"Charting Our Energy Future"
www.peia.biz Charting Our Energy Future: F OR UM 2 0 0 7 Adapting & Applying California’s GHG Strategies in BC & Canada S Y NOP S I S Prepared by: Alex Tunner, P.Eng. President, Pacific Energy Innovation Association Monday, April 30th, 2007 The Vancouver Club Vancouver, BC – Canada CONTENTS Page Forum Program . . . . . . . . . . . . . . . 2 Highlights . . . . . . . . . . . . . . . . . 3 1. Observations 2. Conclusions 3. Recommendations Synopsis . . . . . . . . . . . . . . . . . 5 A. Opening Remarks . . . . . . . . . . . . . 5 B. British Columbia’s Energy/GHG Plan . . . . . . . . 5 1. BC’s 2007 Energy Plan 2. Initial Steps C. California’s Greenhouse Gas Strategies . . . . . . . . 6 1. Chronology of Climate Initiatives 2. California’s GHG Targets 3. AB32 & Air Resources Board 4. Market Issues 5. Electricity Sector 6. Transportation 7. National & International Collaboration 8. Discussion D. Programs that Work – California Case Examples . . . . . 8 1. Portfolios, Not Programs 2. Progress in California 3. S-Cal Edison Leadership 4. Demand-side Management 5. Results & Savings 6. Ten Important Success Factors in California E. GHG Reductions in Oregon . . . . . . . . . . . 11 1. Climate Change & Action in OR 2. CO2 Standards 3. Building Standards 4. Renewable Energy Action Plan 5. Renewable Energy Portfolio Standard 6. Vehicle Standards 7. Other Climate Change Bills 8. Comments F. GHG Reductions in Washington . . . . . . . . . . 12 1. Changes in the Past Year 2. Executive Order – February, 2007 3. Adaptation & Preparation 4. Measures in Effect 5. Climate Advisory Team 6. Economic Impact of Climate Change 7. Other Action 8. WA & BC Interests G. GHG Reductions in British Columbia . . . . . . . . 14 1. BC’s Adaptation Work 2. Transportation Emissions 3. Other Emissions 4. Changing Behaviour 5. Institutional Action H. Discussion (E,F,G) – GHG Reductions in Pacific Northwest . . . 15 1. Implementation & Adaptation 2. New Generation I. An Energy Vision for Western Canada . . . . . . . . 16 1. Background 2. Energy Demand & Supply 3. Systems Dependent on Renewable Energy 4. System Issues 5. An Energy Vision for Western Canada 6. Discussion J. GHG Responses – Technology . . . . . . . . . . 18 1. GHGs in the Developed World 2. The Energy Conversion Chain 3. The GHG Reduction Challenge 4. Cap & Trade or Carbon Tax 6. Primary Energy Mix for the Future 7. Discussion K. GHG Responses – Efficiency . . . . . . . . . . . 20 1. Collaborative Models for Efficiency 2. Community Action 3. Provincial Building Targets by 2010 4. Implementing Efficiency 5. Examples 6. E3 Green Fleet Rating System 7. E3 Fleet Review 8. Recommendations L. GHG Responses – Lifestyle . . . . . . . . . . . 21 1. Personal Experience & Progress 2. Behaviour Challenges & Steps Back 3. Discussion M. Next Steps – GHG Reductions & Impacts . . . . . . . 22 1. “Take Aways” from Forum 2007 2. Reflections on Electricity 3. Action – 4 Streams Highlighted 4. Kyoto 5. Trade & Customer Behaviour 6. Nuclear Question 7. Focus on British Columbia Pre-Forum Discussion Dinner – Guest List . . . . . . . 25 Pre-Forum Background Notes . . . . . . . . . . . 26 2. Energy/GHG Strategies & Activities Energy/GHG Control – Programs that Work 3. A Few Facts about British Columbia Power Point Slides Posted on: www.peia.biz PEIA Forum 2007 – Synopsis Page 1 PEIA Forum 2007 – www.peia.biz Adapting & Applying California’s GHG Strategies in BC & Canada April 30, 2007 The Vancouver Club Vancouver, Canada PROGRAM 7:00 Registration & Continental Breakfast 8:00 Opening Remarks Conrad Guelke – Forum Chair, Director, PEIA. 8:10 BC’s Energy/GHG Plan (Session Chair – Conrad Guelke, Director, PEIA) Hon. Richard Neufeld – Minister, Energy, Mines & Petroleum Resources. 8:30 California’s Greenhouse Gas Strategies (Session Chair – Stephen Hall, Director, PEIA) Dan Skopec – Undersecretary, California Environmental Protection Agency. 9:30 Case Examples – Programs that Work (Session Chair – Bruce Vernon, Director, PEIA) Gene Rodrigues – Director, Energy Efficiency, Southern California Edison. 10:00 Refreshment Break 10:30 GHG Reductions in Pacific Northwest (Session Chair – Penny Cochrane, Director, PEIA) Michael Grainey – Director, Oregon Department of Energy. Jay Manning – Director, Washington Department of Ecology. Chris Trumpy – Deputy Minister, BC Ministry of Environment. 12:00 Lunch Break (Session Chair – Alex Tunner, President, PEIA) 12:40 Luncheon Address – An Energy Vision for Western Canada Dr. John MacDonald, OC – President, Day4 Energy Inc. 13:30 Western Canada’s GHG Responses (Session Chair – Janet Benjamin, RIX Communications) Technology: Dr. Robert Evans – Director, Clean Energy Research Centre, UBC. Efficiency: Jim Vanderwal – Program Manager, Fraser Basin Council. Lifestyle: Deborah Jones – Journalist, Contributor to Globe & Mail. 15:00 Refreshment Break 15:30 Next Steps – GHG Reductions & Impacts (Session Chair – Alex Tunner, President, PEIA) Dr. Roger Gale – President & CEO, GF Energy Inc., Washington, DC. 16:30 Networking Reception (Session Chair, Bruce Vernon, Director, PEIA) 18:00 Forum Concludes Power Point Slides Posted on: www.peia.biz PEIA Forum 2007 – Synopsis Page 2 PEIA Forum 2007 – HIGHLIGHTS Below are some notable observations, conclusions and recommendations emerging from Forum 2007. The bracketed references following each item refer to the relevant sections of this Synopsis. Observations • The climate change discussion means talking about energy efficiency & renewables (B.1, E.1). • Environmental agencies lead on climate change, but most action is from energy agencies (C.3). • California has a balanced approach to GHG reduction: regulations, best practices, incentives, market mechanisms. It has rejected a purely command & control regulatory approach (C.3). • Market issues are the most challenging – establishing sector responsibilities to reduce (C.4). • California must reduce emissions from electricity imports, despite its lack of jurisdiction. A load-based (not generation-based) approach is anticipated, whereby the load-serving entities (utilities) receive a carbon budget & they decide on what generation sources to spend it (C.5). • Ιn California and BC, transportation is the main source (40%) of GHG emissions. California’s Low-Carbon Fuel Standard aims to reduce the carbon content of fuels 10% by 2020 (C.6). • Ten Success Factors for GHG Reduction: Energy efficiency must be integral to utility planning; Stringent standards & codes; Effective messaging; Portfolio of programs; Partnership programs; Evaluation; Market transformation; Technology; Collaboration; Commitment (D.6). • Oregon has comprehensive set of bills & benchmarks – 10% saving on energy, $1B/year (E.8). • Ports are a concern: generate traffic & vessel emissions – West Coast ports will harmonize (G.2). • Community action is required on energy efficiency – building codes, official community plans (K.2, K.4). • Dynamic pricing works to change behaviour, but it is rarely used (M.5, page 31). • Stakeholder processes exist in California, but not in BC – time consuming, but effective (M.7). • Pine-beetle kill in BC is a huge climate change message (G.1). Conclusions • Energy efficiency and GHG control programs must focus on four factors: Energy, Environment, Economy, Community (B.1, D.1, D.6). • Customers have absorbed huge fuel price increases, without much change in behaviour; thus, behaviour forcing initiatives are needed on the supplier-side (C.6). • Transport fuel emissions will get worse (more Tar Sands, etc.) in the absence of standards (C.6). • National and international collaboration is essential – WCI, Climate Registry ... to set targets, measure and report (C.7). • Transport emissions are #1 source; half personal, requiring denser communities & transit (G.2). • Most 2020 targets can be achieved with existing technology (G.5). • Municipalities can do much to advance the climate change agenda (H.1). • Green rating systems for vehicle fleets result in improved operation & vehicle mix (K.6, K.7). PEIA Forum 2007 – Synopsis Page 3 • Average Canadian emits 5 t/yr carbon – challenge is to change consumption habits (L.1, L.2). • Carbon tax (clear impact) is generally preferable to Cap & Trade (uncertain impact). In Europe, under Cap & Trade, the price of carbon collapsed from € 20 to € 1 – then recovered (J.4). • Carbon tax is simpler than Cap & Trade, but nothing happens if it’s not high enough (M.3). • The issue now is how to meet GHG and energy goals, not whether (F.5). • Our quality of life is the result of plentiful cheap energy. This will change. (I.1). • There are three basic energy sources: fossil fuels, nuclear power, renewables (J.2). • There are four basic end-uses: transportation, industry, commercial, residential (J.2). • Good geothermal sites exist in PNW, no serious discussion. Nuclear unlikely in PNW (H.2). • Renewable energy sources are intermittent, but can complement each other (I.4). • A system dominated by renewables would involve intermittent sources, power shaping, and a smart grid, able to respond in milli-seconds to unpredictable changes in load and supply (I.3). • Plug-in Hybrids can provide significant storage for renewables-dominated systems (I.6). • Of BC’s large fossil fuel exports, only the GHG of production is counted, not end-use (H.1). • Hydrogen is costly to produce and currently has limited applications: e.g. Space shuttle (J.6). • Electric vehicles with batteries are 90% efficient; with hydrogen fuel cell, only 34% (J.3). • Plug-in hybrids recharged from grid have battery efficiency, and good range (J.3). • Electricity is still sold on “push” basis (other industries it’s demand pull) and is one of the few industries where customers have little understanding of their usage; this needs to change (M.2). Recommendations • It’s portfolio management, not program management, that works (D.1). • GHG policies must convince and facilitate people to act energy efficiently in daily life (D.2). • Demand Side Management implies utility control – for success, must look beyond DSM (D.4). • Adaptation & preparation are essential – a severe future issue will be water supply (F.3). • A significant gap between energy demand & supply is likely to occur effective 2025. Only renewables and nuclear power are available to fill the gap, and must be the focus (I.2). • In Western Canada, BC and Manitoba have firm hydro generation. Alberta and Saskatchewan have good wind & solar potential. An East-West Link is needed for a viable system (I.5). • Recognize that electricity is the transportation fuel of the future (J.3). • Give customers real-time tools to control their usage – demand response is effective (M.7). • GHG cuts will be very difficult to achieve in BC, since electricity is primarily clean hydro. The main focus must be on transportation (M.7). Abbreviations • EPRI – Electric Power Research Institute. • ETS – European Union Greenhouse Gas Emission Trading Scheme. • GHG – Greenhouse Gas. • LEED – Leadership in Energy and Environmental Design. • RGGI – Regional Greenhouse Gas Initiative (Eleven Northeast and Mid-Atlantic States, working to reduce CO2 emissions from electric power plants). • WCI – Western Climate Initiative (California, Oregon, Washington, Arizona, New Mexico, British Columbia … & others in progress). PEIA Forum 2007 – Synopsis Page 4 PEIA FORUM 2007 Adapting & Applying California’s GHG Strategies in BC & Canada SYNOPSIS A. Opening Remarks Conrad Guelke – Forum Chair, Director, PEIA. • Welcome to the Pacific Energy Innovation Association’s Forum 2007, and most sincere thanks to BC Hydro and Terasen Gas for their support in making this Forum possible. • Today’s program reflects PEIA’s Mission Statement “to initiate and promote discussion and action for energy innovation, efficiency and sustainability” and supports British Columbia’s commitment to make rapid progress in controlling GHG emissions and energy efficiency. B. BC’s Energy/GHG Plan Hon. Richard Neufeld – BC Minister of Energy, Mines & Petroleum Resources. 