Transcript Energy Efficiency - American Association of Blacks in Energy

American Association of
Blacks in Energy (AABE)
Webinar on
The American Clean Energy
and Security Act – H.R. 2454
Sponsored by
AABE Legislative Issues and
Public Policy Committee
August 27, 2009
AGENDA


Introduction and Background
Key of Provisions of H.R. 2454
 Climate Change
 Combined Energy Efficiency and Renewable Energy Standard
 Other

Questions

Action Items
Slide 2
Background on H.R. 2454
Passed By House June 26, 2009


Four titles

Promoting clean energy

Increasing energy efficiency

Combating climate change

Assisting the transition to a clean energy economy
Regulates greenhouse gas emissions (GHG)

Amends Clean Air Act adding a Title VII

Establishes “Global Warming Reduction Program”
Slide 3
Senate Action on Climate Legislation

Draft legislation to be released soon after the Labor Day recess

Chairwoman Boxer, Senate Environment and Public Works Committee

H.R. 2454 a starting point

Legislative hearings followed by markup



Week of September 22 before Senate Environment and Public Works
Other Senate Committees will have substantial input

Energy and Natural Resources, Finance, Agriculture, Commerce and
Foreign Relations
Goal - Complete work of Committees by September 28

Deadline set by Majority Leader Reid
Slide 4
Climate Change Questions
We Must Answer!

How do you minimize the impact of compliance costs on low-income
consumers?

What must U.S. climate change legislation and carbon management
strategy include to

Ensure economic growth?

Ensure energy security?

Avoid unfairness?
Slide 5
Key Climate Questions

Economy Wide?

Cap-and-Trade or Tax?

Mitigating Customer Impacts?


Allowances

Offsets

Strategic allowance reserve

Other approaches
Targets and Timetables?
Slide 6
U.S. Green House Gas Emissions
By Sector
Agriculture
7%
Residential
6%
Commercial
7%
U.S. Territories
1%
Electricity
Generation
32%
Industry
19%
Transportation
28%
Slide 7
Targets and Timetables
Leading Congressional Proposals
H.R. 2454




U.S. CAP proposal




3 % below 2005 by 2012
17 % below 2005 by 2020
42 % below 2005 by 2030
83 % below 2005 by 2050
3 % below to 2 % above 2005 by 2012
14-20 % below 2005 by 2020
42 % below 2005 by 2030
80 % below 2005 by 2050
Boucher-Dingell discussion  6 % below 2005 levels by 2020
draft (110th Congress)  44 % below 2005 levels by 2030
 80 % below 2005 levels by 2050
Targets and Timetables
Questions / Concerns

To meet short-term targets
 Power sector will rely on energy efficiency, renewables and
natural gas

In the medium term (i.e., 2020-2025)
 Targets should be harmonized with the development and
commercial deployment of advanced climate technologies
and measures


(e.g., nuclear energy, advanced coal technologies with carbon
capture and storage, PHEVs, smart grid)
Electricity demand will increase 21% by 2030

Latest DOE Energy Information Administration forecast
Slide 9
Targets and Timetables
Questions / Concerns

Cost-containment mechanisms to mitigate consumer cost
increases




Allocation of allowances (v. auctions)
Price collar
Full and robust domestic and international offsets
Additional mandates will further increase consumers’ electricity
prices

e.g., Combined Efficiency and Renewable Energy Standard (CERES),
performance standards for new coal generation and smart grid peak
reduction goals
Slide 10
Allocation of Allowances
Primary Goals

