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The California Renewables Market is Robust and Competitive

2012-02-07T19:27:08Z

Peter Miller, Senior Scientist, San Francisco

The market for renewable electricity is robust and competitive according to a report released this week by the California Public Utilities Commission (CPUC). The Quarterly Report on the state’s 33% Renewable Portfolio Standard (RPS) provides a snapshot on the impressive progress that has been made in building the state’s clean energy economy.

Highlights of the report include:

The state's three largest private utilities - PG&E, SCE, and SDG&E - collectively served 17% of their load with renewable energy in 2010.
All three of the state’s largest utilities are projected to meet the requirement to provide an average of 20% renewable power from 2011 to 2013.
Over 830 MW of renewable capacity came on line in 2011.
The cost of renewable power declined significantly over the past two years. Bid prices in response to the 2011 solicitation dropped 30% compared to 2009.

The successful growth in the renewable energy market demonstrates that we can achieve our clean energy goals and create tangible benefits for all California’s residents. The RPS has led to a steady increase in reliance on renewable electricity, which means growing energy security and price stability for California utility customers. And a competitive, orderly market means that electricity costs are coming down, helping to keep energy clean and affordable for residents of the Golden State.

Benefits of California Energy Efficiency Program are Underestimated

2011-07-21T22:53:44Z

Peter Miller, Senior Scientist, San Francisco

This week, I completed an analysis of a recent California energy efficiency program to promote energy-saving light bulbs that demonstrates the program was a huge success, providing customers with over $7 in benefits in energy savings and pollution reductions for every $1 invested.

From 2006 to 2008, California residents purchased over 90 million heavily discounted compact fluorescent lamps, through an initiative administered by the state’s investor-owned electric utilities – SCE, PG&E, and SDG&E – and overseen by the California Public Utilities Commission (CPUC) known as the Upstream Lighting Program (ULP). As described in earlier blogs, some stakeholders have questioned whether the efficiency programs in California have been successful or whether the state would have achieved the savings even without the programs, based largely on perceptions about the impacts of this program.

The CPUC’s staff evaluation of the 2006-2008 Upstream Lighting Program (ULP Evaluation Report) concluded that the Upstream Lighting Program successfully provided over $50 million in net benefits to utility customers. However, as detailed in my report, errors and biases in estimates for incremental measure costs, net-to-gross ratio (NTGR), and installations in the ULP Evaluation Report resulted in an erroneously large estimate of program costs and an extremely low estimate of program benefits. When corrections for these three areas are made, net benefits increase to over $1 billion. In total, the program provided customers with over $7 in benefits in energy savings and pollution reductions for every $1 invested.

This analysis highlights the fact that California’s efficiency programs have been an enormous success for consumers and that these savings would not have been achieved without these programs. Using the revised estimates in this report provides a truer picture of past program impacts and a better guide to help California take full advantage of future opportunities to achieve cost-effective energy efficiency savings in the future.

This analysis also highlights the need for improvements to the measurement and evaluation process at the CPUC. Our recommendations include:

Set clear guidelines up-front. The CPUC should ensure that independent evaluation, measurement and verification results provide clear guidance to utility administrators and third party implementers on the energy savings that are available from various measures prior to the start of program implementation.
Resolve disputes in a timely manner. The CPUC should provide a dispute resolution process to resolve the legitimate technical disputes that experts may have over evaluation results, so that the CPUC can be sure it understands the full impact of the efficiency programs it oversees and to provide clear guidance for future programs.
Make information publicly available. All evaluation results, data, and models should be made publicly available in a timely manner.
Adopt accurate estimates of energy and bill savings. The CPUC should strive to adopt the most accurate estimates of savings from energy efficiency programs including the full range of benefits to customers rather than the lowest plausible estimates of program impacts. Excessive discounting of energy saving estimates leads to fewer energy efficiency projects and ultimately more power plants, pollution, and higher bills for California consumers.

A Golden Future for the Renewable State

2011-04-19T22:53:23Z

Peter Miller, Senior Scientist, San Francisco

While Congress stalls on America’s clean energy future, California is already making renewable energy the resource with which we’ll power our way to the future. Just last month, the California Legislature passed the 33 percent Renewable Portfolio Standard with broad bipartisan majorities. This legislation increases the share of renewable energy supplied by electricity providers to 33 percent by 2020. California lawmakers who supported the bill were no doubt listening carefully to their constituents who resoundingly defeated Proposition 23 last November, sending a strong signal that they want to move forward with a clean energy future now.

A national poll from Pike Research shows that support for renewable energy sources is extremely high with 75 percent or more people having a favorable view of solar and wind energy. And a recent California survey also found that over 90 percent of Californians approve of wind and solar energy as sources of electricity for the state.

It’s not surprising that there is broad support for renewables in California and a growing consensus for clean energy in the rest of the country. With more than 12,000 cleantech companies in California, clean energy programs including the 33 percent RPS will create thousands jobs over the coming years and spur billions of dollars of investments in infrastructure projects, contributing to the state’s economic recovery.

