RE/AC/CCS option descriptions

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					Midwestern Governors’ Association Renewable Energy and Advanced Coal and
         Carbon Capture and Storage (RE/AC/CCS) Advisory Group

Summary List of Pending Options for Analysis
                                                         GHG Reductions
                                                           (MMtCO2e)      Net Present Cost-
                                                                    Total   Value    Effective-
  Policy                                                            2008– 2008–2025     ness    Level of
  Option                 Policy Description             2015   2025 2025 (Million $) ($/tCO2e) Support
                Stimulate the Development of New
    RE-1                                                TBD    TBD    TBD       TBD        TBD       Pending
                Renewable Electricity Generation
                Expand Collaborative Regional
    RE-2                                                TBD    TBD    TBD       TBD        TBD       Pending
                Transmission Planning and Siting
                Incorporate transmission development
                requirements into existing state
    RE-3                                                TBD    TBD    TBD       TBD        TBD       Pending
                renewable energy objectives and
                standards
                Pursue a Multi-State Transmission
    RE-4                                                TBD    TBD    TBD       TBD        TBD       Pending
                Initiative
                Develop and Implement Comprehensive
    RE-5        Siting Principles and Policies for Wind TBD    TBD    TBD       TBD        TBD       Pending
                Farms
                Encourage a Diversity of Approaches to
    RE-6                                                TBD    TBD    TBD       TBD        TBD       Pending
                Renewable Electricity Development
                Demonstrate Technology, Engineering
                and Operating Strategies for Maximizing
    RE-7                                                TBD    TBD    TBD       TBD        TBD       Pending
                the Total Electricity Generation from
                the Region’s Wind Resources
                Attract Renewable Energy Component
    RE-8        Manufacturers and Service Providers to TBD     TBD    TBD       TBD        TBD       Pending
                the Region
           Promote the Establishment of a Regional
  AC/CCS-1 Carbon Capture and Storage              TBD         TBD    TBD       TBD        TBD       Pending
           Infrastructure
           Coal Technology Incentives, Support or
 AC/CCS -2                                         TBD         TBD    TBD       TBD        TBD       Pending
           Requirements
                Sector Total After Adjusting for
                                                       TBD     TBD    TBD       TBD        TBD               NA
                Overlaps
                Reductions From Recent Actions         TBD     TBD    TBD       TBD        TBD           NA
                Sector Total Plus Recent Actions       TBD     TBD    TBD       TBD        TBD           NA

GHG = greenhouse gas; MMt = million metric tons; t = metric ton; CO2e = carbon dioxide equivalent; TBD
= to be determined; NA=not applicable


Note to RE/AC/CCS Members: The option write-ups below started with the options
presented in the “MGA Advanced Coal and Carbon Capture and Storage Platform: Goals,



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Objectives, and Policy Options,” the ET2050 Forum participant input, and additional
options and ideas generated in the Breakout Groups from the RE/AC/CCS 20-21 May
2008 meeting in Indianapolis and the July 30 meeting in Dearborn.
Subsequent to future conference calls with RE/AC/CCS members, the options that follow
will be further elaborated, incorporating changes as proposed by working group
members. Please bear in mind that the text you are seeing will continue to be
edited/elaborated upon as the RE/AC/CCS group sees fit.
Previously discussed revisions have been incorporated. The most recent revisions are
shown in track changes.




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     RE-1: Stimulate the Development of New Renewable Electricity Generation



Policy Description
Policy-makers need to identify and implement appropriate policies that will overcome existing
barriers in the Midwestern region for the development of renewable electricity generation
(REG). There are a number of barriers, including policy, institutional, and marketing
impediments. Examples include lack of sufficient government policy support, lack of
information dissemination and consumer awareness, actual or perceived near-term cost of
renewable technology, challenges incorporating new technologies into traditional utility
operations, inadequate financing options for renewable energy projects, and others.

Policy Design
Develop and implement a stable regulatory environment for renewable energy production and
consumption. Assess the effectiveness of various policy mechanisms and means for improving
linkages and synergies between them. Develop and implement a region-wide planning process
for renewable electricity buildout.

    1. Enact, where appropriate, or enhance existing state Renewable Energy Standards or
       Renewable Energy Objectives (RES/REOs) in the Midwestern Governor’s Association
       (MGA) region. Promote and assess coordination amongst all states in the region
       regarding meeting RES/REO goals.

    2. Maximize in the region cost-effective renewable electricity production and grid
       integration.

    3. Strive for consistent, long-term federal policies and financial support, which recognize
       and equitably accommodate MGA regional needs.

Goals:
The timing and targets for the penetration of increased levels of renewable energy generation
in the region are as follows:
   By 2015: 10 percent of electricity consumed in the region (equivalent to 103 million MWh of
    retail sales) will be from renewable resources.
   By 2020: 20 percent of electricity consumed in the region (equivalent to 219 million MWh of
    retail sales) will be from renewable resources.
   By 2025: 25 percent of electricity consumed in the region (equivalent to 293 to million
    MWh of retail sales) will be from renewable resources.
   By 2030: 30 percent of electricity consumed in the region (equivalent to 376 million MWh of
    retail sales) will be from renewable resources.


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Timing: As noted above.
Parties Involved: Parties involved in achieving the goals above include all power producers
operating qualifying renewable facilities in the region and MISO, and be closely linked to the
MRETS as a possible MGA wide tracking system for renewable energy. Political support is also
necessary for success on these goals, so various governmental parties will need to be involved.


