Green Mountain Global Forum

Waitsfield, VT

Michael Dworkin, Professor of Law & Director,

Institute for Energy and the Environment

Vermont Law School

June 19, 2007-

Energy Policy: The world's most important environmental issue

The Energy “Trilemma”

• Cost of Energy -- $ $ $

• Security and Reliability • Foreign & Domestic

• Environmental Stress• Land Use, Air & Water Pollution, and Climate Change

Why Care About World Energy Trends ?

Because the World Prices – and World Emissions Affect You

• World energy demand sets world natural gas price.

• World natural gas price sets wholesale new England electricity price.

• New England wholesale electricity price sets one-sixth of Vermont power costs now

• Climate Change is global, and Green House Gases have global effects

Bering Sea 2004(NYTimes 07/02/03)

Climate Change…..an environmental tragedy

Carbon dioxide that results from burning coal, oil and gas (using energy) remains in the atmosphere for over a hundred years trapping heat.

The earth’s temperature correlates with the amount of carbon dioxide in the atmosphere. As it accumulates, the earth’s temperature rises.

Then…1884 Now…..2006

Surface and sea temperatures have risen around the world and they will rise further over the next century

The end of nature -- Six months of mud-season Bill McKibben

A sharp drop in the human-carrying capacity of the earth Kurt Yeager

We are confronted with insurmountable opportunities Amory Lovins

What we need is not a silver bullet, but “A Green New Deal” -- a broad spectrum of

measures.

Sources of US air pollution….

More Than 1/3

3,000 Power Plants

15% from dirtiest 20 50% from dirtiest 100 90% from dirtiest 300

About 1/3

200 million Cars & Trucks

Less Than 1/3

2 Billion Other Sources

% of Electric % of US % of World20 Plants 15% 6% 2%50 Plants 31% 13% 3%100 Plants 51% 20% 5%3,000 Plants 100% 40% 10%

% of Electric % of US % of World20 Plants 23% 15%50 Plants 42% 28%100 Plants 61% 41%3,000 Plants 100% 67%

CO2

SO2

Carbon Emissions: The Willie Sutton Principle

Are The Current Challenges Episodic or Fundamental ?

Average household electricity use of world population (6.1 billion people) in the late 1990s----

0.6 billion people 10,000 kWh (US level ca. 12,000)2.0 billion people 5,000 kWh (typical Latin/Eastern Eur)2.0 billion people 1,000 kWh (typical Asia, Africa)1.5 billion people 0 kWh (Asia, Africa)

If 5.5 billion people use 5,000 kWh/ year in 2025:equals about 200% of 1990s’ electricity demand

If 9 billion people use 5,000 kWh/year in 2030:equals almost 300% of 1990s’ electricity demand

If 9 billion people use 10,000 kWh/year in 2030: equals over 500% of 1990s’ electrical demand.

Pareto assumption – new need met without reducing current usage levels of 600 mm people

Power costs will be high for a long time

We will be competing with the developing world for gas and oil

Shifting to efficiency and renewables will save money over the next decade.

Cheap coal will hit financial and environmental limits very soon.

What does the rising demand for energy mean?

Do we have a national energy policy?

We do .. And it is this

So, how is America dealing with the likelihood of more expensive less available energy?

Stunning coal resurgence: 154 new plants planned -- 93 GW, $137 billion

Where is the problem?

Think vehicles

Think fossil-fired electric power

Think a dozen other ideas across the board

Most Importantly: THINK !

Potential Sectors For State Climate Policy

• Electric System Efficiency – • Utility Generation, Transmission, Distribution

• Natural Gas Use• End Use Efficiency

• Buildings, Farms• Appliances• Industrial Processes

• Non-Utility Electric Generation – • especially renewables

• Transportation

It is feasible: We have done it , we can do it

Energy Efficiency, Most important Electric Efficiency: Lighting, motors, insulation, pumpsTransportation efficiency: New Cars, feebates, guzzler fees

High Mileage Tires Bus routes ?

New FuelsElectricity from Renewable energy: Wind, solarTransportation fuels: Bio Fuels, Cellulosic Ethanol

Attention & Awareness, Commitment!

