This is the fifth in a series of questions that highlights RFF’s Expert Forum on EPA’s Clean Power Plan.
RFF asks the experts: Does EPA make appropriate assumptions regarding the deployment of renewable energy in its proposed Clean Power Plan?
One way for states to reduce their carbon emissions is to expand their renewable and low-carbon power generating capacity; this is building block #3 in EPA’s proposed Clean Power Plan. EPA assumes that each state can increase its renewable energy generation to achieve a "best practices" scenario—a level it says is “reasonable and consistent” with existing policies that have already been implemented by a majority of states. This assumption directly influences the stringency of each state's carbon emissions target. Does EPA make appropriate assumptions regarding the deployment of renewable energy in its proposed Clean Power Plan?
“The Clean Power Plan . . . bases state targets on an average of existing renewable energy policies in different regions of the country. By taking this approach—effectively looking backwards—the proposal fails to reflect the dynamism in renewable energy deployment that is happening across America.”
—Megan Ceronsky, Director of Regulatory Policy & Senior Attorney, Climate & Air Program, Environmental Defense Fund (See full response.)
“Despite the potential for improvement, the important message here is that EPA’s framework provides an opportunity for states to include renewables in their compliance plans. States are free to go beyond the levels of renewables that EPA estimated in order to meet their emissions rate reduction target—and they should, since this is a cost-effective option nationwide.”
—Jeremy Richardson, Senior Energy Analyst, Union of Concerned Scientists (See full response.)
“The reasonableness of the assumption underlying the renewables building block depends on: (1) the renewables market potential in each region; and (2) the ability of the state and the key participants in each state to realize this potential in a reasonable period of time. . . . There may remain an opportunity to improve the construction of this building block.”
—Ray Williams, Director, Long-Term Energy Policy, Energy Procurement Department, Pacific Gas & Electric (See full response.)
Megan Ceronsky
Director of Regulatory Policy & Senior Attorney, Climate & Air Program, Environmental Defense Fund
The proposed Clean Power Plan identifies the “best system of emission reduction” to address carbon pollution from power plants as comprised of four building blocks: (1) efficiency improvements at coal-fired power plants; (2) shifts in utilization away from higher-emitting fossil plants towards lower-emitting fossil plants; (3) deployment of zero-carbon generation sources such as wind and solar; and (4) harvesting demand-side energy efficiency improvement opportunities. This system best satisfies the statutory command of the Clean Air Act, which directs EPA to identify the system that maximizes emissions reductions, considering cost and impacts on energy and other health and environmental outcomes. This system also reflects what is happening across the country (and indeed, around the world) to reduce carbon pollution—states and companies are using the interconnected electric system as a whole to cut carbon pollution, deploying zero- and low-emitting generation and reducing reliance on high-emitting generation, and doing so flexibly to ensure that reliability is maintained and emissions reductions are achieved cost-effectively. Fifteen states wrote to EPA Administrator Gina McCarthy as the Clean Power Plan was being developed to describe the success they have had in deploying this system, cutting carbon pollution from power plants by 20 percent between 2005 and 2011, with some states achieving reductions of over 40 percent during that period.
Renewable energy is our future. More than 60,000 megawatts of wind energy capacity have been installed in 39 states and an additional 12,000 megawatts are under construction. Wind power capacity in the United States has increased nine times over since 2005, supporting over 80,000 jobs and driving a new manufacturing sector with over 550 facilities across the country. Solar generating capacity is also rising rapidly—increasing by 418 percent between 2010 and 2014. PG&E has connected more than 100,000 customers with solar panels to the grid, saving the average residential customer with solar panels $130 a month. Costs of renewable generation have been falling rapidly, and power companies such as Xcel, DTE, MidAmerican, Georgia Power, and Austin Energy have announced renewable energy purchases that are outcompeting fossil-fueled alternatives and that will lower customer bills by saving fuel costs.
The Clean Power Plan’s assessment of the potential for renewable energy to reduce carbon pollution bases state targets on an average of existing renewable energy policies in different regions of the country. By taking this approach—effectively looking backward—the proposal fails to reflect the dynamism in renewable energy deployment that is happening across America, and fails to satisfy Section 111’s technology-forcing framework. The proposed alternative approach, which would consider the technical and economic potential to harvest renewable energy in each state, has the potential to better reflect the country’s vast renewable energy resources. The analysis underlying the alternative approach needs to be updated to reflect current technologies (such as taller wind turbines and distributed generation) and current costs (which are falling rapidly). An up-to-date analysis of the technical and economic potential for renewable energy to cut carbon pollution will provide a strong legal and technical foundation for the Clean Power Plan, and help facilitate our transition to the clean energy–fueled economy of the future.
