (GCVTC) and the Western Regional Air Partnership (WRAP) WRAP Pollution Prevention ForumWRAP Pollution Prevention Forum Estimating Costs and Benefits of Renewable EnergyEstimating Costs and Benefits of Renewable Energy ConclusionsConclusions

5. Regional Haze Rule and Renewable Energy ( Section 309 (d) (8): Pollution Prevention) Identify state RE and EE programsIdentify state RE and EE programs Progress meeting 10/20 renewable goalProgress meeting 10/20 renewable goal Projections of short and long term:Projections of short and long term: Energy costs and savingsEnergy costs and savings Emissions reductionsEmissions reductions Secondary economic benefitsSecondary economic benefits Visibility ImprovementsVisibility Improvements

6. Western Regional Air Partnership

8. Five WRAP states went “309”.

9. Air Pollution Prevention Forum Prevention Forum Work Plan Examine market barriers to efficiency and renewable energy. Identify policies to remove market barriers. IPM Model Demand Fuel Costs Gen Capacity Electricity Costs Gen Output Emissions Model Visibility Impacts REMI Model Employment Income GRP ) WRAP Policy Renewable Energy and Energy Efficiency (April 2003)

10. Renewable Recommendations Enact RE Portfolio Std or Service Benefit ChargesEnact RE Portfolio Std or Service Benefit Charges State and local tax incentivesState and local tax incentives Govt “Green” purchase requirementsGovt “Green” purchase requirements Policies supporting efficient marketsPolicies supporting efficient markets –Transmission Reform –Labeling/Disclosure –Green Tags –Green Pricing Programs (Renewable Energy Certificates) –Net Metering Federal PoliciesFederal Policies

11. Fossil-Fuel Capacity Displaced Region Meets 10/20 Goal (10,000) (8,000) (6,000) (4,000) (2,000) - 2,000 Coal Oil/Gas Turbines Combined Cycle CoGen MegaWatts

12. Investments in RE and EE Lowers SO 2 Compliance Costs 10/20 goals and EE will reduce the need for scrubber capacity by 1200 MW to 1700 MW by 201810/20 goals and EE will reduce the need for scrubber capacity by 1200 MW to 1700 MW by 2018 Cuts compliance cost by about $10 million or 7%Cuts compliance cost by about $10 million or 7% - 2,000 4,000 6,000 8,000 10,000 12,000 2018 Scrubber Capacity (MW Scrubber Capacity (MW) BAU10/20 Goals10/20 Goals + EEWith EE

13. Summary of Modeling Results RE strategies reduce haze-causing pollutantsRE strategies reduce haze-causing pollutants Visibility improvements not largeVisibility improvements not large –SO2 cap –“Cleaner” gas-fired generation is displaced Secondary benefits beyond regional hazeSecondary benefits beyond regional haze –Downward pressure on gas prices –Lowers SO2 compliance costs –Significant CO 2 reductions Small positive or no impact on region’s jobs, income and economic activity. Small positive or no impact on region’s jobs, income and economic activity.

14. The Future 309 RH SIPs good start, but not typical –REEE is a regional goal, not a single state RFP enforceable measure Need EPA & State vision to:Need EPA & State vision to: –Catalyze, not just encourage RE/EE in SIPs & more –New RE/EE Guidance good, but still has barriers –Find different yardsticks to accept and measure effectiveness We all need to think regionallyWe all need to think regionally –Power, like pollution, doesn’t stop at state lines (except in Texas) –Encourage multi-state collaboration Create the market…hardware will followCreate the market…hardware will follow

15. RE is coming soon…

16. …EE is coming too…

17. …Voila!!!! It’s a “WRAP”

18. GCVTC Renewable Energy Recommendation “The Commission promotes the transition to power production based on renewable resources …[T]the goal of the states in the Transport Region should be to achieve annual additions in order that renewables will comprise 10% of the regional power needs by 2005 and 20% by 2015.”

19. GCVTC Findings GCVTC concluded that renewable energy and efficiency can be effective tools to reduce haze and if adopted could result in “…emissions reductions, improvements in visibility, and provide secondary environmental and economic benefits to the region.” (Report of the GCVTC to the U.S. Environmental Protection Agency: Recommendations for Improving Western Vistas, June 1996, pg. 28)

20. Regional Haze Rule Final rule issued July 1999Final rule issued July 1999 Targets 156 Class I air shedsTargets 156 Class I air sheds Applies to all statesApplies to all states SIPS must demonstrate “reasonable progress”SIPS must demonstrate “reasonable progress” Section 309: GCVTC Optional Approach – Presumptive RFPSection 309: GCVTC Optional Approach – Presumptive RFP

21. WRAP P2 Forum Objectives Identify market barriers,Identify market barriers, Examine policies that can overcome market barriers,Examine policies that can overcome market barriers, Quantify emissions reductions, and economic impacts, andQuantify emissions reductions, and economic impacts, and Recommend a portfolio of policies and “best practices” to states and tribes.Recommend a portfolio of policies and “best practices” to states and tribes.

22. Renewable Generation Mix 2018 GCVTC Generation Mix 2018 29% 0% 26% 7% 6% 14% 18% Renewable Energy Generation Mix in 2018

23. Renewables lncrease Regional Electricity Production Cost 2% - 5% Levelized Annual Production Cost (2005 –2022) $17.4 $17.7 $ 18.3 $-0 $5,000 10,000 $10,000 $15,000 $20,000 BAU 10/20 Goals No Improvements in wind technology Million 2001 $

24. SO 2 Emissions 200 400 600 800 20052007201020152018 SO2 ('000 tons) Because of the trading program, there will be no changes in SO 2 emissions under the 10/20 goals or EE Emissions limited through the regional SO 2 trading program

25. CO 2 Emissions of Utility Sector Reduced by 10% - 5 10 15 20 25 30 35 40 200520152018 Million Metric Tons of CO2 Saved

26. NO x Emissions of Utility Sector Reduced by 1% - 2 4 6 8 10 12 14 16 200520152018 Thousand Tons of NOx Saved

27. Final Observations Energy efficiency cost-effective emissions control strategyEnergy efficiency cost-effective emissions control strategy Cost of meeting 10/20 renewables goal lower than expected.Cost of meeting 10/20 renewables goal lower than expected. Federal actions (e.g., production tax credit, RPS) can helpFederal actions (e.g., production tax credit, RPS) can help Regional action desirableRegional action desirable –Need regional RE credit trading system –Need regional action on transmission reform –Don’t exclude out-of-state RE power in state RPS’s Environmental policy benefits from a balanced energy policy.Environmental policy benefits from a balanced energy policy.