Help mitigate the impact of increased energy prices on
consumers

Assist in transition to clean energy economy

Advance development and deployment of clean energy
technologies, including energy efficiency
Slide 11
Cumulative Distribution of Allowances
Under H.R. 2454 2012 - 2020
Energy Programs
35%
Direct Auctions
21%
International Programs
6.9%
Domestic Energy
Technology
14.5%
Low-Income Consumers Public Purpose
Programs General Purpose
14.8%
1.5%
Auctions
4.6%
Industrial Energy Sector
13.2%
Small LDCs
Petroleum & Natural Gas 0.49%
Consumers
6.7%
Cogenerators
0.04%
Merchant Coal
3.7%
Electricity LDCs
31.9%
Long-term Contract
Generators
1.6%
Energy Producers &
Consumers
44%
Slide 12
Cumulative Distribution of Allowances
Under H.R. 2454 2021 - 2030
Energy Programs
33%
Low-Income Consumers
14.2%
International Programs
8.8%
Public Purpose
Programs
3.3%
Direct Auctions
32%
General Purpose
Auctions
14.5%
Domestic Energy
Technology
13.2%
Industrial Energy Sector
10.5%
Electricity LDCs
24.3%
Merchant Coal
2.4%
Petroleum & Natural Gas
Long-term Contract
Consumers
Generators
7.3%
Small LDCs
1.0%
0.3%
Energy Producers &
Consumers
35%
Slide 13
Cumulative Distribution of Allowances
Under H.R. 2454 2031 - 2050
Energy Programs
24%
Low-Income Consumers
14%
Direct Auctions
75%
Public Purpose
Programs
5%
General Purpose
Auctions
56%
International Programs
10%
Domestic Energy
Technology
14%
Industrial Energy Sector
1%
Energy Producers &
Consumers
1%
Slide 14
Allowance Distribution Schedule 2012 - 2050
6000
Reds = Energy Producers & Consumers
Yellow = Domestic & International Energy Programs
Blues = Auctions
5000
Electricity LDCs
Small LDCs
4000
Long-term Contract
Generators
Merchant Coal
3000
Petroleum & Natural Gas
Consumers
Domestic Energy Technology
2000
Industrial Energy Sector
1000
General Purpose Auctions
International Programs
0
2012 2015 2018 2021 2024 2027 2030 2033 2036 2039 2042 2045 2048
15
Slide 15
Mitigating Customer Impacts
Allowances

Electric power sector 35%


For consumers until 2025, phase out 2026 – 2030
Small electric LDCs .5%

For (sales under 4 million MWh/year) for renewable, efficiency and low
income; cannot sell output for RECs

Natural gas consumers - 9%

Low-and-middle-income consumers ~15% (auctioned)

Home heating oil and propane ~2%

Energy efficiency 3% to 6%

Through 2050
Slide 16
Mitigating Customer Impacts
Offsets

Allows use of up to 2 billion tons annually of offsets



Recognizes three types of offsets




Up to 1 billion from domestic sources
With waiver (insufficient domestic offsets at market price of allowances), up
to 1.5 billion from international sources
Domestic (exchanged at 1:1 basis)
International
Term offsets (only valid for five years)
Concerns

Questions about supply and ability to fully utilize cap
 Domestic offsets mainly from ag, forestry projects (<1/2 billion tons)?
 International offsets largely dependent on successor to Kyoto Protocol
 EPA has discretion whether to issue any international offset credits
Slide 17
Mitigating Customer Impacts
Strategic Allowance Reserve

Provide price cushion if allowance prices rise faster than expected

Reserve pool stocked by borrowing from future




1% of the allowances from years 2012-2019
2% from years 2020-2029
3% from years 2030-2050 (2.5 billion total)
Minimum auction price = 60% above rolling 36-month average
market price by 2015

In 2012, the minimum price will be $28/ton

Limits on purchase levels

Auction revenue used to purchase REDD offsets

Converted to allowances at 1.25:1 ratio, used to replenish the reserve
Slide 18
Mitigating Customer Impacts
Other Approaches

Stretching out the transition to full auction

Economic safety valve



Price collar


Upper limit or ceiling on price for allowances
To limit impacts of price volatility and rate impacts
Also includes minimum prices for allowances
Mitigating near- and medium-term targets
Slide 19
Federal Preemption

States cannot enact or enforce separate cap-and-trade programs
from 2012-2017

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States can continue to regulate GHG emissions in other ways

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Can exchange Regional Greenhouse Gas Initiative (RGGI), California or
Western Climate Initiative (WCI) permits issued before 2012 for federal
permits, but not one-for-one exchange
CAFÉ standards
Emissions caps
Required surrender of federal allowances
Etc.
Other federal laws not addressed

Endangered Species Act, Clean Water Act, etc.
Slide 20
AABE Climate Change Principles

AABE supports

Consistency of compliance timetables w/ technology development

Ensuring low / fixed income consumers are not disproportionately impacted

Cost containment measures

Preserving all energy options – energy efficiency, renewables, advanced
nuclear, carbon capture and storage

Inclusion of all sectors of the economy and all sources of GHG

Balancing economic improvements with economic development

Cost effective GHG reductions

Green jobs, economic development, maintain trade balances

Public / private partnerships – research, development & deployment

Use of alternative fuels and needed infrastructure
Slide 21
What Will It Take to Address Climate
Change?
There is no silver bullet!

