Clean Energy-Environment Guide to Action Policies, Best Practices, and Action Steps for States

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EPA Clean Energy-Environment Guide to Action
This prepublication version of the Clean Energy-Environment Guide to
Action has been provided to the public to facilitate timely access to the
report's contents. The substance of the Guide to Action is final. However,
EPA will makeadditional editorial changes and check the citations prior to
publication.

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                                EPA Clean Energy-Environment Guide to Action (Prepublication Version)

Table of Contents
                                                                                           ST1IE PARTNERSHIP
 Prsfses ,, >,	 Hi

                	,.1	,,.,.,	,—•	,«,,	iv

 List of Tabiss  .,-,...	«—	>,.,..,		,,,.,„.«,,	 vi

 Key Acronyms	,	,., v«

 Executive Summary	 —.,, ES-1

 Chapter 1: Introduction and Background  	.,.«...,'«,....	 1-1

 Chapter 2: Developing s Clean Energy-Environment Action Plan 	, —,	, >, 2-1

 Chapter 3; State Planning and Incentive Structures	3-1
   Section 3.1: Lead by Example	3-3
   Section 3.2: State and Regional Energy Planning	3-28
   Section 3.3: Determining the Air Quality Benefits of Clean Energy—	3-47
   Section 3.4: Funding and Incentives.	3-64
 Chapter 4: Energy Efficiency Actions	„	 —„.,,	4-1
   Section 4.1: Energy, Efficiency Portfolio Standards	4-3
  . Section 4.2: Public Benefits Funds for Energy Efficiency	4-19
   Section 4.3: Building Codes for Energy Efficiency 	4-37
   Section 4.4: State Appliance Efficiency Standards	4-54
 Chapter S: Energy Supply Actions  	,«...,	,	,	.,«,,., &-1
   Section 5.1: Renewable Portfolio Standards	.5-3
   Section 5.2: Public Benefits Funds for State Clean Energy Supply Programs  	5-21
   Section 5.3: Output-based Environmental Regulations to Support Clean Energy		5-32
   Section 5.4: Interconnection Standards	._	5-43
   Section 5.5: Fostering Green Power Markets  	5-59
 Chapter 6: Utility Planning and incentive Structures	 —, „..,. ,,.„..,	8-1
   Section 6.1: Portfolio Management Strategies	6-3
   Section 6.2: Utility Incentives for Demand-Side Resources	6-25
   Section 6.3: Emerging Approaches: Removing Unintended Barriers to   .
     Distributed Generation	6-41
 Appsndioss	,«...,.,.„,<...,..,.	,,,„.,<	,	...,,.,.,,..,,.,.,,.,.,,,. XX
   Appendix A: Federal Clean Energy Programs  	XX
   Appendix B: Energy Efficiency Program Resources	XX
   Appendix C: Clean Energy Supply: Technologies, Markets, and Programs	XX

> Table of Contents

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I
                           EPA Clean Energy-Environment Guide to Action (Prepublication Version)
           Sr/IFE PARTNERSHIP
                   Acknowledgements
                   The Environmental Protection Agency would like to
                   acknowledge the many individual and organizational
                   researchers, government employees, and consultants
                   whose efforts helped bring this extensive report to
                   fruition. The following key contributors and reviewers
                   provided significant assistance:

                   Neil Elliott, Marty Kushler, Bill Prindle, and Dan York,
                   of the American Council for an Energy Efficient
                   Economy; Andrew DeLaski, Appliance Standards
                   Awareness  Project; Gwen Fuert.es and David Weitz,
                   Building Codes Assistance Project; Sylvia  Bender,
                   Michael Martin, and Mike Messenger, California
                   Energy Commission; Lainie Motamedi and Brian
                   Prusnek, California Public Utilities Commission; Lew
                   Milford, Clean Energy States Alliance; Bryan Garcia,
                   CT Clean Energy Fund; Chris James, Connecticut
                   Department of Environmental Protection; James Bush
                   and John Davies, Kentucky Office of Energy Policy;
                   Michelle New, National Association of State Energy
                   Officials; Matthew Brown, National Conference of
                   State Legislatures; Blair Sweezey, National
                   Renewable Energy Laboratory; Ralph Cavanagh and
                   Oevra Wang, Natural Resources Defense Council;
                   Paul DeCotis, New York State Energy Research and
                   Development Authority; Sara Ward, Office of Energy
                   Efficiency, Ohio Department of Development; Cheryl
                   Harrington, Rich Sedano, and Rick Weston,
                   Regulatory Assistance Project; Scott Weiner, Rutgers
                   University;  Colin Murchie and Rhone Resch, Solar
                   Energy Industries Association; Amy Royden-Bloom,
                   STAPPA-ALAPCO;  Pierre Landry. Southern California
                   Edison; Howard Geller, Southwest Energy Efficiency
                   Project; Theresa Gross, Texas Public Utility
                   Commission; Sean Casten, Turbosteam Corporation;
                   Dan Beckley, Jean J, Boulin, Jerry Kotas, Larry
                   Mansuetti,  and Linda Silverman, U.S. Department  of
                   Energy; John Byrne and Noah Toly, Center for Energy
                   and Environmental Policy, University of Delaware;
                   and Suzanne Watson, Watson Strategy Group.
The Guide to Action was developed by the Climate
Protection Partnerships Division in EPA's Office of
Atmospheric Programs. Steve Dunn managed the
overall development of the Guide to Action. EPA staff
who contributed to the Guide are listed below by
section of the Guide to Action:

• Developing a  Clean  Energy-Environment Action
  Plan: Nikolaas Dietsch and Denise  Mulholland

• State Planning and  Incentive Structures: Art Diem,
  Steve Dunn, Sue Gander, Caterina  Hatcher, Laura
  Helmke, and Edgar Mercado

• Energy Efficiency Actions: Art Diem, Nikolaas
  Dietsch, Sue Gander, Maureen McNamara, and
  Sam Rashkin

• Energy Supply Actions: Joe Bryson, Kurt Johnson,
  Tom Kerr, and Katrina Pielli

• Utility Planning and Incentive Structures: Stacy
  Angel, Joe Bryson, Sue Gander, Tom Kerr, and
  Katrina  Pielli.

A multi-disciplinary team of energy and environmen-
tal consultants provided research, analysis, and tech-
nical support for this project. They include: Eastern
Research Group (Lynne Agoston, Sue Eisenfeld, and
Scott Warner); Energy and Environmental Analysis
(Joel Bluestein); Kajal  B. Kapur; Navigant Consulting,
Inc. (Lisa Frantzis, Shannon Graham,  and  Ryan
Katofsky); Stratus Consulting (Nimmi Damodaran,
Chuck Herrick, Joanna Pratt, and Heidi Ries); Summit
Blue (Kevin Cooney); and Synapse Energy Economics,
Inc. (Bruce Biewald. Bob Fagan, Lucy Johnston, Geoff
Keith, Amy Roschelle,  and Bill Steinhurst).
                                                                                                        Acknowledgements

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                                  EPA Clean Energy-Environment Guide to Action (Prepublication Version)
Preface
                                                                                                ST«IE PARTNERSHIP
The Dean Energy-Environment Guide to Action is a
cornerstone of EPA's Clean Energy-Environment State
Partnership, a voluntary program to help states
incorporate clean energy into a low-cost, clean, and
reliable energy system. The Guide to Action provides
in-depth  information about 16 clean energy policies
and programs that states are using to meet their
energy, environmental, and economic objectives.
Each policy description is based  on states' experi-
ences in designing and implementing policies that
enhance energy efficiency and/or increase the use of
renewable energy and clean distributed generation
(including combined heat and power). States have
found that these 16 clean energy policies and  pro-
grams  offer numerous opportunities to save energy,
improve air quality,  reduce greenhouse gas emissions,
improve system reliability and security, and enhance
economic development.
The Guide to Action is intended for use by state ener-
gy, environment, and economic policymakers and
public utility commissions. States participating in  the
Clean Energy-Environment State Partnership will use
the Guide to Action to develop a Clean-Energy
Environment Action Plan for employing existing and
new clean energy policies to increase their use of
clean energy. Other states are also encouraged to  use
the Guide to Action to examine the role clean energy
can play. Any comments, questions, and corrections
related to the Clean Energy-Environment Guide to
Action and the State Partnership Program can be
directed -to the contacts provided in the Guide to
Action on page  ES-29.
  Preface

