Renewable Energy as a Renewable Energy as a Mechanism for Reducing Mechanism for Reducing

Pollution Pollution North Carolina North Carolina DENR/DAQ Mercury/CO2 WorkshopDENR/DAQ Mercury/CO2 Workshop

Raleigh. North CarolinaRaleigh. North Carolina

April 20, 2004April 20, 2004

Harnessing the power of voluntary Harnessing the power of voluntary marketsmarkets… to improve the … to improve the environmentenvironment

Copyright Environmental Resources Trust, Inc. (ERT), 2003. Request to reproduce all or part of this material should be made to ERT .

Alden HathawayAlden Hathaway

Environmental Resources Trust, Inc.Environmental Resources Trust, Inc.

OVERVIEWOVERVIEW

Clean Air Act (CAA) FrameworkClean Air Act (CAA) Framework CAA as Drivers for WindCAA as Drivers for Wind MWCOG Case StudyMWCOG Case Study Chicago EcoPowerChicago EcoPower®® Report Report Potential Market OpportunitiesPotential Market Opportunities Necessary Policy ChangesNecessary Policy Changes Related Marketing InnovationsRelated Marketing Innovations

Problem StatementProblem Statement

How do we get How do we get more voluntary more voluntary participation when participation when most municipals most municipals and end-users are and end-users are staying on the staying on the sidelines because of sidelines because of the increased price the increased price for Green Power?for Green Power?

Answer: Give them credit for pollution reductionAnswer: Give them credit for pollution reduction

CLEAN AIR ACT CLEAN AIR ACT FRAMEWORKFRAMEWORK

Act drafted without renewable energy in mind Act drafted without renewable energy in mind CAA requires regional air quality plans (State CAA requires regional air quality plans (State

Implementation Plans or SIPs) Implementation Plans or SIPs) To date, EPA has To date, EPA has nevernever approved renewable approved renewable

energy as an air pollution control measure energy as an air pollution control measure under a SIP under a SIP

““Window of opportunity” created - new Window of opportunity” created - new quantification methods, 8-hour ozone quantification methods, 8-hour ozone standard, and regional haze regulationsstandard, and regional haze regulations

CAA POLICIES AS CAA POLICIES AS MARKET DRIVERSMARKET DRIVERS

State/local governments choose from wide range of State/local governments choose from wide range of air pollution control measuresair pollution control measures

Emission reductions from traditional control Emission reductions from traditional control measures largely exhausted in dirty air areasmeasures largely exhausted in dirty air areas

States and municipalities interested in air quality States and municipalities interested in air quality benefits of renewable energy (particularly wind) benefits of renewable energy (particularly wind)

Lowering NOx emissions results in reduced ozone Lowering NOx emissions results in reduced ozone transport and less regional hazetransport and less regional haze

CAA POLICIES AS CAA POLICIES AS MARKET DRIVERSMARKET DRIVERS

State and local governments are a key market for State and local governments are a key market for renewable energy, for example consider wind;renewable energy, for example consider wind; Increasing market demand is the “linchpin” for Increasing market demand is the “linchpin” for

wind power developmentwind power development Wind plants are financed based on the future Wind plants are financed based on the future

revenue stream from wind purchasesrevenue stream from wind purchases Municipalities and states often serve as important Municipalities and states often serve as important

“anchor” customers (e.g., City of Chicago)“anchor” customers (e.g., City of Chicago)

MWCOG CASE STUDYMWCOG CASE STUDY Metropolitan Washington (MW) area (MD-Metropolitan Washington (MW) area (MD-

DC-VA) designated as “severe” ozone non-DC-VA) designated as “severe” ozone non-attainment area under 1-hour standardattainment area under 1-hour standard

Met. Wash. Council of Governments (COG) Met. Wash. Council of Governments (COG) submitted revised regional air quality plan submitted revised regional air quality plan (SIP) to EPA Region III in March 2004 for (SIP) to EPA Region III in March 2004 for 60-day review60-day review

MWCOG CASE STUDYMWCOG CASE STUDY

Case demonstrates market potential of SIP Case demonstrates market potential of SIP emissions reduction credit under the CAA emissions reduction credit under the CAA

Mont. Co. seeking to purchase 5% of its Mont. Co. seeking to purchase 5% of its energy from windenergy from wind

Energy conservation planned to offset Energy conservation planned to offset “green power” premium“green power” premium

Co. issued request for proposals in late Feb. Co. issued request for proposals in late Feb. 20042004

