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

2. Outline of Presentation Regional Haze Rule: 309(d)(8)Regional Haze Rule: 309(d)(8) AP2 Forum CharterAP2 Forum Charter Organization and Work Plan of ForumOrganization and Work Plan of Forum Renewable and Efficiency RecommendationsRenewable and Efficiency Recommendations Economic and Emissions ImpactsEconomic and Emissions Impacts Next stepsNext steps Tribal RecommendationsTribal Recommendations

4. 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. 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,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 help states meet SIP requirements.Recommend a portfolio of policies and “best practices” to help states meet SIP requirements.

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

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

10. AP2 Work 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) Model Visibility Impacts Nox REMI Model Employment Income GRP (July 2002)

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

12. Renewable Recommendations Enact RPS or SBCEnact RPS or SBC 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 –Net Metering

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

14. States with System Benefits Charge for Renewables. 16 states with SBCs for renewable energy16 states with SBCs for renewable energy $3.6 billion collected through 2012$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. Source: Lawrence Berkeley National Laboratory Full Disclosure Partial Disclosure Proposed Proposed PartialDisclosure

20. Energy Efficiency “Best Practices” RESIDENTIAL Efficient Cooling Systems CFL Lighting Energy Star Appliances Appliance Recycling Building Envelope COMMERCIALINDUSTRIAL COMMERCIAL INDUSTRIAL 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

21. Policy Recommendations for Energy Efficiency Tax IncentivesTax Incentives Public purpose funding (ratepayer, SBC)Public purpose funding (ratepayer, SBC) Improved Information (accurate load data, forecasting)Improved Information (accurate load data, forecasting) Price signals (real time pricing, inverted block)Price signals (real time pricing, inverted block) Markets for demand side resourcesMarkets for demand side resources Government “leading by example”.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 renewablesMarket barriers exist to renewables 20,264 MW needed to meet 10/20 goal20,264 MW needed to meet 10/20 goal Costs of meeting 10/20 goal is $256 millionCosts of meeting 10/20 goal is $256 million Less than a 2% increase in regional electricity costs over BAULess than a 2% increase in regional electricity costs over BAU Impact on average residential customer is about 78 cents per month.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.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.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.Net savings in electricity production costs range from $200 million in 2005 to $1.6 billion in 2018.

25. 25 Energy Efficiency Savings Estimated Total Energy Efficiency (EE) Savings by Region, AP2 Forum Recommendations - 10,000 20,000 30,000 40,000 50,000 60,000 20022003200420052006200720082009201020112012201320142015201620172018 Annual GWh Savings CA/Las Vegas-EE OR w. ID-EE Interior West EE

26. 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

27. NO x Emissions

28. CO 2 Emissions

29. Lowers Compliance Cost Lowers Compliance Cost 10/20 goals will lower compliance cost of meeting SO 2 Annex milestones by $ 10 million in 201810/20 goals will lower compliance cost of meeting SO 2 Annex milestones by $ 10 million in 2018 Represents 7% of the compliance cost of meeting the SO 2 Annex milestones without 10/20 goals) 1Represents 7% of the compliance cost of meeting the SO 2 Annex milestones without 10/20 goals) 1 1 Compliance cost of SO 2 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.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.“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 Policies Aligned with WGA Energy PolicyAligned with WGA Energy Policy

32. Regional Policies Renewable Portfolio StandardRenewable Portfolio Standard Regional “green tags” market.Regional “green tags” market. Western generation tracking system.Western generation tracking system. Regional forum for energy and air quality decision-makers.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?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 savingsEnergy savings Emissions reductionsEmissions reductions State economic impactsState economic impacts –Dialogue between energy and air agencies

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