CLIMATE CHANGE REGULATION IN CALIFORNIA

NCSL Summer Energy Outlook Conference – 4-22-08

Denver, CO

OUTLINE

• The GhG Issue• California Policy Landscape• Utility/SMUD Reduction Options

– Carbon Sequestration & Offsets– Energy Efficiency– RD&D– Renewables

THE GHG ISSUE

• Citizens Believe Global Warming is Happening & Will Get Worse in Future

• Numerous Scientific Studies, IPCC Reports• Federal Legislation Developing • Other States Taking Action, e.g., RGGI• Many California Scientific & Policy

Reports

THE GHG ISSUE

4.4 – 5.8 ºC

(8-10.4 ºF)

1.7 -3.0 ºC

(3.0-5.4 ºF)

Higher Emissions

A1fi(970 ppm)

LowerEmissions

B1

(550 ppm)

Medium-High Emissions

A2(830 ppm)

90% loss in Sierra snow pack55-75 cm (22-30 inches) of Sea level rise 3-4 times as many heatwave days in major urban centers2

2.5 times the number critically dry years3

20 % increase in electricity demand4-10 times as many heat-related deaths projected for some urban centers4

Increase in Forest yields not evaluated for this scenario5

Increase in Fire risk not evaluated for this scenario5

Increase in days meteorologically conducive to ozone formation5

70- 80 % loss in Sierra snow pack35-55 cm (14-22 inches) of Sea level rise 1-2 times as many heatwave days in major urban centers 2.5-5.5 times as many heat-related deaths projected for some urban centers4

75-85% increase in days meteorologically conducive to ozone6

2-2.5 times the number critically dry years3

11% increase in electricity demand30% decrease in forest yields (Pine)55% increase in the expected risk of large fires

3.1 -4.4 ºC

(5.5-7.9 ºF)

30-60 % loss in Sierra snow pack15-35 cm (6-14 inches) of Sea level rise 2-2.5 times as many heatwave days in major urban centers 2-4 times as many heat-related deaths projected for some urban centers4

25-35% increase in days meteorologically conducive to ozone formation 6

Upto 1-1.5 times the number critically dry years3

3- 6 % increase in electricity demand7-14% decrease in forest yields (Pine)10-35% increase in the risk of large fires

Statewide Temperature Rise (ºC)

2070-2099

Emissions Scenarios(End of century Atmospheric C02

Concentration)

•IncreasedTemperatures

•Reduction in Snowpack

•Worsened AirQuality

•Increased Riskof Flooding

Source: California EPA Climate Action Team Report, Figure 4-9, 2006

THE GHG ISSUE

California (left) and US (right) CO2 Emissions in 2006

Transportation 57%

Industry 20%

Commercial 3.4%Residential 7.6%

Electricity 12%

Electricity 28.5%Residential 14.6%

Commercial 12.7%

Industry 20%Transportation 24.2%

Source: DOE EIA 2006 Data

THE GHG ISSUEAverage CO2 Emissions Rates for Various Technologies

0

500

1,000

1,500

2,000

2,500

SMUD y200

5 Gen

eratio

n Avg

Cosumnes

SMUD Cog

ens

Gas P

eake

r

Oil Fire

d Com

bined C

ycle

IGCC w

/o se

questr

ation

Conven

tiona

l Coa

l

lbs

CO

2/M

Wh

Gas Combined Cycle

GHG 2020 & 2050 GOALS• 80% Reduction below state’s 1990 levels (2050)• Based on Climate Change Science

Comparison of Emissions Output Rates

0

200

400

600

800

1000

1200

1400

1600

US 2004Avg Emis

Rate

2004 CAAvg Emis

Rate

SMUD FossilEmis Rate

SMUD TotalEmis Rate

ExpectedTarget 2020

CA Rate

ExpectedTarget 2050

CA Rate

Emis

sion

s Rat

e (lb

sCO2/

MW

h)

CALIFORNIA POLICY

• Governor’s Executive Order (2005) – 1990 Levels by 2020; 80% below 1990 by 2050

• SB 1368 - CO2 Limit for Utility Investments in Baseload PPs (2006)

• SB 1078 & SB 107 – Renewables Portfolio Standard (RPS) (2006)

• AB 2021 – Energy Efficiency Standard (2006)

CALIFORNIA POLICY

• AB 32 (2006)– 1990 Levels by 2020 (29% less than BAU)– California Air Resources Board = Lead Agency– Direct Regulations - - Multi Sector– Market-based Cap and Trade– CEC&CPUC Recommendations- Utility Sector– CARB Adoption: 2008 = Scoping Plan; 2011 =

Comprehensive GhG Regs; 2012 = Enforceable

REDUCTION OPTIONS

• Carbon Sequestration– Permanent Storage in Spent Gas/Oil Wells,

EOR, Deep Saline Aquifers, Deep Ocean– Performance? Cost?