The first RPS bill approved in California in 2002 established that electric utility generators had to obtain at least 20 percent of power from renewable resources by 2017. Many predicted that California would fail to meet this goal. Opponents of the legislation said it was too expensive and difficult and couldn't be done. But the good news is that California will achieve the 20 percent goal four years ahead of that schedule.

Under Senator Joe Simitian’s 33 percent RPS bill, electricity providers are required to obtain one-third of their electricity from renewable resources, including solar, wind, biomass, geothermal, and small hydroelectric plants. And we’re well on our way to meeting the 33 percent goal. The California Independent System Operator has already approved enough transmission to get us to 33 percent. Utilities PG&E, Southern California Edison and San Diego Gas&Electric have signed power purchase agreements for more than 20,000 MW to reach that goal. And last year, the California Energy Commission approved almost 4,200 MW of new solar thermal capacity in the state.

Senator Simitian’s legislation also includes provisions to ensure that utilities make steady progress by procuring a balanced portfolio of renewable resources and minimizing any cost impacts to utility customers. As a result of the RPS program, renewable energy generation in California in 2020 will be roughly equal to total current U.S. renewable generation, and supply enough clean energy to power nearly 9 million homes.

We congratulate Governor Brown and all involved for signing the 33 percent RPS into law this week. With the stroke of a pen, he added his support to this significant collaborative bipartisan effort. The RPS demonstrates the commitment by California lawmakers from both sides of the aisle to build a diverse and resilient energy portfolio that minimizes impacts of fossil fuel price spikes and enhances our energy independence. By signing the RPS legislation into law, Governor Brown will lead the Golden State forward to a prosperous, renewable energy future.

This essay was published on the California Progress Report on 4/18/11.

http://www.californiaprogressreport.com/site/node/8892

California Renewables Legislation Moves to Assembly Floor for Final Vote

2011-03-10T23:31:54Z

Peter Miller, Senior Scientist, San Francisco

The much anticipated renewables portfolio legislation that would increase California's share of electricity coming from renewables to 33 percent cleared its last remaining hearing in the Assembly Appropriations Committee today on a vote of 12 to 3. The RPS bill now advances to the Assembly floor for a final vote sometime later this week (depending on budget negotiations) and from there to the desk of Governor Jerry Brown, who is expected to sign the bill into law.

Following is a Q&A about what the RPS bill does and does not do:

Q: What does SB1X 2 require utilities and other power generators to do?

A: The 33 percent RPS requires all electricity providers in the state to obtain one-third of their electricity from specified renewable energy resources by 2020.

Q: What types of energy resources qualify as renewable?

A: The types of resources that qualify as renewable include solar, wind, biomass, geothermal, and small hydroelectric plants under 30 MW. Other technologies such as wave and tidal current also qualify and may contribute to California’s renewable portfolio over the longer term. Large hydroelectric plants and nuclear power do not qualify as renewable.

Q: Are there specific deadlines in the bill prior to 2020?

A: In addition to the 2020 deadline, electricity providers must get an average of at least 20 percent of their electricity from renewable resources from 2011 to 2013, and at least 25 percent of their electricity from renewables by December 31, 2016.

Q: Meeting the 33 percent RPS sounds very ambitious. Is it feasible?

A: Absolutely. California utilities are already well on their way to meeting the RPS goals. The California Independent System Operator has already approved more than enough transmission to meet the 33 percent goal. PG&E, Southern California Edison and San Diego Gas & Electric have already signed nearly power purchase agreements for more than 20,000 MW, more than enough to reach 33 percent. And last year, the California Energy Commission approved almost 4,200 MW of new solar thermal capacity in the state.

Q: Are there geographic restrictions on where the electricity can come from?

A: The RPS requires that by 2020 at least 75 percent of the renewable electricity comes from renewable power plants whose first point of interconnection with the electricity grid is controlled by a California entity, such as the California Independent System Operator or the Los Angeles Department of Water and Power. However, if an electricity provider demonstrates that it is unable to meet this requirement due to conditions outside its control, the CPUC can lower the requirement to 65 percent. The RPS also places strict limits on the use of renewable energy certificates (RECs) to meet the 33 percent goal.

Q: Are renewable energy projects being developed in California?

A: Yes. Renewable energy projects are being proposed and built across the state, including solar thermal in the deserts, wind turbines in the mountain passes, geothermal in the southeast and distributed photovoltaic projects on rooftops and parking lots in cities and suburbs.

Q: Why is this legislation important?

A: The 33 percent renewable standard is a key part of the effort to create jobs and build a clean energy economy. Increasing the share of electricity that comes from renewable resources will help us to meet our climate change goals, increase our energy independence and economic security, and create good jobs here at home.