Implementation Mechanisms
Some of the key implementation mechanisms to be explored for this policy option are as
follows:
1. Multi-year extension of the federal production tax credit (PTC) for renewable energy: The
   Production Tax Credit (PTC) has been a key component in the growth of domestic wind
   energy use since Congress created it as part of the country’s energy policy in 1992. By
   renewing the tax credit, the Midwest can capitalize on creating jobs in the emerging
   renewable energy industry. Economic incentives will attract energy service providers.
   Political opposition from senators and the White House poses the largest barrier to its
   reauthorization. Many government officials may object to the PTC reauthorization, since
   many oppose funding strategies that compete with gas and oil tax incentives. Key
   implementation activities are as follows:
        Advocates of renewing the PTC must act quickly, before the credit expires.
        Government officials and members of the media must be solicited to help inform the
         public and put political pressure on decision makers.
        Legislators must pass unanimous joint resolutions urging Congress to renew the PTC,
        Governors and stakeholders should write letters urging Congress to renew the PTC.
        The MGA should speak to state legislatures, members of the media and the American
         Wind Energy Association (AWEA) to address renewing the PTC.
2. Expansion of federal Clean Renewable Energy Bonds: As some key entities are unable to
   utilize the PTC effectively, other supplementary mechanisms such as federal renewable
   energy bonds should be made available to such entities in order to promote the
   development of renewable energy in their jurisdictions. This will involve efforts to clarify
   the benefits of these bonds with key congressional offices and staff.
3. Promote states working together on RPS goals/standards to improve utilization of high
   potential wind regions and integrated regional transmission planning: Several efforts
   should be implemented including the following:
        Encourage all states in the region to adopt RES/REO goals which will help the Midwest
         Independent Transmission System Operator (MISO) planning process and have all states
         adopt credit market tracking such as the Midwest Renewable Energy tracking System
         (M-RETS).


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        Look into how renewable energy credits (REC) trading should be incorporated into GHG
         Cap and Trade system and if M-RETS can help in tracking REC usage in both markets. M-
         RETS can be expanded to the MGA/MISO footprint so all states are included in the
         program.
        Study the possibility of feed-in tariffs, rate making incentives for RES/REOs and other
         financing options for increasing renewable energy percentages in each MGA state.
        Factor in technology development and economics in the timeline for RES/REO
         percentage increases as electricity storage technologies and alternative fuel production
         allow more wind without corresponding transmission needs.
        Quantification of these goals should model the outcome of this policy using the targets
         and timelines specified in the Platform’s goals and should assume that the RECs can be
         used regionally via an MRETS type tracking system.
        Consider an ecological tax shifting policy in a gradual and revenue neutral manner,
         whereby existing subsidies/incentives for fossil fuels could be transferred to renewables
         to increase development.

Related Policies/Programs in Place
There are several states in the MGA that have implemented policies/programs to stimulate the
development of renewable energy, as follows:
   Iowa: The Iowa law, passed in 1983, is a capacity-based standard requiring investor-owned
    utilities to purchase a shared total of 105 MW (averaged) of capacity each year from
    renewable energy generators. This is a fixed total of 105 MW, not an incremental total that
    is added to each year. In 2003, Goernor Vilsack set a goal for Iowa utilities to install 1000
    MW of renewable resources by 2010. In 2008 Governor Culver set two new goals: 2015
    MW by 2015, and 25% by 2025.
   Illinois: The Illinois House of Representatives passed a Renewable Portfolio Standard (RPS)
    requiring the state to buy 2% of its power from renewable energy sources by 2008, 10% by
    2015, and setting a goal of 25% by 2025.
   Minnesota: The state has adopted a 25% renewable energy goal by 2025.
   North Dakota: North Dakota has a renewable energy objective to meet 10% of annual retail
    sales with renewables by 2015 with mandatory reporting to the PSC.
    South Dakota: South Dakota has a renewable energy objective to meet 10% of annual retail
    sales with renewables by 2015.
   Ohio: Ohio recently passed legislation which ramps up use of renewable energy by power
    companies from 0.25% in 2009 to 12.5% in 2025.
   Wisconsin: Wisconsin’s legislation requires a fixed 50 MW renewable capacity target for a
    portion of the state, as well as an RPS increasing from 0.5% in 2001 to 10% in 2015 that
    applies to all retail electricity providers



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Type(s) of GHG Reductions
Reductions in GHG emissions associated with the displacement of fossil-fired electricity
production.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.



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       RE-2: Expand Collaborative Regional Transmission Planning and Siting



Policy Description
Collaborative regional transmission planning and siting are necessary enablers for the
widespread, near term development of renewable electricity generation, especially from the
region’s extensive wind power resources.
There are a number of barriers to regional transmission planning and siting, the most
noteworthy being that individual jurisdictions are typically resistant to paying and supporting
regional planning and transmission projects beyond those that provide direct benefit to their
customers and utilities. There are also major differences between East and West, with things
like size of transmission grid, proximity to major wind development areas and access to coal
which create different issues between the regional power markets, the old MAPP (Mid-
American Power Pool) region and the MISO. Moreover, cost allocation in the form of an
approved transmission tariff does not exist for large regional transmission projects. These are
long term issues that require significant time and effort to improve.
However, improving the planning and siting process for new transmission will enable the
region’s electricity load centers to better access the significant wind and other renewable
resource potential that exists in the region’s areas distant from these centers. A collaborative
regional transmission plan can provide long term cost savings and more efficient delivery of
electricity for all. The policy will necessarily involve the development of an equitable cost-
sharing system in order to provide long-term benefits for those who are paying for the system.
In examining transmission needs in the region to accommodate greater levels of renewable
energy generation, it will be essential to consider collaborative links and interconnections, not
only within the MGA region, but beyond, in order to enhance future markets for the region’s
renewable resources.

Policy Design
Inter-jurisdictional transmission planning and siting must be strengthened to support
optimization of future electricity infrastructure investments and ensure the region’s grid
infrastructure enables robust development of renewable electricity generation and broader
system adequacy. Elements for a stable regulatory environment for regional transmission
planning and siting should include MGA support and encouragement for:
1. State PUC authority broad enough to encompass a regional definition of public interest.
2. Inter-jurisdictional and inter-regional transmission planning.
3. National and international standardization of regional transmission planning criteria and
   procedures; and
4. Equitable cost-sharing for transmission system improvements.



