What Do You Mean by Green?

Deck: 

Seemingly eco-friendly definitions can prevent adoption of renewable portfolio standards.

Fortnightly Magazine - October 1 2003

The recent failure of H.B. 2200 in Illinois, which would have established mandatory renewable portfolio standards (RPS) for electric energy suppliers, can be attributed to a failure to achieve agreement on workable definitions of "green." Flawed conceptions of "green" in Illinois and elsewhere have undermined the broad-based progress toward environmentally compatible energy sources that green and renewable energy proponents claim to seek.

The two most often stated goals of advocates for green and renewable energy are the lowering of energy-related emissions and the avoidance of resources that disrupt the environment. The case of Illinois shows how seemingly eco-friendly definitions of green can actually prevent adoption of RPS.

For the RPS debate to move beyond the ideological and toward policies that actually can be implemented, a new framework is needed that will provide a solid foundation for policy debate. First, categorizations of green should be oriented toward reducing effluents from generating facilities and using more restorable resources as fuel. A working definition would define low-emission energy as electricity generated at facilities plants that emit below a certain cap of CO2, NOX, and SO2 per kilowatt of average capacity. Second, renewable resources would be defined as those that are sustainably self-replenishing or otherwise non-extractive. Green energy, therefore, could be that generated with renewable resources or at power plants that, while perhaps not using renewable resources, would nonetheless result in emissions lower than some set standard.

The rub may come when a renewable resource causes emissions above the cap. This problem has been treated as a definitional question but is actually better handled as an implementation issue.

The framework proposed here recognizes the importance of both fuel and method of generation without linking them, leading to a net decrease in pollution and fossil fuel use. This approach also rewards technological advances and individual high-quality plants by anticipating that new fuels and generation technologies may arrive on the market. Over time, policy-makers could lower the caps for CO2, SO2, and NOX, and the list of pollutants could change as researchers better understand the effects of effluents.

Table 1 - Illinois Gen Capacity

One particularly useful application of this definition is with emission trading. The Illinois Environmental Protection Agency could accept and retire a certain number of CO2, SO2, and NOX credits in exchange for the certified labeling of additional kilowatt-hours of production as green. This green energy would have the same regulatory attributes as traditional green power: counting toward an RPS or selling at a green premium. This opens a new market for emissions credits, a compliance method that has proven its value. Public and private institutions (such as the Chicago Climate Exchange) are already emerging that could facilitate this future market.

It may not be obvious that the proposed definitional framework for the green debate is warranted. The recent Illinois experience helps to make the case. Illinois H.B. 2200 would have established an impossible-to-fulfill RPS. It mandated an RPS of 2 percent of all kilowatt-hours sold in 2005, 5 percent in 2010, 15 percent in 2020, and a number of smaller steps in between.1 The bill defined "renewable energy resources" as:

Wind, solar thermal energy, photovoltaic cells and panels, dedicated crops grown for energy production and organic waste biomass, hydropower that does not involve new construction or significant expansion of hydropower dams, and other such alternative sources of environmentally preferable energy.2

The definition goes on to identify resources not deemed renewable, most notably waste wood and municipal waste. The bill requires that all power counting toward the RPS must have been generated in Illinois. The problem is that such a restrictive definition makes it extremely unlikely that the RPS goals of the legislation's advocates could be achieved. The numbers tell the tale.

Table 2 - The RPS

Illinois generated 177,447,035 MWh of electrical energy in 2000. The figure for 20033 is probably larger, but this example will use the 2000 figures and not assume any growth in load. To satisfy the RPS in 2005, Illinois would need to domestically generate more than 3,500,000 MWh (about 403 MW of average capacity) of energy from renewable fuels in 2005. By 2010 and 2020, that number would increase to more than 8,800,000 MWh (1,008 MW) and 26,600,000 MWh (3,023 MW), respectively. Because these figures assume no growth, the actual need likely will be greater. In reality, any percentage increase in Illinois' total generation would induce the same percentage increase in required renewable-based generation.

Very little green capacity exists in Illinois. According to the Renewable Electric Plant Information System (REPiS), a national database of renewable-fueled plants run by the U.S. Department of Energy, Illinois had less than 140 MW of installed capacity from renewable power at the end of 2002.4 Almost 75 percent of that comes from landfill gas, about 25 percent from hydroelectric dams, and less than 1 percent from photovoltaic cells.

The room for growth from these fuels is not nearly enough to support the proposed RPS. Neither solar nor geothermal resources in Illinois can support utility-scale projects. New hydroelectric dams do not qualify for the H.B. 2200 RPS, and landfill gas is a useful but limited resource. For the sake of argument, consider the upper bound for average generation from these fuels as about 200 MW by 2020-well short of the 3,023 MW required by that year.