Low Carbon Futures – Key Next Steps

US energy use already cut to Lovins’ “soft path”

but that just scratches the surface, esp. for oil & electricity…

renewablesnuclear

gas

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1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

primary energy consumption

(quadrillion BTU/year)

"hard path" projected by industry and government

"soft path" proposed by Lovins

soft technologies(which do not include big hydro or nuclear)

oil and gas

coal

renewables

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actual total energy consumption

Government (DOE- EIA)

Residential Electricity Use kWh per customer per year, 1940-2001

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But, Isn’t Vermont Already Clean?

Physically, operationally, Vermont is part of New England’s unified electric system so sometimes the ISO-NE ramps up “dirty” power plants to meet our electricity demand.

85% of time fossil fuel runs the marginal electric unit in New England (fueling the power plant that is turned on if our demand goes up, and turned off if our demand goes down)

Every kWh Vermont serves with efficiency or with renewables reduces New England’s – and world’s -- global warming pollution/ carbon.

… and we may not be low-carbon for long

Things for Vermont to do :

• Reduce emissions from Transportation

• Reduce emissions from Stationary Sources

• Seize Business Opportunities

• Take advantage of Fiscal Opportunities

• Enact Policies

• Provide Technical Assistance

Reduce Emissions from Mobile Sources

Ways to reduce emissions from transportation:

• Travel fewer miles

• Use greener fuels

• Create and use efficient vehicles

• Create good public transportation systems

Things for Vermont to do :

• Reduce emissions from Transportation

• Reduce emissions from Stationary Sources

• Seize Business Opportunities

• Leverage Fiscal Opportunities

• Enact Policies

• Technical Assistance

Electric Non-Utility

Community Energy Production & Ownership or Control

• Group Net Metering

• Clean Community Generation

• Distributed Generation/CHP

• Streamlined Permitting for Renewables

Electric Utility and Use

Improve System• Sustain Renewable Energy Support

• Ratepayers• Taxpayers• Utility Performance Based Regulation with GHG in

performanceEnd-Use Efficiency• Make Efficiency Vermont Enduring• Franchise with same term and same freedom to advocate that

investor-owned utilities now have• Expand scope of efficiency utility

Reduce Emissions from Stationary Sources

Electric • Utility• Non-Utility

Non-Electric• Regulated• Unregulated

State-Funded Buildings & Programs• State-Owned Buildings• Non-State-Owned Buildings

Regulated Non-Electric

VT Gas Systems

• Continue and expand VGS efficiency programs

• Building Energy Use• HVAC• Residential insulation and furnaces

Unregulated Non-Electric

End-Use Efficiency

• Expand Efficiency Vermont

• Building Codes• Updating• Enforcement

• Appliance & Equipment Efficiency Standards

Renewable Content in Heating Fuels

State-Funded Buildings & Programs

State-Owned Buildings• Goal• Stiffer standard than generally applies• Clean energy and efficiency as a design fundamental

State Supported Non-State Buildings• High Performance Schools - required for state $$• Scoring bonus on state-administered grants for green buildings

and clean energy

Things for Vermont to do :

• Reduce emissions from Transportation

• Reduce emissions from Stationary Sources

• Seize Business Opportunities

• Leverage Fiscal Opportunities

• Enact Policies

• Provide Technical Assistance

Seize Business Opportunities

• Jump start for forest products industry• Note sustainability issues (regrowth and mono-culture)

• Use reserved ag land for woody (cellulosic) fiber• Biofuels• Biomass Energy

• Intellectual capital brings $ to Vermont• Professional – Regulatory Assistance Project• Academic – VLS & UVM… and GMC and … …

• Promote Implement Skills and Tools for Export• GRO• NRG• Stone Environmental Services• Solar Works• VEIC

Leverage Fiscal Opportunities

• Exclude value of clean energy systems in grand-list value.

• Make green systems and/or insulation and high efficiency appliances tax exempt.

• Offer Production Tax Credit (better than Investment Tax Credit)

• Provide Low-cost financing of high efficiency and/or renewable projects.