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Goals:
The overall goal for this policy is to develop regional electric transmission and energy delivery
capacity sufficient to accommodate the substantial increases needed in low- and zero-carbon
energy production. The following are key objectives to achieve this overall goal:
   It is necessary to develop a “30,000 foot” view and a set of principles to guide discussion
    and progress, e.g., “Those who benefit should pay.” It may be necessary to revisit the reach
    or definition of “who benefits” in light of climate benefits, etc as Midwest states should not
    be expected to fund the transmission of greater renewables from the Midwest to the East
    Coast without due compensation.
   Better modeling, systems, and communication capacity and transparency is needed in the
    region so that policymakers can “see” what transmission and generation scenarios would be
    based on policy decisions – what they are, what they would be, how much the changes
    would cost, what they would accomplish regarding renewables, etc. The Joint Coordinated
    System Plan (JCSP) being done by MISO in conjunction with adjoining transmission systems
    and using the DOE 20% national wind study is an example and a start.
   There need to be effective protocols developed so that the recommendations from studies
    are linked to pursuant action plans. Such protocols are not well developed at this point and
    an effort should be directed to determining and addressing potential obstacles. Numerous
    potential reasons exist, e.g., the question of who will pay the cost (cost allocation); some
    parties advocate BANANA (Build Absolutely Nothing Anywhere Near Anything), etc. One
    particular regional quandary is that MISO can study and suggest regional transmission
    solutions, but there may be no utilities that choose to pick them up on their ideas or utility
    commissions are not able to deal with the shared cost of a large regional transmission
    project. Conversely, utilities can propose projects, but they typically bring an outlook driven
    by narrow interests rather than a “big picture.”
Timing: to be determined
Parties Involved: to be determined

Implementation Mechanisms
The implementation mechanisms for the policy will need to be established based on a study of
the needed transmission infrastructure based on a state-by-state evaluation of expected new
MW’s of wind power development through 2020. The Transmission Resolution Subgroup will
help inform the Advisory Group on how to move forward with this. That Subgroup will also
look at regional transmission cost sharing and cost recovery mechanisms for the build-out of
resource transmission. Some of the key issues that will need to be explored in order to identify
suitable implementation mechanisms are as follows:
   Cost allocation: There is concern that state planning vs. regional planning when weighing, for
    example, a MISO-wide T/L [need to explain T/L] cost. If decision is for a MISO-wide
    approach, it will need to determine cost allocation, etc. A Department of Energy (DOE) study
    has just been released on the possibility of a national RPS with 20% wind that may inform
    the process.


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   Recent MISO analyses of cost sharing: MISO will release a study in early 2009 for 20% wind
    within its footprint. MISO’s current cost sharing requirement for transmission expansion
    (80% developer or MISO sub-region/20% MISO-wide) needs to be looked at to put a larger
    share on the MISO region and less on developers or sub-regions. MISO also has a bracketing
    or “bookends” study underway that shows a policy under which all wind/RE must be
    sited/generated within each state vs. a policy where all wind can be sited/generated where
    optimal wind resources are located and regional transmission gets that wind power to
    market.
   MISO is undertaking a Regional Generator Outlet Study (RGOS) in the western region of
    MGA which will look at different scenarios of local vs. regional wind farms and transmission
    needed to reach significant levels of wind in the MGA footprint. This study will help to
    provide options and costs for meeting 20 to 30 % renewable energy in the MGA, but will not
    be done until spring of 2009.
   MISO is doing a survey with load serving entities and regulators in Iowa, Minnesota,
    Wisconsin and Illinois to determine plans for generation and transmission in the next 20
    years. The transmission subgroup is working to adopt that survey for the other MGA states
    and have the MGA steering committee approve sending that survey to the other MGA states
    to help determine a long-term renewable energy buildout that can feed in to transmission
    plans.
   Deregulated/regulated electricity markets: The regulated vs. deregulated state issues will
    have significant ramifications in striving towards regional solutions for RES/REO goals and
    Cap and Trade. Regulatory certainty is vital, including likely future direction, not just clarity
    for near term project decisions and costs. Some proponents support a regional approach to
    cost allocation to be piloted in several adjoining states instead of trying to find a MISO-wide
    solution. If costs within such a pilot area are attributable to other states, there will need to a
    mechanism for sharing them.
   Potential state/federal jurisdictional constraints: It is important to acknowledge potential
    limitations under Federal Energy Regulatory Commission (FERC) rules and regulations that
    can delay or constrain MISO and states from making changes that facilitate regional
    transmission solutions for increased RE goals.
   An inventory of existing authority, regulatory requirements, agencies involved and whether
    the state is regulated or deregulated should be developed.

Related Policies/Programs in Place
Identify major policies and programs currently in place.

Type(s) of GHG Reductions
Briefly describe in a paragraph/several sentences.




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Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




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   RE-3: Incorporate transmission development requirements into existing state
                   renewable energy objectives and standards



Policy Description
Link renewable energy generation targets with transmission requirements so that, when it
proves economical, high-quality wind resource areas will be provided with adequate electricity
transmission capability in advance of wind farm development.

Policy Design
Adequate transmission needs to be coordinated with state renewable energy standards and
objectives. States should work with MISO to support and manage transmission planning and
construction so that renewable energy obligations will be met in the most economical manner.
Approval for transmission improvements through the appropriate utility regulatory process
should be streamlined, and construction should be facilitated, to enable timely development of
renewable generation facilities.
For intermittent renewable such as wind power, one of the most significant challenges is that
wind farms can be built more quickly than transmission lines. It can take a year to build a wind
farm, but given siting and other concerns, can take considerably longer to plan for and build the
transmission lines needed to send power to electricity load centers. A chicken-egg problem has
arisen that finds wind developers reluctant to build in areas where suitable transmission
infrastructure does not yet exist and electric utilities equally reluctant to install transmission
infrastructure in areas lacking power generators.