With other resources accounted for, wind-fueled plants must make up the balance. Wind farms in Illinois could realistically achieve up to a 25 percent capacity factor given the lack of winds above class four. Thirty-five percent is the steadfast upper limit, even with any of the technological advances in the near future.5 A liberal estimated range for the necessary wind generation to fulfill the RPS for 2005 is 1,152 to 1,612 MW (35 percent capacity factor to 25 percent capacity factor) of installed capacity. The RPS would continue to increase until 2020, leveling at 8,638-12,093 MW, depending on the average capacity factor.

The massive amount of required wind generation to meet the RPS levels and definitions in the Illinois bill are more than Illinois can be expected to support, leading to an unworkable situation. Illinois can support up to 9,000 MW of installed wind capacity, based on current estimates.6 Including the upper limit of 200 MW of the average capacity of other renewable energy, all 9,000 MW of installed capacity would need to average an almost 32 percent capacity factor. Even with the most generous estimates, the RPS proposed by the Illinois bill remains an impossible dream.

How could an impossible definition for green almost become part of an Illinois mandate? First, in fairness, the definition used in the failed bill was somewhat more inclusive than in RPS legislation in most other states where such issues have been addressed, meaning that most green definitions would make the RPS unreachable. Second, some notions of green serve as a surrogate for other issue agendas.

The desire to fundamentally change the generation system may be driving some conceptions of green to the point of irrelevance. Definitions that include "new renewable/green" clauses seek to forcibly replace installed generation through mandates, regardless of costs or feasibility.

Some of the support for green development comes from developers seeking subsidies for wind, solar, or other projects. The problem is that merely funding specific politically preferred technologies does not address the real green issues efficiently or effectively.

While environmental advocates rightly address emissions from coal-fueled plants, there is not yet an adequate recognition of the variance of emissions from various types of coal plants. The focus on nuclear has been on radioactive waste-disposal issues, rather than the benefits from the lack of atmospheric emissions. Others publicly decry the dangers of nuclear meltdowns or terrorism while extolling the safety of volatile hydrogen gas. The argument here is not that the stated concerns are unjustified, but that the green energy agenda is sometimes ill-focused.

Illinois can move beyond the definitional barriers by adopting a clear, workable standard for green as the foundation for future debate. This new definitional approach will focus on environmental results and maximize the opportunities for compliance. Progress and benefits become measurable more concretely in terms of emissions avoided and volume of fossil fuels saved. Although a future RPS using this definition may still overreach Illinois' resources, depending on the effluent levels chosen or other factors, at least it would offer an opportunity for both progress and success and would be more receptive to adjustment as more was learned.

Adding an emissions allowance trade-and-retire system to the mix will enhance the ability to satisfy-or even exceed-RPS at the lowest cost. Trading systems have proven themselves in the past as powerful tools for reducing emissions. As in other trading systems, the producers able to install renewable-fueled generators or to cut the pollution from existing plants at the lowest price will do so. Further, because green energy produced by retiring credits is indistinguishable from other green energy, green pricing programs could make overcompliance economical if the marginal cost of retiring extra credits is lower than the premium from green power.

No party involved in supplying electricity will need to fight unattainable standards any longer. Generators will get an incentive to clean up and improve their current plants. Utilities and retail suppliers will be rewarded for providing cleaner and renewable-based power. Emission credit holders will have a new market for their assets, and the markets themselves will develop. Citizens concerned about the environment will see plants reduce their emissions and developers install new renewable-fueled plants that can stand in the market.

An RPS based on workable premises does hold out promise for gains for all Illinois electricity users. They can get a cleaner atmosphere and knowledge that innovative plants and fuels will become part of their power portfolio, based on a sustainable partnership of environmental and business interests.

Endnotes:

  1. Illinois General Assembly. "House Bill 2200" (93rd Session: 2001).
  2. "Renewable Energy, Energy Efficiency, and Coal Resources Development Law of 1997" (20 ILCS 687).
  3. E. H. Pechan & Associates, Inc. and United States Environmental Protection Agency Office of Atmospheric Programs. "Emissions & Generation Resource Integrated Database v 2.01 (eGRID)" (USEPA-OAP: May 2003).
  4. U.S. Department of Energy, Energy Efficiency and Renewable Energy office. "Renewable Electric Plant Information System" http://analysis.nrel.gov/repis/online_reports.asp (Accessed June 2003).
  5. Federal Energy Management Program Technical Assistance. "Renewable Energy Fact Sheet: Wind Power" http://www.eere.energy.gov/femp/techassist/wind_energy.htm (Accessed June 2003); U.S. Department of Energy National Renewable Energy Lab. "Illinois - Wind Resource Map: Best Areas" www.windpoweringamerica.gov/images/windmaps/il_high800.jpg (Accessed July 2003).
  6. Wind Powering America. "Illinois Wind Resource Map" http://www.windpoweringamerica.gov/maps_template.asp?stateab=il (Accessed July 2003).