• Use long-term financing of efficiency potentials through Efficiency Vermont VT state employees’ pension fund investments

Implement Policies to Foster Green Energy

Land Use Planning & Regulation:• Require efficiency and GHG consideration in Act 250 permit

decisions

• Emission Fees / “Carbon Tax”

• Pollution Caps (first “cap”, then “trade”)

• Public Allocation of RGGI Credit Revenues

• Green House Gas Assessment Obligations for Significant Governmental Actions

� The nation’s first energy efficiency utility

� Established by regulatory order and supporting legislation

� Implements energy efficiency as a least-cost resource to meet Vermont’s electric power needs

� Kennedy School of Government 2003 Award of $100,000 for one of 5 Most Innovative and Effective Programs in America

Efficiency Vermont

Key Design Features

� Funded by a “System Benefits Charge” ( a 2- 4% surcharge on customer bill)

� A single, statewide administrator acts as: “Efficiency Vermont”

� Selected through competitive performance bidding

� Independent, non-utility contractor, under a multi-year, performance-based contract with the Vermont Public Service Board, with significant $ holdback

2004 Savings Distribution

LOW-INCOME MULTIFAMILTY3%

RETAIL PRODUCTS24%

BUSINESS NEW CONST18%

RESIDENTIAL NEW CONST2%

RESIDENTIAL RETROFIT2%

LOW-INCOME SINGLE FAMILY5%

BUSINESS EQUIP REPLACE35%

BUSINESS RETROFIT11%

Wholesale Power Costs vs. Efficiency Vermont Costs 2002 - 2005

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EfficiencySavings:

Low .9 cent/kWh

(Jan 2002),High >than

9 cents/kWh(Oct 2005).

2005 efficiency data is Q3 est.

Cost of Wholesale Electric Energy including ancillary and bulk transmission costs but not distribution ISO NE Monthly Average Wholesale Market Price Efficiency Vermont, Contract Price per levelized kWh, stacked below customer-cost

Market Potentials– and Results

Nation-Leading Market Shares

• Highest 2002 Efficient Residential Air Conditioning Share (61%)

• Highest 2003 Efficient Washer Share (62% in 3rd Quarter)

• 2002 Share for Energy Star Homes: 25%

High Participation of Lighting and Appliance Dealers

High Participation in Key Markets• Affordable Housing• Commercial and Industrial New Construction

Recognized for Innovation$100.000 Award from Harvard’s Kennedy School of Government for Innovation

in American Government

Things for Vermont to do :

• Reduce emissions from Transportation

• Reduce emissions from Stationary Sources

• Seize Business Opportunities

• Leverage Fiscal Opportunities

• Enact Policies

• Provide Technical Assistance

Provide Technical Assistance

Provide Ombudsman for state and federal grants to : Help Cow Power farmers deal with:

• Bureaucracies: USDA, DOE, VT Agriculture, VT DPS• Guide them through regulatory mazes

Help people who install on-site clean generation through Net Metering, etc.

Answer questions

Leadership Vermont leads effectively and others join

Rich Cowart and public allocation of RGGI credits: NY, MA and other RGGI states will follow

Efficiency Vermont’s awarded $100, 00 Kennedy School for Innovative and Effective Governmental programs

Rich Sedano’s work with Arkansas PSC efficiency.

In March, May, and September, the IEE at VLS will be working with Chinese law schools and Chinese governmental utilities:

What shall we tell the energy leaders of one-quarter of humanity ?

Institute for Energy & the Environmentwww.vermontlaw.edu/energy/research

Michael Dworkin,

Professor of Law and Director,

Institute for Energy and the Environment

Vermont Law School

802.831.1319 South Royalton VT

802.249.7840 Cellular

MDworkin@VermontLaw.edu

Vermont’s Energy Efficiency And Affordability Act: Vetoed

Provisions of H-520 Sets renewable energy for state at 25 percent by 2025 Energy‑efficiency and load management measures beyond

electric sector (i.e., for inefficient buildings) Allows self‑generation and net metering Facilitates wind energy production with a tax incentive. Commercial building energy standards Renewable energy pricing Gives credit for businesses that use solar power

Vermont’s Energy Efficiency And Affordability Act: Vetoed

Encourages energy projects on farms Requires utilities to offer renewable energy to customers Several provisions that encourage conservation and efficiency Expands weatherization program to save energy and money for

customers Sets goals for bio-diesel use Encourages small hydro power projects\ Make Efficiency Vermont as enduring as an electric utility