1. BC’s 2007 Energy Plan • Energy is the key to a great economy. BC’s 2007 Energy Plan sets out an aggressive strategy for reducing GHG emissions and for providing a secure, reliable supply of clean energy. • Environment – Net zero GHG emissions from all new electricity generation projects, and from existing thermal ones by 2016. Eliminating routine oil & gas flaring by 2016 (50% by 2011). Targets include reducing GHG emissions by at least 33% below current levels (or 10% below 1990 levels) by 2020, and new standards to reduce vehicle emissions by 30%. • Conservation & Efficiency – Acquiring 50% of incremental electricity needs through conservation, and implementing energy efficient building standards by 2010. • Energy Security – Achieving electricity self-sufficiency by 2016, and maintaining public ownership of BC Hydro and BC Transmission Corp. • Innovation – Maximizing renewable energy opportunities via the BC Bio-energy Strategy, and establishing an Innovative Clean Energy Fund of $25 million. 2. Initial Steps • Among initial steps BC has taken to achieve these goals are: • A Climate Action Team to develop processes for meeting BC’s Energy/GHG targets; • Joining the Western Climate Initiative (WCI = CA, WA, OR, AZ, NM); • A standing offer by BC Hydro for small (<10 MW) power purchase agreements; • Exploring possible development of Peace River Site-C (900 MW, 8% of BC’s capacity). PEIA Forum 2007 – Synopsis Page 5 C. California’s Greenhouse Gas Strategies Dan Skopec – Undersecretary, California Environmental Protection Agency. 1. Chronology of Climate Initiatives • June 2005 – Governor establishes emission targets and Climate Action Team, which includes all relevant agencies – energy, water, transportation, agriculture, land use, buildings. • March 2006 – Climate Action Team report: 40 strategies, market & regulatory approaches. • September 2006 – Global Warming Solutions Act (AB 32) is the key legislation. 2. California’s GHG Targets • Key number = 174 MMT CO2 reduction, 28% of “business as usual” (620 MMT) by 2020. • Cap is 1990 levels by 2020 (25% cut), early action by 2010, enforceable limits start 2012; • 10% reduction of GHG emissions by 2020. 3. AB 32 & Air Resources Board • ARB has primary responsibility for implementing Bill AB 32 and for achieving cuts. It is a sub-agency of CAL-EPA. • Energy Commission & Public Utilities Commission reside outside EPA. They are the “brains” of energy, and make recommendations on how the electricity sector should deal with GHG. • Must recognize that while environmental agencies are the lead on climate change, much of the action necessary to effect climate change comes from the energy agencies. • Decisively rejected a purely “command & control” regulatory approach. • CA will have a “balanced” policy approach to reduce GHG – regulatory measures, best management practices, incentive programs, market-based mechanisms. 4. Market Issues • The market issue will be the most serious and challenging. • By “market system”, CA means “Cap & Trade”. • Market Advisory Committee was established in January 2007, with national & international (Europe, UK) experts on market systems (mostly cap & trade), to make recommendations by June, 2007 to ARB (which will develop the market). Members could be available to BC. • Must determine the scope of the market – who should be in it (sectors, groups of industries), and the allocation of responsibilities to make reductions (a sector could be put into a market without much responsibility to reduce, or with stiff responsibilities to reduce). • In some sectors, a regulatory approach will be more effective than a market system. • Must determine the allocation of carbon credits – Europe had a problem with over-allocation, resulting in a lower carbon credit price, and failure to get the desired GHG reductions. • California is considering a combination of free allocation of credits and auctioning, whereby industries are forced to buy the credits they need. In EU, credits were mostly freely allocated. • California is also considering allowing offsets (credits purchased from outside the market). EU uses the Clean Development Mechanism established by Kyoto. • Important to integrate with other markets. CA is keen to work with WCI, RGGI, ETS, all of which have well-developed GHG programs. 5. Electricity Sector • In-state CA generation is much cleaner than imports (23% of electricity, 56% of emissions), since CA has no coal. PEIA Forum 2007 – Synopsis Page 6 • Thus, CA has the unique challenge of finding ways to reduce the emissions associated with electricity imports, although it does not have the legal jurisdiction to do so. • One of the solutions for dealing with the out-of-state coal problem is a Load-Based approach rather than a Generation-Based approach. The choice is between putting GHG requirements onto the power plants themselves, or onto the load-serving entities (utilities). • In CA, the utilities had to divest much of their electricity generation – they enter into contracts to supply the energy they provide to customers, but they do not own many of the power plants. • CA is considering putting the GHG reduction requirements onto the load-serving entities. • A load-based approach gives a carbon budget to CA’s load-serving entities (utilities). They must then decide how to spend it – through a combination of generation sources, energy efficiency, renewable sources, or conservation. • Thus, utilities are forced to decide how much out-of-state coal they can afford – it would be futile to try to tell an out-of-state generation plant what it can or cannot do. • A load-based approach would not be ideal for a national cap-and-trade system. But, because of CA’s limitations and large coal-based electricity imports, this will likely be the approach. • As another important step in addressing the out-of-state coal problem, CA has established a GHG Performance Standard for power plants. Any new contracts utilities make for power (for >5 years) have to be with generation sources that are at least as clean as combined cycle natural gas (1100 lbs. CO2 per MWh). • Thus, load serving entities cannot contract for new coal sources. The standard is not perfect – there will be spot market and short-term purchases, so coal-based electricity will still enter CA. 6. Transportation • It’s the main source of GHG emissions – 41% (same as BC); industry = 28%, power = 20%. • CA has developed a Low-Carbon Fuel Standard (LCFS) to reduce the carbon intensity (content) of transportation fuels by 10% by 2020. • For each fuel, this will be based on its full life-cycle (well-to-wheels) emissions, something that is not usually done around the world. This shows that there is not much GHG benefit from using corn-based ethanol (other ethanol can be). • Most of CA’s transportation fuel (96%) is from petroleum – big challenge for oil companies. • Trading of carbon credits (plug-in hybrids, bio-fuels, …which over-comply) will be allowed. • Fuel providers will decide on the mix of fuels to sell. • Emissions from transportation fuels will get worse (with more fuel from tar sands, shale, coal to liquid via “Fischer-Tropsch”), unless there are Fuel Standards. • This sector is not appropriate for Cap & Trade. While this would tend to produce the lowest cost emissions, it would tend to delay the necessary fundamental changes to CA’s fuel supply. • Customers have absorbed huge fuel price increases, without significant changes in behaviour. Therefore, behaviour-forcing initiatives will be needed on the supplier side, rather than the customer side before there will be changes in the transportation sector. • CA won’t try to pick winners – there may be new fuels, as yet unknown. Alternative fuel policies have for too long tried to pick winners. CA is concerned with the carbon content of the fuel, and will set the performance standard – the market will respond. • Impact of LCFS: creates a certain market for LCF and, in addition to 10% reduction in carbon content, it’s also a petroleum reduction policy, aiming to displace 20% of gasoline consumption with alternate fuels; huge increase in hybrid & alternate fuel vehicles. PEIA Forum 2007 – Synopsis Page 7 7. National & International Collaboration • The California Climate Action Registry (voluntary reporting of emissions) is working toward a multi-state registry. A registry is the foundation for any climate program – must know what emissions are, and companies must be prepared to account for their emissions. • Europe has shown that good data are essential – over-allocation problem was due to bad data. • WCI (CA, OR, WA, AZ, NM) is CA’s most important interaction – the goal is to establish a regional cap, and design a cap & trade system, by the Fall of 2008; the five states all have advanced climate programs. CA also want to integrate with RGGI. • Collaboration with Canada (BC, Manitoba, … ), European Union, UK (trading systems), Sweden (bio-fuels, bio-gas), Australia, Mexico (soon). Climate study tour to Europe. 