New ERT Environmental New ERT Environmental ReportReport

Prepared under a Grant from the Great Lakes Protection Fund

MethodologyMethodology Methodology Breakthrough in Chicago ReportMethodology Breakthrough in Chicago Report Confidentiality agreements with utilities Confidentiality agreements with utilities

provide access to previously unavailable data provide access to previously unavailable data to generate emissions avoidance reportto generate emissions avoidance report

Results of Chicago ReportResults of Chicago Report Analysis proves that renewable energy backs down fossil fuel plants, coal, oil, gas rather than nuclear or hydro;Analysis proves that renewable energy backs down fossil fuel plants, coal, oil, gas rather than nuclear or hydro; Renewable energy backs down fossil fuel plants because of zero or near zero marginal operating costs;Renewable energy backs down fossil fuel plants because of zero or near zero marginal operating costs; Analysis utilizes actual power plant dispatch ranking data – specific plants dispatched in order of economic Analysis utilizes actual power plant dispatch ranking data – specific plants dispatched in order of economic

cost;cost; Analysis compares actual power plant dispatch ranking data and actual continuous emissions monitor data to Analysis compares actual power plant dispatch ranking data and actual continuous emissions monitor data to

verify emission and operational changes;verify emission and operational changes; Data based on continuous monitors are current vs. time lag (up to two years) with other methodologies;Data based on continuous monitors are current vs. time lag (up to two years) with other methodologies; Data in Chicago shows 2300 lbs CO2 per MWh vs. 815 lbs per MWh “System Mix” methodologyData in Chicago shows 2300 lbs CO2 per MWh vs. 815 lbs per MWh “System Mix” methodology

How Chicago Methodology How Chicago Methodology Can Help Provide an Example Can Help Provide an Example

Use ERT Environmental Use ERT Environmental

Impact methodology to Impact methodology to validate NOx emission validate NOx emission reductions created reductions created through renewable through renewable energy back down of energy back down of fossil plants.fossil plants.

Use NC New Generation Use NC New Generation NOx Set-Aside to provide NOx Set-Aside to provide SIP credit to NOx SIP credit to NOx emission reductions emission reductions resulting from renewable resulting from renewable energy.energy.

NECESSARY ACTIONNECESSARY ACTION MOU’s between DOE and EPA Regional MOU’s between DOE and EPA Regional

Offices to support EEREOffices to support EERE Revision of CAA regulations and policy to Revision of CAA regulations and policy to

place RE on level playing field;place RE on level playing field; Comments on EPA’s proposed Interstate Air Comments on EPA’s proposed Interstate Air

Quality Rule and planned supplemental ruleQuality Rule and planned supplemental rule EPA issuance of improved guidance and EPA issuance of improved guidance and

training for Regions, States, & local govrmt.training for Regions, States, & local govrmt. Development of model documentation Development of model documentation

POTENTIAL MARKET POTENTIAL MARKET OPPORTUNITIES OPPORTUNITIES

Regional air quality plans to meet 8-hour ozone Regional air quality plans to meet 8-hour ozone standard in Midwest and East standard in Midwest and East Marketing window of opportunity in next few Marketing window of opportunity in next few

yearsyears Wind energy as important optionWind energy as important option SIP plans due April 2007 SIP plans due April 2007

Regional air quality plans to meet regional haze Regional air quality plans to meet regional haze regulations in Westregulations in West

RELATED MARKETING RELATED MARKETING INNOVATIONSINNOVATIONS

Promote increased cost-effectiveness of Promote increased cost-effectiveness of wind purchases through:wind purchases through: Bundling with energy efficiency and innovative Bundling with energy efficiency and innovative

financing approachesfinancing approaches Blending with landfill gas & other lower-priced Blending with landfill gas & other lower-priced

renewable energy renewable energy

Chicago Leads the WayChicago Leads the Way

City of Chicago to began purchasing over 120,000 MWh of Wind from Mendota Hills Wind Plant.

2 Largest Wind Plants in Midwest coming on line 2004?

Chicago Mayor Richard Daley receives a ceremonial EcoPower® Certificate from Commonwealth Edison CEO John Rowe.

Questions?Questions?

Copyright Environmental Resources Trust, Inc. (ERT), 2001.

Request to reproduce all or part of this material should be made to ERT.

Alden HathawayAlden HathawayDirector Green Power Director Green Power ProgramsProgramsERT, Inc.ERT, Inc.202-785-8577202-785-8577

Debra JacobsonDebra Jacobson

Lecturer in Energy Law,Lecturer in Energy Law,

GWU Law SchoolGWU Law School

703-356-7448703-356-7448