To: Senator Max Baucus and Senator Lamar Alexander
From: Brett Dinner, Duke University (SkyPower Intern)
Re: National Renewable Portfolio Standard
Date: 4/24/2012

This memorandum is written to advocate for a national Renewable Portfolio Standard (RPS) to address

the national environmental and health risks caused by electricity generation.

Coal, natural gas, and nuclear power generation destroy all aspects of our environment: our land, water, ecology and health. Renewables preserve our terrain from destruction and toxic exposure. Coal is responsible for the annihilation of our land through strip mining, mountain top removal, and coal ash. The 5.4 million cubic yards of coal ash spilled from the Tennessee Valley Authority’s Kingston Fossil Plant in 2008 have converted 900 acres of residential land into uninhabitable toxic waste dumps, necessitating $1.2 of clean-up costs, according to TVA in December 2011. Nuclear power generation additionally contributes to surface exposure of radioactive pollution from mining, processing and transporting nuclear fuel, according to the “Nuclear Energy” information page from the Environmental Protection Agency (EPA).

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Renewables conserve our water supply. 2006 estimates from U.S. Geological Survey that nearly 136 billion gallons per day of freshwater withdrawals are due to coal, natural gas, and nuclear power generation. Thermoelectric generation ranks only slightly behind agricultural irrigation as the largest source of freshwater withdrawals in the U.S. Recovery of fossil fuels also contributes to freshwater withdrawal. A 2011 EPA report states that 2 to 6 million gallons of water are required to fracture one horizontal well in a shale gas formation.

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In addition, power generation contaminates our water supply and aquatic environments. Coal ash continues to contaminate our rivers and streams with arsenic and lead. The EPA’s “Nuclear Energy” information page shows that nuclear power plants also affect ground water and surface water with discharged heavy metals, salt build up, and radioactive elements. In addition, the EPA is currently conducting a hydraulic fracturing study to determine whether fracturing subjects our groundwater to toxic chemicals in addition to natural gas leaks.

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Renewable energy does not threaten American’s safety. We cannot permit another nuclear catastrophe, like Fukushima, to ever happen again. The Fukushima Power Plant explosion and meltdown on March 11, 2011 resulted in levels of radioactive iodine-131 recorded at a new high of 4,385 times the legal limit, magnifying the cancer risk, according to 2011 news reports by ABC and Times. We cannot continue to impose this risk on Americans.

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Renewable energy production does not produce air pollution. Electricity generation accounts for 41.6% of U.S. greenhouse gas emissions from fossil fuel combustion, making electricity generation the U.S.’s leading cause of climate change, according to the EPA’s 2010 Greenhouse Gas Inventory Report. Air toxins from coal and natural gas particularly threaten the health of the very young, very old, and those with heart and respiratory issues. According to the report “Full cost accounting for the life cycle of coal” in the Annals of the New York Academy of Sciences, carbon emissions’ climate impacts on land use, energy consumption, and food prices cost the U.S. $205 billion annually.

Methane, natural gas’s primary component, is more than 20 times as effective at trapping heat in the atmosphere as CO2, according to the Intergovernmental Panel on Climate Change. Further, a 2012 report in the Proceedings of the National Academy of Sciences of the U.S. concludes that replacing coal-fired power plants with natural gas-fired power plants may not lead to net reductions of greenhouse gas emissions.

A National Renewable Portfolio Standard is needed to ensure the nationwide implementation of environmentally safe energy sources.

Currently, 29 states and Washington, D.C. and Puerto Rico have an RPS. An additional 8 states have renewable energy goals. Mandated renewable percentages (ratios of electricity generated by renewables to total electricity generated) range from Maine’s 40% by 2020 to North Carolina’s 12.5% by 2021. With existing RPS’s proven success of increasing renewable energy, the National RPS is the next logical step is to expand renewable energy development to all states.

The National RPS should require by 2025 15% renewable energy for all large utilities, 10% renewable energy for all small utilities, and 5% renewable energy for the smallest utilities.

• Large utilities are defined as utilities with more than 3% of the state load.
• Small utilities are defined as those with more than 1.5%, but less than 3% of state load.
• Smallest utilities are defined as those with less than 1.5% of the state’s load.

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Each electricity producer would be required to maintain a minimum of the renewable percentage requirement indefinitely. Given current RPSs across a variety of geographic locations, all states have the capacity to comply with this set of renewable energy requirements.
The proposed legislation is intended to serve as a baseline RPS for states. State governments are able to create stricter requirements to the National RPS as they wish for their state’s RPS. To increase state’s feasibility to do so, the proposed RPS would utilize the current general structure of states’ RPSs.

