Opportunities for Energy Efficiency and Renewable Energy in State Air Quality Planning

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1 Opportunities for Energy Efficiency and Renewable Energy in State Air Quality Planning Art Diem Office of Air and Radiation Office of Atmospheric Programs State & Local Branch Emissions Reduction & Energy Leadership Summit San Antonio TX December 15, 2004

2 Outline Heightened Interest by States to Implement Energy Efficiency (EE) and Renewable Energy (RE) & Include in Air Quality Planning EPA Issued SIP Guidance for EE/RE Measures (Aug 2004) Voluntary and Emerging Measures (Sep 2004) Upcoming Air-Energy Integration Activities 2

3 Heightened interest in EE/RE New Air Quality Standards more areas affected more reductions required many low hanging fruit measures have been picked EE/RE multiple benefits multipollutant/multimedia emission reductions economic value 3

4 New Air Quality Challenges Areas Nonattainment of 8 hour Ozone Std. Areas Protected by EPA s Regional Haze Rule 4

5 Emission Rates: Fossil vs. Wind (lb/mwh) (Year 2000) 7 Oxides of Nitrogen (NO x ) 2500 Carbon Dioxide (CO 2 ) Coal Oil Gas Wind Coal Oil Gas Wind Data Source: E-GRID2002 v2.0 Prepared 04/16/2004 by Art Diem USEPA

6 EPA helping to motivate EE/RE and AQ planning Some EPA Efforts Guidance: Set asides for EE/RE under cap and trade programs States can distribute allowances to EE/RE as incentives Heat Island Reduction Initiative Green Power Partnership Combined Heat and Power Partnership Partnerships with DOE & NREL Technical assistance to states EPA Technical forums New item SIP Guidance for EE/RE Measures (Aug 2004) 6

7 EPA s new SIP Credit Guidance for EE/RE Guidance on State Implementation Plan (SIP) Credits for Emission Reductions from Electricsector Energy Efficiency and Renewable Energy Measures August OAP&G -Title I - Guidance & Policy Documents Intended to support those places that wish to better include EE/RE projects, policies and programs into their SIPs General Information and background Step-by-step procedure List of tools and resources Examples of proposed SIP submissions 7

8 Ways to incorporate EE/RE reductions in SIP Process 1) As part of emission baseline/projections (Emission projections guidance) 2) As an emission reduction measure (Guidance on SIP Credit for EE/RE Measures) Not as SIP credits -- (Set-aside Guidance) Incentives can be given to EE/RE projects by allocating emission allowances as part of a cap and trade program 8

9 Ways to incorporate EE/RE reductions in SIP Process Emissions Emissions Goal Baseline Projection w/o EERE EE/RE Measures New Baseline Projection w/ EE/RE Emission Reductions Needed from Other Measures Time 9

10 SIPs: What must state officials consider? Emissions reductions that are: Quantifiable Surplus not included in baseline or in other measures Enforceable requirement or voluntary measure Permanent for the time period of the SIP Also Geographically relevant to the air quality planning area 10

11 Geographic Relevance Surrounding upwind area Nonattainment area 1 Power plants likely influenced by measure State 11

12 NERC Interconnections 12

13 ERCOT 13

14 TX 1 hour ozone nonattainment areas 14

15 TX 8 hour ozone nonattainment areas 15

16 SB 5 Areas 16

17 State and Local Capacity ERCOT Building Estimated 1999 NOX Emission Reductions (#/MWh) ANDREWS ANGELINA BASTROP BEXAR BRAZORIA BRAZOS CALHOUN CAMERON CHAMBERS CHEROKEE COKE COLEMAN COLLIN CROCKETT DALLAS DENTON FANNIN FAYETTE FORT BEND FREESTONE FRIO GALVESTON GRIMES HARDEMAN HARRIS HASKELL HAYS HENDERSON HIDALGO HOOD HOWARD JOHNSON JONES LAMAR LIMESTONE LLANO MCLENNAN MITCHELL NOLAN NUECES PALO PINTO PARKER PECOS PRESIDIO RED RIVER ROBERTSON SAN PATRICIO TARRANT TAYLOR TITUS TOM GREEN TRAVIS UPTON VICTORIA WARD WEBB 17 American Electric Power - West (ERCOT)/PCA Austin Energy/PCA Brownsville Public Utils Board/PCA Lower Colorado River Authority/PCA Reliant Energy HL&P/PCA San Antonio Public Service Bd/PCA South Texas Electric Coop Inc/PCA Texas Municipal Power Pool/PCA Texas-New Mexico Power Co/PCA TXU Electric/PCA

