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					   Midwestern Governors’ Association Renewable Energy and Advanced Coal
       Carbon Capture and Sequestration (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
                Encourage Orderly Development of
    RE-5                                                   TBD    TBD   TBD      TBD       TBD       Pending
                Wind Resources
                Encourage a Diversity of Approaches to
    RE-6                                                   TBD    TBD   TBD      TBD       TBD       Pending
                Renewable Electricity Development
                Maximize Electricity Generation from the
    RE-7        Region’s Wind Resources Through            TBD    TBD   TBD      TBD       TBD       Pending
                Demonstration Efforts
                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




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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,
Objectives, and Policy Options,” the ET2050 Forum participant input, and additional
options and ideas generated in the Breakout Groups from the RE/CCS 20-21 May 2008
meeting in Indianapolis.
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 appropriate policies that can overcome existing barriers in the
Midwestern region for the development of renewable electricity generation (REG). There are a
number of barriers to renewable energy use, including poilcy, institutional, and marketing
impediments which are holding back the penetration of renewable energy technologies.
Examples of barriers include lack of sufficient government policy support, lack of information
dissemination and consumer awareness, actual or perceived cost of renewable technology,
difficulties bringing new technologies into traditional utility operation,, inadequate financing
options for renewable energy projects, and others.

Policy Design
Elements for a stable regulatory environment for renewable energy development should
include the following:
1. Enact, where appropriate, or enhance existing state Renewable Energy Standards or
   Renewable Energy Objectives (RES/REO) in the Midwestern Governor’s Association (MGA)
   region to stimulate the development of new renewable electricity generation. Maximize
   cost-effective renewable electricity production in the region and its integration on the grid.
2. Promote a multi-year extension of the federal production tax credit (PTC) for renewable
   energy for up to eight years, effective once the current two-year extension expires on
   December 31, 2008. A longer extension will bring needed industry stability and help
   achieve more development than would otherwise be possible with repeated short-term
   extensions.
3. Promote expansion of federal Clean Renewable Energy Bonds to increase incentives
   available for development of renewable energy projects by entities that cannot utilize the
   PTC effectively, such as tax-exempt electric cooperatives, municipal utilizes, and local and
   tribal governments.
Promote and assess coordination across all states in the region regarding meeting RES/REO
goals. Attention should be devoted to developing a planning process for regional renewable
buildout, including an assessment of ways to improve linkages between renewable-promoting
policies, and the analysis of the effectiveness of various policy mechanisms. An effort is also
needed to expand the Midwest Renewable Energy tracking System (MRETS) throughout the
Midwest region and to integrate it with the various policies to promote renewables. Feed in
tariffs could also be considered.
Goals:
The timing and targets for the penetration of increased levels of renewable energy generation
in the region are as follows:



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   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.
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 that will need 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



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    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 coordination across states and assess policy mechanisms: 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).
        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/REO and other
         financing options for increasing renewable portfolio percentages in each MGA state.
        Factor in technology development and economics in the timeline for RES/REO
         percentage increases as wind storage 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 how subsidies/incentives for oil and gas 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.
   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.



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   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

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).



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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
This option involves the expansion of collaborative regional transmission planning and siting to
enable future development of renewable electricity generation. There are a number of barriers
to regional transmission planning and siting, the most noteworthy being that States 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, closeness 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
renewable resources.

Policy Design
Inter-jurisidictional transmission planning and siting involving state regulators, utilities, regional
transmission organizations, project developers, advocates, and others must be strengthened to
optimize future transmission investments and ensure that the region’s grid infrastructure
enables robust development of renewable electricity generation and ensures broader system
adequacy. In addition, state regulatory commissions need to be empowered to define the
“public interest” more broadly to include regional benefits. Elements for a stable regulatory
environment for regional transmission planning and siting should include the following:
1. State PUCs need to have their authority broadened to include the “public interest” more
   broadly than most current legislative authority. Indiana provides a good example of
   expansion of PUC authority to include “in the public interest” in generation and
   transmission decision.
2. The MGA should encourage inter-jurisdictional transmission planning through the
   Organization of MISO States (OMS). The region must be pushed politically to work together


30 June Draft                                                                                       8
    on planning and cost allocation, with the backing of Federal Energy Regulatory Commission
    (FERC) Order 890, which requires public utility transmission providers to participate in open
    joint transmission planning processes at the local and regional levels.
3. The MGA must also ask utilities to attend these inter-regional planning sessions to resolve
   the East versus West issues. It must support national regional planning standardization and
   utilize the National Association of Regulatory Utility Commissions (NARUC) to resolve
   regional planning and cost-allocation issues.
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 chose 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


30 June Draft                                                                                    9
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 cost. If decision is for 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.
   Recent MISO analyses of cost sharing: MISO will release a study in early 2009 for a 20% wind
    footprint within MISO. MISO’s current cost sharing requirement for transmission expansion
    (80% developer/20% MISO) needs to be looked at to put more share on MISO and less on
    developers. 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 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
   Potential state/federal jurisdictional constraints: It is important to acknowledge potential
    limitations under Federal Energy Regulatory Commission (FERC) rules and regulations on the
    ability of MISO and states to move ahead on potential regional transmission solutions for
    increased RE goals and timelines.
   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.



