Ensuring a Strong, Smart, Sustainable Vermont RPS

February 29, 2012 Update

Vermont is considering a ‘Renewable Portfolio Standard’ that would move the state forward in an essential direction to get more of our electricity from renewable sources. There have been many iterations of the RPS since it was first introduced this session, and VNRC has been supportive of Vermont enacting an ambitious and forward-looking RPS but have cautioned against creating an incentive that rewards the inefficient development of Vermont’s forest resources for biomass.

VNRC believes Vermont’s RPS should:

•    Bring more renewables online: Set a requirement — not a goal — that Vermont meets 80 percent of its electric portfolio from renewables by 2032.

•    Not incentivize inefficient and potentially damaging use of Vermont’s resources and, instead, maximize the most efficient and sustainable use of our resources. (Find far more detail below about what that looks like.)

•    Reduce greenhouse gas emissions: Require utilities to own the environmental attributes of 80 percent of their electric supplies by 2032. That means that utilities would be required to retire the ‘Renewable Energy Certificates’ or ‘RECs’ that they buy or generate, instead of maintaining the existing system that allows them to sell their RECs out of state and still claim that generation as renewable in Vermont.

•    Advance in-state renewable generation: Expand the Standard Offer program by 10 MW per year for the next 10 years to promote the development of in-state, distributed, community-scale renewable energy generation.

If done right, an RPS 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 more renewable energy development in Vermont and regionally.

•    Enhance Vermont’s economy.

•    Serve as a tool to support other important policy goals, such as maximizing the most efficienct use of limited and valuable Vermont resources, such as woody biomass.

Addressing Biomass Well and Moving Towards a ‘Total Energy Standard’….

Vermont’s goal, as framed in the Vermont Comprehensive Energy Plan is to “attain 90% of our energy from renewable sources by 2050 …. based on a comprehensive approach, requiring action in all sectors regarding all energy sources.” To do this, the CEP recommends that we “look beyond electricity and design an RPS to integrate a future Total Energy Standard to encourage cost-effective adoption of renewables across the entire energy portfolio.”

While creating an RPS for Vermont is an important step, if we do not integrate it with thermal energy, we will be creating unbalanced incentives that drive biomass towards stand-alone electricity production rather than thermal energy production or Combined Heat and Power. This will promote the inefficient use of Vermont’s limited biomass supplies for electricity production as opposed to using those resources for the far more efficient thermal energy production.

There’s a Better Way

The Biomass Energy Development Working Group, a diverse group of forest experts and stakeholders, recently laid out a set of consensus recommendations that included the following priorities on the issues of efficiency and carbon accounting. To this end, the “Bio-E” group recommended that:

➢    The Clean Energy Development Board, in consultation with the Department of Public Service (DPS), develop recommended incentives for woody biomass thermal energy that use a tiered structure that rewards greater design system efficiency with a larger incentive in comparison to less efficient systems.

➢    All new electric generation plants using woody biomass should incorporate CHP.

➢    Economic incentive programs for biomass energy development should incorporate strong design system efficiency standards. The state should maintain the existing “standard offer” program’s requirement of 50 percent design system efficiency for woody biomass generation. For incentive programs other than the standard offer, as an alternative to a flat requirement of 50 percent for design system efficiency, the DPS in consultation with the Clean Energy Development Board should consider a tiered structure for incentives for woody biomass electric generation plants that would reward greater efficiency.

➢    The state should closely follow the development of issues relating to carbon accounting for woody biomass and should initiate a process, working with key stakeholders including the ANR, DPS, the University of Vermont (UVM), and others, to research and officially adopt greenhouse gas accounting protocols relevant to wood bio-energy.

(Check out the Bio-E Groups Report here: http://www.leg.state.vt.us/workgroups/BioMass/)

To ensure that Vermont’s forests are used sustainably to produce biomass energy and to maximize economic benefits and energy efficiency Vermont’s RPS should:

1.    Ensure that harvesting and procurement policies maintain healthy soils, wildlife habitat, water quality and forest regeneration.

2.    Ensure effective standards to protect air quality and public health associated with biomass energy technologies.

3.    Maximize the efficiency of biomass energy technologies.

4.    Accurately account for atmospheric carbon associated with biomass energy.

To achieve that, VNRC recommends that a Vermont RPS set a course where:

•    The Vermont Department of Public Service design a tiered REC system in this RPS that would apportion REC’s to biomass energy based on efficiency. (For example, Massachusetts has changed its RPS to apportion ½ REC to systems operating at 40% efficiency and 1 whole REC to systems operating at 60% efficiency with proportional REC’s awarded for systems within this range.)

•    The Vermont Department of Public Service work with the Agency of Natural Resources to study and develop recommendations for a thermal component to Vermont’s RPS.

•    The DPS and the ANR develop a carbon accounting framework for biomass energy in Vermont.

To read the bill, visit: http://www.leg.state.vt.us/database/status/summary.cfm?Bill=H.0468&Session=2012