Renewables

Energy efficiency

Clean coal technologies

Carbon capture and storage

Nuclear

Plug-in hybrid electric vehicles (Smart grid)
We need it all … but it will be costly!
Slide 22
Renewable / Energy Efficiency Questions
We Must Answer!


Renewable Technology

How much can increased renewable capacity contribute going forward?

How do we get transmission constructed for renewables?
Energy Efficiency

How significant of a role can energy efficiency play in the future?

How can customers benefit and actively participate in energy efficiency
programs from the residential and commercial perspectives?
Slide 23
Combined Efficiency and
Renewable Electricity Standard (CERES)

20% federal CERES by 2020 for retail electricity suppliers

Federal Energy Regulatory Commission (FERC) administers

“Electricity savings” definition:



Reductions in electricity consumption, relative to business as usual.
FERC standards must ensure that electric suppliers had a “significant role”
Savings due to improved codes and standards are specifically excluded
from “electricity savings”

Alternative compliance option of $0.25 / MWh; trading and banking
option; civil penalties

Three-fourths (15% in 2020) must be qualified renewables unless a
state petitions for more efficiency (up to two-fifths, or 8% in 2020)
Slide 24
Waxman-Markey CERES Requirements
20% by 2020
Percentage
20.0
15.0
10.0
5.0
0.0
Remaining
renewable
energy
Efficiency eligible with
petition (up to 8%)
Energy efficiency eligible
portion (5%)
CERES Requirements as Percentage of Retail Sales
Slide 25
CERES –
Changes Made on House Floor

Central Procurement State (CPS)





State runs central renewable procurement in lieu of RES
 State assumes responsibility for CERES compliance
 Federal RECs issued directly to state fund
State defines renewable resources
Mandatory state public benefit fund pays for renewables
Funded by retail customers via suppliers
State can make alternative compliance payments or demonstrate
electricity savings
Slide 26
Integrating Renewables
Operational Challenges

Higher RPS levels can create significant surplus energy




Can’t be used on grid or sold to others
Energy storage / off-peak electric vehicle charging can mitigate problem
At present these technologies can not significantly contribute to resource
plans - smart grid will help enable these new technologies
Higher RPS levels will require higher planning reserve margins for
system backup to maintain reliability



More ancillary services req’d to maintain frequency and voltage levels
Generation and storage technologies required to meet system regulation,
load following, and ramping requirements
Quick start and fast ramping technologies (peaking / storage) to manage
generation variability and maintain reliability
Slide 27
Biggest Challenge for Renewables …
Transmission

Planning

Siting

Cost Allocation
Renewables are Variable Resources!
Slide 28
Renewables Challenges
Transmission Planning (Section 216A)

House-passed version has slightly modified planning section Section 216A
• FERC to develop planning principles
• Planning entities submit plans within 18 months thereafter
• Plans are to roll-up from subregional plans to interconnection-wide plans, if
possible
• A multi-regional plan cannot impose a facility on a region that did not
include the facility in its plan
• No cost allocation provision
Slide 29
Renewables Challenges
Backstop Siting

Added on House floor

Provides FERC with limited siting authority when states fail to act

Treats Eastern and Western Interconnections differently

Eastern Interconnection



Current Federal Power Act Section 216 applies with additional requirement
that facility must be “interstate in nature or is an intrastate segment integral
to a proposed interstate facility”
Fourth Circuit decision problem not fixed
DOE is lead agency for siting
Slide 30
Renewables Challenges
Backstop Siting

Western Interconnection

Adds new Federal Power Act (FPA) section 216B that applies only in the
Western Interconnection

Applicability: Facility must be included in one or more plans and
identified as needed “in significant measure” to meet the demand
for renewables; multistate; no voltage limitation

FERC backstop siting triggered if state:




Did not issue a decision within one year;
Denied a complete application for siting; or
Authorized siting of the facility subject to conditions that unreasonably
interfere with the development of the facility
Federal lead agency: FERC and Interior (for federal lands)
Slide 31
Renewables Challenges
Transmission Cost Allocation

Who pays for new transmission?

