California’s Alternative Fuels Investment, Renewable Portfolio Standard and Climate

Change Strategy

California’s Alternative Fuels Investment, Renewable Portfolio Standard and Climate

Change Strategy

Latin America Energy ConferenceLa Jolla, California

May 14, 2008

James D. Boyd, Vice ChairCalifornia Energy Commission

Latin America Energy ConferenceLa Jolla, California

May 14, 2008

James D. Boyd, Vice ChairCalifornia Energy Commission

Presentation OverviewPresentation Overview

Alternative Fuels

Renewables Portfolio Standard

Climate Change

Alternative Fuels

Renewables Portfolio Standard

Climate Change

California’s Primary Energy SourcesCalifornia’s Primary Energy Sources

Reducing California’s Petroleum Dependence

Reducing California’s Petroleum Dependence

August 2003 Joint Report by the Energy Commission and the Air Resources Board in response to state legislation (AB 2076).

Recommended state petroleum reduction goals. • Reduce demand for gasoline and diesel to 15 percent below 2003

levels by 2020. • Increase use of alternative fuels by 20 percent.

Urged a doubling of vehicle fuel economy through Federal Corporate Average Fuel Economy standards (found to be cost-effective with current vehicle technology).

These findings were reported to the Governor and Legislature in the 2003 Integrated Energy Policy Report.

August 2003 Joint Report by the Energy Commission and the Air Resources Board in response to state legislation (AB 2076).

Recommended state petroleum reduction goals. • Reduce demand for gasoline and diesel to 15 percent below 2003

levels by 2020. • Increase use of alternative fuels by 20 percent.

Urged a doubling of vehicle fuel economy through Federal Corporate Average Fuel Economy standards (found to be cost-effective with current vehicle technology).

These findings were reported to the Governor and Legislature in the 2003 Integrated Energy Policy Report.

California’s Low Carbon Fuel StandardCalifornia’s Low Carbon Fuel StandardOn January 9, 2007, the Governor issued Executive Order S-1-07, establishing the world’s first Low Carbon Fuel Standard for transportation fuels.

Under this proposal, petroleum refiners, gasoline sellers and fuel suppliers must reduce the carbon content of their fuels by 10 percent by 2020.

By regulating carbon fuel content, this standard will support the state’s greenhouse gas reduction targets, while promoting the use of alternative fuels.

Adding ethanol or other biofuels into gasoline is one option formeeting the Standard; advanced biofuels show promise.

The California Air Resources Board expects to complete its rulemaking in late 2008.

On January 9, 2007, the Governor issued Executive Order S-1-07, establishing the world’s first Low Carbon Fuel Standard for transportation fuels.

Under this proposal, petroleum refiners, gasoline sellers and fuel suppliers must reduce the carbon content of their fuels by 10 percent by 2020.

By regulating carbon fuel content, this standard will support the state’s greenhouse gas reduction targets, while promoting the use of alternative fuels.

Adding ethanol or other biofuels into gasoline is one option formeeting the Standard; advanced biofuels show promise.

The California Air Resources Board expects to complete its rulemaking in late 2008.

State Alternative Fuels PlanState Alternative Fuels Plan

December 2007 the Energy Commission and Air Resources Board adopted a joint plan to expand the use of alternative fuels in California (AB 1007).

Low Carbon Fuel Standard alone cannot achieve all of the needed GHG reductions.

A combination of regulations or standards, financial incentives, and advanced technology is needed to achieve policy goals.

Substantial public and private investment is needed for vehicles, fueling infrastructure and advanced technology.

A three-part strategy---advanced technology, alternative fuels, and travel reduction---is recommended.

December 2007 the Energy Commission and Air Resources Board adopted a joint plan to expand the use of alternative fuels in California (AB 1007).

Low Carbon Fuel Standard alone cannot achieve all of the needed GHG reductions.

A combination of regulations or standards, financial incentives, and advanced technology is needed to achieve policy goals.

Substantial public and private investment is needed for vehicles, fueling infrastructure and advanced technology.

A three-part strategy---advanced technology, alternative fuels, and travel reduction---is recommended.

Three-Legged TransportationEnergy Stool

Three-Legged TransportationEnergy Stool

Three-Part Strategy

AdvancedTechnology

AlternativeFuels Travel

Reduction

Alternative and Renewable Fuel and Vehicle Technology Program

Alternative and Renewable Fuel and Vehicle Technology Program

The Governor signed landmark legislation, (Assembly Bill 118, Nunez, 2007) to develop and deploy innovative technologies and to address state alternative fuel use and petroleum reduction goals.

Up to $120 million per year for 7.5 years is appropriated to the Energy Commission for state incentives.

Energy Commission will co-fund the development and deployment of alternative fuels production, fuel distribution, and advanced vehicle and fuels technology.

Up to $80 million per year for 7.5 years to the Air Resources Board for vehicle retirement and air quality improvement.

The Governor signed landmark legislation, (Assembly Bill 118, Nunez, 2007) to develop and deploy innovative technologies and to address state alternative fuel use and petroleum reduction goals.

Up to $120 million per year for 7.5 years is appropriated to the Energy Commission for state incentives.

Energy Commission will co-fund the development and deployment of alternative fuels production, fuel distribution, and advanced vehicle and fuels technology.

Up to $80 million per year for 7.5 years to the Air Resources Board for vehicle retirement and air quality improvement.

State Policies Affecting Renewable EnergyState Policies Affecting Renewable EnergyKey Renewable Energy Policy Impacting California

Accelerated RPS(from IEPR / EAP /

SB1250/107Governor’s Response)

California Solar Initiative

2010 20202016

Governor’s GHG Reduction Targets &

AB32 Specific GHG reduction targets allocated to RE will most likely be contained in the

Climate Action Team Recommendations to the Governor, expected in 2008.

