Capturing the Environmental Benefits of Renewables

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Capturing the Environmental Benefits of
Renewables
NWCC

Rick Morgan U.S. Environmental Protection
AgencyClimate Protection Partnerships
Division morgan.rick_at_epa.gov (202)
564-9143 November 7, 2002
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(No Transcript)
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Summary

• Electricity air quality
• RECs emission credits challenges
  opportunities
• EPA data tools

60 MW Pocono Wind, Scranton PAPhoto Source New
Wind Energy
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Electricity Air Quality Basics

• A few statistics
• How we regulate for clean air
• Command control vs cap trade
• Issues for renewables

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Major Air Emissions from Power Generation
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Power Industry Resource Mix (1997)
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Emission Rates Fossil vs. Wind (lb/MWh)
Oxides of Nitrogen (NOx)
Carbon Dioxide (CO2)
Data Source E-GRID2000 v2.0
Prepared
11/04/2002 by Art Diem USEPA 202-564-3525
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RECs and Emission Markets

• What do you want from air regulators?
• An opportunity to demonstrate quantifiable
  environmental benefits
• Equal treatment with other fuel sources
• Emission credits!

Hull Municipal Lighting Plant, MA Photo Source
NREL
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Emission Credits for Renewables Why So Hard?

• Traditional command control approach inflexible
• SIP process has many hurdles
• Cap trade programs provide opening, but credit
  allocation goes to fossil
• Offsets set-aside programs too limited
• ? Emission credits for renewables are very rare!

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Regulating for Clean AirThe Traditional Way

• Command control dictates compliance method
• Example state implementation plans (SIPs) for
  criteria pollutants (e.g., NOX, SO2)
• State-by-state approach
• focus on non-attainment areas
• reductions must benefit airshed
• Emission rate formula based
  on fossil heat input (lb/MBtu)
• lets air become dirtier over time
• no incentive for technology
  substitution

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SIP Process Has Many Hurdles

• State-by-state regulation of criteria pollutants
• e.g., NOX, SO2
• Emission reductions must be
• quantifiable
• surplus
• enforceable
• permanent
• geographically relevant (i.e., within
  non-attainment areas)
• Renewables addressed in set-asides (if at all)
• MA, NY, NJ, MD, OH, IN

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Regulating for Clean AirCap Trade Approach

• Example Acid Rain Program (enacted 1990)
• Permanent SO2 emissions cap for 48 states
• Emissions trading banking ? reduced compliance
  costs
• Verified by continuous monitoring of emissions
• Flexibility in compliance method
• renewables efficiency can free up allowances
• Cap protects air quality over time
• Allowances awarded based on fossil heat input
• renewables get no allocation

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AQ RegulationKey Issues for Renewables

• Command control vs. cap trade
• Allocation process
• fossil only, or
  incl other generation
• input-based vs. output-based

Wind farm near Humbie, Scotland Photo source
Rick Morgan
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Emission Credits RECsChallenges
Opportunities

• Bundling of RECs emission credits
• The Big Quandary What to do with your emission
  credits?

• Multi-pollutant legislation
• New ideas for linking emissions renewables

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Bundling RECs Emission Credits Is a Challenge

• Different concepts separate commodities
• emission credits are legal instruments
• green tags are a creation of the marketplace
• Air regulatory programs have prescribed
  boundaries
• RECs emission credits have different time
  frames
• ? Bundling possible,
  but problematic

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Quandary for Green Power Sell Your Emission
Credits?

• Emission credits are valuable
• current price for one SO2 allowance 135
• One allowance authorization to emit one ton
• Sale of credits might devalue green product
• Another option retirement of credits
• preserves environmental attributes
• forgoes revenues from allowance sales
• Green-e standard recommends retirement of
  emission credits

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Multi-Pollutant Legislation

• Congress considering new nationwide caps on power
  plant emissions
• Cap trade approach likely
• Bush Admins Clear Skies Initiative
• caps NOX, SO2, mercury
• trading banking permitted
• initial allowance allocation by fossil heat input
• Other legislative proposals
• S. 556 (Jeffords)
• S. 3135 (Carper)
• AWEA concerns re allocation of credits

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New Ideas for Linking Emissions Renewables

• Regional partnerships
• WRAP allows renewables trading in states
  regional haze SIPs
• Supplemental environmental projects (SEPs)
• Pollution settlements offer green power option
• Emissions performance standards
• Mass, Conn require clean power
• New Englands GIS tracks emissions, renewables

Energy markets ? Air policy
Western Regional Air Partnership Generation
Information System
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New Ideas for Linking Emissions Renewables
(contd)

• Renewables-friendly transmission policies
• FERC seeks elimination of barriers to renewables
• part of Standard Market Design rulemaking
• Interconnection standards for small generators
• FERC rulemaking
• NARUC model policies
• Resource planning via portfolio management
• PUCs explore resource procurement strategies
• Regulatory Assistance Project (www.rapmaine.org)

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EPA Data Tools Support Renewable Energy Markets

• E-GRID
• Power Profiler
• Displaced emissions analysis (ADER)

Searsburg VT (6 MW) Photo source NREL
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E-GRID EPAs Comprehensive Source of Electric
Power Data

• Emissions profile (NOX, SO2, CO2, Hg)
• (short) tons
• input rate (lb/mmBtu)
• output rate (lb/MWh)
• Generation resource mix
• percentage break-out by fuel type
• Data aggregated to every level
• unit, plant, company, state, grid region, U.S.
  total
• Includes 4600 US plants, 2200 companies
• Integration of 23 federal data sources

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Accessing E-GRID Data

• Two ways to view E-GRID data
• user-friendly data browser (install on PC)
• 35 spreadsheets in Excel workbook 1500
  variables
• Forthcoming E-GRID2002 edition featuring 2000
  data expected late December 2002
• download from EPA Website www.epa.gov/airmarkets/
  egrid/
• On-line access to E-GRID data expected early 2003
• Questions/comments?
• comments.egrid_at_epa.gov

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Forthcoming Power Profiler

• Web-based calculator for businesses, individuals
• Calculates consumers emissions and fuel mix
• compares to national average
• Info on energy alternatives
• Expected late fall 2002
• Access via www.epa.gov/cleanenergy

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Forthcoming Average Displaced Emission Rates
(ADER)

• Estimates emissions displaced by efficiency,
  renewable technologies
• CO2, NOX, SO2, Hg
• technology-specific estimates
• region-specific, for 2005,
  2010, 2015, 2020
• ADER values generally below historic system
  averages
• Preliminary results expected early 2003

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EPAs New Clean Energy Website

• Energy use environment
• How clean is my electricity?
• How can I make a difference?
• Emissions data
• Green Power Partnership
• CHP Partnership

www.epa.gov/cleanenergy
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Conclusions

• Renewables offer quantifiable emissions benefits
• Existing clean air rules are not well suited to
  providing emission credits for renewables
• Emission credits for renewables are very rare
• Cap trade approaches are preferable to command
  control
• The key issue will be how future clean air
  programs allocate emission credits
• Bundling of RECs emission credits is tricky
• Preserving environmental attributes requires
  retirement of emission credits