California's Renewable Portfolio Standard Clears Hurdles Moving Forward to Final Vote

2011-03-08T23:23:19Z

Peter Miller, Senior Scientist, San Francisco

The RPS bill that would increase California’s share of electricity coming from renewables to 33 percent (SBX1 2) surmounted two critical hurdles over the past few days. Last Thursday, the Assembly Utilities and Commerce Committee voted out SBX1 2 unamended on a vote of 10 to 3; and yesterday the Assembly Natural Resources Committee also voted 6 to 3 to move the bill forward unchanged.

The final committee vote on SBX1 2 will be in the Assembly Appropriations Committee either tomorrow or Thursday. The Assembly floor (and final) vote is expected sometime next week depending on budget negotiations.

Of historic note, Wesley Chesbro's Natural Resources Committee hearing was graced by the presence of Senator Byron Sher. Senator Sher is the author of SB 1078, California’s first RPS bill that established 2017 as the year that the state's residents would get at least one-fifth of their electricity from renewable energy resources. Many predicted that the state would fail to meet this goal. They said it was too expensive and difficult and couldn't be done.

Just nine years later, sitting in the hearing room, one could almost see Senator Sher's metaphorical hand resting on Senator Simitian's shoulder as he delivered his brief closing statement.

If signed into law, Senator Simitian's bill will move the SB 1078 target date up four years to 2013. By doing so, SBX1 2 will formally acknowledge what everyone clearly accepts. Namely, the issue of whether California can or should get to 20 percent renewables is no longer in question. Getting to 20 percent four years early is now essentially a foregone conclusion. In fact, many utilities will get there sooner.

I think that's something that's often lost in the debate. The Sher RPS program will have achieved its goal in ten or eleven years instead of fifteen. By my lights, that counts as a resounding success.

Not only that, everything that went into the RPS effort over the past decade -- the research, the investment, the analysis, the planning, the contracting, the siting, the permitting, and of course the daily efforts of tens of thousands of workers -- has given California a head start on achieving our next RPS goal. Thanks to the bracing tailwind from Senator Sher, we are already well our way to a future when fully one-third of our electricity will come from renewable energy resources that don't run out.

Thank you Senator Sher.

California Senate Approves 33% Renewable Standard

2011-02-25T22:20:19Z

Peter Miller, Senior Scientist, San Francisco

This week the California State Senate approved Senate Bill 2X, authored by Senator Joe Simitian (D-San Mateo), which would require California utilities and other electricity providers to generate 33 percent of their electricity from renewable energy resources, including solar, wind, geothermal and small hydro by 2020. If approved by the Assembly, the bill will boost confidence in clean energy investments, create jobs, and bring California closer to meeting its pollution reduction goals.

The vote was 26 to 11 in favor of the bill, with aye votes from three Republican Senators – Sam Blakslee (R-San Luis Obispo), Sharon Runner (R-Antelope Valley), and Tony Strickland (R-Santa Barbara). I believe that the votes of these three Senators are harbingers of a new era in which renewable energy is seen not through a partisan lens, but instead as a collaborative effort to build a diverse and resilient energy resource base, minimize the threat of fossil fuel price spikes, and enhance our energy security.

Billions of dollars are now being invested in renewable energy projects in traditionally Republican parts of the state like San Bernadino, Kern, Riverside, and Imperial counties. Over the past few weeks, there has been a steady parade of renewable energy investors, developers, and supporters into the offices of Senate Republicans highlighting the jobs and revenues that these projects will create. This trend will continue to grow, not just in California, but in states across the west.

NRDC will be working closely with the broad coalition of SB 2X supporters over the next couple of weeks to get this bill passed by the Assembly and signed into law by Governor Jerry Brown. Voters made it clear last November that they want to move forward with a clean energy future by defeating Prop 23. Now we must implement the wish of the voters.

Evaluation of California CFL Program Is Too Pessimistic

2010-10-14T18:00:58Z

Peter Miller, Senior Scientist, San Francisco

A Recent Evaluation of a Key California Efficiency Program Is Far Too Pessimistic

In an earlier blog, I described how a recent evaluation of a key energy efficiency program that promoted compact fluorescent lamps (CFL) concluded that nearly half of the reported savings would have occurred even without the program.[1] As detailed below, the history of CFL sales in California and across the nation over the past decade suggests that this estimate is deeply flawed and far too pessimistic.

Evaluation of Lighting Efficiency Program Draws Surprising Conclusion

This past spring the Energy Division of the California Public Utilities Commission (CPUC) released its evaluation of an energy efficiency program for lighting implemented by the three largest utilities in the state from 2006 through 2008. [2] This evaluation is particularly important because the program, known as the Upstream Lighting Program (ULP), accounts for over half of the net reported energy savings from the portfolio of programs run by these utilities over that three-year program period. [2]

In brief, the ULP provides incentives to manufacturers of CFLs in order to lower the price of the bulbs and encourage consumers to buy them instead of inefficient incandescent bulbs. Compact fluorescent lamps save a lot of energy and money. For example, a CFL using only 15 watts provides the same amount of light as a traditional 60 watt incandescent bulb. From 2006 through 2008, PG&E, SCE and SDG&E provided incentives to manufacturers averaging $1.57 per bulb on nearly 100 million CFLs. [2]