State Bioenergy Goal(Executive Order S-06-

06)

Renewables 33% of generation

40% biofuels produced in California

3,000 MW of new solar

20% biofuels produced in California

20% of RPS from biopower

Renewables 20% of generation

20% of RPS from biopower

State Renewables Portfolio StandardState Renewables Portfolio Standard

Increase the diversity, reliability, public health and environmental benefits of California’s energy mix.

Current goal of 20 percent of retail sales from renewable power by 2010.

Goal of 33 percent renewable power by 2020.

Increase the diversity, reliability, public health and environmental benefits of California’s energy mix.

Current goal of 20 percent of retail sales from renewable power by 2010.

Goal of 33 percent renewable power by 2020.

Progress on California’s RPS GoalsProgress on California’s RPS Goals

-

20,000

40,000

60,000

80,000

100,000

120,000

1983 1988 1993 1998 2003 2008 2013 2018

Year

Est

imat

ed S

tate

wid

e R

enew

able

s GW

h/ye

ar

(Exc

ludi

ng L

arge

Hyd

ro)

20% by 2017

20% by 2010

33% by 2020

2002 11.0% Renewables (RPS begins)

2006 10.9% Renewables

Recommendation for Achieving State RPS Goals

Recommendation for Achieving State RPS Goals

The 33 percent RPS is achievable by 2020 with program improvements: transmission access, grid reliability, and contract assurance.

Implement a feed-in tariff, immediately for small renewable energy projects, and, if warranted, for all renewable projects.

Integrate transmission and distribution planning to enable renewable power.

Renewable energy will be essential for meeting AB 32 goals.

The 33 percent RPS is achievable by 2020 with program improvements: transmission access, grid reliability, and contract assurance.

Implement a feed-in tariff, immediately for small renewable energy projects, and, if warranted, for all renewable projects.

Integrate transmission and distribution planning to enable renewable power.

Renewable energy will be essential for meeting AB 32 goals.

California Solar InitiativeCalifornia Solar Initiative

Largest solar program of its kind in the country and part of Governor Schwarzenegger’s Million Solar Roofs initiative.

$3.35 billion effort by the Public Utilities Commission, the Energy Commission, and utilities.

Performance-based incentives for residential and non-residential customers.

3,000 MW is a combined public and investor-owned utilities’ goal.

Largest solar program of its kind in the country and part of Governor Schwarzenegger’s Million Solar Roofs initiative.

$3.35 billion effort by the Public Utilities Commission, the Energy Commission, and utilities.

Performance-based incentives for residential and non-residential customers.

3,000 MW is a combined public and investor-owned utilities’ goal.

Global Warming Solutions Act of 2006Global Warming Solutions Act of 2006

On September 27, 2006, Governor Schwarzenegger signed legislation, Assembly Bill 32, the Global Warming Solutions Act of 2006.

California’s initiative is intended to limit greenhouse gas emissions from the state’s largest emitting sources.

This legislation gives the California Air Resources Board significant, new responsibilities.

On September 27, 2006, Governor Schwarzenegger signed legislation, Assembly Bill 32, the Global Warming Solutions Act of 2006.

California’s initiative is intended to limit greenhouse gas emissions from the state’s largest emitting sources.

This legislation gives the California Air Resources Board significant, new responsibilities.

Climate Action TeamClimate Action Team

Governor’s Executive Order S-3-05 created the Climate Action Team (CAT).

Coordination responsibility for state climate policy rests with the Secretary of Cal/EPA.

The Energy Commission is an active member.

Governor’s Executive Order S-3-05 created the Climate Action Team (CAT).

Coordination responsibility for state climate policy rests with the Secretary of Cal/EPA.

The Energy Commission is an active member.

Energy CommissionClimate Change Strategies

Energy CommissionClimate Change Strategies

Increase energy efficiency through standards and utility incentives. • Building efficiency standards• Appliance energy efficiency standards• Water efficiency and conservation standards in future

appliance standards

Municipal Utility Efficiency and Renewable Energy Programs.

Integrated land use, transportation, and energy planning.

Increase energy efficiency through standards and utility incentives. • Building efficiency standards• Appliance energy efficiency standards• Water efficiency and conservation standards in future

appliance standards

Municipal Utility Efficiency and Renewable Energy Programs.

Integrated land use, transportation, and energy planning.

Energy Commission Climate Change Strategies

Energy Commission Climate Change Strategies

Alternative fuels and vehicle technologies

33 Percent RPS Goal by 2020

GHG emission performance standard for new power procurement contracts for municipal utilities and load serving entities.

Climate Science and Research Program

Alternative fuels and vehicle technologies

33 Percent RPS Goal by 2020

GHG emission performance standard for new power procurement contracts for municipal utilities and load serving entities.

Climate Science and Research Program

SummarySummary

California remains committed to a diverse portfolio of energy options.

State investment in alternative transportation fuels and renewable energy development is a high priority.

The passage of AB 32 and the Governor’s subsequent Executive Orders highlight a “systems approach” to energy diversity and greenhouse gas reduction.

The Energy Commission intends to promote energy security through fuel diversity, while addressing global climate change.

California remains committed to a diverse portfolio of energy options.

State investment in alternative transportation fuels and renewable energy development is a high priority.

The passage of AB 32 and the Governor’s subsequent Executive Orders highlight a “systems approach” to energy diversity and greenhouse gas reduction.

The Energy Commission intends to promote energy security through fuel diversity, while addressing global climate change.