Goals:
The overall goal for this policy is to link the transmission planning framework to existing or
future renewable energy requirements to overcome the challenge of transmission capacity
constraints that exist in the MGA region. These constraints result in transmission investments
lagging behind wind project development time frames and as a result prevent cost effective
wind projects from being built and from delivering benefits to the region’s electricity
consumers. The implementation mechanisms for the policy will need to focus on a set of
institutional and regulatory enhancements that merge the planning and costing processes
associated with wind and transmission capacity expansion. Some of the key objectives of the
overall goal are as follows:
1. Regulatory enhancement: The regulatory process should be modified to better address the
   coterminous needs of transmission and renewable energy generation infrastructure
2. Cost allocation framework: Integrated within the regulatory process should be a suitable
   cost allocation methodology for regional transmission costs that is equitable to stakeholders
   served.


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Timing: to be determined
Parties Involved: to be determined

Implementation Mechanisms
Some of the key implementation mechanisms that will need to be explored for this policy
option are as follows:
1. Regulatory enhancement: The key mechanism for enhancing the regulatory framework is
   the development of a fast track regulatory process for transmission built for regional
   renewable energy generation needs
2. Cost allocation framework: Several ideas should be explored regarding the implementation
   of a suitable cost allocation framework in the region, as follows:
        Consider finding regional transmission projects that can be worked in with both MISO
         and state regulatory agencies to reach cost sharing agreements.
        Transmission projects that enhance multiple system goals (add RE and boost reliability
         or reduce congestion points) should receive special treatment in terms of expedited
         approvals and cost sharing.
        Review and assess implementation models represented by the ITC holding Corporation
         and American Transmission Company (ITC/ATC) and PJM for different cost sharing of
         new transmission- 50/50 or 100% by ITC.
        Review and assess different cost sharing schemes for area load serving network
         transmission vs. regional transmission.

Related Policies/Programs in Place
Texas and Colorado and PJM provide some examples of transmission line cost sharing to help
incentivize major transmission to help speed up development of RPS goals and development
zones, as outlined below.
   Texas Transmission Plan - Senate Bill 20: This bill was passed in response to the rapid growth
    of the state's wind industry. This bill laid the groundwork for large transmission lines in order
    to accommodate present wind industry needs and to further accelerate the use of wind
    power in the state. In order to implement the RPS goals, SB 20 includes a transmission plan
    for remote regions such as McCamey in West Texas that are handicapped by lack of
    sufficient transmission infrastructure, the goal being to increase transmission capacity to get
    clean energy (especially wind) from remote areas of the state to the cities.
   Connecting Colorado’s Renewable Resources to the Markets – Senate Bill 91: This bill create
    a 15-member task force on renewable energy generation that mapped the state, where
    various types of renewable energy plants or wind farms could be located, and what
    transmission lines are needed to get that power to the electricity grid. The resulting plan is
    available                                                                                  at
    http://www.colorado.gov/energy/in/uploaded_pdf/ConnectingColoradoResources.pdf.



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Type(s) of GHG Reductions
Briefly describe in a paragraph/several sentences.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




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                     RE-4: Pursue a Multi-State Transmission Initiative



Policy Description
Implement at least one multi-state transmission initiative to facilitate construction and delivery
to market of a large amount of new renewable electricity generation, together with power from
other lower-carbon generation facilities.

Policy Design
Utility transmission planners have long identified bottlenecks in the transmission system that
must be addressed in order to deliver to market large quantities of new wind energy as well as
other renewable and low carbon electricity. Elements for a multi-state transmission initiative
should include the following:
1. Regional planning: Cooperation and collaboration on transmission and generation initiatives
   should be pursued.
2. Cost allocation: cost-benefit analysis and cost allocation issues across states must be
   addressed.
Goals:
The overall goal of this option is to make most efficient use of the existing transmission
infrastructure and develop new infrastructure, as necessary, to accommodate the region’s
economical renewable electricity.
Timing: to be determined
Parties Involved: to be determined

Implementation Mechanisms
Expanding collaborative regional transmission planning and siting to enable future
development of renewable electricity generation will enable the region’s electricity load
centers to better access the significant wind and other renewable resource potential that exists
in the region’s areas distant from these centers. A multi-state transmission initiative can
provide long term cost savings and more efficient delivery of electricity for all. The policy will
necessarily involve the development of an equitable cost-sharing system in order to provide
long-term benefits for those who are paying for the system and require agreement by both
responsible state agencies and MISO members.
Some of the key implementation issues that will need to be explored regarding regional
planning and cost allocation are as follows:
1. Regional Planning: A key idea that should be explored regarding regional planning is as
   follows:



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        Policy-makers and other stakeholders need to engage in regional integrated resource
         planning efforts to identify multi-state transmission and renewable generation
         initiatives.
2. Cost allocation: Several ideas should be explored regarding the development of a suitable
   cost allocation framework in the region, as follows.
        A cost sharing plan supported by MGA would be helpful and could possibly exist as a
         subset of MISO. We could recommend to MGA that they convene a broad effort to move
         forward positively and demonstrate to FERC that there may be other ways to solve cost
         allocation problems. Perhaps OMS could help in this process.
        Need to look at how to take recommendations and apply to deregulated states and still
         support RE goals and timelines.
        Consider a non-by-passable system benefits charge per kWh to fund regional
         transmission possibly on a national basis, creating an analogue to the federally funded
         interstate highway system. Differences must be considered e.g., government owns the
         roads, vs private companies own transmission assets.

Related Policies/Programs in Place
Identify major policies and programs currently in place.

Type(s) of GHG Reductions
Briefly describe in a paragraph/several sentences.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits


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Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




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 RE-5: Develop and Implement Comprehensive Siting Principles and Policies for
                               Wind Farms



Policy Description
Comprehensive siting principles and policies for wind farms must be developed and
implemented to encourage orderly development of the resource. When combined with other
policies (e.g., RPS, PTC, net metering for small turbines, disclosure, etc) these principles can
encourage the sustained, orderly development of wind power in the region.