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



Policy Description
The electric transmission grid in the Midwestern region has a critical need for expansion that
keep pace with renewable energy targets. Wind energy production in remote areas of the
region has increased significantly over the past few years, putting heavy demands on the
transmission systems that deliver electricity from the best resource locations in remote areas to
where it will be used in urban areas.
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.
Incorporating transmission development requirements into existing state renewable energy
objectives and standards attempts to solve this dilemma. Through a focus on long-term
planning that links renewable generation targets with transmission requirements, this policy
aims to meet transmission needs by providing for electricity transmission to wind-rich areas in
advance of wind farm development.

Policy Design
Given the potential mismatch in timing between rapid wind farm development and the much
longer time required to study, approve, and construct electric transmission lines, adequate
transmission needs to be coordinated with state renewable energy standards and objectives.
States should include transmission planning and construction incentives alongside
requirements to meet state renewable energy obligations. 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.
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


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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.
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 regulatory framework is the
   develop 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 adding regional transmission costs to overall MISO transmission rate to spread
         them to all customers.
        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) for different cost sharing of new
         transmission- 50/50 or 100% by ITC.
        Review and assess different cost sharing schemes for network connection transmission
         vs. regional transmission.

Related Policies/Programs in Place
Texas and Colorado 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



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    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.

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                                                                                   14
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
This policy option is very similar to RE-2 (Expand Collaborative Regional Transmission Planning
and Siting) and could be incorporated as subset of #2. However, its focus is more short term
addressing changes that are more easily implemented. The policy involves pursuing a 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. 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.

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 mutli-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
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


30 June Draft                                                                                 17
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                                                                                  18
                RE-5: Encourage Orderly Development of Wind Resources



Policy Description
This policy focuses on the development and implementation of comprehensive siting principles
and policies for wind farms 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 must be deployed with a clear
awareness of the need for appropriate siting that takes into account ecological, scenic, cultural,
and other concerns. In some parts of the Midwest, local opposition to wind farm construction
already presents a barrier to development of the resource. Crafting adequate and consistent
state siting policies and procedures should be done cooperatively and inter-jurisdictionally to
ensure that wind development proceeds in ways that foster long-term public support for the
industry and that avoid pitting states against one another or impeding a regional approach to
wind development. Development of a model citing ordinance including best practices and
principles would be helpful in promoting wind resources and could lead to more rational
development. [ NWCC and/or MN references] This should also address the critical ecological
issues.


Goals: Develop a model rule specifying state of the art principles and policies for wind farms.
[Need specificity and mechanisms to encourage the development of wind. Could be regulatory
and/or institutional ones but quantitative and specific in terms of MW hours and tons of carbon
removed to the extent possible. Discussion of deliverables would go under implementation
mechanisms, etc.]
Timing: to be determined
Parties Involved: to be determined

Implementation Mechanisms
Complete a survey of available policies and principles currently in use for citing socially and
environmentally acceptable wind farm citing as a starting point for a regional policy
development project. Identify additional major implementation mechanisms.

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




30 June Draft                                                                                     19
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.




30 June Draft                                                                                  20
         RE-6: Encourage a Diversity of Approaches to Renewable Electricity
                                   Development



Policy Description
This policy option focuses on encouraging a diversity of approaches to renewable electricity
development, including projects that have significant components of local 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.

Policy Design
Policymakers should evaluate the experience with local ownership incentives in Minnesota,
Iowa, and elsewhere and consider further measures 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 in the marketplace and
avoid creating barriers to achieving significant levels of 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                                                                                  21
       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 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.


30 June Draft                                                                                 22
   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                                                                                  23
RE-7: Maximize Electricity Generation from the Region’s Wind Resources through
                             Demonstration Efforts



Policy Description
This policy focuses on demonstrating technology, engineering and operating strategies for
maximizing 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 efforts. Such demonstration efforts should take of form of small-scale
pilot projects focusing on the following:
   Applying the findings of wind integration studies, such as the 2006 Minnesota Wind
    Integration Study. (These studies show that higher percentages of wind power can be
    incorporated reliably into the electric power system given the Midwest’s tremendous wind
    resource.)
   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 require bulk transmission and 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. [group goals by type/size/number for demonstration projects]


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 forecast wind for use by operations
      centers in estimating the next days expected wind generation.