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                          EPA Clean Energy-Environment Guide to Action (Prepublication Version)
           STATE PARTNERSHIP
                   List of Figures
                     &c8CMi3¥0 Summary
                       Figure ES.1: Clean Energy is Competitive with Fossil Fuel Generation Technologies	ES-2
                     Chapter 1: Introduction and Background
                       Figure 1.1a: Nonattainment Areas Ozone (8-hour)	1-3
                       Figure 1.1 b: Nonattainment Areas PM2 5 .:	1-3
                       Figure 1.2a: Energy Savings from California's Energy Efficiency Programs	1-5
                       Figure 1.2b: Comparison of Energy Efficiency Program Costs to Supply
                         Generation Costs (2000 to 2004)	 1-5
                       Figure 1.3: Clean Energy is Competitive with Fossil-Fuel Generation Technologies	1-7
                     Chapter 2: Developing a Clean Energy-Envimnrnsnt Action Plan
                       Figure 2.1: Tools and Resources for Assessing the Benefits of Clean Energy	2-6
                       Figure 2.2: Sample Outline for a Clean Energy-Environment Action Plan	;. 2-8
                     GSiapter 3: Stats Planning snd incentive Structures
                       Figure 3.3.1: Map of Interconnections	3-50
                       Figure 3.3.2: NOX and S02 Emissions by Capacity	3-50
                       Figure 3.3.3: Historical Emissions Data	3-51
                       Figure 3.3.4: Estimated NOX Reductions from Energy Efficiency/Renewable Energy (EE/RE)	3-56
                       Figure 3.3.5: Marginal Emission Rates in  Wisconsin	3-57
                       Figure 3.4.1: States with Revolving Loan  Funds for Renewable Energy	3-66
                       Figure 3.4.2: States with Grant Programs for Renewable Energy	3-68
                       Figure 3.4.3: Grid-Connected  PV Capacity Installed in California	3-82
                     Chapter 4: Energy Effioiensy Actions
                       Figure 4.1.1: States that Have Adopted or Are  Developing EEPS	4-5
                       Figure 4.2.1: Cost of Energy Saved ($/kWh) for Six State Public Benefits Funds	4-20
                       Figure 4.2.2: States with  PBFs for Energy  Efficiency	4-20
                       Figure 4.2.3: Rate-Payer-Funded Energy Efficiency Programs	4-21
                       Figure 4.3.1: States with Residential and Commercial Building Energy Codes	4-39
                       Figure 4.4.1: States with or Considering Appliance Standards	4-56
                       Figure 4.4.2: Load Savings from Appliance Efficiency Standards as Compared to Other
                         Energy Efficiency Programs in California	4-56
                                                                                                             List of Figures

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                                EPA Clean Energy-Environment Guide to Action (Prepublication Version)
                                                                                               ST«fE PABTKEflSHIP
Chapter S; Ensrgy Supply Actions
  Figure 5,1.1a: Projected New Renewable Capacity by 2015 Attributable to Existing RPS Requirements
    (California compared to all other states)	5-3
  Figure 5.1.1b: Projected New Renewable Capacity by 2015 Attributable to Existing RPS Requirements
    (breakout of all other states)	5-3
  Figure 5.1.2: A Sampling of Cost of RPS Requirements to Ratepayers	5-5
  Figure 5.1.3: States with RPS Requirements	5-5
  Figure 5.1.4: State RPS Requirements	5-6
  Figure 5.1.5: Eligible Technologies  under State RPS Requirements	5-7
  Figure 5.1.6: Illustration of Renewable  Energy Credits (RECs) and Power Markets	5-10
  Figure 5'.2.1: Estimated 2005 Funding Levels for State Renewable Energy  Programs	5-22
  Figure 5.2.2: Map of State Renewable Energy Funds	-.	 5-23
  Figure 5.3.1: CHP System Efficiency	'.	5-34
  Figure 5.4.1: States with DG Interconnection Standards	5-44
  Figure 5.4.2: States with Net Metering  Rules	5-45
  Figure 5.5.1: Renewable Energy Capacity Added to Meet Voluntary Green Power Demand Through 2004 5-60
  Figure 5.5.2: States with Utility Green Pricing Programs	5-62
  Figure 5.5.3: States with Competitive Green Power Marketing	5-62
Chspter 6: Utility Perming and Incentive Structures
  Figure 6.1.1: A Laddered Approach to Default Service Contracts Offers Flexibility and Price Stability	6-6
  Figure 6.3.1: Effect of Rate Structure on Electric Savings Revenue for 1.4 MW CHP Project	6-41
List of Figures