18 TX Numbers ERCOT Estimated 2007 NOx Emission Reductions (#/MWh) ANDREWS ANGELINA BASTROP BEXAR BOSQUE BRAZORIA BRAZOS CALHOUN CAMERON CHAMBERS CHEROKEE COLEMAN COLLIN DALLAS DENTON ECTOR ELLIS FANNIN FORT BEND FREESTONE FRIO GALVESTON GUADALUPE HARRIS HAYS HENDERSON HIDALGO HOOD HOWARD HUNT JACK JOHNSON JONES KAUFMAN LAMAR LIMESTONE LLANO MCLENNAN MILAM MITCHELL NOLAN NUECES PALO PINTO PARKER 18 American Electric Power - West (ERCOT)/PCA Austin Energy/PCA Brownsville Public Utils Board/PCA Lower Colorado River Authority/PCA Reliant Energy HL&P/PCA San Antonio Public Service Bd/PCA South Texas Electric Coop Inc/PCA Texas Municipal Power Pool/PCA Texas-New Mexico Power Co/PCA TXU Electric/PCA PECOS ROBERTSON RUSK SAN PATRICIO TARRANT TITUS TOM GREEN TRAVIS UPTON VICTORIA WARD WEBB

19 4 Steps in Guidance STEP 1 - Estimate the energy savings of EE or generation of RE STEP 2 Estimate how the electric grid will respond to the EE/RE measure & estimate emission reductions STEP 3 Determine AQ Impact of emission changes STEP 4 Validate EE/RE activity & emission reductions 19

20 Potential EE/RE measures System Benefit Charge Programs Renewable Portfolio Standards Energy Codes Appliance Standards Gov. purchase Green Power EE equipment standards Utility run Demand Side Management Programs More 20

21 Electricity Policies that Reduce Air Emissions 21

22 Electricity Policies that Reduce Air Emissions 22

23 Electricity Policies that Reduce Air Emissions 23

24 Electricity Policies that Reduce Air Emissions 24

25 Example: EE in Dallas-Fort Worth TX SIP Measure: Senate Bills 5 and 7 EE Grant Programs and Utility EE Programs 912,000 MWh in 2007 Analysis: ERCOT wide analysis on nonbaseload fossil-fuel fired units (mostly natural gas) How much credit: 0.7 tons NOx per day in 12 county non-attainment area 25

26 Example: RE in Washington, D.C. SIP Measure: Montgomery County MD Wind Power Purchase 5% of electricity use = 28,000 MWh/year Analysis: Dispatch analysis of a new wind plant to meet power demand in PJM West (mostly coal-fired) How much credit: 0.05 tons NOx per day 50% of estimated emission reductions (of 5.72 #NOx per MWh) sought for SIP credit Other: Cap and Trade Area, commitment to retire allowances 26

27 Upcoming Activities Shreveport LA Energy Efficiency Contract for municipal buildings DOE Pilot Projects 4 DOE regions providing tech. assist (not $) to quantify emission benefits of EE/RE Southeast, Midwest, Central, Midatlantic DOE considering Grants to quantify emission impacts of special projects FY05 EPA developing quantification clearinghouse and best practices report Other venues discussing quantification e.g. State Technical Forums (hosted by EPA) discussing Air Energy topics 27

28 Side-note for SEP toolkit Supplemental Environmental Projects implemented through environmental enforcement settlement agreements Opportunity to fund energy efficiency and renewable energy projects through SEPs EPA issuing a Toolkit for States 28

29 Conclusion EPA Supports Polices that Integrate Environmental and Energy Objectives Many Opportunities Informational Resources Policy Options Technical Assistance 29

30 Contacts SIP Guidance Art Diem (OAP) David Solomon (OAQPS)

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