Policy Design
Achieving wind energy generation on a large scale will require sustained public acceptance of
the siting and construction of wind farms. Wind energy deployment must take into account
ecological, scenic, cultural, and other concerns. Guidelines and a toolkit of resources
incorporating best practices and principles need to be readied for: (1) optimum/maximum
siting approach of wind farms, turbines, and ancillary facilities; (2) siting ordinances; and (3)
land easements/contracts. These will lead to more rational development and thereby help
promote the industry over the long term. Adequate and consistent state policies and
procedures should be crafted cooperatively and inter-jurisdictionally to ensure that wind
development proceeds in ways that foster long-term public support for the industry and avoids
pitting states against one another or impeding regional wind development approaches


   Goals: Develop a model rule specifying state of the art siting principles, guidelines and
    requirements for wind farms (ecological, social and wind rights) and providing improved
    planning and coordination of macro and micro-siting of wind farms and turbines and of FAA,
    archeology and wildlife studies.
   Develop toolkit for MGA jurisdictions that includes:
                o Model wind development options and easement contracts for use by developers
                  and landowners to ensure positive and equitable relationships between project
                  developers and landowners;
                o Other items in the toolkit?

Timing: to be determined
Parties Involved: to be determined

Implementation Mechanisms
   Use Minnesota’s wind siting statute, rules and guidelines as the starting point for a regional
    policy development effort.



30 June Draft                                                                                    17
    MGA to survey other policies and principles currently in use in other jurisdictions.
    MGA to convene key stakeholders to review MN experience and results of survey and gather
     input on proposed work products.
    MGA and REACCS Advisory Group to recommend work products to MGA Steering
     Committee.
    Identify additional major implementation mechanisms.

Related Policies/Programs in Place
Identify major policies and programs currently in place.

Type(s) of GHG Reductions
Briefly describe in a paragraph/several sentences.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
    Use numerical listing.
    Keep the items brief – 1 or 2 sentences.
    Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
    Use bullet points.
    Give each a sentence.
    Add any other info relevant to the feasibility questions.



30 June Draft                                                                                 18
Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




30 June Draft                                                                                  19
         RE-6: Encourage a Diversity of Approaches to Renewable Electricity
                                   Development



Policy Description
A diversity of approaches to renewable electricity development should be encouraged,
including projects with local and community ownership. This option seeks to extend evaluation
criteria for renewable electricity to include diversity by ownership, geographic distribution and
type of energy (fuel/source). Additional factors that should be considered in the renewable
electricity development approaches are the extent of local industry and manufacturing
development, job creation benefits, and competitive parity amongst Midwestern jurisdictions.

Policy Design
Policymakers should evaluate the experience with local ownership incentives in Minnesota,
Iowa, and elsewhere and consider how best to foster local equity participation in wind and
other renewable energy projects to enhance local economic returns. However, policy-makers
should continue to support a diversity of ownership structures and avoid creating barriers to
expanding renewable electricity development and associated transmission expansion.
Goals:
The overall goal of this option is to encourage a diversity of approaches to ensure retention of
local economic benefits renewable power development and to ensure that the unique
challenges of greater exploitation of regional biomass resources are adequately addressed.
Timing: to be determined
Parties Involved: to be determined

Implementation Mechanisms
Some of the key implementation issues that will need to be explored regarding regional
planning and cost allocation are as follows:
   The use of biomass must be explored on a greater scale.
        Biomass tends to be developed on a smaller scale with smaller     developers, and has
    similar developmental issues to wind power.
       Catastrophic insect infestation must be taken into account during the     infrastructural
    planning for biomass. With the arrival of the Emerald Ash      Borer, an exotic beetle that is
    destroying ash trees in the Midwest, biomass may a more viable option now than ever
    before. In Minnesota, using only 1% of ash trees fuels a 25-megawatt facility for 200 years.




30 June Draft                                                                                  20
       Investigate developing biomass fuels on conservation acres, such as forest
        preserves, on which maintenance burns to control overgrown dead wood are
    required.
       Explore Internal Revenue Service (IRS) uncertainty regarding biomass     financing,
    which results in a lack of certainty for project planning and  financing.
   The use of solar power needs to be explored on a greater scale also.
   Find ways to incentivise local investment in wind and other renewable energy development.
   Expand net metering.

Related Policies/Programs in Place
Identify major policies and programs currently in place.

Type(s) of GHG Reductions
Briefly describe in a paragraph/several sentences.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if availableDaniel Kammen et al, Putting
Renewables to Work: How Many Jobs Can the Clean Energy Industry Generate (2006).
http://rael..berkeley.edu/files/2004/Kammen-Renewable-Jobs-2004.pdf.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:


30 June Draft                                                                                 21
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




30 June Draft                                                                                  22
      RE-7: Demonstrate Technology, Engineering and Operating Strategies for
    Maximizing the Total Electricity Generation from the Region’s Wind Resources



Policy Description
Next generation technology, engineering and operating strategies must be demonstrated in
order to maximize the total electricity generation from the Midwest region’s wind resources.

Policy Design
Policy-makers should support the development and deployment of strategies and technologies
to maximize wind energy’s contribution to the region’s electric power generation through a
series of demonstration projects focusing on the following:
   Demonstrating how high percentages of wind power can be incorporated reliably into the
    electric power system.
   Making better use of existing transmission infrastructure and capacity through next
    generation grid management.
   Commercializing all practical and economical energy storage options, such as advanced
    batteries and compressed air storage.
   Developing new uses of wind energy such as wind electrolysis to produce hydrogen or wind-
    to-ammonia for fertilizer production that do not necessarily require bulk transmission and
    can readily substitute for existing GHG-emitting fossil energy sources.
Goals:
The overall goal of this option is to demonstrate through small-scale pilot intervention that the
harnessing of increasing levels of the region renewable energy potential is both feasible and
cost-effective.


Timing: to be determined
Parties Involved: to be determined

Implementation Mechanisms
     o Develop a list of ongoing projects that deal with the intermittency issues including at
       least storage, wind to hydrogen or other innovative efforts.
     o Review and/or promote development of efforts to provide better software for system
       wind load forecasting and load following for use by operations centers in estimating the
       next hours/days expected wind generation.




30 June Draft                                                                                 23
Related Policies/Programs in Place
To be determined

Type(s) of GHG Reductions
Briefly describe in a paragraph/several sentences.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.