8. Discussion • Determining life-cycle GHG emissions of fuels is difficult. At Low Carbon Fuel Standards Symposium on May 18, 2007, team of UC professors presenting an initial methodology. Working with EU toward a uniform CA/EU standard for full life-cycle analysis of fuels. • Protocols for Local Governments & others are being established for emission reductions, to start earlier than 2012. Land-use is a huge driver of GHG emissions, and a Smart Growth Plan is being developed for CA. • Great optimism for the development of clean energy technologies and economic benefits. UC Lawrence-Berkeley received $400 M from British Petroleum for a bio-fuels institute. Every major university has an energy, energy efficiency or clean technology institute. • Climate change has to be addressed, but not because of its potential economic benefits, D. Programs that Work – California Case Examples Gene Rodrigues – Director of Energy Efficiency, Southern California Edison. 1. Portfolios, Not Programs • It’s not program management, but portfolio management (a set of programs) that works. • There is no single magic thing – it’s collaboration and how everything comes together. • Collaborative leadership is the key: legislature, regulators, business & industry, the public. • The four value propositions for success are: Energy, Environment, Economy, Community. • Ten things are critically important for real success (6. below). 2. Progress in California • CA is world’s 6th largest economy, and the 12th largest source of CO2. • All sectors of government, industry and the public are committed to meeting CA’s GHG targets. • CA energy policies are not just policies – they are roadmaps for action. • In 1990’s, CA passed laws to pursue cost-effective conservation & energy efficiency measures. • Business interests & public policy now combine to ensure that good intentions result in action. • Growth in CA is in the “Inland Empire” – hotter, larger & peakier loads. Energy efficiency in partnership with customers is the most important attack platform. • In the past 6 years, via this partnership, S-Cal Edison (2nd largest investor-owned utility in US) saved far more energy than any other US utility. • The obvious fact is that GHG policy must convince & facilitate people to act energy efficiently in their daily lives. PEIA Forum 2007 – Synopsis Page 8 3. S-Cal Edison Leadership • A leader, with 17% renewables in its generation portfolio, including 90% of all purchased solar energy in USA; it has the largest private electric vehicle fleet. • Largest portfolio of demand response programs (reducing energy use in peak periods) in CA, and second only to FL. • Working with auto industry on infrastructure to support vehicle-to-grid and hydrogen refuelling. • Edison SmartConnect – advanced metering infrastructure, assists customers to reduce GHGs. • SCE targets to save over 3000 GWh in 2006-2008 (“hard wired”, not market transformation). 4. Demand-side Management • From a utility industry point of view, “success” means DSM programs. • DSM is an all-encompassing notion, but a view whereby the utility controls what it wants. • But, to be successful, it’s essential to look beyond the utility planner’s view. • Four value propositions for DSM programs are: - Energy – least-cost, reliable electric service. - Environment – a cleaner, greener environment. - Economy – helping customers save energy, money, and the environment. - Communities – fulfilling societal obligations. • SCE (as an investor-owned utility) views energy efficiency from the point of its value to SCE. • In acquiring resources to serve its customer load, Energy Efficiency is #1 – not because it’s CA policy or because it’s green, but because it’s the cheapest resource by far. • Also important are demand response programs, to attack the growing, difficult peak problem. • There is distributed generation, primarily from the CA Solar Initiative, a leading-edge measure. • Customer service, satisfaction & loyalty – utilities must work with customers to ensure they use energy wisely and reduce their energy burden (rate discounts exist for lower income customers). 5. Results & Savings • Per capita consumption – stable in CA at 7 MWh/year for 30 years, while doubling elsewhere. • There are other factors, but this shows the value of consistently pursuing energy efficiency. • BC’s aggressive energy targets promise to follow a similar track. • Codes & standards will lock-in energy efficiency savings. • EE is only one leg of the GHG answer – 3.4 B tonnes of CO2 (= 650,000 cars) saved in 3 years. • CA electricity rates are very high, and rate signals are important. However, what is important to customers is that, while EE raises rates, their total bill is down. 6. Ten Important Success Factors in CA • 1. The Institutionalized Pursuit of Energy Efficiency – Making energy efficiency be an integral part of long-term resource planning in the utilities sector. With a short-term horizon (5 years), only limited investment can be justified. However, looking ahead 20 years to plan for system needs creates a rational framework for procurement planning – it challenges the utilities to plan aggressively for energy efficiency and investment efficiency. CA has two funding sources for energy efficiency: i) A legislatively mandated Public Goods Charge representing the minimum that must be done – for SCE the PGC amounts to $90M/year; ii) Individual utilities, whereby SCE actually spends much more on energy efficiency – some $250M/year directly ($400M/year total). It’s not only good public policy, it’s the most cost effective way to serve customers. The money spent would otherwise have to pay for long term energy procurement contracts. PEIA Forum 2007 – Synopsis Page 9 • 2. “Ratcheting” of Codes and Standards – CA Energy Commission has set some of the most stringent and aggressive building and appliance standards in USA. It’s not a Command & Control approach. The standards are the result of partnership between the Commission and the utilities. The “market softening” effects of utility energy efficiency programs allow for more aggressive standards – the associated market experience and research guide the Commission in determining what standards could be put in place, which would be complied with. Everyone working together to elevate standards is much more productive than government acting alone. • 3. State Leadership in “Messaging” – It’s consumers ultimately who “do energy efficiency”. Thus there must be an education and messaging component. CA has three levels for targeting consumers: i) The “Energy Star” brand for wise and virtuous energy efficiency purchases; ii) The State’s “Flex your Power” campaign for broadly reminding consumers of the value of energy efficiency and demand responsiveness; iii) Each utility’s own branded campaign linking the broad message to specific customer programs. • 4. A Portfolio Approach for Serving Customers – It encompasses a whole series of programs (see website for Appendix to Power Point). For example, in the residential sector the aim is to make it easy for consumers to make the right decision, without the need to understand technical details. This requires attention to all market sectors. It includes rebate programs, subsidized compact fluorescent light bulbs (a market transformation program), new construction, retrofits. Similarly, for businesses the aim is to price energy efficiency so that it is the economic choice, and not merely the “green” choice. • 5. Affinity (Partnership) Programs – Designed for Local Governments and Large Institutions, to motivate them to undertake programs they otherwise would not do, both in marketing energy efficiency programs, and in greening their own internal operating & purchasing practices. • 6. Ideas from Outside Normal Sources – Not all wisdom resides within the utilities or CA. Thus, there is competitive solicitation (30% of SCE’s $250M) to bring innovation and fresh ideas (both technologies & marketing) to the portfolio. • 7. The Need for Collaboration – To make large-scale impacts, opportunities must be sought for collaboration with customers, with efficiency stakeholders and across borders – for example: the Consortium for Energy Efficiency (CEE – USA & Canada; Energy Star); the National Action Plan for Energy Efficiency (sharing best practices); and events such as Forum 2007. The entry ticket to international efforts should require good work at home. Similarly, purchases of cheap offsets should require good work at home – offsets can be the cherry on the cake, but should not be a substitute for the cake. • 8. Measurement, Verification, Evaluation – If public funds pay for energy efficiency, it is essential to prove that real savings are achieved. Promises made are promises remembered. Furthermore, you can’t manage it, if you can’t measure it. • 9. Market Transformation – The California Solar Initiative provides incentives for homes and businesses ($3.3B, 3000 MW by 2017, PV & non-PV) – an aggressive market transformation program. Advanced metering, by taking the utility system beyond the meter and into customer premises, will provide huge opportunities to reduce the energy being used. • 10. Enthusiasm & Commitment – The leadership, enthusiasm and commitment evident in BC for making progress with energy efficiency and GHG control are impressive. CA and SCE are pleased to collaborate with BC, and to assist in any way they can. PEIA Forum 2007 – Synopsis Page 10 E. GHG Reductions in Oregon Michael Grainey – Director, Oregon Department of Energy. 1. Climate Change & Action in Oregon • When discussing climate change, we’re really talking about energy. • Most GHG and pollution is from power plants and energy to run vehicles. • In Oregon, 40% of CO2 is from vehicles, 40% from power plants, 20% from everything else. • USA has 5% of the world’s population, but emits 25% of the CO2, and uses 25% of the oil. • As such a large emitter, USA has a special duty to reduce GHGs. • Because energy is the primary cause of emissions, energy efficiency & renewable energy are fundamental to any meaningful GHG reduction strategy. • Oregon issued its first report on climate change in 1989, and a benchmark for CO2 production was created in the mid-1990s. • OR has adopted California efficiency standards in a number of areas. • OR has nearly 100 benchmarks, covering areas such as access to medical care, education, crime rates and other issues. While not binding, State programs are expected to achieve these goals. 