VNRC RPS Testimony January 2012

Legislative leaders are considering a bill - H.468 - that would create a mandatory Renewable Portfolio Standard for Vermont. An RPS is a market-based tool to catalyze more renewable generation and reduce greenhouse gas emissions. VNRC recently testified on the bill before the House Natural Resources and Energy Committee, which is currently considering it. Read VNRC's testimony here or below.

Date:     January 11, 2012
To:         House Natural Resources & Energy Committee
From:    Johanna Miller, VNRC Energy Program Director and Jamey Fidel, VNRC General Counsel and Forest    Program Director
RE:       Testimony on H.468
_____________________________________________________________________________

Thank you for the opportunity to speak with today and a sincere thank you for all you have done to promote energy efficiency and renewable energy development in Vermont.

VNRC is a membership organization which has for nearly 50 years been working to protect Vermont’s natural resources, build a strong, rural economy and promote a clean energy future.

VNRC also coordinates the Vermont Energy and Climate Action Network — the network of over 100, primarily volunteer community energy committees across Vermont who are working to help their friends and neighbors save energy, transition to renewables and reduce greenhouse gas emissions.

In our close work with Vermonters, we understand that there is a strong interest in moving swiftly to transition off of fossil fuels as a way to reduce the greenhouse gas emissions that are contributing to climate change as well as grow a strong, local economy.

Regarding H.468, VNRC believes it can support several important goals. If done right it can:
•    Reduce the greenhouse gas emissions that are perpetuating climate change and ensure sustainable and efficient development of Vermont’s resources.
•    Create a market mechanism to promote far more renewable energy development in Vermont and regionally.
•    Enhance Vermont’s economy.
•    Serve as a tool to support other important policy goals, such as increasing thermal energy efficiency.

To achieve these goals, VNRC believes that Vermont must:
•    Very clearly articulate Vermont’s goals with an RPS, including economic benefits and costs, the development of renewable energy industries, carbon reduction goals, in-state job development, efficiency, environmental protection etc. (i.e. adding more meat to the bones of 30 V.S.A., Section 8001), below:
o    (1) Balancing the benefits, lifetime costs, and rates of the state's overall energy portfolio to ensure that to the greatest extent possible the economic benefits of renewable energy in the state flow to the Vermont economy in general, and to the rate paying citizens of the state in particular.
o    (2) Supporting development of renewable energy and related planned energy industries in Vermont, and the jobs and economic benefits associated with such development, while retaining and supporting existing renewable energy infrastructure.
o    (3) Providing an incentive for the state's retail electricity providers to enter into affordable, long-term, stably priced renewable energy contracts that mitigate market price fluctuation for Vermonters.
o    (4) Developing viable markets for renewable energy and energy efficiency projects.
o    (5) Protecting and promoting air and water quality by means of renewable energy programs.
o    (6) Contributing to reductions in global climate change and anticipating the impacts on the state's economy that might be caused by federal regulation designed to attain those reductions.
o    (7) Supporting and providing incentives for small, distributed renewable energy generation, including incentives that support locating such generation in areas that will provide benefit to the operation and management of the state's electric grid.

•    Require utilities to hold long-term contracts for renewable power. This will help create the financing mechanisms and the predictabilty that renewable energy developers need to bring projects online.
•    Require utilities to own the environmental attributes of power by requiring them to retire renewable energy credits. This will have several benefits, including:
o    Bringing more renewable projects online in Vermont and regionally.
o    Serving as an essential tool to reduce greenhouse gas emissions by ensuring that more renewables are truly coming online. To date, while the SPEED program has been a tremendous benefit to Vermont, the fact that utilities can both count the renewable power they build as renewable as well as sell the ‘renewableness’ of that energy to other states in the form of a renewable energy certificate is a double accounting that falls short of the kinds of mechanisms we need to meet our climate change goals.

(VNRC recognizes that it likely makes sense to ease into this requirement and ramp it up over time, largely to avoid penalizing those Vermont utilities that have taken R.E. development seriously already. To this end, VNRC would recommend that utilities be required to begin retiring their RECs in a few years, such as the PSB recommends in their recently commissioned report on an RPS.

•    Expand the Standard Offer program to promote the development of in-state renewable energy generation. To this end, VNRC supports this being an annual program which would, at a minimum, bring 10 MW of new, small-scale renewable projects online each year. VNRC supports a regular (annual) review of the S.O. prices under this program to guard against significant ratepayer impact.

VNRC also supports:
•    Prohibiting large-scale hydro in an RPS.
•    The use of preference mechanisms for projects that achieve ends that Vermont would like to promote, such as a multiplier for community or municipally owned projects.
•    A cost containment measure such as that proposed in H.468 — the Alternative Compliance Payment, set at a cap of 3%. VNRC also supports these dollars going into the Clean Energy Development Fund.
•    Setting eligibility criteria for biomass – in the Standard Offer and in the development of an RPS – that maximizes the most efficient use of the resource. To that end, and to speak more to VNRC’s recommendations for balancing renewable energy development with environmental protection goals, I’ll turn it over to my colleague Jamey Fidel.

VNRC looks forward to working with you further on this bill to ensure that the state’s goals
are met and that any RPS program works well for Vermont while still maintaining a commitment to other important Vermont values, such as environmental protection.

THANK YOU AGAIN for the opportunity to speak with you today and for all you have done — and are doing — to help promote clean energy development in Vermont. 