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National RPS Compliance

Energy producers would receive Renewable Energy Credits (RECs) in order to account for renewable energy production. 1 REC represents 1 MWh of renewable energy production. RECs give utilities the ability to elect whether to invest in renewable energy infrastructure or purchase from other renewable energy producers.

Failure to comply with the RPS requirement would subject electricity providers, regardless of size, to a non-compliance fee per MWh of renewable energy shortfall. Civil penalties for non-compliance would be paid to the Federal Energy Regulatory Commission (FERC).

Civil penalties would not be automatically assessed to electricity providers that fail to comply with a sufficient number of RECs. The proposed legislation would establish “Renewable Energy Credit Borrowing,” allowing for flexible compliance. Electricity providers would be able to borrow RECs by submitting a compliance plan to the FERC. The compliance plan would be required to demonstrate that sufficient RECs to meet the RPS requirement for each year of noncompliance would be earned within the next 3 calendar years. Electricity providers would be required to pay the FERC a civil penalty for failure to repay borrowed RECs.

We must develop broad support for the proposed RPS throughout the following Senate and House committees:
• Energy and Natural Resources Committee of the Senate
• Environment and Public Works Committee of the Senate
• Energy and Commerce Committee of the House of Representatives
• Natural Resources Committee of the House of Representatives

Chairman Bingaman, who previously proposed a national RPS in 2009, is willing to lead the new National RPS through Congress. All senators of the majority party of the listed Senate committees have shown to be proponents of a RPS and all but one senator of the majority party represents a state with a RPS or a renewable energy goal. Therefore, each senator would be able to highlight outcomes of current state regulation. However, resistance to the proposed legislation is expected from the Energy and Commerce Committee and Natural Resources Committee of the House, particularly from Chairmen Upton and Hastings.

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It is critical that joint hearings take place both between the listed Senate Committees and between listed House Committees due to shared interest between committees. Joint hearings would help the committees coalesce and determine necessary changes in the National RPS design. In addition, joint hearings would receive a larger audience, increasing the hearings’ effectiveness.
Joint hearing participation by electricity companies, public utility commissions, supporting committee members and the FERC are recommended to dispel resistance from opposing committee members and the oil, natural gas, coal, and nuclear industries. Industry has demonstrated its support of the RPS.
As each of the nation’s 20 largest utilities already participates in a state RPS, utilities can dispel the concerns of senators who are proponents of fossil fuels. In addition, given that public utility commissions regulate state RPSs, they are the most informed for creating an effective RPS. Electricity companies, of all sizes, would emphasize that fossil fuel companies can thrive in the renewable energy industry. The public utility commissions would provide feedback regarding their state’s RPS and the proposed National RPS.

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It is important that the FERC, as the program administrator under the proposed legislation, elaborates on the details of its implementation strategy. The FERC would lead the nationwide implementation of the RPS. Explanation of the implementation process would show the feasibility and potential effectiveness of the proposed legislation. Such topics would include the applicable renewable energy sources, the compliance monitoring mechanism, and a newly established Clean Energy Bank. For more information on these topics, please see the appendix.

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As a global leader, the U.S. must act responsibly by mobilizing the National RPS to protect our citizens, plants, and animals. The U.S. has the power to reduce health and environmental risks caused by electricity generation not only domestically, but internationally. Other countries will follow our lead. We must act now.

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Appendix:
The compliance monitoring would call for the expansion of current electronic REC tracking systems from a regional level to a national level. Each electronic REC tracking system employs the same technology. The FERC, electricity companies, and public utility commissions should each attest the ease and effectiveness of electronic REC tracking systems. Additionally, the national REC tracking system would ease the FERC’s administrative burden of compliance monitoring.
The FERC would administer a newly established Clean Energy Bank. The Clean Energy Bank would aid the domestic development and deployment of renewable technologies. To meet these ends, it would provide utilities financing options, including loans, letters of credit, and insurance products. As well, it would oversee the REC borrowing program.
The FERC defines the following renewable sources:

• Photovoltaics
• Solar Thermal Electric
• Wind
• Hydroelectric
• Tidal Energy
• Wave Energy
• Ocean Thermal
• Biomass
• Biodiesel
• Geothermal Electric
• Geothermal Heat Pumps
• Geothermal Direct-Use
• Fuel Cells using Renewable Fuels
• Landfill Gas
• Municipal Solid Waste
• Solar Water Heat
• Solar Space Heat
• Solar Thermal Process Heat
• Solar Pool Heating
• Solar Space Cooling
• Solar HVAC
• Energy Storage
• CHP (when the source fuel is an eligible renewable energy resource)
• Anaerobic Digestion