2. CO2 Standards • For CO2, the benchmark is to stabilize at 1990 levels, not quite what was required by Kyoto. • In 1997, OR adopted the first enforceable Carbon standard in USA. New power plants must pay a fee to the OR Climate Trust to offset CO2 emissions. For an average natural gas plant, the fee is about $4 million – 85¢ per metric tonne of CO2 emitted, increasing soon to $1.27. • That’s about 1/3 of the cost of projects to offset CO2. • Environmentalists, utilities and the power industry support this standard. • The need for a power standard became urgent in the 1990s, when most new power plants were merchant plants developed by independent power producers. • The standard has worked well, and many new natural gas power plants were built. The Climate Trust has financed many projects to offset GHG emissions. It recently invested $9M to offset 3M tonnes CO2, via rain forest reforestation, energy efficiency in factories & new commercial buildings, wind energy, preservation of native Northwest forests. • For a new coal plant, offsets would exceed $50M. No new coal plants have been built since the standard was adopted – instead, 1000 MW of wind built, with another 1000 MW pending. • The CO2 standard played a big part in avoiding new coal plants. 3. Building Standards • Since 2003, the State Government has made GHG reduction a priority. • The Advisory Committee on Global Warming proposed 70 actions to reduce GHGs, including energy efficiency in buildings, industrial processes, and transportation. • By 2010 (5 years ahead of schedule) Oregon’s strict energy building codes will increase 15%. The current code saves Oregonians $125M/yr, & businesses $100M/yr, in lower energy costs. • Appliance standards (same as California) will save energy & water – more measures pending. 4. Renewable Energy Action Plan • It contains 130 actions by Federal & State agencies & others to increase renewable energy. • For example: tax credits to individuals were increased from $1500 to $6000 for solar and other renewable energy – used by 20,000 individuals for solar energy (mostly space & water heating); purchased 220,000 energy efficient appliances; highest US per capita hybrid vehicles use. PEIA Forum 2007 – Synopsis Page 11 • State loan program helped businesses, State & local governments to invest $350M in renewable energy and energy efficiency in the past 20 years, saving more that $75M/year in energy. • Quicker permits for bio-fuel plants – 2 ethanol plants (150M gal/yr) to be completed in 2007. • Businesses get a 35% tax credit for energy efficiency & renewable projects, up to $10M of project costs. Over 12,000 businesses used the tax credit to invest $900M in the past 20 years, reducing their energy costs by $300 M/yr. • The tax credit will increase to 50% of project costs up to $20M, basically tripling the tax credit. 5. Renewable Energy Portfolio Standard • 25% of Oregon’s electric load must come from new renewable energy by 2025. Thus most, if not all, of Oregon’s load growth must be met by new renewable energy. • Tax credits for bio-fuel producers, and for users of B99 (99% bio-diesel from vegetable oils, with 1% diesel added) and B85 (cold-weather blend – 85% bio-diesel, with 15% diesel added). • Renewable fuel standard requires certain percentages of bio-diesel and ethanol to be sold in OR. 6. Vehicle Standards • The Environmental Quality Commission adopted CO2 vehicle emission standards, based on those in California. Besides reducing air pollution, they will improve vehicle mileage. • US Federal Government has not improved vehicle standards in 20 years, so the States must act. 7. Other Climate Change Bills • A Global Warming Commission was formed to oversee progress in reducing GHGs. • Requirement to reduce CO2 levels to 10% below 1990 levels by 2020, and 75% below by 2050. • A climate change research institute will be established at Oregon universities. • GHG emission standards for new power plants serving OR loads, whether or not located in OR. • State-wide carbon cap for GHGs from new & existing power plants – includes Cap & Trade program, with the cap to decline over time to meet the 2020 & 2050 GHG reduction targets. • These bills (and similar ones in Washington) are based on California legislation. 8. Comments • Western Climate Initiative of 5 US states & now BC working collaboratively will have a major impact on standards & markets – they are equivalent to one of the world’s 10 largest economies. • Oregon spends $10B/yr on energy. Measures to date save $1B/yr, 2 fossil fuel plants avoided. • Despite the many efforts, GHG emissions in OR increased by 15% since 1990. Only recently have CO2 emissions begun to level – it’s a long way to the OR benchmark of 1990 and Kyoto. • Much more needs to be done, with the help and support of WCI allies, now including BC. • Remember King Arthur … political boundaries are not real ... certainly not real for GHGs. F. GHG Reductions in Washington Jay Manning – Director, Washington Department of Ecology. 1. Changes in the Past Year • A year ago, the question was “is climate change real” – main-stream businesses were opposed. • Remarkable positive change in attitudes toward climate change, with business community now urging adoption of California-type standards. • Like Oregon, Washington has “madly chased” California for several years – now also BC. PEIA Forum 2007 – Synopsis Page 12 2. Executive Order – February, 2007 • GHG emission reduction goals were established. • Climate Advisory Team to recommend (within one year) actions to meet the reduction targets. • Three emission reduction goals: - By 2020, reduce GHG emissions to 1990 levels; - By 2035, reduce emissions to 25% below 1990; - By 2050, reduce emissions to 70% below 1990. • Two economic goals: - By 2020, increase clean energy sector jobs to 25,000 (from 8,400 in 2004); - By 2020, reduce fuel import costs by 20%, through energy efficiency and WA resources. • Manage the unavoidable – preparation & adaptation: - Prepare for effects of Global Warming on health, agriculture, coast, forestry, infrastructure; - Assess steps to prepare for impacts of Global Warming on water supply and management. 3. Adaptation & Preparation • BC’s Climate Change Adaptation Plan is excellent – it inspired WA’s plan. • Minimum 2 ft. sea level rise is expected, and will cause significant inundation of land. • A more severe issue will be water supply … 70% of WA’s stored water is in the snow pack. • It melts at the right time (July, August) critical time for salmon, agriculture, municipal supply. • Expect a 70% drop in snow pack, and the effects on water supply will be catastrophic. • The cost of replacing this storage is horrendous. • Though BC is slightly farther north, the effects will be similar. 4. Measures in Effect • Action was taken prior to the grand vision on Climate Change announced in February, 2007. • CA clean car standards adopted (2005) to reduce CO2 emissions in new vehicles by 30%; renewable fuel standard; green building standard; most energy-efficient building code in USA. • Recent clean renewable energy initiative requires power providers (public & private) to supply at least 20% of their load from renewable resources – Hydro is not considered to be renewable. • Utilities are nervous about how to meet this (wind, tidal, conservation, ... ). 5. Climate Advisory Team • To produce comprehensive recommendations prior to the January, 2008 Legislative Session. • High level stakeholder representation. It’s about “how” to meet the goals, not “whether”. • Two groups of committees within CAT develop recommendations: - Adaptation – working groups on water supply, shorelines, health, forests, agriculture; - Emissions Reduction – technical working groups to establish reductions by sector: transportation, energy supply, residential, commercial, industrial, forestry, agriculture. 6. Economic Impacts of Climate Change • Study of economic impacts got great attention – economics was a major driver of action in WA. • New requirements will cause some economic dislocation, but much less than taking no action. • An inventory of CO2 & GHG emissions has been established, as an important building block. 7. Other Action • Western Climate Initiative – pleased at BC participation, continuity along entire West Coast. PEIA Forum 2007 – Synopsis Page 13 • CA passed Bill AB32, setting emissions goals enforceable by statutes. That scared business and industry in WA. They will make proposals, likely for something similar to AB32 in WA. • The performance standard for new power generating facilities, or for the importation of power into WA, has to meet the emissions level of a modern state-of-the-art natural gas fired plant. Thus, big new WA coal plants unlikely, without advanced technology including sequestration. However, two proposed coal plants will be permitted, by allowing them to buy offsets it they do not meet the standard. 8. WA & BC Interests • Columbia River Watershed is a huge source of water for Eastern WA and BC – agriculture, fish and wildlife, municipalities, recreation, navigation. Allocating water between these competing uses is a difficult issue. The anticipated loss of snow pack will necessitate new high levels of cooperation between WA, OR, BC to manage the watershed. • Similarly, close collaboration is needed on CO2 emissions, sequestration, sea level rise. • Collaboration now exists on engine idling and emissions from heavy vehicles, including ships. • The Pacific Coast Collaborative (AK, BC, WA, OR, CA) launched by BC in 2007 is a good vehicle to advance other issues. • WA and BC have a common culture and heritage in their attachment to the land and its natural resources. Mountains and glaciers are an essential part of their identity. Since 1984, 53 glaciers have disappeared in WA (it must be similar in BC) and the loss of half the glaciers is apparent. There is a moral obligation to ensure it does not happen. G. GHG Reductions in British Columbia Chris Trumpy – Deputy Minister, BC Ministry of Environment. 