Western Regional Air Partnership
Search the WRAP  
   
Printer Friendly Page
 
WRAP Home   About WRAP Contact WRAP
Board
Committees/Forums
SIP Status Summary
308 Support
309 Support
309 Support
Tribal Resources
Other WRAP Projects
ClimateChangeOff
ClimateChangeOff
Fact Sheets
Kids's Corner
Contractor's Corner
Calendar
 
WRAP Sheet
Live Camera Pictures
National RPO Info
Getting Involved
Reimbursement
Related Links
 
WRAP Staff
The Western Governers' Association
The National Tribal Environmental Council
 
Technical Decision Systems
Contractor's Corner
Contractor's Corner
Contractor's Corner
Contractor's Corner
 
 

Air Pollution Prevention Forum: Documents

Determining a State's Contribution to the GCVTC Regional Renewable Energy Goals and to what Extent a State's Renewable Energy Programs are Helping to Meet its Contribution

A WRAP AP2 Forum Discussion Document

I. Introduction

A central theme underlying efforts to improve visibility in the West is that visibility degradation is a regional problem requiring a regional solution. At the same time, there is the recognition that the existing air quality regulatory structure contains no regional organization with the authority to implement solutions. Instead, this authority rests with the states. Like other aspects of the GCVTC regional haze recommendations, the challenge of meeting the renewable energy goals is how to assign responsibility for solving a regional problem to individual states and to how to coordinate their activities to meet the goal in the most efficient way possible.

The issue of developing regional solutions while maintaining individual state responsibility is present in the Pollution Prevention section of the GCVTC component of EPA's regional haze rule. Section 309(d)(8)(i) of the rule requires states to include in there regional haze state implementation plans their anticipated contribution to the regional renewable energy goals that 10% of regional power needs be met by renewable generation by 2005 and that 20% be met by 2015. In addition, Section 309(d)(8)(vi) requires a state to provide descriptions of the programs it is relying on to achieve its contribution toward the 10/20 goals. The rule, however, does not provide guidance on how to determine either a state's contribution or the extent to which programs adopted by a state are helping to meet its contribution. As the WRAP forum charged with helping the states design policies to achieve the renewable energy goals, the AP2 Forum is an appropriate place to make recommendations on these issues. As a starting point for discussion, this paper presents some preliminary ideas on how these issues might be addressed.

II. Determining a State's Contribution to the Regional Renewable Energy Goals

One potential way to determine a state's contribution to the overall regional renewable energy goal is to multiply the end-use electricity consumption in the state by the regional renewable energy percentage targets. This method bases a state's contribution on its share of overall regional electricity demand. Under this approach, states with greater electricity use (presumably due to a larger population or greater economic activity) would make a larger contribution to the regional goals in terms of the MWh of renewable energy their renewable energy programs induce. However, when measured as a percentage of electricity use, all states would be contributing equally.

This approach is based on the following public policy rationale. The GCVTC renewable energy goals were recommended to help solve the problem of regional visibility degradation which is caused, in part, by conventional power production. If one agrees that electricity production is driven by the demand for electricity, then ultimately it is electricity consumption that causes the problem the renewable energy goals are seeking to address. If one also agrees that a fair way to assign a state's responsibility for the solution of a regional problem is based on a state's contribution to the problem, then determining a state's contribution to the renewable energy goals based on its share of regional electricity demand is a fair way to apportion the renewable energy goals across the states.

III. Determining the Extent to which a State's Renewable Energy Programs are Helping to Meet its Contribution to the Regional Renewable Energy Goals

Once a state's contribution to the regional goal is determined the next step is to ascertain the extent to which the state's renewable energy programs are helping to meet its contribution. It is suggested here that, for the purposes of counting a programs contribution toward a state's share of the regional goal, the location of the production or consumption of the renewable energy is not important. Instead, a policy should count toward a state's contribution so long as it induces increased renewable energy production or consumption anywhere within the region. Several examples will help illustrate the concept.

Example 1: Suppose the cost of producing renewable electricity is 2/kWh more than the cost of producing conventional electricity. To eliminate this cost differential and spur renewable energy development, State A adopts a 2/kWh renewable energy production tax credit. As a result of the tax credit, a power supplier invests in a renewable production facility in State A, the power from which is sold and consumed in State B. In this case, the renewable energy production would count toward State A's share of the regional renewable energy goal.

Example 2: Again, suppose that the cost of producing renewable electricity is 2/kWh more than the cost of producing conventional electricity. A power supplier in State B commits to deliver a renewable energy product to customers willing to pay a 2/kWh premium. To supply the power for the product, the power supplier invests in a renewable energy production facility in State A. In this case, the renewable production would count toward State B's share of the regional renewable energy goal.

In each of the above examples a single policy adopted by single state was responsible for inducing the renewable energy production. The situation is more complicated when multiple polices across multiple states are responsible for the increase in renewable energy production. Consider the following example.

Example 3: Again, suppose the cost of producing renewable electricity is 2/kWh more than the cost of producing conventional electricity. Suppose that state A offers a 1/kWh production tax credit that narrows, but does not eliminate, the cost differential. Because of the tax credit, power suppliers in State B are able to offer their customers renewable energy from a State A production facility at a premium of 1/kWh rather than 2/kWh. In this case, both the State A production tax credit and the willingness of State B consumers to purchase renewable energy at a premium have combined to increase renewable energy production in the region. Because 50% of the renewable/conventional cost differential is made up by State A and 50% is made up by State B, 50% of the renewable energy production is counted toward State A's contribution to the regional renewable energy goals and 50% is counted toward State B's.

III. Conclusions

The ideas presented in this paper are preliminary and intended as a starting point for discussion. Alternative approaches for determining a state's contribution to the regional renewable energy goals exist that are not discussed in this paper. For example, rather than using the "bottom up" approach of determining a state's contribution based on its share of overall regional power demand, as is suggested here, some within the Forum have suggested that a "top down" approach may be more appropriate. The idea behind the "top down" approach would be to survey the renewable energy potential in the region, identify where the renewable energy production necessary to meet the regional goals could come from, and then, using available policy tools, design a least-cost regional strategy for meeting the goals. A state's progress toward achieving the goals would be measured by the extent to which the state was adopting its part of the overall strategy. This type of "top down" approach should also be developed and discussed within the Forum.

In addition, in this paper, the method for determining the extent to which a state's renewable energy programs are helping to meet its contribution to the regional renewable energy goals is illustrated with some very simple examples. In reality there are likely to be many factors that will complicate this determination, especially in situations where different policies across different states are acting together to cause the renewable energy development. Moreover, for policies such as disclosure, that provide consumer information rather than a direct financial incentive, quantifying the effects on renewable energy development may be difficult. In short, much more work is needed on this topic.

 

Air Pollution
Prevention Forum

Major Projects

Tools

 
 
 
Contact the Webmaster

©2009 Western Governors' Association