The factor the evaluation study tried to estimate that had the biggest impact on the final estimate of savings was how many of the CFLs would have been sold in the absence of the program, an estimate known in the energy efficiency literature as the net-to-gross ratio (NTGR) . Unfortunately, as the study reported, none of the complicated statistical analyses used to try to estimate the NTGR produced a useable result. [2] The authors instead chose to use an estimate of 54% based on “best judgment.” [2] In other words, the evaluators estimated that the utility program was only “responsible” for about half the savings that were achieved. Since this program was such a big part of the portfolio, this one estimate has led some to conclude that the utility programs provided far less benefits than anticipated and even that incentives should no longer be provided for CFLs. But an analysis of CFL sales growth trends shows that the opposite is true.

Actual Growth in CFL Sales Far Exceeds Historical Trends

In 2002, total sales of CFLs in California were around 4.5 million per year. Utility incentive programs are estimated to have been responsible for sales of approximately 2.8 million of these lamps. The remaining 1.7 million was due to consumer demand from early adopters and represents the best estimate of what sales would have been in 2002 without the utility incentive program. Total statewide sales dropped somewhat from 2001 to 2002, but there was a modest uptick in sales of approximately 170,000 in 2003. If we assume this growth was not due to program effects, then the rate of sales growth outside the program from 2002 to 2003 was about 10% per year. [3]

As the utilities prepared to implement the new upstream CFL rebate program, the question facing the utilities and the CPUC was what would happen to sales over the next five years in the absence of a CFL rebate program in the state. The year 2003 is a reasonable starting point both because it immediately preceded the significant expansion of the ULP program to its current status and because it could reasonably be considered the most up-to-date sales data available when the utilities developed and the CPUC reviewed the 2006-08 program plans. Obviously, one plausible forecast is that the 2002 to 2003 growth rate of 10% would be sustained. A growth rate of 10% beginning in 2003 would have resulted in sales of 3 million CFLs in 2008. [4]

There is no way to know what would have happened if the California utilities hadn’t run the ULP program, but we do know what actually did happen. In 2008, CFL sales in California totaled 52.1 million lamps with rebates provided to customers for 42.6 million of those lamps. [2] If we adopt the estimate that CFL sales would have continued to grow at 10% per year without the program, then a total of 49.1 million lamps were sold as a result of the program (52.1 million minus 3 million). Since rebates were provided for only 42.6 million lamps, the estimated NTGR should be 115% (49.1 million divided by 42.6 million), more than double the 54% rate based on the consultant’s “best judgment.” [5]

Of course, one might argue that CFLs were actually poised in California in 2003 for even faster sales growth. For example, if sales in other parts of the country grew even faster than 10%, that would be an indication that this forecast sales growth rate was too low. In fact, it turns out that the average rate of growth in CFL sales from 2003 to 2008 in the rest of the U.S. was 37% per year. [6] Of course, efficiency programs in other states were also providing incentives to consumers that led to increased sales. [7] In addition, the California programs were run in part through national retailers and likely resulted in additional, unrebated sales outside California, at least in neighboring states. However, for the sake of argument, let’s assume that the California ULP and programs in other states had absolutely no effect on sales in other states and that, in the absence of the ULP program, California would have enjoyed the same rapid growth in CFL sales of 37% per year. Under this hypothetical scenario, California CFL sales in 2008 would have totaled 8.8 million lamps. That estimate, when compared to actual sales in 2008, results in a NTGR of 102%. [4]

In other words, even if one assumes that the rapid growth in CFL sales in the rest of the US from 2003-08 was not due in any way to the energy efficiency programs implemented over that period and one also assumes that California would have experienced similarly rapid sales growth, then the net benefits of the program are still roughly twice as large as the ULP evaluation concludes.

The Pessimistic Conclusion in the Evaluation Report is Implausible

Let’s look at this in a different way. How large would the growth rate in sales have to have been in California without the efficiency programs to justify the estimated NTGR of 54%? In order to justify a NTGR this low, CFL sales would have had to grow from under 1.7 million in 2003 to 29.3 million lamps in 2008 without utility incentives. The growth rate required to get to this level of sales is 74% per year. (See figure below) In other words, the growth rate in CFL sales in California without a program would have to have been twice as large as the growth rate that actually occurred in the rest of the U.S., during a period in which there were ambitious, well-funded programs in a number of states. As noted earlier, the ULP evaluation provides neither conclusive evidence nor analysis to support this highly implausible result.

Actual Benefits of Lighting Efficiency Program Are Likely Twice as Large as Estimated

To summarize, the estimated NTGR of 54% is based on an implicit assertion that in 2003 sales were somehow poised to grow at the extraordinarily rapid rate of 74% per year for five years running, despite modest at best sales growth from 2001 to 2003. Even if one assumes that sales would have risen at 37% per year based on sales growth in other states, the NTGR in 2008 should be 102%, nearly twice the “best judgment” estimate from the ULP evaluation study. A lower growth rate based on the actual sales growth from 2002 to 2003 would result in a NTGR of 115%. The bottom line is that the proposed NTGR of 54%, which is based solely on a consultant's judgment, is unsupported by readily available evidence and is far too low. The programs were likely responsible for savings twice as large as the evaluation report estimated.