Jeremy Richardson
Senior Energy Analyst, Union of Concerned Scientists
For establishing the emissions reduction potential from the renewable energy building block, EPA relied on existing state-level renewable electricity standard (RES) policies as a benchmark. They split the country into six regions and established a regional target for renewable energy by averaging the existing state RES requirements within each region. EPA then calculated a growth rate for each region needed to meet that level, and applied the growth rate to each state's renewable generation in 2012.
The resulting level of renewable energy generation that EPA estimates states could feasibly achieve is quite modest: roughly 524 million MWh in 2029, or approximately 12 percent of the total US power mix. That’s only marginally more ambitious than what the US Energy Information Administration (EIA) projects for renewable energy generation under its business-as-usual (e.g. no new policies) case: 444 million MWh. Half of the states do not even reach their region's renewable target in EPA's proposed plan. Worse, in 2020, EPA's renewables targets are less than what EIA says will be achieved under business as usual. Seven states exceeded EPA's 2030 targets with existing generation—in 2013.We view EPA's methodology in determining the potential for building block #3 as more of an "average system of emissions reductions" rather than the best system.
We note that there are at least six ways that EPA could strengthen the renewables building block:
Factor in renewable energy growth between 2012 and 2017.
EPA assumes that states begin increasing renewable energy in 2017, but beginning at 2012 levels. This is an overly conservative method that excludes incremental renewables added in 2013, and projects planned for 2014 to 2016. It's important to capture the tremendous growth of renewables in recent years as costs decline. From 2009 to 2013, wind capacity increased by 75 percent and solar capacity by 473 percent. Average costs of wind power dropped more than 60 percent since 2008; solar photovoltaic systems costs fell by about 40 percent from 2008 to 2012, and another 15 percent in 2013.
Incorporate full renewable portfolio standard (RPS) compliance into state targets.
EPA's methodology results in 17 states with lower renewable targets than the level that the Lawrence Berkeley National Lab projects they will reach by meeting existing RPS mandates.
Remove (or relax) artificial limits on growth rates.
EPA assumes that state renewable generation levels off after reaching regional targets.
Set growth rates to what leading states are achieving.
Instead of basing growth rates on policy mandates, EPA could instead estimate potential by looking at what states are already achieving.
Improve cost assumptions for renewable energy in integrated planning model (IPM) frameworks.
In the alternative method for determining renewables targets, EPA limited the targets by the economic potential determined by IPM modeling. However, the assumed cost assumptions for renewable technologies are higher than recent real-world experience.
Include distributed solar, offshore wind, and low-carbon biomass in setting state targets.
In its technical and economic alternative approach for determining renewables targets, EPA did not include several technologies that are either already growing rapidly (distributed solar) or are of particular interest to certain regions (such as offshore wind for the East Coast and biomass for the Southeast).
Despite the potential for improvement, the important message here is that EPA’s framework provides an opportunity for states to include renewables in their compliance plans. States are free to go beyond the levels of renewables that EPA estimated in order to meet their emissions rate reduction target—and they should, because this is a cost-effective option nationwide.
Ray Williams
Director, Long-Term Energy Policy, Energy Procurement Department, Pacific Gas & Electric
Simply stated, the reasonableness of the assumption underlying the renewables building block depends on: 1) the renewables market potential in each region; and 2) the ability of the state and the key participants in each state to realize this potential in a reasonable period of time.
Information needed to address the first issue includes the following:
The availability of zero-carbon resource potential defined as renewables in a distinct region;
The portion of zero-carbon resources defined as renewables that are included in setting the goal for each state;
The portion of zero carbon resources defined as renewables that can be used for compliance (for example, biomass may be an issue); and
The ability to convert this resource potential to electricity at a reasonable cost.
Information needed to address the second issue includes the following:
The ability to build any new transmission to bring these qualifying renewables to market—in a timely way and at reasonable cost;
The need for and ability to integrate this generally intermittent generation into a reliable electric system, particularly as the renewables percentage increases;
The speed with which the state, the state’s suppliers (primarily merchants and utilities), and the state’s purchasers (primarily utilities) institute a procurement process that meets the requirements of this building block;
The relative consistency between the definition of qualifying renewables for states that have a renewable portfolio standard and the definition of renewable energy for this building block, and the ability to reconcile the two; and
The need for enabling state legislation, and to work out whether this building block is enforceable at the federal or state level.
I would suggest that, to the extent that EPA has not researched these kinds of questions in setting the renewable energy building block and determining what can be used for compliance, there may remain an opportunity to improve the construction of this building block.