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       EPA Clean Energy-Environment Guide to Action (Prepublication Version)
List of Tables
  Executive Summary
   Table ES.1: Summary of Clean Energy Policies by Type of Clean Energy	ES-5
   Table ES.2: Summary of Clean Energy Policies	ES-6
   Table ES.3: Federal, State, and Nonprofit Resources for Enhancing State Clean Energy Programs	ES-24
  Chapter 1; Introduction and Background
   Table 1.1: 2003 Energy Efficiency Spending as a Percentage of Utility Revenues	'.	1-8
   Table 1.2: Summary of Clean Energy Policies	1-10
  Chapter 3: State Planning and incentive Structures
   Table 3.1: State Planning and Incentive Structures	3-2
   Table 3.1.1: State of Colorado Performance Contracting Results Through June 2003 ($ Millions)	3-15
   Table 3.3.1: Existing Policies to Reduce C02 Emissions	3-59
   Table 3.4.1: Economic Multipliers Used for Washington's Production Incentive Program	3-83
  Chapter4: Siwgy Efficiency Actions
   Table 4.1: Energy Efficiency Policies and Programs	4-2
   Table 4.1.1: Current and Pending State EEPS Policies	4-6
   Table 4.2.1: Summary of 11 State PBFs for Energy Efficiency	4-22
   Table 4.2.2: Common Cost-Effectiveness Tests	4-25
   Table 4.4.1: Estimated Energy Savings and Economics of
      Appliance Standards Not Covered by Federal Law	4-55
   Table 4.4.2: States with Adopted or Pending Appliance Efficiency Standards	4-57
   Table 4.4.3: Products Subject to Existing Federal Appliance Efficiency Standards	4-60
  Chapter 5: Energy Supply Actions
   Table 5.1: Energy Supply Policies and Programs	5-2
   Table 5.3.1: Design Flexibility Offered by Output-Based Standards	5-33
   Table 5.3.2: State Output-Based Regulations	5-35
   Table 5.5.1: Green  Pricing  Programs Offered in Washington (as of May 2005)  	5-70
  Chaptar 8: Utility Planning and incentive Structures
   Table 6.1: Utility Planning  and Incentive Structures	 6-2
   Table 6.1.1: States that Use Diverse Contract  Terms	6-5
   Table 6.2.1: Simplified Illustration of Decoupling Rate  Effect	6-26
   Table 6.2.2: Approaches for Removing Disincentives to Energy Efficiency
      Investment: Decoupling  vs. Lost Revenue Adjustments	6-28
                                                                                          list of Tables

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                                 EPA Clean Energy-Environment Guide to Action (Prepublication Version)
Key Acronyms

A
ACEEE           American Council for an Energy-
                Efficient Economy
ACP            Alternative Compliance Payment
AEPS            Alternative Energy Portfolio
                Standard
AlAPCO         Association of Local Air Pollution
                Control Officials
APPA            American Public Power Association
ASAP            Appliance Standards Awareness
                Project
ASE            Alliance to Save Energy
ASHRAE         American Society .of Heating,
                Refrigerating and Air-Conditioning
                Engineers
ASME           American Society of Mechanical
                Engineers
ASTM           American Society for Testing and
                Materials
BCAP            Building*Codes Assistance Project
BECI             Building Energy Conservation
                 Initiative
BETC            Business Energy Tax Credit
Btu              British thermal unit
CAIR            Cleari Air Interstate Rule
CALMAC        California Measurement Advisory
                Council
CCEF            Connecticut Clean Energy Fund
CEC             California Energy Commission
CEDC           Clean Energy Development Council
CESA            Clean Energy States Alliance
CFC             Chlorofluorocarbon
CFL             Compact Fluorescent  Lighting
CHP             Combined Heat and Power
CIP             Conservation Improvement
                Program
CO              Carbon Monoxide
C02
COBRA