1. BC’s Adaptation Work • A big reason BC got into adaptation work is the vast Mountain Pine Beetle tree kill. • It’s a huge message to all about what’s happening in the world. • Controlling the beetle requires –40°C temperatures for two weeks. • Control was lost some time ago, as the climate warmed up. 2. Transportation Emissions • BC is fortunate that, unlike most jurisdictions, there is little GHG is from energy production. • Transportation accounts for 39% of GHGs, half of that being personal transportation. • BC is moving with several US states and Quebec to adopt CA’s tailpipe emission standards. • By 2016, using existing technology, it will result in 30% less GHG emissions for new vehicles. • Carbon content standards for fuels will provide additional GHG benefits. • Vancouver has seen huge densification – it’s 2nd in NA in terms of people walking to work. • Solving the passenger vehicle problem will require denser communities and rapid transit. • Increased densities can be seen along Vancouver’s rapid transit lines. • Commercial vehicles must restrict idling. • The Port of Vancouver will no longer allow inefficient vehicles to pickup cargo. • Ports are a concern, generating a lot of traffic, and the fuel burned by ocean going ships is dirty. • West Coast ports will harmonize their environmental policies. PEIA Forum 2007 – Synopsis Page 14 3. Other Emissions • The oil & gas industry accounts for 18% of BC’s GHGs, in recovering & transporting product. The BC Energy Plan calls for capping fugitive emissions to 2000 levels by 2016. • Other industry accounts for 16% of emissions. Of that, mining & refining is 18%, cement 12%, aluminium 12%, manufacturing 58%. • GHG emissions from a new Alcan smelter would be 70% lower than today. • Forest sector (fuel switching, from oil) and smelters have reduced their GHGs in last 20 years. • Sector targets will be established. • Waste (mostly methane escaping from land fills) accounts for 9% of GHGs. Kitchen compost and garden waste produce most of the methane, and should be removed from the waste stream. • Electricity generation is 3% of GHGs, and hydro power is considered renewable (unlike WA). • Residential & Commercial account for 11% of GHGs in BC. The challenge is providing the right incentives, and changing behaviours. 4. Changing Behaviour • CA’s door-to-door program seems aggressive, but far more effective than traditional programs like advertising and public education to encourage rational decisions. • The average house size in BC has increased by 50% in the last 20 years, while families shrank. • Tax & regulatory incentives will be introduced, to encourage more GHG friendly behaviour. • A green building code will be implemented – also real-time, in-house electricity metering. 5. Institutional Action • All government operations will be net-zero emission by 2010, and will look for GHG reduction opportunities in the agencies they deal with. • Reduction targets will be set for the broad public sector, including hospitals, schools, colleges. • BC will join the US climate registry (with 30 states). Measurements by Statistics Canada are somewhat dated – that’s a problem in managing a system with short term targets. • Carbon trading within WCI will be part of the solution for BC. • BC’s targets are more ambitious than Federal ones – implementation will be designed to avoid competitive pressures and administrative nightmares for BC companies. • Most of the 2020 targets can be achieved with existing technology. • The 2050 targets will be more challenging, and will require new technology. H. Discussion – E, F, G 1. Implementation & Adaptation • Additional states and provinces (Ontario, Manitoba) may wish join WCI, once the current members have the foundation built and move forward together. • Municipalities can do a lot to advance the climate change agenda. Cities in OR play a key role, and Portland is achieving Kyoto targets. Some incentives & tax credits for energy projects can be used by local governments, by transferring their value to a private entity. Both WA & OR view local governments as partners. • Land-use planning is an important GHG tool, and local governments make those decisions. Seattle and King County have significantly lowered their carbon foot prints, ahead of WA state. • BC has seen only limited local consultation. This will change, with incentives for local GHG reduction and adaptation. Richmond is a good place for work on adaptation to rising sea levels. PEIA Forum 2007 – Synopsis Page 15 • Regarding adaptation to climate impacts on water supply – WA has funded irrigation efficiency and reclaimed water projects, for water quality and salmon recovery, but not for climate change. • While BC exports large volumes of fossil fuels (coal, natural gas), only the GHG impact of its production is considered, not the end use. By contrast, a recent court decision in Australia has ruled that their environmental process must consider the GHG impacts of coal exports. • In the absence of Federal leadership, US states & industry (e.g. National Action Plan for Energy Efficiency) have initiated action. Meeting Kyoto is unlikely, even with a new Administration. 2. New Generation • Global warming has rekindled interest in Nuclear Power, but it’s seriously impeded by the lack of progress on spent fuel disposal. US Congress is committed to deep geologic disposal, but the intended site at Yucca Mountain NV is almost completely discredited, and unlikely to ever be opened. There is no light at the end of the tunnel for nuclear waste disposal. • In France, where 80% of electricity generation is nuclear (USA 20%, Canada 15%), there is above ground, monitored, retrievable storage. • Nuclear is quite unlikely in WA and OR. The only operating plant is at Hanford WA (the most contaminated site in the Western Hemisphere, from weapons production – Uranium, Plutonium) where clean-up is costing billions. New generation nuclear plants still generate waste, disposal would cost billions – coal and renewable resource options will likely remain cheaper. • There are good geothermal sites in BC (50), WA, OR – but no serious discussion. On the other hand, wind was barely discussed 10 years ago, and there is now considerable wind generation. • There are tidal and wave prototype energy projects in OR, WA, BC, but no “ocean thermal”. I. An Energy Vision for Western Canada Dr. John MacDonald, OC – President, Day4 Energy Inc. 1. Background • In the developed economies, we’ve had the enormous privilege of living in an era with the highest quality of life in the history of the human species. • This occurred because our immediate ancestors learned how to create and control the flow of energy at low cost. That’s about to change. • There are three issues in the energy business: energy security, energy demand & supply, and the environment. 2. Energy Demand & Supply • The International Energy Agency’s optimistic view of total energy supply from traditional sources (coal, oil, gas, nuclear, hydro) is that it will increase to about 2030, and then decline. Effective 2025, a significant gap will develop between demand and supply. • Meanwhile, energy demand is projected by IEA to double between 2015 and 2050. • Clearly, even optimistically, demand is likely to exceed supply in the 2030-2040 time frame. • But, the pessimistic view is that supply will peak by 2015, with a demand gap starting 2012. Oil & gas declining; coal & hydro increasing; nuclear staying flat – nobody really wants it. • Reality is likely somewhere between these two scenarios. • What will fill the gap? Nuclear and renewable energy – that’s all there is. • Our future will rely largely on renewable energy – we’d better learn how to use it effectively. PEIA Forum 2007 – Synopsis Page 16 3. Systems Dependent on Renewable Energy • Renewable sources are intermittent (wind, solar), or location dependent (tidal, geothermal). • A grid structure dominated by renewables would require three major components: - Intermittent Sources (solar, wind, tidal, wave, small hydro); - Power Shaping (big hydro, geothermal, biomass, large-scale storage, nuclear, fossil fuel); - These would be connected via a Smart Grid (power management system) to supply loads. • Managing a grid dominated by renewables would be totally different from today’s systems. • Future systems would have to respond in milliseconds to unpredictable changes, and manage huge transients – their complexity would be several orders of magnitude greater than today. • It’s important to remember that renewable energy is a local resource. Having local sources, especially ones that can be easily distributed (like solar) increases the security of the supply. • Electrical generation a hundred years ago was largely local – today, much of the world is dependent on sources of energy from politically unstable regions. • In future, there will have to be distributed energy generation – some utilities may not like it, and the power management systems to run renewable-dominated grids will be very complex. 4. System Issues • To accommodate economically the measures required to achieve the GHG and energy goals for a low-emission future, it is necessary to think about system issues, such as an East-West grid. • While energy consumption can be lowered and efficiencies increased, fundamental changes are necessary, and are beginning to take place, in the way energy is used. • For example, low-emission transportation is starting. Rechargeable hybrids (or pure electric) will change the primary transportation fuel from hydrocarbons to electricity, with HC backup. • Thus, in moving toward lower emissions, electricity consumption will necessarily grow. • However, if that electricity is not generated from renewable sources, nothing is accomplished. • Interestingly, renewable resources can complement each other. For example, solar and wind tend to blend – wind is highest in the cold months, and solar is highest in the warm months. • The solution for the future is a blend of local renewable sources, with an electrical system that can smoothly integrate them. Such a system will be a huge engineering challenge, and it is not too early to get started – if the pessimists are right, it may be too late. 5. An Energy Vision for Western Canada • Firm hydro-electric generation dominates BC in the West, and Manitoba in the East. • Between them are considerable intermittent, renewable resources – Alberta and Saskatchewan have solar potential, and the Rocky Mountains are rich in wind (as is the BC coast). • Thus, a system can be envisioned with two intermittent renewable resources, wind and solar, working in concert with two firm hydro resources functioning as batteries. • Thinking outside-the-box in this way will be necessary for future, renewable-dominated grids. • Missing to make this model possible is an East-West grid. 6. Discussion • The challenge is to redirect our vision of what’s possible – for example, moving from centralized to distributed generation, and active management of interruptible loads. • Logically the utilities must take the lead, together with government. • Any renewals dominated grid must have storage – beyond large hydro, there is currently no satisfactory technology for large scale storage. • Renewable energies must reach cost parity with conventional sources. PEIA