NTGR figure (2).pdf

References

1. http://switchboard.nrdc.org/blogs/pmiller/cpuc_should_scrutinize_ulp_eva.html

2. "Final Evaluation Report: Upstream Lighting Program". The Cadmus Group, Feb. 8, 2010.

http://www.energydataweb.com/cpucFiles/18/FinalUpstreamLightingEvaluationReport_2.pdf

3. Sales data is from: "California Lamp Report 2003." Itron, July 15, 2004. This calculation assumes a NTGR of 80% for 2002 and 2003. A lower NTGR would result in more sales in the absence of the program, but a lower growth rate. For example, a 60% NTGR would increase the estimate of 2003 sales without the program by 40% but decrease the annual growth rate to 7%.

4. Assuming a starting point of 1.7 million lamps, sales growth of 10%/year for 5 years results in 2008 sales of 3 million lamps. Similarly, a 37%/year growth rate for 5 years results in 2008 sales of 8.8 million.

5. A NTGR of over 100% means that the program resulted in sales of some lamps in addition to those that got rebates. This could happen because of increased customer awareness and acceptance among other factors. A number of states, including New York, Vermont, and Massachusetts currently credit their CFL rebate programs with NTGRs of greater than 100%.

6. Ecos Consulting analysis of USA Trade Online data

7. "CFL Market Profile." U.S. DOE. March 2009

CPUC Should Scrutinize ULP Evaluation Results

2010-05-26T19:29:50Z

Peter Miller, Senior Scientist, San Francisco

The Energy Division of the California Public Utilities Commission (CPUC) recently released its evaluation of the success of the utilities energy efficiency programs, including the lighting program implemented by the three largest utilities in the state from 2006 through 2008. This assessment is particularly important because the energy efficiency program, known as the Upstream Lighting Program (ULP), accounts for 56% of the net expected energy savings from the portfolio of programs run by these utilities over that 3-year program period. More generally, this study is an attempt to measure the impacts of one of the largest single energy efficiency programs ever implemented.

In brief, the ULP provides incentives to manufacturers of efficient light bulbs (mostly compact florescent lamps, known as “CFLs”) in order to lower the price of these products and encourage consumers to buy and use efficient CFLs instead of inefficient incandescent bulbs. From 2006 through 2008, PG&E, SCE and SDG&E provided incentives to manufacturers averaging $1.57 per bulb on nearly 100 million CFLs. By providing the incentive directly to manufacturers (rather than as a rebate to the purchaser), the utilities leveraged their investment, resulting in an average discount for consumers at the register of $2.70 per bulb.

The goal of the ULP Evaluation Report was to estimate how much electricity was saved and how much peak demand was reduced by the CFLs that received rebates through the program. The study also tried to estimate how much of that savings would have happened in the absence of the program.

Surprisingly, the report concludes that the net savings from each bulb was only 25% of what was expected when the CPUC approved the programs. As a result, even though the utilities provided incentives on 95 million lamps, which was well in excess of their goals, the ULP evaluation proposes to credit the utilities with achieving only a small fraction of their savings targets for this program. Because of the substantial consequences for current and future programs, both in California and around the country, this conclusion deserves close scrutiny.

Perhaps the biggest issue arising from the ULP Evaluation Report is the estimate of the fraction of the total program savings that would have occurred even if the program had not been implemented. This estimate, known as the net-to-gross ratio (NTGR), is difficult to estimate with confidence in any case. In this instance, the estimation of NTGR was particularly challenging.

Estimation of NTGR usually requires an assessment of the market conditions prior to program implementation. However, the ULP evaluation didn’t begin to collect market data from participants until 2008, following two years of a massive market intervention. By that time, it had become extremely difficult – if not impossible – to estimate the market activity that would have occurred in the absence of the program.

The NTGR estimation was further complicated by the use of complex modeling approaches whose practical effectiveness had not been tested. As the report acknowledges, the proposed modeling approaches failed and the authors had to rely on alternative models with significant but unknown biases and measurement methods that weren’t fully representative of the program. Ultimately, the authors chose to reject the only NTGR estimates that were defined as representative of the full 2006-2008 program and instead to simply select a set of estimates based on “best judgment.” Given that the final proposed NTGR ratio of 54% is based on the authors’ judgement, it is perhaps unsurprising that it differs substantially from the NTGR ratio adopted for similar CFL programs in other states.

The ULP evaluation also ran into problems in the attempt to estimate the installation rate of CFLs through the program. The evaluation plan proposed to estimate a set of three inter-related models from a survey of users. Unfortunately, as the authors explain, the models did not produce meaningful results and an ad hoc alternative had to be developed late in the study process. The installation rate that emerged from this ad hoc analysis resulted in an additional 15% reduction in the program savings estimate, mainly due to CFLs that were in customers’ homes but had not yet been installed.