Jamey Fidel — VNRC General Counsel & Forest and Wildlife Program Director:

Thank you for the opportunity to testify today. Picking up on where Johanna left off, I would like to touch upon several issues related to carbon reduction goals, efficiency and environmental protection.

As this Committee is vitally aware, Vermont is strongly committed to addresssing climate change, with targets of reducing Vermont’s greenhouse gas emissions by 25% from 1990 levels by 2012, 50% by 2028, and 75% by 2050. In light of these strong emission and carbon reduction goals, in tandem with many other policies promoted by this Committee, is is imperative that H.468 and the development of an RPS or expanded Standard Offer program create a structure to ensure that renewable requirements focus on zero and low emmission renewable energy resources.

To get there, there will be a need to implement specific policies to address carbon accounting, as well as efficiency and environmental protection standards, especially to the degree that they influence carbon accounting.

For example, in regards to woody biomass projects, it matters what kind of projects are promoted through incentive based policies. This is beacause it can not be assumed that all biomass is carbon neutral. Emerging research demonstrates that some sources of wood for bioenergy might make a negative contribution to reducing GHG emissions within the time frame of the climate mitigation policies I just referenced, whereas others may have potential to be helpful. Put another way, some bioenergy options are more beneficial for meeting short-term GHG reduction goals while others or more appropriate for longer term objectives.

Carbon is released when biomass is burnt. The degree to which this carbon flux is offset and recaptured by plant regrowth can vary depending on a host of issues, including whether current harvest levels are increased to produce more bioenergy.  It is important to consider the source of wood, the efficiency of the project, the overall intensity of the harvesting that is occuring, and the future use of the land after it has been harvested. All of these can factor into whether a project is carbon nuetral. There are experts in Vermont and the region that can explain the research that is currently emerging on carbon accounting such as Bill Keeton at UVM or Sandy Wimot with the Department of Forests, Parks, and Recreation. For purposes of today’s testimony, I would like to stress that a new RPS should have a carbon acccounting protocal tied to it to ensure that the projects that are being incentivized will be beneficial in meeting carbon reduction targets.

I have been serving on the Bomass Energy Development Working Group, along with Representative Malcolm, and you will see in our upcoming final report a recommendation that the ANR develop a carbon accounting protocol to inform biomass policy. VNRC supports adding a section to H.468 that would require ANR and other relevant agencies to develop a carbon accounting protocol and standard for projects to meet as part of the RPS.

Furthermore, like the Standard Offer Program, an RPS should build in an efficiency standard, as suggested by the PSB report to the legislature. Projects that are more efficient are more beneficial from a carbon reduction perspective, and they will also use limited forest resources a more productive way.  This is because the design of projcts can greatly influence the manner in which the fuel potential of woody biomass is realized. In general, projects that are designed for heating and thermal use are much more efficient than projects such as stand alone electricity generation. See VNRC brochure as handout.

According to revised wood supply estimates from the Biomass Energy Resource Center, based on a conservative harvesting scanrio we may only have 250,000 additional green tons of wood available for biomass development, while potentially 900,000 may be available in a moderate harvesting scenario (see VNRC brochure for additional information). Because our wood resources are limited in Vermont, we should promote the most efficient use of this wood supply. The Bio-E Group report talks about creating a tiered approach for rewarding efficient projects, and this is what other RPS programs are looking at as well, such as in Massachussetts. VNRC supports the maintenance of the 50% efficiency standard in the Standard Offer Program, and we support developing an efficiency standard for the RPS as part of the implementation of this bill.  In addition, we support adding a component to the RPS that would incentivize thermal projects that are not tied to electricity generation.

Furthermore, as I mentioned previously, the manner in which wood is harvested in Vermont can infuence everything from carbon accounting to forest health. It is important that as incentive based policies for biomass energy are developed, that we are mindful of the role that procurement and harvesting policies can play in assuring the public that projects are being designed with environmental standards in mind. Therefore, we support developing minimum procurement and forest health policies as part of the RPS and beyond. The upcoming Bio-E Report will explain more about this issue. 

Finally, in regards to woody biomass, it is important to incentivize projects that are designed to reduce air pollution emission levels by employing cutting edge technology. We encourage you to invite additional experts on woody biomass technology who can speak to these issues, such as the Biomass Energy Resource Center and experts at the ANR.

The details which I have discussed will likley need to be worked out in through agency rulemaking or additional policymaking. H.468 can set out a process for addressing benchmark standards such as carbon accounting protocols, efficiency standards, procurement and forest health provisions, and air emission standards. These standards are part of developing responsible renewable energy policy in Vermont, and they should not be seen as a barrier to renewable energy development, but as a mechanism to ensure the public that we are promoting renewables in an efficient and sustainable manner with environmental protection in mind.

I have touched on woody biomass policy in my testimony. There are obviously other forms of renewable energy development that will require some level of certification that environmental sustainability measures are being met. We encourage the Committee to explore the appropriate mechanism for addressing these measures, which should include oversight and participation by the Agency of Natural Resources.

In conclusion, thank you for your consideration of our comments are we look forward to working with you as you implement your vision and goals for promoting renewables with environmental protection in mind.


CONTACT INFO:
Johanna Miller, VNRC Energy Program Director
Jmiller@vnrc.org -- 802-223-2328 ext. 112

Jamey Fidel, VNRC General Counsel & Forest and Wildlife Program Director
jfidel@vnrc.org -- 802-223-2328 ext. 117