Forum 2007 – Synopsis Page 17 • Plug-in hybrids can be an element in the portfolio of renewable sources. In a sophisticated network, they could serve as energy sources at peak times. They function as electric cars at typical commuting distances (25 km), and gasoline powered beyond that. Even without renewable electricity, the greater efficiency of their electric motors makes them preferable. • It is interesting to note that the combined power of the motor vehicles manufactured annually in North America is of the same order as the power of all the electricity generating stations. • The first plug-in hybrid was reportedly demonstrated by Ferdinand Porsche around 1900. • An excellent energy funding program is operated by the New York State Energy Research and Development Authority (www.nyserda.org). • No need to wait for plug-in hybrids – much can be achieved now, with pure electric vehicles. • Future energy planning requires a systems approach, not simply “favourite” technologies. • Smart meters and rate signals will permit utilities to extend their systems into the energy using sector, allowing them to work with customers on how and when to use energy. Trials have shown that both demand peaks and total energy can be significantly reduced (page 31). J. Western Canada’s GHG Responses – Technology Dr. Robert Evans – Director, Clean Energy Research Centre, University of BC. 1. GHGs in the Developed World • Emissions are directly related to economic output (energy consumption). • Canada is the largest per-capita energy consumer in the world. • 80% of Canada’s energy is from fossil fuels. Gasoline prices hardly affect vehicle use. • Global carbon cycle: Atmosphere = 760 Gt carbon. Fossil fuel emissions = 6.2 Gt/year. Annual atmospheric exchange: Ocean = 90 Gt, 2.3 uptake; Vegetation = 60 Gt, 0.7 uptake. Net addition by fossil fuels = 3.2 Gt/year – apparently small, but sensitive and large effect. • Canada & US emissions are growing at about 2%/year. • Current global energy supply is 80% fossil fuels, 13% renewables, 7% nuclear. 2. The Energy Conversion Chain • Energy Sources – there are 3 basic sources: fossil fuels, nuclear energy, renewable energy. • Processing (into energy carriers) – requires energy & produces emissions. • Energy Carriers – include petroleum products, natural gas, electricity, hydrogen (maybe). • Storage – requires energy. • End Use Conversion (requires energy & produces emissions). • Energy Use – there are 4 basic end-uses: transportation, industry, commercial, residential. • Annual Energy Consumption in USA: (approx.) 100 Exajoules (10^18) = 30 billion MWh. Sources (100 EJ): petroleum 40, coal 24, natural gas 24, nuclear 8, renewable 4. Gross Energy (100 EJ): residential/commercial 40, industrial 28, transportation 32. Useful Energy (40 EJ): residential/commercial 17, industrial 17, transportation 6, loss 60. Electricity: input 40 EJ, distributed 12.5 EJ . 3. The GHG Reduction Challenge • Transportation is the biggest challenge – it accounts for 28% (USA) of primary energy, but only 5.6% (one fifth) is “useful” – clearly, huge inefficiencies exist in the energy conversion chain. • Almost all electricity in BC is renewable hydro power, so there is no GHG impact. • The priority in BC must be to reduce emissions from all the other sectors. PEIA Forum 2007 – Synopsis Page 18 • Could hydrogen be a useful carrier ? No, losses in electrolysis (25%), compression (10%) and fuel cells (50%), result in an overall efficiency of only 34%. • By contrast, electric vehicles with batteries are 90% efficient. • Thus, the battery route requires only 1/3 of the primary energy required by fuel cells. • At present, pure battery vehicles have a limited range – thus hybrids (where the battery is recharged with a small, efficient, liquid fuelled engine) is an improvement. • The plug-in hybrid, recharged from the grid, is the best of both worlds. Studies by EPRI have shown that CO2 emissions per mile are: 420 gms for conventional gasoline vehicles; 300 gms for conventional hybrids with no all-electric range (Prius); 230 gms for plug-ins with 20-mile battery range; and 180 gms for plug-ins with 60-mile range. These figures assume electricity generation by combined-cycle natural gas turbines. • With electricity generated from sustainable sources, as in BC, the figures for plug-ins drop to 140 gms for 20-mile all-electric range, and 55 gms for 60-mile range, representing CO2 reductions of 65% and 87% compared to conventional gasoline powered vehicles. • Clearly, this is the way of the future for transportation, with electricity the carrier. • Electric vehicles (GM’s “Volt”) and plug-in hybrids are on the way. • Switching all transportation to electricity would require doubling the world’s electricity infrastructure. • Reaching the reduction targets will be difficult: - California: By 2020, return to 1990 GHG levels; By 2050, 80% below 1990 levels. - Canada: By 2020, 20 % below 2007 levels; For industry, 18% “intensity” reduction. - BC: By 2020, 10% below 1990 levels – that represents 33% below 2007 levels. 4. Cap & Trade or Carbon Tax ? • In EU, the end of 2007 settlement price for carbon has collapsed from € 20/tonne to € 1. • When the caps and allocations were set, everyone demanded and received a maximum, resulting in a gross over-supply of carbon credits, and collapse of the market. • By contrast, a carbon tax may be more effective, sending a clear signal everyone could see. • A good MIT study estimated the costs of new nuclear power at 7¢/kWh, compared to 4¢ for new pulverized coal. When the study was done, natural gas was in the $4/GJ range. Now it’s double; while volatile, it’s likely to increase, pricing it above coal and nuclear. • For example, with a carbon tax at $100/tonne ($27/tonne CO2), nuclear and coal power would cost the same, and gas more. • Utilities building generation plants would want to know future costs with some certainty, rather than face a carbon market. 5. Primary Energy Mix for the Future • Current world energy consumption is in the order of 12 Gtoe (Giga-tonnes oil equivalent), with oil 30%, gas 23%, coal 23%, renewable 16%, nuclear 8%. • By the end of the century, total energy consumption will double to 25 Gtoe. • A Nuclear & Renewable scenario would suggest an energy mix with: renewable 30%, nuclear 30%, coal 22%, gas 14%, oil 4%. • A Clean Coal scenario would suggest a mix with: coal 48%, renewable 20%, nuclear 14%, gas 14%, oil 4%. This requires reservoirs to permanently store vast volumes of CO2. Most of the energy increase would be from coal, and used in IGCC (Integrated Gasification Combined Cycle) gas turbines. PEIA Forum 2007 – Synopsis Page 19 6. Discussion • The only sensible application now for hydrogen (highest energy/weight) is the Space Shuttle. • Airbus has studied a “Cryoplane” based on A-310, fuelled by liquid hydrogen (also Boeing). Tupolev has tested a TU-155, with one engine fuelled by liquid hydrogen. May make sense. • The problem is the hydrogen (producing it requires much energy), not the fuel cell. Solid oxide fuel cells (operating at high temperatures) can use various hydrocarbon fuels – may be OK. K. Western Canada’s GHG Responses – Efficiency Jim Vanderwal – Manager, Climate Change Program – Fraser Basin Council. 1. Collaborative Models for Energy Efficiency and Emissions Reduction • The Fraser Basin Council is a partnership between government, industry and communities. • They work with local governments, vehicle fleets and others on making immediate, practical starts to improve energy efficiency and emissions locally. • They try to find leaders in different sectors, with whom to build a critical mass for change in specific areas – implementing change with large groups or the general public is difficult. 2. Community Action on Energy Efficiency (CAEE) • Two years ago the new Building Code was published, without energy efficiency standards. • Local governments have no mandate in this area, but can exert influence on development. • Many communities wanted to act, hence CAEE – now there are 30, with a target 55 by 2010. • Municipalities directly account for 7% of GHG emissions, and indirectly for 50%. • Canadians are the world’s 4th highest per capita energy users, spending $4300/capita/year. • Buildings account for 27% of energy use in Canada, and 13% of GHG emissions in BC. • The goal is to meet Provincial targets for green buildings. 3. Provincial Building Targets by 2010 • Energuide 80 (equivalent to R-2000) for all new houses – a minimum standard. This reduces energy consumption from 25 MWh/year for conventional construction to 15 MWh/year. • 25% better than MNECB – CBIP (Model National Energy Code for Buildings – Commercial Building Incentive Program) for new commercial buildings. • A 17% reduction in 12% of existing residential housing. • A 14% reduction in 20% of existing commercial buildings. 4. Implementing Energy Efficiency at the Community Level • Starting point is OCP (Official Community Plan) – sets guidelines for community development and land-use; basis for discussion with developers – e.g. amenities in exchange for rezoning. • Energy objectives can be part of OCP – it’s a tool for energy efficiency & emission control. • Other tools include: Comprehensive Development Zoning; Development Permits; Rezoning. • While these cannot require specific energy standards, they afford some discretion over layout, form and orientation of buildings, whereby energy efficiency can be influenced. 5. Examples • City of Richmond specifies sunlight access, north-south spacing, south-orientation of windows. • Burnaby uses UBC’s REAP (Residential Environmental Assessment Program, LEED - based). • Municipalities can exert the greatest influence when there is rezoning. PEIA Forum 2007 – Synopsis Page 20 • Bowen Island’s rezoning policy requires “Built Green – Gold” rating, and Energuide 80. • Some municipalities provide incentives, such as faster processing for green buildings (reducing a typical 1-2 year process by several months) and lower building permit fees. 6. E3 Green Fleet Rating System • North America’s first green rating system for fleets (Energy, Environment, Excellence). • 17 charter members in BC (mostly municipalities), 17,000 vehicles – also beyond BC. • Membership includes: calculators; best practices; information resources; green fuels map. • Fleet Review includes: Fleet assessment; sector benchmarking; scenarios; modelling; advice. • Green Rating includes: Site audit; bronze, silver, gold, platinum ratings. • Calculators include: Life-cycle cost, bio-diesel, hybrid, idling. 