Powering the South: Report Summary

Powering the South asks and answers three questions. Does the generation of electricity in the South have to carry with it disastrous levels of air pollution? No. Will the new, clean technologies that solve pollution problems raise the cost of electricity to households and businesses in the South? No. Are the policies necessary to move the South to a Clean Energy program known, tested, and proven? Yes.

Powering the South shows that a clean generation mix can meet the region’s power demands and reduce pollution by shutting down coal plants built before 1960, developing strong efficiency programs, and phasing in renewable energy for each of the six states. Pollution, especially the pollution related to fine particulate emissions, can be dramatically reduced without raising the average regional cost of electricity. The report also lists the policy initiatives that can make the changes. As shown in the Table, under Powering the South the carbon dioxide, nitrogen oxide, and sulfur dioxide emissions in 2020 will be lower than the “business as usual” levels and significantly lower than emissions in 2000. In 2020 the Powering the South generation mix achieves a 25 percent reduction in Sulfur Dioxide emissions, which are closely related to fine particulate emissions. Powering the South is the result of over a year’s effort undertaken by the Renewable Energy Policy Project and Southern Advocacy groups from the region. The group looked for a clean, affordable energy future for the region, which at present has some of the worst air pollution and health related problems in the nation. The focus of the effort was to explore how the generation mix of the South could be changed in order to drastically reduce pollution and not raise the price of electricity to end-users. The Clean Power Plan includes four major changes from the Business-As-Usual forecast: – Aggressive energy efficiency measures are implemented – Additional non-hydroelectric renewable resources are installed – Fewer new natural gas facilities are installed as a result of lower electricity demand and increased use of renewable resources – Pre-1960 coal plants are retired early. These clean energy gains can be realized with no increase in the cost of electricity for the region as a whole. Aggressive efficiency programs will reduce the annual growth in demand for electricity from 1.8 percent to 0.7 percent. As a result, 236 million MWh of new demand, or the equivalent of the output of 112 new power plants with 300 MW generation each, can be avoided. Under the Powering the South plan, part of the savings from the efficiency programs will be used to increase the use of renewable generation. Under the plan, renewable resources will grow to provide 10 percent of the electricity generated in the region in 2020. Replacing the dirtiest generation with the efficiency and renewable package will dramatically reduce regional pollutants. The Table of “New Renewable Resources” on the next page presents a summary of the new renewable generation facilities that are installed in the Clean Power Plan. The majority of new renewable energy generation is from biomass co-firing, biomass CHP, and wind. Wind turbines, both on and off-shore, represent about 40 percent of the total renewable generation by 2020. Solar photovoltaics represents a very small portion of the total renewable generation due to its relatively high cost, but this technology is expected to play a larger role in the future. Clean Energy Policies Powering the South offers a menu of known, tested, and proven policy options that can deliver the clean energy future detailed in the report. The following summaries give a flavor of the options presented. Creating an Energy Efficiency Fund Each state should create a Public Benefits Fund (PBF) that supports expanded markets for energy-efficient products and services. The fund is based on a small surcharge of US0.2¢ per kilowatt-hour (kWh) on electricity delivered to customers—that is, a charge per kilowatt-hour that shows up on a customer’s electricity bill, just as other utility charges do. Promoting Education and Market Transformation State legislatures and utilities should channel funds toward enabling consumers to buy and suppliers to sell energy-efficient products and services. One of the primary barriers to energy efficiency is lack of information among both consumers and producers. Rewarding Efficiency Through Tax Incentives, Tightening Buildings Codes, Appliance Standards State governments should support tax incentives that reduce the financial barriers that many customers face when purchasing equipment, as well as stimulate the development of advanced technologies that have not yet reached commercialization. State governments should apply more-stringent energy efficiency standards, while state and local governments should apply more-stringent buildings codes throughout the South. Requiring Better Utility Planning In regulated states, public utility regulators should require utilities to perform integrated resource planning (IRP) before deciding on new infrastructure investments such as power plants and power lines. Under IRP, utilities determine the most cost-effective source of new electricity service. Establishing the Renewable Portfolio Standard Each state in the South should pass a Renewable Portfolio Standard (RPS) that requires all retail electricity suppliers to include renewable energy as a specified portion of the overall power mix. Legislators or public utility regulators should require private retail power suppliers to install renewables so that the region as a whole meets 4 percent of in-state power production in 2010 with renewable energy, moving up to 10 percent in 2020. Creating a Renewable Energy Fund Each state should create a Public Benefits Fund that supports renewable energy development. As with the fund on efficiency, this would be based on a small surcharge of US0.2¢ per kWh on electricity delivered to customers. The purpose of the fund is to channel public support to financing for specific renewable energy projects and programs. Making the Market Equitable for Renewables through Tax Incentives Southern states should design tax policies that support both producers and consumers of renewable energy. State governments should pass a Production Tax Credit (PTC) for renewable energy. State governments should offer consumer tax credits for small-scale technologies such as solar PV. Credits should offer buyers incentives that reduce the “up-front” cost of the product. Enabling Customers to Benefit From Distributed Power Public utility regulators must adopt uniform product and service standards for technologies such as solar photovoltaics. As with any industry, manufacturers and installers of small-scale, distributed power systems such as PV must face consistent standards. Such standards must address safety concerns—for example, fire safety and safety for power line workers—as well as ensure quality so customers get what they reasonably expect. Bringing Green Power Choices to All The Clean Power Plan requires substantial public policies to advance renewable energy. Even with these policies in place, southern consumers should still have the option to support more renewable energy development voluntarily. Green power purchasing gives consumers this option, whether in a regulated electric system or a deregulated one. Regulating Carbon Dioxide In the South, each megawatt-hour of power generated by plants in the six-state region covered by Powering the South plus Virginia and Mississippi produces 1,441 pounds of CO2. One way to set CO2 limits is to place a total emissions cap on an entire region, allocate emissions allowances to individual pollution sources, and permit trading among sources. Delaying limits to CO2 in the face of increasingly robust predictions of climate change is dangerous for the South, the United States, and the world. Ending the Grand fathering of Coal Power Plants The Clean Energy Plan includes efforts to retire old coal power plants in the South. Closure can take many forms: negotiated closures for individual power plants, tight caps on air pollutants based on output-based emissions standards, and distribution of emissions allowances under cap-and-trade programs through auctions rather than through “grandfathered” allowance distribution that again favors existing plants that are large sources of emissions. The Way Ahead With all that a final question remains to be answered: will the Clean Energy Plan described in this report become reality? The answer to that question rests with the citizens of the South. Powering the South shows that a clean energy future is feasible, but those tools must be enacted by changing regulations, state legislation, and even federal legislation. As this report went to the printer, a debate began in Washington about whether to weaken federal regulations and move the electricity industry directly away from the path shown in Powering the South. The proposals contemplate weakening the Clean Air Act Amendments of 1990 and in particular would weaken the regulation of the “grand fathered” coal plants that contribute much to the pollution reduction identified in Powering the South. It is the early retirement of these plants that contribute much to the pollution reduction identified in Powering the South. If Powering the South is successful it will help the citizens of the South decide the future they want and provide them with the specifics on how to get there. About the Author George Sterzinger is the Executive Director of the Renewable Energy Policy Project in Washington, D.C. Download the full, Powering the South report at http://www.poweringthesouth.org

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