Use of Renewable Energy Use of Renewable Energy and Energy Efficiency to and Energy Efficiency to Reduce Regional HazeReduce Regional Haze

in the Westin the WestAir Innovations ConferenceAir Innovations Conference

Chicago, IllinoisChicago, IllinoisAugust 10-12, 2004August 10-12, 2004

Rick SprottRick SprottDirectorDirector

Utah Division of Air QualityUtah Division of Air Quality

Today’s Presentation:Today’s Presentation:

• • What is Regional Haze?What is Regional Haze?

•Grand Canyon Visibility Transport Commission (GCVTC) Grand Canyon Visibility Transport Commission (GCVTC) and the Western Regional Air Partnership (WRAP)and the Western Regional Air Partnership (WRAP)•WRAP Pollution Prevention Forum WRAP Pollution Prevention Forum •Estimating Costs and Benefits of Renewable EnergyEstimating Costs and Benefits of Renewable Energy•ConclusionsConclusions

Regional Haze Rule and Regional Haze Rule and Renewable EnergyRenewable Energy

((Section 309 (d) (8): Pollution Prevention)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

Western Regional Air PartnershipWestern Regional Air Partnership

Five WRAP states went “309”Five WRAP states went “309”

.

Air PollutionAir Pollution

Prevention ForumPrevention Forum

Work PlanWork 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 PolicyRenewable Energy and

Energy Efficiency

(April 2003)

Renewable Renewable RecommendationsRecommendations

•Enact RE Portfolio Std or Service Benefit Charges Enact 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 ReformTransmission Reform

–Labeling/DisclosureLabeling/Disclosure

–Green TagsGreen Tags

–Green Pricing Programs (Renewable Energy Certificates)Green Pricing Programs (Renewable Energy Certificates)

–Net MeteringNet Metering

•Federal PoliciesFederal Policies

Fossil-Fuel Capacity DisplacedFossil-Fuel Capacity Displaced Region Meets 10/20 GoalRegion Meets 10/20 Goal

(10,000)

(8,000)

(6,000)

(4,000)(4,000)

(2,000)(2,000)

-

2,0002,000

CoalCoal

Oil/GasOil/GasTurbinesTurbines

CombinedCombined

CycleCycle

CoGenCoGen

Meg

aWat

tsM

egaW

atts

Investments in RE and EE Lowers Investments in RE and EE Lowers SOSO22 Compliance Costs Compliance Costs

• 10/20 goals and EE will 10/20 goals and EE will reduce the need for reduce the need for scrubber capacity by scrubber capacity by 1200 MW to 1700 MW 1200 MW to 1700 MW by 2018by 2018

• Cuts compliance cost by Cuts compliance cost by about $10 million or 7%about $10 million or 7%-

2,0002,000

4,0004,000

6,0006,000

8,0008,000

10,00010,000

12,00012,000

2018

Scr

ub

ber

Cap

acit

y (M

WS

cru

bb

er C

apac

ity

(MW

)

BAU 10/20 Goals 10/20 Goals + EE With EE

Summary of Modeling ResultsSummary of Modeling Results

• RE strategies reduce haze-causing pollutantsRE strategies reduce haze-causing pollutants

• Visibility improvements not largeVisibility improvements not large– SO2 capSO2 cap– ““Cleaner” gas-fired generation is displacedCleaner” gas-fired generation is displaced

• Secondary benefits beyond regional hazeSecondary benefits beyond regional haze– Downward pressure on gas pricesDownward pressure on gas prices– Lowers SO2 compliance costsLowers SO2 compliance costs

– Significant COSignificant CO2 2 reductionsreductions

• Small positive or no impact on region’s jobs, Small positive or no impact on region’s jobs, income and economic activity.income and economic activity.

The FutureThe Future309 RH SIPs good start, but not typical309 RH SIPs good start, but not typical

– REEE is a REEE is a regional goalregional goal, not a single state RFP , not a single state RFP enforceable measureenforceable measure

• Need EPA & State vision to:Need EPA & State vision to:– CatalyzeCatalyze, not just encourage RE/EE in SIPs & more, not just encourage RE/EE in SIPs & more– New RE/EE Guidance good, but still has barriersNew RE/EE Guidance good, but still has barriers– Find different yardsticks to accept and measure Find different yardsticks to accept and measure

effectivenesseffectiveness

• We all need to think regionallyWe all need to think regionally– Power, like pollution, doesn’t stop at state linesPower, like pollution, doesn’t stop at state lines

(except in Texas)(except in Texas)– Encourage multi-state collaborationEncourage multi-state collaboration

• Create the market…hardware will followCreate the market…hardware will follow

RE is coming soon…RE is coming soon…

……EE is coming too…EE is coming too…

……Voila!!!!Voila!!!!