30 June Draft                                                                                  24
Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




30 June Draft                                                               25
      RE-8: Attract Renewable Energy Component Manufacturers and Service
                             Providers to the Region



Policy Description
Develop and implement economic incentives and workforce development policies to attract
renewable energy equipment manufacturers and service providers to the region.
Jobs are being lost due to the declining manufacturing industry in the Midwest and jurisdictions
in the MGA are currently competing against each other for job creation within the renewable
energy industry. By working regionally, the associated risks can be spread out over a larger area
that will showcase renewables positive impact on the job market.

Policy Design
Inter-state competition should be conducted in a manner that does not interfere with regional
success. The Midwestern Region must seek recognition as one of the world’s premier locations
for advanced energy technology research and development and manufacturing.
Goals:
The overall goal of this option is to expand the region’s domestic production of wind turbines,
towers and blades, solar technologies, and other renewable energy technologies to provide
high-paying manufacturing and operational support jobs.
Timing: to be determined.
Parties Involved: to be determined.

Implementation Mechanisms
Some of the key implementation issues that will need to be explored regarding the attraction of
renewable energy component manufacturers and service providers to the Midwest are as
follows:
   PTC renewal should be promoted as a reason to protect manufacturing jobs in the
    renewable energy industry.
   A regional turbine pool should be created to guarantee the market, possibly by using
    existing policy frameworks in the region to pass similar individual state legislation.
    Legislators could coordinate policy, perhaps by looking at a “turbine utility.”
   Implementing a marketing strategy would assist in the creation of a regional economic plan.
    The Midwest should be marketed as a hub of renewable energy within the United States
    and North America, to raise global awareness by creating a brand to promote. We all stand
    to benefit, individually and as a region. The Midwest is not only the breadbasket of the
    United States, but also the wind source. To promote the region, the MGA could send
    governors to an international wind conference; in Europe, for example.


30 June Draft                                                                                 26
   The MGA should perform a market analysis that can translate into a workforce analysis of
    the education/job training needed for potential employees, along with infrastructure
    development and an inventory of existing capacity.
                                                                                                     Formatted: Bullets and Numbering
   A regional assessment is needed regarding current education and training activities for
    renewable energy and other “green” jobs. Each state’s assets should be assessed to identify
    opportunities for collaboration.
                1.    Catalog current university research efforts and educational programs related
                     to renewable energy.
                                                                                                     Formatted: Indent: Left: 0", Hanging: 0.25",
 Catalog training programs available related to work force development programs.                     Bulleted + Level: 1 + Aligned at: 1" + Tab
                                                                                                     after: 1" + Indent at: 1.2", Tab stops: 0.25",
                2.                                                                                   List tab + Not at 1"

   Investigate opportunities for business development based on manufacture of renewable
    energy component parts to include an inventory of potentially important component parts.
                                                                                                     Formatted: Bullets and Numbering
Catalog  current university research efforts and educational programs related to renewable
    energy.
Catalog   training programs available related to work force development programs.

Related Policies/Programs in Place
To be determinedIowa Training.
                                                                                                     Formatted: Left
Iowa Lakes Community College Wind energy & Turbine Technology program. More information
                                                                                                     Formatted: English (United States)
available at:
http://www.iowalakes.edu/programs_study/industrial/wind_energy_turbine/index.htm.                    Field Code Changed

Des Moines Area Community College Wind Turbine Technicians. More information, including
curriculum and course descriptions, available at:
http://www.dmacc.edu/programs/windenergy/.
North Iowa Area Community College Training for Wind Turbine Technicians. More information
available at:
                                                                                                     Field Code Changed
http://www.niacc.edu/industrial/wind.html. Note that the Iowa Lakes program is the most
specialized and focused wind program, while the North Iowa Area Program is more generalized.
                                                                                                     Formatted: Default
                                                                                                     Formatted: Font: Not Italic


Type(s) of GHG Reductions
Briefly describe in a paragraph/several sentences.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.



30 June Draft                                                                                  27
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




30 June Draft                                                                                  28
 AC/CCS-1: Promote the Establishment of a Regional Carbon Capture
                    and Storage Infrastructure



Policy Description
This policy would promote the establishment of a multi-state/province and multi-jurisdictional
carbon capture and storage infrastructure for management of captured CO2 through enhanced
oil recovery and deep saline formation storage.

Policy Design
Goals: This option aims to support development of a CO2 management infrastructure, as well
as demonstration and commercialization of geologic carbon storage projects that, where
possible, take advantage of the Midwest region’s enhanced oil and gas recovery (EOR)
potential. Safe, reliable and long term injection of CO2 into oil and gas formations for EOR is an
established commercial practice in the United States today. DOE estimates of CO2 storage
capacity in oil and gas formations suggest the ability to store many years’ worth of U.S.
stationary source emissions, while extending oil production from depleted domestic oil
reserves. Meanwhile, deep saline formations provide a storage option with much greater
capacity in the long term. Storage in deep saline formations would in many ways be analogous
to existing and well established underground gas storage. Consideration should also be given
to the potential use of thin coal beds for storage. Finally, pipeline(s) to existing EOR fields
outside the Midwest, especially in the Gulf Coast, represent another important option.
Timing: The timing for this option is as outlined below:
   By 2010: A regional regulatory framework for carbon capture and storage (CCS) will have
    been implemented that enables long-term geologic storage of CO2, provides regulators and
    industry clear direction with regards to CO2 capture, underground injection, storage,
    monitoring, mitigation, verification and compliance, and addresses ultimate liability for
    stored CO2.
   By 2012: A multi-jurisdiction pipeline will have been sited and permitted to transport CO2
    captured from one or more new advanced coal plants to an appropriate reservoir for use in
    EOR or deep saline formation storage.
Parties Involved: to be determined

Implementation Mechanisms
Some of the key implementation issues that will need to be explored regarding the
establishment of a carbon capture and storage infrastructure are as follows:
   Develop a report that quantifies the costs and benefits and potential capacity, of EOR. This
    report will identify CO2-EOR resource potentials in the MGA region and quantify the
    potential GHG reduction benefits of CO2-EOR projects.