CON EG
CPUC
0
DEER

DG
DOC
DOE
DSIRE

DSM


E
ECPA
EEPS

EE/RE

EGRID

EIA

EPA

EPAct
ERAM

ERCOT
ESCO
ESL

ESP
ESPC
Carbon Dioxide
Co-Benefits Risk Assessment
Model
Coalition of Northeast Governors
California Public Utilities
Commission
Database for Energy Efficient
Resources
Distributed Generation
U.S. Department of Commerce
U.S. Department of Energy
Database of State Incentives for
Renewable Energy
Demand-side Management
Energy Conservation and
Production Act
Energy Efficiency Portfolio
Standards
Energy Efficiency/Renewable
Energy
Emissions and Generation
Resources Integrated Database
U.S. Energy information
Administration
U.S. Environmental Protection
Agency
Energy Policy Act
Electric Rate Adjustment
Mechanism
Electric Reliability Council of Texas
Energy Service Company
Energy Systems Laboratory at
Texas A&M University
Electric Service Provider
Energy Savings Performance
Contract
  Key Acronyms

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               EPA Clean Energy-Environment Guide to Action (Prepublication Version)
STATE PARTNERSHIP
        F
        FEMP

        FERC



        G
        GCVTC

        6PCP
        GSA

        6SC
        GSP
        GWh
        HERS
        Hg
        HVAC
        1C
        ICC
        ICC
        ICLEI

        1ECC

        IEEE

        IEPR
        IES
        IESNA

        IOU
        IPM
        IPMVP
        IREC

        IRP
 Federal Energy Management
 Program
 Federal Energy Regulatory
 Commission
                                    IRS
                                    ISO
                Internal Revenue Service
                Independent System Operator
 Grand Canyon Visibility Transport
 Commission
 Green Power Choice Program
 U.S. General Services
 Administration
 Governor's Steering Committee
 Gross State Product
 Gigawatt-hour
 Home Energy Rating System
 Mercury
 Heating, Ventilation, and Air-
 Conditioning
 Internal Combustion
 Illinois Commerce Commission
 International Code Council
.International Council for Local
 Environmental Initiatives
 International Energy Conservation
 Code
 Institute of Electrical and
 Electronics Engineers, Inc.
 Integrated Energy Policy Report
 Illuminating Engineering Society
 Illuminating Engineering Society
 of North America
 Investor Owned Utility
 Integrated Planning Model
 International Performance
 Measurement and Verification
 Protocol
 Interstate Renewable Energy
 Council
 Integrated Resource Planning
                                    K
kW
kWh
Kilowatt
Kilowatt-hour
Ib/kWh           Pounds per Kilowatt-hour
Ib/MMBtu        Pounds per Million British Thermal
                 Units
Ib/MWh          Pounds (of Emissions) per
                 Megawatt-hour
LBNL             Lawrence Berkley National
                 Laboratory
LCOE           .  Levelized Cost of Electricity
LEED             Leadership in Energy and
                 Environmental Design
LEV              Low Emission Vehicle
LRAM            Lost Revenue Adjustment
                 Mechanism
MAORI           Mid-Atlantic Distributed
                 Resources Initiative
MAIN            Mid-Atlantic Interconnected
                 Network
MAPP            Mid-Continent Area Power Pool
MCS             Model Conservation Standards
MEEA            Midwest Energy Efficiency Alliance
MEC             Model Energy Code
Midwest ISO      Midwest Independent System
                 Operator
MLP             Master Lease Purchase
MLPP            Master Lease Purchase Program
MMBtu           Million British Thermal Units
MMTCE           Million Metric Tons of Carbon
                 Equivalent
MMTC02e        Million Metric Tons of Carbon
                 Dioxide Equivalent
Mmtherms       Million Therms
                                                                                               Key Acronyms

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                                 EPA Clean Energy-Environment Guide to Action (Prepublication Version)
                                                                                              Cltan [
                                                                                              «T«TE PARTNERSHIP
 MRA
 MRO
 MSW
 MW
 MWh
 M&V

-H
 QMS
 OTC
Monthly Revenue Adjustment
Midwest Reliability Organization
Municipal Solid Waste
Megawatt
Megawatt-hour
Measurement and Verification
 NABCEP         North American Board of Certified
                 Energy Practitioners
 NAECA          National Appliance Energy
                 Conservation Act
 NARUC          National Association of Regulatory
                 Utility Commissioners
 NBI              New Buildings  Institute
 NCSL            National Conference of State
                 Legislatures
 NEDRI           New England Demand Response
                 Initiative
 NEEP            Northeast Energy Efficiency
                 Partnerships
 NEGC           New England Governors'
                 Conference
 NEPOOL         New England Power  Pool
 NERC            North American Electric Reliability
                 Council
 NESCAUM        Northeast States for Coordinated
                 Air Use Management
 NESHAP         National Emission Standards for
                 Hazardous Air Pollutants
 NOX             Nitrogen Oxide
 NRDC           Natural Resources Defense Council
 NREL            National Renewable  Energy
                 Laboratory
 NSPS            New Source Performance
                 Standards
 NYSERDA        New York State Energy Research
                 and Development Authority
Organization of Midwest
Independent System Operator
States
Ozone Transportation Commission
PBF
PBR
PM2.5