Taken as a whole, the substantially delayed data collection and the problems with estimation of NTGR and installation rate, along with a number of other issues identified by commenters, raise concerns about the validity and robustness of the ULP Evaluation Report’s conclusions. The results of this study will have far-reaching implications both in California and around the nation; it will affect the CPUC’s assessment of the utilities’ performance and calculation of any financial rewards or penalties, the cost-effectiveness of the utilities’ current efficiency programs, and the savings and cost-effectiveness of efficiency programs around the country (as my colleague Noah Long states in his blog post), since many states look to California’s evaluation studies to determine savings from their own programs.

Given the importance of the results of this study, it is imperative that the CPUC fully review the report’s methodology and conclusions and formally resolve the disputes about the ULP impacts, something the Commission has not yet indicated that it plans to do.

Bad COP15? Good COP15!

2009-12-24T00:05:08Z

Peter Miller, Senior Scientist, San Francisco

Since I got back from Copenhagen, the most common response among my friends and colleagues has been disappointment with the outcome.

That surprised me. First, because being in Copenhagen was extrordinarily inspiring. It was a privilege and a pleasure to be among the tens of thousands of delegates and activists from around the world working to help address this overwhelming threat.

Second, because being in Copenhagen gave me a sense of the enormity and difficulty of the task before us. Think of it. We are trying to get nearly 200 nations around the world to come together to make a commitment to deep and lasting changes in virtually every aspect of the global economy. This is an extrodinarily challenging undertaking that will require decades of sustained commitment.

Before I left for Copenhagen, a friend asked me how the COP process works. The answer is that there is no blueprint for reaching a global consensus agreement on climate change. Nothing of this scale and scope has ever been attempted.

I sympathize with those who see the Copenhagen Accord as inadequate to the task. Much, much more needs to be done. But as detailed by my NRDC colleagues (here, here, here, and here), the Copenhagen Accord is a big step forward that provides for real reductions in carbon pollution by the world’s biggest emitters, establishes a transparent, international reporting framework, and provides billions of dollars of assistance to those most threatened by climate change. There is plenty of work to do in the weeks, months and years to come. But make no mistake, we took a big step forward last week in Copenhagen.

Just now emerging is the story of the role that President Obama played in the final stages of the negotiations. He arrived to a process that threatened to break down in chaos and recrimination. Through his direct personal involvement he helped forge a global agreement among all but five of the 192 nations present.

I don’t mean to undervalue the extrodinary efforts of so many others – including the 119 heads of state that participated, the largest gathering of world leaders ever. But over the course of only eleven months in office, President Obama has managed to get the U.S. ship of state to make a 180 degree change of course and start steaming in the right direction. As an American, I am impressed and proud of what he has been able to accomplish.

Thank you, Mr. President.

Ensuring Offset Quality

2009-12-15T11:16:10Z

Peter Miller, Senior Scientist, San Francisco

(What follows is an abridged version of the comments I delivered on a side event panel on Ensuring Offset Quality sponsored by the Climate Action Reserve at COP15.)

What is an offset? An offset is an emission reduction in an uncapped sector that is used for compliance with an emissions cap in lieu of a reduction in a capped sector.

There are two parts to that definition. The first is an emission reduction in an uncapped sector, such as forestry or agriculture. The second is the use of those reductions as a substitute for reductions in a capped sector under a compliance regime.

I believe it is important to distinguish between these two parts of offsets. Why? Because while there are reasonable disagreements about the appropriate role that offsets should play in a compliance regime, there is widespread consensus that we need to achieve significant emissions reductions in the uncapped sectors. In particular, NRDC believes that we should be trying to maximize the contribution of the forestry and agriculture sectors. In order to do that, we need to have credible, high-quality mechanisms to measure, report, and verify the impact of emission reductions activities in those sectors.

Once we have accounting standards and verification mechanisms in place to ensure that credits are only earned for real reductions, then it becomes feasible to incorporate the use of offsets into compliance regimes without threatening their integrity. It also becomes possible to implement a range of other policies to achieve those emission reductions, including incentives using, for example, allowance auction revenues, and direct regulation.

To date, offsets have suffered from an unfortunate dynamic in which offsets are seen as nothing more than an opportunity for easy credits and cheap compliance. Proponents work to make the rules as lax as possible, thereby undermining credibility. Opponents work to make the process as difficult and restrictive as possible, thereby undermining practicability. What is left are low quality, impractical offsets with no environmental credibility. This is a dynamic that we must surmount by working together. Credible, high-quality offset accounting mechanisms are in the interest of all parties, including NGOs, industry, and government.

From my perspective, there are four key components to a credible, high-quality, offset accounting program.

Full and accurate accounting using standardized protocols.
Reasonable and appropriate minimum environmental safeguards.
Strong baselines that ensure additionality.