30 June Draft                                                                                  29
   Conduct a state-by-state inventory of Partnership member’s regulations governing or
    potentially relating to CO2 capture, and underground injection. This inventory will provide
    guidance for the MGA process by laying out existing statutes and regulations and identifying
    gaps in regulation for policy makers.
   Develop a legal and regulatory framework for geologic storage of CO2. In order to set the
    stage for geologic storage projects to move forward in a five to 10-year timeframe, states
    must establish the necessary legal and regulatory framework in partnership with the federal
    government. States should begin to develop the necessary statutes and regulations for
    geologic storage, including guidance on pipelines, injection, monitoring, mitigation,
    verification and long-term liability.
   Evaluate and comment on the Underground Injection Control regulations proposed by the
    EPA on geologic sequestration of CO2. The EPA’s UIC regulations related to geologic
    sequestration will have broad impacts on CCS project development and technology
    deployment.
   Develop scenarios for a CO2 pipeline network buildout using a Midwest-tailored pipeline
    network optimization model. Scenarios will be linked to implementation of MGA Platform
    technology commercialization and CCS deployment targets and GHG Accord resolution
    targets for CO2 reductions. Scenario modeling results will inform the identification, siting
    and permitting of an inter-jurisdictional CO2 pipeline.
   Provide state-based incentives for CCS, encompassing projects that use captured CO2 for
    EOR, as well as deep saline formation storage. A number of states have made credits
    available, and others should consider offering similar incentives. Stability in the CO2 credit
    market is also important for CCS.
   Provide EOR project development assistance. The Midwest has a mature oil and gas industry
    with many small oil and gas producers that have not traditionally used CO2 EOR, in part
    because they are not large enough to develop projects. The public sector, companies and
    trade associations can play a useful role in helping to identify the specific mechanisms by
    which producers can band together to leverage cost-effective projects.
   Support comprehensive assessments of geologic reservoirs at the state and federal levels to
    determine CO2 storage potential. Governments should build on work of the U.S. DOE-
    funded regional sequestration partnerships to complete comprehensive, basin-level geologic
    assessments of storage potential. Regions with a history of oil and gas exploration tend to
    have better data available on geologic formations, making such assessments easier and less
    expensive; although these regions suffer the deficiency of having much previous drilling that
    can diminish reservoir integrity. Detailed, accurate mapping of lesser known potential
    reservoirs for CCS will require continued federal and state investment.
   Fund sufficient underground injection tests to prepare for future storage on a widespread
    commercial basis. Congress and the president should support sufficient federal funding for
    the U.S. DOE to ensure a robust program of tests to demonstrate to the private sector,
    policymakers and the public the viability, efficacy and safety of widespread commercial
    geologic storage of CO2. These tests should focus on a variety of geologic settings, including


30 June Draft                                                                                  30
    reservoirs other than oil and gas bearing formations, and produce guidelines for appropriate
    monitoring, mitigation and verification.
   Evaluate the feasibility of alternative sequestration options for jurisdictions without as yet
    adequately documented underground injection potential, such as Minnesota and Wisconsin.
    This includes evaluating the cost and feasibility of CO2 pipelines to proven storage sites in
    neighboring states, as well as CO2 sequestration options such as mineralization, carbon
    nano-fibers or biological means.
   Support development of coal to substitute natural gas (SNG) as a near term commercial
    opportunity to deploy CCS. Coal-SNG with CO2 capture for EOR is commercially
    demonstrated and can be deployed today. Pipeline transport of SNG could allow better use
    of peaking/intermediate generation capacity and complement the expanded development
    of wind power. Also, pipeline transport of SNG would provide a carbon management option
    for those regions and jurisdictions that lack other immediate options for CCS.
   Evaluate the cost-competitiveness of commercial-scale advanced-coal generation units
    (IGCC, Ultra Super Critical, and Super Critical with Carbon Capture and Storage capability) in
    applicable regional electricity markets (PJM, MISO) to determine the level of disadvantage
    such a unit would have in a market with and without greenhouse gas emissions limits and
    then design measures that would enable an advanced coal generation unit to compete in
    such markets, taking into account projected greenhouse gas emissions limits imposed on the
    six-state MGA region, allowance costs, as well as projected leakage from states not subject
    to greenhouse gas emission limits. Without measures ensuring that advanced coal units will
    be cost-competitive in regional power markets, it will be virtually impossible to obtain
    project financing for them.


Related Policies/Programs in Place
To be determined.

Type(s) of GHG Reductions
Reductions in GHG emissions vented to the atmosphere associated with the capture and long-
term sequestration of GHGs from fossil-fired electricity production.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.


30 June Draft                                                                                  31
Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
   Use numerical listing.
   Keep the items brief – 1 or 2 sentences.
   Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
   Use bullet points.
   Give each a sentence.
   Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




30 June Draft                                                                                  32
      AC/CCS-2: Advanced Coal Technology Incentives, Support or
                          Requirements



Policy Description
The Midwest region depends heavily on electricity generated by traditional coal-fired plants.
However, for coal to play a significant role in the Midwest’s future energy system, its overall
carbon profile must improve, and come as close as possible to zero CO2 emissions, while
producing energy that is both affordable and reliable. Given its vast base of energy resources,
ingenuity and manufacturing prowess, the Midwest has the greatest potential of any region in
North America to transform present energy vulnerabilities into future energy advantages.
Advanced coal technologies combined with carbon capture and storage (CCS) could enable
significantly lower CO2 emissions. Policies for advanced coal technologies may include
mandates or incentives to use these technologies for new coal plants. Policies to encourage CCS
could include creating agencies/departments tasked with promoting CCS, evaluation studies to
identify geologically suitable reservoirs, R&D funding to improve CCS technologies, financial
incentives and/or mandates to accelerate the commercialization of carbon capture
technologies and deployment of CCS.
CCS incentives targeted at power plants should also be targeted for other large stationary
sources such as biorefineries, natural gas processing, cement plants, fertilizer production and
others as appropriate.