• Offsets– Preserve a Forest & Get Credit for Emissions– What will be Eligible & How Much Credit???

ENERGY EFFICIENCY

• SMUD’s Board adopted most aggressive energy efficiency goals in CA – 15% over ten years

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total10-Yr Avg

GWh 70 107 145 196 200 205 209 213 217 222 226 1940 194MW 18 28 40 58 59 60 62 63 64 66 67 568 57Budget ($millions) $ 25 $ 34 $ 40 $ 45 $ 45 $ 46 $ 46 $ 47 $ 48 $ 49 $ 50 $ 450 45$ The 10-year goals (2008-2017) were adopted by the SMUD Board of Directors on May 17,2007

10-YEAR ENERGY EFFICIENCY TARGETS ADPOTED BY THE SMUD BOARD OF DIRECTORS

ENERGY EFFICIENCY

• SMUD Residential Programs- Residential Services- Equipment Efficiency- Appliance Efficiency- Solar DHW- Shade Trees- New Construction - - Energy Star Lighting, Pool & Spa Efficiency

ENERGY EFICIENCY

• SMUD Commercial/Industrial• New Construction (Savings By Design)• Retrofit Programs

– Lighting and HVAC rebates– Small C/I HVAC Tune-Up– Retrocommissioning– Building Operator Certification– Process/industrial rebates

ENERGY EFFICIENCY

• SMUD Energy Efficiency Loans Program Averages $25 - 30 million in loans per year– 4000 - 5000 loans/yr– 99% residential

• $42 million portfolio• 7 ½% interest rate• Terms up to 10 years• Program has operated for 28 years• $389 million over life of program• 127,500 loans

ENERGY EFFICIENCY

• SMUD LOCAL GOVT. PROGRAM - 7 local governments: 6 cities & County of Sacramento

• Incorporate energy efficiency in general plans and developer agreements

• Eliminate permit fees for retrofit photovoltaic installations, Streamline application process, over the counter review, & final inspection in 24 hours

• Started the Build It Green Public Agency Council with local city managers, building officials, planning directors

ENERGY EFFICIENCY

•CHP - SMUD JPAs Owns3 Large Cogen Plants•DG Cooling Heating & Power•Current Program

–Define Market, Feasibility Studies,– Own/Operate or Provide Incentives?-Railyards, Blue Diamond, Airport -Terminal B Rebuild, Others

Fuel Cell Energy 300 kW MCFC

Capstone 30 kW Microturbine

8,964 homes

1,000 hotel rooms

1,370,000 ft2 retail

1.478,000 ft2 office

416,690 ft2 Historical

EFFICIENCY RD&D

• Emerging Technologies Focus

• Demand Side

SUPPLY SIDE RD&D • Supply Side

RD&D - LANDFILLS

•Problems –10-40% of methane produced at a landfill (with collection) is lost –Smaller landfills are not required to collect gas and release all their gas to atmosphere

•Opportunities–Controlled “bioreactor” landfills capture 95% of methane–New landfills are difficult to site - diverting organic wastes from landfills can extend their life

RD&D - BIOGAS PRODUCTION

0

1

2

3

4

5

6

7

8

9

10

0 5 10 15 20 25 30

Anaerobic Bioreactor Landfill

Conventional Landfill

Time (Years)

Rel

ativ

e G

ener

atio

n R

ate

RENEWABLE ENERGY

Green Pricing Program (97) called Greenergy + RPS (2001)

Renewable Energy

Programs

2007 Supply Goal

2007 Actual

Supply* (Estimate)

2011 Supply Goal

RPS 12% 14.6% 20%Greenergy 2.2% 2.2% 3%Total 14.2% 16.8% 23%* Accounts for sales of surplus RECs in 2007. The final percentage could be lower due to sale of addtitional RECs.