And, for activities that require retention of sequestered carbon, an effective mechanism to ensure permanence.

RPS Flexibility and Cost Containment

2009-09-18T18:33:03Z

Peter Miller, Senior Scientist, San Francisco

The 33% Renewable Portfolio Standard (RPS) recently passed by the California Legislature represents a commitment to an almost 3-fold increase in the amount of renewable generation for California consumers in 2020 compared to current levels. If enacted, this legislation would reaffirm California's leadership in energy policy and set the standard for action by the federal government.

The key issue addressed in this legislation was finding a balance between flexibility and encouraging in-state development. Utilities, developers, and the grid operator want flexibility to help them achieve the overall goal and minimize costs. Labor, consumer groups, and environmental justice advocates want in-state construction to create jobs and economic development.

Both of these goals are important. We must create adequate flexibility to allow utilities and renewable developers to achieve these goals at a reasonable cost. But we must also work to ensure that California benefits from the jobs and economic development that this investment will create.

In the legislation, this balance is achieved by requiring that at least 70% of renewable energy actually is delivered to California customers. The bills allow for the remaining 30% of renewable generation to be "undelivered electricity," which can be met through the purchase of renewable energy certificates that verify incremental renewable generation somewhere else in the western U.S. electricity grid. (Not coincidentally, the 30% REC limit is what Governor Schwarznegger asked for in his legislative request. ) Overall, these rules would allow perhaps 50% or more of renewable power to come from out-of-state facilities.

Opponents of the legislation argue that even this level of flexibility is inadequate. But claims that the bill would require too much of the new renewable generation to be built in California may not be well received by the State's citizens who want investments in renewable energy to produce good paying jobs in their communities as well as help protect the planet from global warming. Where some see protectionism, others see an effort to protect and rebuild California's economy.

The 33% RPS legislation also includes a cost containment mechanism to protect consumers from excessive costs. This provision requires that the total net cost of the program not raise rates by more than 6%. That's far less than the expected increase in rates over the next decade for non-renewable investments and less than the 7% that was estimated by PUC staff to meet the 33% goal. The cost cap will impose significant cost discipline on developers and regulators, encouraging competition and efficient implementation. If we're successful and renewable technology costs decline over the coming decade, the goal could be achieved at substantially lower cost or even at a net savings.

Executive order or legislation

2009-09-18T16:49:21Z

Peter Miller, Senior Scientist, San Francisco

Over the past couple of days, I've been asked by a number of reporters about the practical difference between an executive order directing CARB to adopt an RPS regulation and legislative enactment of the RPS.

Here, then, is a clear difference between Governor Schwarznegger's signature on an executive order and his signature on RPS legislation.

If all we have is an executive order, then the RPS program could be brought to an abrupt halt by a future governor. If all we have is an executive order, the millions of dollars that will be devoted to developing and reviewing projects and the dedicated efforts of private companies and state employes devoted to developing procurement plans and program guidelines will be at much greater risk. If all we have is an executive order, it will be much harder, and perhaps impossible, to create the decade-long, stable policy environment that will be necessary to attract and support billions of dollars of investment in clean energy infrastructure. If all we have is an executive order, then Governor Schwarznegger's vision of California as a global leader in renewable energy development may never be realized.

If, instead, Governor Schwarznegger signs the RPS bills that were passed by a solid majority of the state legislature just one week ago, then the clean energy economy can be built on a strong legal foundation. If the governor signs the RPS legislation, then rather than the precipitous action of a single individual, changes to the RPS program would need to gain the support of a majority of California legislators, many of whom could still be in office well into the coming decade. If the governor signs the RPS legislation, then it will be possible to give investors confidence that their dollars and their efforts will not be squandered. If the governor signs the RPS legislation, then the thousands of students now studying how to install solar panels and erect turbines can be confident there will be jobs for them when they graduate. If the governor signs the RPS legislation, his vision of a clean and secure energy future for California has a chance of becoming a reality.

Please contact Governor Schwarznegger and urge him to sign the RPS legislation.

Two steps forward. One step back.

2009-09-17T22:53:40Z

Peter Miller, Senior Scientist, San Francisco

Very late last Friday on the final day of the legislative session, the California legislature passed a package of bills that together would require all utilities in the state to get one third of their electricity from renewable energy facilities by 2020.

On Saturday, the tired but optimistic supporters were looking forward to asking Governor Schwarznegger for his signature. The Governor had himself asked for RPS legislation just a few months earlier and the final compromise met most, though perhaps not all, of his objectives. While the bills are not perfect and no stakeholder got everything they wanted, the final product is a strong, balanced step forward.

But less than half a day after the legislation passed, Governor Schwarznegger's spokesman announced that he would veto it when it reaches his desk. Instead, on Tuesday, he signed an executive order directing the Air Resources Board to develop and adopt regulations to implement the 33% RPS. The reasons he cited were that the legislation didn't allow adequate flexibility and could result in excessive costs for utility customers.