30 June Draft                                                                                 24
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                                                                                  25
Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.




30 June Draft                                                               26
      RE-8: Attract Renewable Energy Component Manufacturers and Service
                             Providers to the Region



Policy Description
This option focuses on the development of economic incentives and workforce development
policies to attract renewable energy component manufacturers and service providers to the
region. Every day in the Midwest, jobs are lost due to the declining manufacturing industry in
the Midwest. This option will showcase the positive impact that the region’s renewable energy
resource can have on the job market by creating manufacturing jobs in this industry.
Moreover, States 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. This is particularly important should the PTC not be available. A long term
extension of the PTC would help support manufacturers building facilities in the region.

Policy Design
This option takes steps to integrate state economic development and workforce development
programs and incentives into renewable energy development policies and strategies with the
goal of attracting manufacturers and service providers, both for regional economic benefit and
to stem the rising capital and labor costs associated with all energy projects. The Midwest
already benefits, for example, from the presence of major wind turbine blade and tower
manufacturers, turbine assembly operations, engineering and wind farm construction firms,
and operations and maintenance providers whose commercial success extends well beyond the
region. Creating more opportunities for utilities to build renewable energy should lead to the
creation of more jobs in the Midwest. The timing for European investment is good, as the
exchange rate is in the Euro’s favor.
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.


30 June Draft                                                                               27
   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.
   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.
   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.
   Investigate opportunities for business development based on manufacture of renewable
    energy component parts to include an inventory of potentially important component parts.
   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 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.




30 June Draft                                                                                 28
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                                                                                  29
 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/provincial and multi-jurisdictional
carbon capture and storage infrastructure for management of captured CO2 through enhanced
oil recovery and deep saline aquifer storage.

Policy Design
Goals: This options aims to support development of a CO2 management infrastructure and
demonstration and commercialization of large-scale geologic carbon storage projects that 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 a commercial
practice in the United States today. DOE estimates of CO2 storage capacity in oil and gas
formations suggest the ability to store at least two decades worth of U.S. stationary source
emissions, while extending oil production from depleted domestic oil reserves. Deep saline
aquifers also provide an important potential storage option. Storage over a much longer time
scale will require demonstration of the cost-effectiveness and reliability of CO2 storage in deep
saline aquifer formations, which has yet to be accomplished at commercial scale. Consideration
should also be given to the potential use of thin coal beds for storage.
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 permanent geologic storage of CO2, provides regulators and
    industry clear direction with regards to CO2 capture, injection, monitoring, 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.
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:
   Consideration of an infrastructure buildout that extends beyond the MGA region.
   Develop a report that quantifies the costs and benefits 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                                                                                  30
   Conduct a state-by-state inventory of Partnership member’s regulations governing or
    potentially relating to CO2 capture, compression, pipeline transportation, 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 storage, measurement,
    monitoring, 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 CO2 pipeline network buildout using 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, including projects that use captured CO2 for EOR. 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 the CO2 storage potential and feasibility. Governments should build on work of
    the U.S. DOE-funded regional sequestration partnerships to complete comprehensive, basin-
    level geologic assessments of storage potential and CO2 injection rates. 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. Detailed, accurate mapping of lesser
    known potential reservoirs for CCS will require continued federal and state investment.
   Fund sufficient large-scale geologic storage 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 large-scale 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 formation types, including reservoirs other than oil and gas bearing formations, and
    produce guidelines for appropriate measuring, monitoring and verification.


30 June Draft                                                                                 31
   Evaluate the feasibility of CO2 transport and “advanced sequestration” options for
    jurisdictions without documented geologic storage potential, such as Minnesota and
    Wisconsin. This includes evaluating the cost and feasibility of CO2 pipelines to geologically
    appropriate areas in neighboring states, CO2 storage in nontraditional geologic formations
    and advanced sequestration options, such as mineralization, the use of carbon nano-fibers
    or algae.
   Consider the use of transported synthetic natural gas to areas where near term carbon
    storage options are not available. This could also allow better use of peaking/intermediate
    generating capacity and complement the expanded development of wind power.


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.

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.


30 June Draft                                                                                 32
   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                                                                                  33
      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 producing zero CO2 emissions,
while producing energy that is both affordable and reliable. Given the region’s vast base of
energy resources, ingenuity and manufacturing prowess, it 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 sequestration (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 or
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:




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The timing and targets for the penetration of power generation with CCS in the region are as
follows:
   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


30 June Draft                                                                                     35
    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
    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                                                                                    36
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                                                                                  37

				
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Description: Reo Bulk Sales Investor Profile document sample