Policy Design
The maximization of energy resources and economic advantages and opportunities of
Midwestern states while reducing emissions of atmospheric CO2 will require deployment of
lower-carbon emitting coal technologies that implement geologic CO2 storage. This policy
would create a regulatory environment that advances CCS technologies for coal-based
generation and biorefineries. The advancement and commercialization of CCS technologies will
reduce CO2 emissions while producing energy that is both affordable and reliable.
This policy would also seek to provide financial and regulatory incentives to build advanced coal
generation projects with CCS, using bituminous, sub-bituminous and lignite coals and
biorefineries as appropriate. This policy should also cross link to non-incentive programs such
as cap and trade, carbon tax and others being considered elsewhere within the overall MGA
carbon effort.



Goals:
The timing and targets for the penetration of coal-based generation with CCS in the region are
as follows:


30 June Draft                                                                                 33
   2012: the region will have operating at least one commercial-scale integrated gasification-
    combined cycle (IGCC) power plant with CCS that uses bituminous coal.
   2015: The region will have:
       Three or more commercial-scale IGCC plants with CCS operating with bituminous coals;
       At least two IGCC plants with CCS operating at commercial scale that use sub-
        bituminous and lignite coals, respectively;
       Commercial scale post-combustion capture of CO2 emissions at one or more pulverized
        coal plants.
   2020: All new coal gasification and coal combustion plants will capture and store CO2
    emissions.
   2050: The region’s remaining fleet of coal plants will have completely transitioned to the use
    of advanced coal and CCS technology.
Timing: as noted above.
Parties Involved: Incumbent utilities, IPPs, state regulators.

Implementation Mechanisms
Some of the key implementation mechanisms that will need to be explored for this policy
option are as follows:
   Provide state support for front-end engineering and design (FEED). FEED studies provide the
    cost estimates needed to secure private investment in power plant projects. State tax credits
    or grants can help offset FEED study costs and allow utilities and developers to recoup those
    initial engineering costs that are most difficult to finance. This approach has been effective in
    Illinois, North Dakota and Wyoming in spurring project development, and is under
    consideration in other parts of the Midwest.
   Provide direct state financial incentives (grants, tax credits, loan guarantees and
    performance wrap engineering/procurement/construction or EPC coverage). States should
    establish the same or complementary incentives to those in the federal Energy Policy Act of
    2005 to help reduce the financial cost of the overall project once engineering and cost
    studies are completed.
   Allow regulated utilities cost recovery for appropriate commercial projects. Utilities
    committed to developing advanced technology coal plants with CCS should be ensured cost
    recovery, as long as they meet a state commission’s standards for proper spending
    decisions. States should also consider a comparable process for merchant and independent
    power producers involved in request for proposal bidding processes.
   Enhance integrated resource planning (IRP) policies, where applicable, by using them to
    encourage low-CO2 coal technologies. Regional leaders should adopt well-designed IRP
    rules to weigh the full costs, benefits and risk characteristics of various resource options.
    Doing so would improve the accuracy of “least cost” planning for generation options, which
    currently penalizes advanced coal and CCS proposals because it does not fully address future


30 June Draft                                                                                     34
    regulatory and environmental costs. Future risks to be factored in should include fuel price
    fluctuation, carbon constraints, emission limits of criteria pollutants and mercury, and
    technology uncertainty.
   Modify state policies and regulatory programs to favor advanced CO2-limiting generation
    technologies with CCS over conventional pulverized coal units. These policies could include:
    1) A low-carbon electricity portfolio standard or objective that combines fossil electricity
        generation resources (such as IGCC with CCS) with traditional renewable resources;
    2) A CCS portfolio standard for electricity providers;
    3) A CO2 performance standard for all new electric power plants;
    4) Innovative, long-term power purchase agreements to provide developers with higher
        rates of return and reduced risk in exchange for price stability that benefits ratepayers
        (allowing regulators to qualify more stable prices as a benefit);
    5) Specific incentives and financing assistance to replace or re-power existing coal plants in
        favor of advanced generation technologies with CCS;
    6) Market-based environmental regulatory programs to provide incentives to invest in low
       CO2 emission technologies with flexibility and certainty for achieving reductions; and
    7) Three-party covenants in which the federal government provides credit, the state
       regulatory commission provides an assured revenue stream from the syngas to protect
       the federal credit, and a project developer provides equity and initiative to build the
       project.
   Increase federal funding of incentives to accelerate deployment of advanced coal
    technologies with CCS at commercial scale. Current federal funding is completely
    inadequate given the scale of the task and urgency of commercializing advanced coal
    technologies with CCS. Midwestern governors call on the region’s congressional delegation
    to expand significantly the federal commitment of resources in this area.

   Provide incentives for deployment of innovative coal gasification technologies, including co-
    gasification of biomass and underground coal gasification, and the utilization of captured
    CO2. Co-gasification of biomass feed stocks with coal has been commercially demonstrated
    in Europe and, when combined with CCS, could provide CO2-neutral or even CO2-negative
    energy production. Underground coal gasification has entered commercial operation
    overseas and has the potential to bring the capital costs of CCS with coal to at or below that
    of conventional pulverized coal generation. Finally, research is underway to convert
    captured CO2 into useful and advanced materials and other products.

Related Policies/Programs in Place
To be determined.




30 June Draft                                                                                    35
Type(s) of GHG Reductions
Reductions in GHG emissions vented to the atmosphere associated with the capture and long-
term sequestration of GHGs from fossil-fired electricity production.

Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other
assumptions incorporated into the analysis.

Key Uncertainties
Briefly describe using separate paragraphs for different topics.

Additional Benefits and Costs
Use numerical listing.
Keep the items brief – 1 or 2 sentences.
Include social /non-quantifiable and indirect benefits

Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if
any:
Use bullet points.
Give each a sentence.
Add any other info relevant to the feasibility questions.

Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval
with objections).

Level of Group Support
This section to indicate the level of group support.

Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.



30 June Draft                                                                                  36

				
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