PNNL

ppm
PRAM

PRC
PSC
PTC
PUC
PUD
PURPA

PV
PVE


a
                                   QF
                                   Quad
RACT

RAP
R&D
REC

REPP
RES
RESNET

RETC
RFP
RGR

RIM
ROE
RPS
RTO
Public Benefits Fund
Performance-Based Ratemaking
Particulate Matter That is 2.5
Micrometers or Smaller in Size
Pacific Northwest National
Laboratory
Parts Per Million
Periodic Rate Adjustment
Mechanism
Public Regulation Commission
Public Service Commission
Production Tax Credit
Public Utility(ies) Commission
Public Utility District
Public Utilities Regulatory Policy
Act
Photovoltaic
Petroleum Violation Escrow
                 Qualifying Facilities
                 Quadrillion British thermal units
Reasonably Available Control
Technology
Regulatory Assistance Project
Research and Development
Renewable Energy
Credit/Certificate
Renewable Energy Policy Project
Renewable Energy Standard
Residential Energy Services
Network
Residential Energy Tax Credit
Request for Proposals
Renewable Generation
Requirement
Rate Impact Measure
Return on Equity
Renewable Portfolio Standard
Regional Transmission
Organization
  • Key Acronyms

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STATE PARTNERSHIP
               EPA Clean Energy-Environment Guide to Action (Prepublication Version)
        SBC
        SELF
        SEP

        S6IP
        SIP
        SIR

        S02
        STAPPA

        SWEEP
System Benefits Charge
State Energy Loan Program
Supplemental Environmental
Project
Self Generation Incentive Program
State Implementation Plan
Standard Interconnection
Requirements
Sulfur Dioxide
State and Territorial Air Pollution
Program Administrators
Southwest Energy Efficiency
Project
L
z
        T&D
        TRC
        T-REC
        TWh
Transmission and Distribution
Total Resource Cost
Tradable Renewable Certificate
Terawatt-hour
        u
        UL               Underwriters Laboratory
        USAEE/IAEE       U.S./lnternational Association for
                         Energy Economics
        USCHPA          U.S. Combined Heat and Power
                         Association
        USGBC           U.S. Green Building Council
        ¥
        W
        WAP

        W1EB
        WGA
        WRAP
Weatherization Assistance
Program
Western Interstate Energy Board
Western Governor's Association
Western Regional Air Partnership
                                                                                                 Key Acronyms

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SSSS5
  | Clean Energygjtvlrersmsnt
  ISTATE  PARTNERSHIP
        Overview
        Across the country, states are using clean energy
        policies to help meet their expanding energy demand
        in a clean, low-cost, reliable manner. In addition, a
        growing number of states are interested in learning
        about successful clean energy strategies and their
        economic and environmental benefits.

        The U.S. Environmental Protection Agency's (EPA's)
        Clean Energy-Environment Guide to Action is
        designed to share the experiences and lessons
        learned from successful state clean energy policies
        and help states evaluate these options, programs,
        and policies to determine what is most appropriate  •
        for them. The Guide to Action describes 16 clean
        energy policies, details the best practices and attrib-
        utes of effective state programs, and provides
        resources for more information. The policies were
        selected from among a larger universe of clean   •
        energy strategies because of their proven effective-
        ness and their successful implementation.

        States that are developing new clean energy programs or
        enhancing existing ones can use the Guide to Action to:

        •  Develop clean energy programs and policies appro-
           priate to their state.
        •  Identify the roles and responsibilities of key deci-
           sionmakers—such as environmental regulators,
           state legislatures, public utility commissioners, and
           state energy offices.
        •  Access and apply technical assistance resources,
           models, and tools available for state-specific
           analyses and program Implementation.
        •  Learn from each other as they develop their own
           clean energy programs and policies.
 The
         is a voarypfograrodssigfled to help
 programs that affectively Integrate clean energy Intp s
 low-cost, clean, refiabfa energy system for tie state,
 States participating ifl tfie Clean Ena^y-Etivjraftwent
 Stats Partnership Program will asathe Guide to Action
 to tfewlep a Clean ffvef^-frnfodmetit Siate ifMn$dt6iff(ft teAvtiM
 ((tefitifies and describes sixteen eieaa energy policies   '
 and strategics that are delivering seonotnic and anviroo-
 ittBntai results for states, ttese poJieios Ideas on ctean '",
 tfkity generators and suppfiers, homes, and businesses.  ,
 There are also opportunities for states to promote clean' '
 energy In the transportatioiissstor, Thsse policies antJ  '
 pr&jijj^rtts affi bfiyofitf the $cop& of th$ cajtertt i?«B5^ ft?,
 Actm but fflignt he addressed in future wlittods.


Why Clean Energy?
Clean energy offers a cost-effective way to meet our
nation's growing demand for electricity and natural
gas while reducing emissions of air pollutants and
greenhouse gases, lowering energy costs, and
improving the  reliability and security of the energy
system.

States and the U.S. energy industry face multiple
energy and environmental challenges in providing
affordable, clean, and reliable energy in today's com-
plex energy markets. In terms of energy challenges,
total U.S. energy demand is expected to increase by
more than one-third by 2025, with electricity
                                                                                               Executive Summary

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EPA Clean Energy-Environment Guide to Action
STATE PAR1HEBSHIP
demand rising by almost 40% (EIA 2005a). This
growth stresses current systems, reduces reliability,
and requires substantial new investments in systems
expansions. In addition, higher natural gas prices
increase energy costs for households and businesses
and raise the financial risk associated with the
development of new generation based on gas tech-
nologies. Environmental challenges stem from fossil
fuel-based electricity generation, which is a major
source of air pollutants that form ground-level ozone
and fine particulate matter, as well as greenhouse
gases. Although emission levels are declining, high
pollution levels persist in many parts of the United
States-nearly half of the U.S. population lives in
counties where air quality sometimes exceeds the
federal 8-hour standard for ozone (EPA 2005a).'

Clean energy includes demand and supply-side
resources that deliver clean, reliable, and low-cost
ways to meet energy demand and reduce peak elec-
tricity system loads. Energy efficiency measures
reduce demand for energy generation, which reduces
energy supply, which relerstD clean distributed gener-
ation a tid renewable energy.
' fewfly sHic^ncy JEE) reduces desmnrf for energy and
peak electricity system loads. C&mmoi* energy &KI-
efeney measures include rrcnctretfe of technofogfes
%ti$ presses for practically all «nd-«$e$ *ero$$ aft
s.ectora el the economy.
FtenawaMe erwgytBE] is partially or entirely serrat-
ed frtMB fion-fessit energy sources. Renewable energy
definitions vary by state,, bat osuaily Include wind.
solar, and; geotherinal energy; some states might also
include low-lmpast or sroaiJ hydro, bjemass, biotas,
" ' '
Combined Jheat and power ICHP), also known as cogea-
to4 is a clean, efmlent «j}|>fft»ch to flewtfattiig
eSectric artd therfflai energy irosi a single ftief SQUKS.
Clean rifefrlbutedsflneRilion (D6) refers to non-oen-
traftzed — ustiajly smaH-scaJfi — fenewable energy and
"
the amount of fuel needed to power our daily lives.
Renewable energy sources avoid the use of fossil
fuels, and combined heat and power (CHP) can pro-
vide much greater energy output for the amount of
fuel used.

States are finding clean energy to be cost-competitive
with traditional sources of generation. Figure ES.1
illustrates the comparative cost of electricity from a
range of sources, including energy efficiency and
wind. More specifically, states' experiences with clean
energy programs and policies have shown that:

• Well-designed energy efficiency programs cost less
than supplying new generation from power plants.
Energy efficiency programs are saving energy at an
average lifecycle cost of about $0.03/kWh saved,
which is 50°/o to 75% of the typical cost of new
Rgure ES.l Cteart Ensrgy is CompstkSve with
! Ssnerstiofi Techrtolsgiss
10.0
s.o •
0.0
I Capital costs [|JO&M costs [|| Fuel costs ^Transmission costs
1 In April 2005,134 million people were living in 470 counties wtiare the air quality sometimes exceeds the federal 8-hour standard for ozone.
Seventy-five million people were living in more than 200 counties that do not meet the PM2.5 standard (EPA 200Sa).
Executive Summary