Everyone pays
 Interconnection-wide / rolled in

Beneficiaries pay
 Participant funding

No cost allocation provisions in H.R. 2454
 Strong advocates on all sides
 Heated debates
Slide 32
AABE Renewables Principles

AABE supports

Renewables as part of an overall strategy for meeting energy and climate
change challenges

Renewable programs that carefully balance the availability of renewable
technologies, their cost effectiveness and environmental benefits

Recognition of renewable energy standards being developed at the state
level

Research, education and training for African-Americans to expedite the
development of renewable energy solutions

Renewable and alternative fuels and needed infrastructure

Working with regional and local communities on renewable programs
Slide 33
New Efficiency Standards

Building efficiency code requirements



Outdoor light bulb and luminaire efficiency standards


30% efficiency improvement in codes by date of enactment
 Compared to 2004 ASHRAE baseline / 2006 IECC baseline
50% efficiency improvement by 2015, 75% by 2030
Staged approach, start in 2016, increase in 2018
New efficiency standards

Water dispensers, portable electric spas, and commercial hot food holding
cabinets, and increased standards for commercial furnaces (2011)

New standards for portable table lamps (2012)

Significant changes to EnergyGuide and Energy Star labels

Carbon footprint estimates added to EnergyGuide labels (AGA endorses),
Ranking of Energy Star products
Slide 34
AABE Energy Efficiency Principles

ABBE supports

Enhancements to US energy infrastructure for the development and
implementation of energy efficient technologies

Focused national, regional and local effort to educate and make available
to all consumers a broad range of options to encourage energy efficiency

Aggressive campaign for the promotion of energy efficiency technologies
including “smart” buildings, appliances, grid and electric meters

Optimizing domestic and foreign energy resources while promoting energy
security, economic prosperity and environmental solutions

Government and commercial suppliers making necessary energy efficiency
upgrades to residential and commercial customers
Slide 35
Smart Grid Peak Demand Reduction
Goals

Must establish peak demand reduction goals w/in later than 1 year
from enactment



Applies to any load-serving entity (LSE) serving more than 250 MW
FERC will develop methodology for adjustments to applicable baseline
within 180 days of bill enactment
DOE, in consultation with FERC, EPA and NERC, will develop a system
and rules for measurement and verification of demand reductions

Must specify reduction / mitigation by a minimum percentage from
the applicable baseline to a lower peak demand during year 2012

Greater reductions are required in 2015
Slide 36
New Coal Generation
Performance Standards
Date Initial
Permit Received
Standard
Date Effective
After 1/1/2009
Achieve an emission limit
that is a 50% reduction in
CO2 emissions
After 1/1/2020
Achieve an emission limit
that is a 65% reduction in
CO2 emissions
4 years after “commercial
operation” of CCS certified
by EPA or 2025; can be
delayed an additional 18
months for certain EGUs
Immediately
“Commercial operation” means at least 4 GW of generating units, including at least 2
EGUs of 250 MW, injecting and storing at least 12 million tons of CO2 per year into
geologic formations other than oil and gas fields in the U.S. Of the 4 GW, 3 GW must be
EGUs; 1 GW may be industrial.
Slide 37
New Coal Generation
Carbon Capture and Storage (CCS)

“National strategy” for a CCS regulatory framework


Geologic storage and propose regulations


EPA to finalize regulations for under the Clean Air Act (sec. 112)
Study of legal framework for geologic storage sites


Federal agencies to develop a (sec. 111)
Establish task force (sec. 113)
New Carbon Storage Research Corporation




Funded by charge on deliveries of fossil fuel electricity
Fund commercial-scale (>250MW), integrated demo projects (sec. 114)
$10 billion over 10 years; 50% of funds reserved for utility projects
Corporation is an affiliate of EPRI and not an agent of the U.S. government
Slide 38
Other Energy Investments

Advanced Research Projects Agency – Energy (ARPA-E)


Allocated 1.05% of allowances for 2012-2050 to be awarded
competitively to accelerate novel early-stage energy research
Clean Energy Deployment Administration (CEDA)






Newly-created independent government corporation to provide financing
assistance to clean energy technologies for which commercial financing
is not available at affordable rates
Focus on deployment of clean energy technologies
Clean energy technologies = help stabilize GHG concentration
Nuclear projects can receive financing assistance
Financing: loans, guarantees, letters of credit, etc.
Davis-Bacon applies to projects that receive assistance
Slide 39
QUESTIONS