It’s a “WRAP”It’s a “WRAP”

GCVTC Renewable Energy GCVTC Renewable Energy RecommendationRecommendation

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

GCVTC FindingsGCVTC Findings

GCVTC concluded that renewable energy GCVTC concluded that renewable energy and efficiency can be effective tools to and efficiency can be effective tools to reduce haze and if adopted could result in reduce haze and if adopted could result in “…emissions reductions, improvements in “…emissions reductions, improvements in visibility, and provide secondary visibility, and provide secondary environmental and economic benefits to the environmental and economic benefits to the region.” region.”

(Report of the GCVTC to the U.S. Environmental Protection Agency: Recommendations (Report of the GCVTC to the U.S. Environmental Protection Agency: Recommendations for Improving Western Vistas, June 1996, pg. 28)for Improving Western Vistas, June 1996, pg. 28)

Regional Haze RuleRegional 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 SIPS must demonstrate “reasonable

progress”progress”• Section 309: GCVTC Optional Section 309: GCVTC Optional

Approach – Presumptive RFPApproach – Presumptive RFP

WRAP P2 Forum ObjectivesWRAP P2 Forum Objectives

• Identify market barriers,Identify market barriers,

• Examine policies that can overcome Examine policies that can overcome market barriers,market barriers,

• Quantify emissions reductions, and Quantify emissions reductions, and economic impacts, and economic impacts, and

• Recommend a portfolio of policies and Recommend a portfolio of policies and “best practices” to states and tribes.“best practices” to states and tribes.

Renewable Generation Mix 2018Renewable Generation Mix 2018

GCVTC Generation Mix 2018GCVTC Generation Mix 2018

29%

0%

26%7%6%

14%

18%

Coal

Oil/Gas Steam &Turbines

Gas Combined Cycles

Cogeneration

Nuclear

Hydro

Renewables

Renewable Energy Generation Renewable Energy Generation Mix in 2018Mix in 2018

23%

64%

13% 0%

Existing Renewables

New Wind

New Geothermal

New Landfill Gas

Renewables lncrease Regional Renewables lncrease Regional Electricity Production Cost 2% - 5%Electricity Production Cost 2% - 5%

Lev

eliz

ed A

nnua

l Pro

d uc t

ion

Co s

t (2 0

0 5 –

2 02 2

)L

evel

ize d

An n

ual P

rodu

ctio

n C

o st (

2 00 5

–2 0

2 2)

$17.4 $17.7

$18.3

$-0

$5,000$5,000

$1010,000,000

$15,000$15,000

$20,000$20,000

BAUBAU 10/20 Goals10/20 Goals No Improvements in No Improvements in wind technologywind technology

Mill

ion

2001

$M

illio

n 20

01 $

SOSO2 2 EmissionsEmissions

200200

400400

600600

800800

20052005 20072007 20102010 20152015 20182018

SO2 ('000 tons)

Because of the trading program, there will be no changes in SO2 emissions under the 10/20 goals or EE

Emissions limited through the regional SO2 trading program

COCO2 2 Emissions of Utility Sector Emissions of Utility Sector

Reduced by 10%Reduced by 10%

-

55

1010

1515

2020

2525

3030

3535

4040

20052005 20152015 20182018Mil

lion

Met

ric

Ton

s of

CO

2 S

aved

Mil

lion

Met

ric

Ton

s of

CO

2 S

aved

NONOx x Emissions of Utility Sector Emissions of Utility Sector

Reduced by 1%Reduced by 1%

-

22

44

66

88

1010

1212

1414

1616

20052005 20152015 20182018Th

ousa

nd

Ton

s of

NO

x S

aved

Th

ousa

nd

Ton

s of

NO

x S

aved

Final ObservationsFinal Observations• Energy efficiency cost-effective emissions control Energy efficiency cost-effective emissions control

strategy strategy • Cost of meeting 10/20 renewables goal lower than Cost of meeting 10/20 renewables goal lower than

expected.expected.• Federal actions (e.g., production tax credit, RPS) Federal actions (e.g., production tax credit, RPS)

can help can help • Regional action desirableRegional action desirable

– Need regional RE credit trading system Need regional RE credit trading system – Need regional action on transmission reform Need regional action on transmission reform – Don’t exclude out-of-state RE power in state RPS’sDon’t exclude out-of-state RE power in state RPS’s

• Environmental policy benefits from a balanced Environmental policy benefits from a balanced energy policy.energy policy.