SMUD's RENEWABLE ENERGY MIX 2007

TOTAL BIOMASS45%

TOTAL GEOTHERMAL22%

TOTAL WIND27%

TOTAL SMALL HYDRO6%

TOTAL PV< 1%

SMUD's Renewable Energy Supply(As of March 18, 2008)

1419 17

35

2445

2239

2019

1910

1800

1800

1735

874

618

552

487

487

487

0

500

1000

1500

2000

2500

3000

3500

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Year

Ren

ewab

le E

nerg

y (G

Wh)

Renew ables Demand Reduction due to Board EE TargetENERGY NEEDED TO MEET GOAL (w ith Board EE Target)SB-1 Estimated Solar Energy to be Added to SMUD's RPSSolano Wind 3 (128 MW @ 35% CF = 392 GWh)EXISTING RENEWABLESGoal (w ith Board EE Target)Goal (w ithout Board EE Target)

RENEWABLES PV

FLAT PLATE

RENEWABLE ENERGY

•SMUD Solar Program – 25 yrs = 11 MW; 125 MW Goal Next 10 yrs. New Homes = Solar Smart•Builders include: Lennar Homes, Tim Lewis Communities, Homes by Towne, Centex Homes, DR Horton and Standard Pacific Homes.•Combines energy efficiency with integrated PV•Over 4,000 homes either approved or in the approval process

RENEWABLE ENERGY

SMUD RENEWABLESSMUD-Owned Solano Wind Project

RENEWABLE ENERGY

• Solano 102 MW Build-Out Completed– Land Purchase = another +128 MW by 2011

• Preparing for Future Growth– Wind Integration Study

• How much intermittency for a small control area? Operating impacts? Balancing generation costs?

– Evaluating New Wind Sites & Transmission

RENEWABLE ENERGY

RENEWABLE ENERGY

• SMUD Local Problem Wastes to Green Electricity• Board Emphasizes Local Environmental Benefits

Over Global Benefits• SMUD Renewables in Service Territory = Solar

and Biomass• How Does Society Currently Dispose of Wastes?• Can Local “Problem” Wastes be Converted to

Electricity & Mitigate Problem? YES!!!

TARGETED LOCAL WASTES/PROBLEMS

++++Fuel-Loaded Forests

+++++Landfills

++++Food Waste

+++Grease Waste

++++Dairy Waste

Other

OdorWaterQual.

Local AQ

GhG

RENEWABLES ANAEROBIC DIGEST.

Dranco - OWS

W. Sac. WWTPRCM Covered Lagoon

RENEWABLES - DIGESTERS

• 2 Dairy Digesters in S. Sac in Next Year

• USDA, CEC, SMUD Providing Incentives– Net Metered

• 1 Lagoon; 1 Complete Mix Digester

• Regulatory Issues

RENEWABLES - DIGESTERS

• Dairy Environmental Benefits Location of

Dairy

Number of Animals

*Total VOC Reduction (Lbs/Year)

**Methane Reduction

(Tons/Year)

CO2 Equivalent (Ton/Year)

Elk Grove 1,435 8,565 534 11,738

Galt #1 1,100 6,426 172 3,776

Galt #2 1,020 6,075 204 4,489

TOTAL 3,555 21,066 910 20,003

**Assuming the biogas produced contains 60% methane

*Based on SMAQMD Title V Emissions estimate; VOC reduction from the dairy planning addition of food waste, is based on manure only.

RENEWABLES-GREASE WASTE

• Benefits of approach– Existing excess capacity– Technically proven with

grease and food waste– Existing permits– Existing trained personnel– Existing use for biogas at

Carson Energy cogen

• Project status– SMUD sponsored

feasibility study in progressSac Regional Wastewater Plant

RENEWABLES - GREASE WASTE

Avg. Daily Gas Production

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Mar 06 Apr 06 May 06 June 06 July 06

Month/yr

Cub

ic F

eet o

f Gas

Dig#1Dig#2

City of Riverside –Grease to Digester Tests

RENEWABLES-FOOD WASTE

• S.F. Food Collection Program

• SMUD/UCD Survey –“Leftovers to Lights”

• Add to Sac RWTP• Distributed Digesters

– Tollenaar Dairy– Folsom Prison Demo