In making his announcement so quickly, it felt to me as though the Governor had jumped two steps ahead, skipping past the legislative foundation, and going straight to the development of the detailed regulations that will be necessary to fully implement the program. But implementation of a 33% RPS through regulation without legislative backing raises important legal issues that could increase uncertainty and whose resolution may delay implementation.

Despite the Governor's announcement, supporters of the legislation are continuing to make their case for signing the 33% RPS bills. We're working to convince the Governor that the legislation meets his substantive concerns and that any remaining issues can be dealt with through follow-up legislation or administrative rulemakings.(e.g. group letter)

We also need to convince the Governor that signing the legislation and revising his executive order, even if he sees it as taking a step backward, is justified. At least in this case, we're working to convince him that two steps forward and one step back represents real progress for California.

California’s proposed 33% Renewable Portfolio Standard (RPS)

2009-08-31T19:05:04Z

Peter Miller, Senior Scientist, San Francisco

California's legislature is close to passing a requirement to raise the state's Renewable Portfolio Standard (RPS) to 33% in 2020. If it is enacted, this law will once again place California at the forefront of efforts to expand the role of renewable energy resources like wind, solar, and geothermal in supplying electricity to homes, businesses, and industry. Achievment of a 33% RPS, which would exceed the RPS requirement of 25% in other states like Oregon and Minnesota, would significantly reduce GHG emissions, help stablize electricity prices, and promote economic development.

California's history of supporting renewables development through RPS requirements began with SB1078, authored by Senator Byron Sher in 2002, which required utilities to meet 20% of their electricty demand with qualifying renewable energy resources by 2017. Four years later, the California Legislature passed SB107, authored by Senator Joe Simitian, which accelerated the RPS timetable and required the state's utilities to reach the 20% renewables requirment by 2010. SB107 included flexible compliance provisions that allow for a 3-year window to meet procurement goals. Utilities in the state are generally on track to meet the SB107 goal by 2013, as permitted by law.

In 2006, the California legislature also passed AB32, authored by Senator Fran Pavley. This landmark legislation imposed a cap on statewide emissions of greenhouse gases at 1990 levels by 2020. The AB32 Scoping Plan, adopted by the California Air Resources Board in 2008, includes an increased RPS requirement of 33% by 2020 as a key component of a comprehensive strategy addressing emissions across a wide range of economic sectors. CARB estimates that the 33% RPS will reduce California's GHG emissions by 21.3 million metric tons of CO2 per year in 2020, accounting for more than 12% of the total reductions needed to meet the AB32 goal.

Governor Schwarznegger has also made meeting a 33% RPS by 2020 one of his administration's policy goals. In November 2000, Governor Schwarznegger signed an executive order which administratively established the 33% RPS and directed state agencies to implement reforms to facilitate achievement of the goal.

However, legislation is essential to establishing a legal mandate and framework for compliance and for ensuring adequate funds are available to realize the goal of a 33% RPS. Since the start of the 2009-10 legislative session, lawmakers have been working with a broad array of stakeholders to draft legislation to establish the 33% target as state law. In January, Senator Simitian and Assemblymember Paul Krekorian introduced parallel bills in the Senate and Assembly. These two bills, SB14 and AB64 have passed through their house of origin and through the policy committees in the other house with strong support. Over the coming two weeks, the authors will be working with legislative leaders, the governor's office and key stakeholders to refine and finalize them, with the intent of crafting a final package that can garner the support of the full legislature and the governor for enactment into law this fall.

Sulfur emissions more important than CO2

2009-02-13T01:55:44Z

Peter Miller, Senior Scientist, San Francisco

The headline reads: "Sulfur emissions more important than CO2 in warming, scientist says."

Apparently, a retired USGS geologist has determined that sulfur is primarily responsible for climate change rather than carbon dioxide. According to the story in Greenwire, Peter Ward of Jackson Hole, Wyoming has correlated atmospheric concentrations of sulfur (based on ice core data) with global temperatures and concluded that sulfur dioxide is more important than carbon dioxide in driving global temperature.

I don't subscribe to the journal Thin Solid Films where it will be published (although I love the title) and the article hasn't been published yet in any case, but I think this is a great example of bad reporting.

The first thing you learn in a statistics class is that correlation is not causation. In order for this analysis to hold up, Ward has got to show a mechanism whereby atmospheric sulfur increases temperature. He's also got to show that it's the sulfur causing the temperature rise, rather than something else that is correlated with the sulfur, e.g. black carbon emissions from the same volcanoes that emitted the sulfur. Even if it turns out that, contrary to the existing understanding of atmospheric chemistry, sulfur dioxide is a potent GHG, that doesn't negate the research showing CO2 is a potent GHG.

As I said, I haven't read the paper, but I'd bet dollars to doughnuts that Ward is wrong. Not that I fault him for doing his research and coming up with an innovative hypotheses that runs contrary to accepted science. The problem isn't the blind canyons scientists often find themselves in, but reporters who are willing to run with any man bites dog story they can find.