7. E3 Fleet Review (3 Reports) & Recommendations • Operational Review – Fuel & emissions performance. • Fleet Asset Profile – Total value, vehicles due for replacement. • Asset Management – Operating costs, down time, costs by age, exception report (vehicles above & below average), utilization, benchmark comparisons. • E3 recommendations provide a roadmap for greening cost effectively. • They match vehicles to requirements & assess adequacy of vehicle age, technology, capability. • Point to operational improvements: idling, driver behaviour, vehicle sharing, charge-backs. • Evaluate alternative fleet composition & fleet utilization scenarios. • Typical 15% per year gain (fuel efficiency, GHG, operating costs), before bio-diesel & hybrids. L. Western Canada’s GHG Responses – Lifestyle Deborah Jones – Journalist, Contributor to Globe & Mail. 1. Personal Experience & Progress • Contributor to recent Globe & Mail’s recent “carbon coach” series. • The average Canadian emits about 5 tonnes of carbon per year. • Her family’s footprint 5 years ago was 22 tonnes/year, while living in Whistler, BC – 2 cars, lot of driving to work & children. • Moved to Vancouver. For a while no car – car rentals were much cheaper than car co-op. • With 1 small car, family emitted 11 tonnes/year. • Did many small things: bought bulk to minimize packaging, walked or used transit if possible, composting, air-dried laundry. 2. Behavioural Challenges & Steps Back • Difficult to persuade people to change – the SUV habit, drivers opposing bike lanes. • Family (parents, two sons) has regressed, flying frequently. Footprint is now 47 tonnes/year. • That trumps all their small efforts. • Carbon offsets are dubious – not flying is a definite benefit. • Changing our consumption habits and choices is the big challenge. • The hard reality is that we must cut back on the way we live. • The Stern Report (Sir Nicholas Stern – The Economics of Climate Change) found that GHG reduction will, in time, produce economic benefit. • Political leadership and public awareness and responsibility are the requirements. PEIA Forum 2007 – Synopsis Page 21 3. Discussion • Huge deficit of scientific literacy in the media, and the media don’t do complex issues well. It’s important for readers to write letters to the editor, challenging errors. Avoid junk media, buy good newspapers. • In addition to technical energy/GHG systems, there is the critical system of individual choice. • The “rebound effect” in behaviour must be considered – people comply, and then “snap back”. M. Next Steps – GHG Reductions & Impacts: Dr. Roger Gale – President & CEO, GF Energy LLC, Washington, DC. 1. “Take-Aways” from Forum 2007 • This time, it’s for real … there have been many false starts on climate & energy efficiency. • Demand-side management in early 1990’s did not work as intended, so there was skepticism. • A lot has been done, although not enough. • Certainty is needed to make long-overdue capital investments … 150 coal, and 17 nuclear plants are on the books in North America … a credit system is needed to make them viable. • A dramatic maturation of technology now makes possible advances proposed in the past. • EU and Japan have made huge commitments … problems initially, step two greatly improved. • The “taming the wilderness cowboy mentality” is over, and we’re in a period of stewardship. • Thinking & acting regionally … RGGI in east, WCI in west, EU in Europe. • This Forum is a good example of regional, cross boundary cooperation … a dramatic change … boundaries are not visible from he air. 2. Reflections on Electricity • Electricity is still sold on a “push” basis ... elsewhere customer “pull” is making demands. • It’s one of the few industries where customers have no impact ... they pay the bills, but are irrelevant players who have no input or understanding of how much they are using, why, and what they can do about it. • This is beginning to change. In 10 years, customers will have highly automated, real-time ability to control usage and be socially responsible. • For example, ATT offers a Remote Monitor, starting at $9.95/momth, whereby temperatures, thermostats, lights, appliances can be controlled, usage monitored … plus video surveillance. • Annual survey of utility CEOs (US & Canadian) shows them convinced that such progress will happen. GF Energy – 2007 Electricity Outlook www.gfenergy.com. 3. Action – Four Streams Highlighted • Set goals – all jurisdictions in the west have done that ... cuts within specified time frames. • Mandate specific cuts – most US states have done that … low-carbon vehicles, ban coal … Oregon has long list of specific actions, companies like S-Cal Edison take corporate action. • Efficiency initiatives – NA is most energy wasteful continent & proud of it. Utilities realize they must educate customers to be more responsible for their energy use & reduce demand. • Tax tools – CEOs would say “carbon tax”, it’s simpler than cap & trade; however, nothing happens if the tax is not high enough, and politically it’s a problem. Tax credits (e.g. OR) are important tools to change behaviour and foster new technology. • There are no silver bullets, only silver pellets. There must be a large combination of efforts. PEIA Forum 2007 – Synopsis Page 22 • Not much linkage between state/province levels & local communities. Many communities are creative and could be models for others. • Are more large, base-load plants really necessary? Or, could that stage be skipped by moving to a distributed world with efficiency, real-time energy management and smart technology. There is a contradiction between asking people to be green, and building large new plants. 4. Kyoto • Didn’t work the first time, nobody will meet first targets (maybe Denmark, Luxemburg). • In moving ahead the second time, see what did not work at first. • Post Kyoto (2009-2014), a practical reality is whether US/Canada will start to move without a global process. It’s a further dimension to get trading not only provincially or nationally, but with US and globally. Much has to be done at the inter-government level to get this right. • Those opposed will talk about negative competitive effects: “why penalize our local economy, if China & India don’t have to do anything”. 5. Trade & Customer Behaviour • Trading is dandy, but cuts are better. Trading may be OK initially, but it avoids the hard stuff. • There is a “PR trading world”, where nothing really happens. While effective trading does exist and can make a real difference, trading tends to have a “buy some time” aspect, whereby there is no change in behaviour. • Ultimately there must be real cuts to reduce emissions, particularly cars and power plants. • There is a limit to what utilities can do, without customers changing their lifestyles. • Per capita energy consumption in NA is 3 times that in Japan, but people are not happier. • Dynamic pricing works and changes behaviour, but is not being done. In US, half of energy management functions available 10 years ago (dynamic pricing) have been lost because of competition (flat rate). No incentive to change behaviour, even with dynamic pricing, because no real-time information is provided – bills arrive a month later, and are unreadable. • Many places now have traffic tolls, which change at different times of day, to control peaks. • In France, EDF’s Tempo system: 10x higher peak rate is preceded by warning signals. 6. Nuclear Question • None likely in BC or NW – 17 are planned in SE USA, where global warming is not an issue. So, ironically, those who don’t care may actually do the most to reduce total emissions. • Nuclear plants will be built, and the waste problem must be solved. 7. Focus on British Columbia • BC appears to do well because of its clean hydro power, but its energy consumption is high. • However, energy prices are too low to encourage anyone to reduce demand. Pricing electricity at 6¢/kWh is not a great way to make things happen. • The challenge is to find ways to motivate people to reduce their energy consumption. • Customers have to be involved, given the tools and the data, and shown how to do it. • It has been shown that providing customers with digital tools to monitor and control energy usage (“demand response”) is highly effective – see www.galvinpower.org. • Ambitious commitments have been made in BC, but little is in place to make things happen. • The main focus in BC has to be on transportation. Everything else is very diffuse and must be tackled in a decentralized, incremental way. It’s easier to make cuts in non-BC markets, where electricity production typically accounts for 40-50% of emissions. PEIA Forum 2007 – Synopsis Page 23 • There are no stakeholder processes in BC – that’s done well in California (starting in Ontario). The process is time consuming but effective. • Workshops such as Forum 2007, focused on particular sectors like transportation, electricity, communities, could be effective to secure buy-in and commitment. ____________________________ PEIA Forum 2007 – Synopsis Page 24 PEIA Forum 2007 – Dinner Guest List – www.peia.biz Adapting & Applying California’s GHG Strategies in BC & Canada 6:30 pm, Sunday, April 29, 2007 Royal Vancouver Yacht Club Vancouver, Canada Guests of Honour • The Honourable Gordon Campbell – Premier of British Columbia • The Honourable John Baird – Minister of the Environment, Canada • James Kusie – Legislative Assistant to the Minister of the Environment, Canada • Jessica O’Connor – Special Assistant to the Premier of British Columbia Invited Speakers – USA • Dan Skopec – Undersecretary, California Environmental Protection Agency • Gene Rodrigues – Director, Energy Efficiency, Southern California Edison • Michael Grainey – Director, Oregon Department of Energy • Jay Manning – Director, Washington State Department of Ecology • Janice Adair – Executive Assistant to the Director, Washington State Dept. of Ecology • Roger Gale – President & CEO, GF Energy Inc., Washington, DC Invited Speakers – Canada • Dr. John MacDonald, OC – President & CEO, Day4 Energy Inc. • Dr. Robert Evans – Director, Clean Energy Research Centre, University of BC • Janet Benjamin – Principal, RIX Communications • Deborah Jones – Journalist, Globe & Mail Contributor • Jim Vanderwal – Program Manager, Fraser Basin Council Special Guests • Bob Elton – President & CEO, BC Hydro • Bev Van Ruyven – Executive Vice-President, Customer Care & Conservation, BC Hydro • Jan Marston – Vice President, Gas Supply, Terasen Gas Inc. • Douglas Stout – Vice President, Marketing & Business Development, Terasen Gas Inc. • Chris Ryan – Executive Director, Pacific: Industrial Research Assistance Program, NRC • Cam Cathcart – Journalist PEIA Directors • Alex Tunner – President • Conrad Guelke – Forum Chair • Bruce Vernon – Vice President • Penny Cochrane – Past President • Gerhard Van Aswegen – Treasurer • Stephen Hall – Director • Paul Willis – Director • Helmut Urhahn – Director • Terry Wong – Director PEIA Forum 2007 – Synopsis Page 25 PEIA Forum 2007 – www.peia.biz Adapting & Applying California’s GHG Strategies in BC & Canada April 30, 2007 The Vancouver Club Vancouver, Canada BACKGROUND NOTES The purpose of these Notes is to provide some background information relevant to PEIA Forum 2007. The intent is to stimulate the thinking of participants in advance, by providing examples of: • Energy/GHG Strategies & Activities; • Energy//GHG Control Programs that Work. 1. Energy/GHG Strategies & Activities Strategies and actions now being adopted in various jurisdictions can point the way to move forward quickly and confidently on energy/GHG control. The following are some examples. British Columbia The BC Energy Plan sets out a strategy for reducing greenhouse gas emissions and for providing a secure, reliable supply of clean energy in the near term. It is organized under four headings, and selected highlights are shown below. Environment • Zero net GHG emissions from new electricity generation projects. • Zero net GHG emissions from existing thermal generation by 2016. • Eliminate routine flaring at oil and gas facilities by 2016 (50% by 2011). Conservation & Efficiency • Acquire 50% of incremental electricity needs through conservation. • Implement energy efficient building standards by 2010. Energy Security • Achieve electricity self-sufficiency by 2016. • Maintain public ownership of BC Hydro and BC Transmission Corp. Innovation • Maximize renewable energy opportunities via the BC Bio-Energy Strategy. • Establish an Innovative Clean Energy Fund of $25 million. PEIA Forum 2007 – Synopsis Page 26 The Speech from the Throne stated that “The science is clear ... it leaves no room for procrastination. Global warming is real.” It outlined ambitious GHG and energy targets for British Columbia: • Reduce GHG emissions by at least 33% below current levels by 2020, which will place emissions 10% below 1990 levels. • Enact new vehicle emission standards to reduce CO2 by 30%. • Achieve electricity self-sufficiency by 2016. • Require all new and existing electricity generation to have net zero GHG emissions by 2016. Canada The Federal Government has recently established EcoTrust Canada with $1.5 Billion in new funding, to assist each province in implementing energy efficiency and clean air programs. BC will receive $200 million, largely to create a Hydrogen Highway. That is an integral part of BC’s Fuel Cell Strategy, aimed at making the province a leader in the hydrogen economy by 2020. California The Global Warming Solutions Act (AB 32, 2006) recognized that GHG emissions must be greatly reduced worldwide to prevent the most devastating consequences of global warming. California is the world’s 12th largest source of carbon dioxide, and has the responsibility to do reduce its share of emissions. By doing so, it can lead the USA and the world in developing innovative policies and technologies to avoid the most dangerous consequences of global warming. This legislation requires that: • The state’s GHG emissions be reduced to 2000 levels by 2010 (11% below business as usual), to 1990 levels by 2020 (25% below business as usual) and 80% below 1990 levels by 2050. This will be achieved through an enforceable cap on emissions, to be phased in starting in 2012. • To effectively implement the cap, the California Air Resources Board (CARB) will develop regulations and a mandatory reporting system to track GHG emissions. The Hydrogen Highway Initiative (SB 76, 2005) is contributing to the development of the infrastructure for a hydrogen transportation economy, reducing dependence on foreign oil and improving air quality. California now has some two dozen hydrogen refuelling stations, and another dozen are planned. In January, 2007, Governor Schwarzenegger issued an Executive Order to establish a Low Carbon Fuel Standard to reduce the carbon intensity of passenger vehicle fuels by at least 10% by 2020. PEIA Forum 2007 – Synopsis Page 27 Western Regional Climate Action Initiative (WRCAI) In February, 2007, five western states (Washington, Oregon, California, Arizona and New Mexico) established a regional initiative to reduce GHG emissions and establish a market- based program (such as cap-and-trade) to achieve reductions. It will also develop a GHG registry to enable tracking and management, and promote renewable energy and energy efficiency. BC has just joined WRCAI. Premier Campbell stated that BC is “committed to creating a co-ordinated, integrated, market-based approach to meet our targets and we will work with our partners to develop a sensible, efficient system for registering, trading and purchasing carbon offsets and carbon credits.” Regional Greenhouse Gas Initiative (RGGI) The Regional Greenhouse Gas Initiative is a co-operative effort by eleven Northeast and Mid-Atlantic states to discuss the design of a regional Cap-and-Trade program, initially covering carbon dioxide emissions from electric power plants in the region. Two eastern Canadian provinces are participating as observers. After the Cap-and-Trade program for power plants is implemented, the states may consider expanding RGGI to cover other sources, and GHGs other than carbon dioxide. PEIA Forum 2007 – Synopsis Page 28 2. Energy/GHG Control – Programs that Work The following are examples of successful programs to control energy and greenhouse gases. Demand Side Management Demand Side Management (DSM) refers to a wide range of actions to reduce the demand for electricity (or gas) , or to shift demand from peak to off-peak times. It is an important tool for balancing demand and supply, and for conserving energy and reducing greenhouse gas emissions. Traditionally DSM was driven by utilities as a means of load management. Today it is increasingly finding new applications as an option in energy markets, and as a means of furthering energy efficiency policy. Utilities usually aim to provide sufficient generation to meet the peak system demand. However, this can be costly as may be seen in the typical example below, where the highest 10% of annual peak demand occurs for less than 1% of the time. DSM measures are being increasingly used both to shift peaks (peak power pricing, rescheduling) and to reduce total energy consumption (increased energy efficiency through better product design and through the control of industrial processes and domestic consumption). 2200 A Typical Load Duration Curve 2065 M W 2000 1850 M W 1800 72 hrs 1600 1400 Megawatts 1200 Hours (Nov'00 - Feb'01) 1000 0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 PEIA Forum 2007 – Synopsis Page 29 California has implemented programs for many years to improve energy efficiency. This is clearly seen in the chart below. It shows that per capita electricity consumption in California has remained constant at 7 MWh per capita over the last 30 years, while in the USA overall it has increased by 50% from 8 - 12 MWh per capita. This electrical energy saving is worth over $1000 per year for every family in California. Per Capita Electricity Consumption Source: http://www.eia.doe.gov/emeu/states/sep_use/total/csv/use_csv 14,000 United States 12,000 12,000 California 10,000 kWh/person 8,000 8,000 7,000 6,000 4,000 Californians have a net savings of $1,000/family 2,000 0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 year This result was not accomplished by means of a single “silver bullet,” but rather through many “silver pellets”, such as: • Building Standards – retrofits & new construction, residential & commercial; • Appliance Standards – efficient design (Energy Star), old appliance recycling; • Utility Programs – load management (short term), DSM (long term); • Dynamic Rates – time-of-use pricing, volume-related pricing; • Lifestyle – controllable thermostats, efficient lighting. The chart at the top of Page-28 shows that DSM programs have reduced California’s peak capacity requirements by some 25%, through improved standards for commercial and residential buildings, domestic appliances and efficiency programs implemented by electric utilities. The cost of the latter was about 1% of electricity bills. PEIA Forum 2007 – Synopsis Page 30 Annual Peak Savings from Efficiency Programs and Standards 14,000 ~ 22% of Annual Peak in California in 2003 12,000 10,000 8,000 Utility Efficiency M /year Programs at a cost of W ~1% of electric bill 6,000 4,000 Building Standards 2,000 Appliance Standards 0 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Rosenfeld, 27/09/05, slide 18 The following chart illustrates the large impact pricing can have on peak power demand. It was obtained in a trial involving several thousand residential customers. Source: Response of Residential Customers to Critical Peak Pricing and Time-of-Use Rates during the Summer of 2003 – California Energy Commission Report, September 13, 2004. PEIA Forum 2007 – Synopsis Page 31 3. A Few Facts About British Columbia Electricity BC Hydro is one of North America’s leading providers of clean, renewable (largely hydroelectric) energy. It is BC’s largest electric utility, serving 94% of the population. The following are some performance indicators. • Total generating capacity: 11,500 MW (1,100 MW thermal) • Annual electricity consumption: 55,000 GWh (6,000 GWh imported) • Consumption per residential customer: 11,000 kWh per year • Electricity trade with Alberta & Western US states: 30,000 GWh per year. • BC Hydro’s Power Smart DSM program saves in the order of 2000 GWh/year, corresponding to some 400 MW of generating capacity. Greenhouse Gases BC is fortunate to be able to generate most of its electric power hydro-electrically Greenhouse Gas Emissions in BC 4 4 9 67 Million Tonnes CO2 Equivalent / Year (Percentages) 40 9 Transportation Manufacturing Industries 9 Commercial & Residential Fossil Fuel Industries Fugitive Sources Waste Treatment Electricity & Heat 11 Agriculture 14 PEIA Forum 2007 – Synopsis Page 32 Total Greenhouse Gas Emissions in British Columbia (Megatonnes of CO2 Equivalent) Per Capita Greenhouse Gas Emissions in British Columbia (Tonnes of CO2 Equivalent) ______________________________ PEIA Forum 2007 – Synopsis Page 33