Energy Policy In The SouthEnergy Policy In The SouthProgress, Decision, TransitionProgress, Decision, Transition

Presented to the:Presented to the:Eastern Coal CouncilEastern Coal CouncilAbingdon, VirginiaAbingdon, VirginiaDecember 8, 2008December 8, 2008

Presented by:Presented by:Kenneth J. Nemeth, SecretaryKenneth J. Nemeth, SecretarySouthern States Energy BoardSouthern States Energy Board

Southern States Energy BoardSouthern States Energy Board

Established 1960, expanded in 1978Established 1960, expanded in 1978 16 U.S. States and Two Territories16 U.S. States and Two Territories Each jurisdiction represented by the governor, a Each jurisdiction represented by the governor, a

legislator from the House and Senate and a legislator from the House and Senate and a governor’s alternategovernor’s alternate

Federal Representative Appointed by U.S. PresidentFederal Representative Appointed by U.S. President

Key Energy Policy Issues in the Key Energy Policy Issues in the Southern RegionSouthern Region

CoalCoal Climate Action PlansClimate Action Plans Energy Efficiency/ConservationEnergy Efficiency/Conservation Energy SecurityEnergy Security Water for EnergyWater for Energy BiomassBiomass NuclearNuclear Natural GasNatural Gas COCO22 Pipelines and OCS Storage Pipelines and OCS Storage State Energy Planning/RegulationState Energy Planning/Regulation TransmissionTransmission

33

Coal• Exports – world markets• Clean Coal Technologies - 48,000 JOBS in

Southern States• Carbon Capture, Storage, Sequestration, Use,

Pipelines, Offshore• Coal to Liquids• Greenhouse Gas Reductions – EPA Regulation• Power Plant Siting

Key Energy Policy Issues in Key Energy Policy Issues in the Southern Regionthe Southern Region

Number of CCT Projects In Number of CCT Projects In Southern (SSEB) statesSouthern (SSEB) states

Number of Projects In SGA States

10

7 7 7

54

32 2

1 1 1 10 0

4

11

0

2

4

6

8

10

12

Pro

jects

Over 80% of U.S. DOE Clean Coal Tech. projects are located in SSEB states

Number of Projects in SSEB States

Carbon Sequestration Enhances Carbon Sequestration Enhances The Future of CoalThe Future of Coal

DOE: Storage Potential of 3.5 Trillion Tons

SECARB Partnership SECARB Partnership ObjectivesObjectives

Characterize the potential carbon sequestration sinks in the Southeast;

Conduct field verification studies in the most promising geologic formations in the region;

Advance the state of the art in monitoring, measurement and verification techniques and instrumentation; and

Develop sequestration technologies and characterize geologic sinks for future readiness.

Coal and Advanced Power Systems

Training and Educating the Mining Workforce of the Future Coal-to-Liquids CO2 Pipelines and outer continental shelf study proposals American Clean Coal Coalition Outreach & Education

Domestic Issues

Carbon Sequestration Leadership Forum (CSLF)

Thailand – Eco-industrial Development Brazil – Financing Clean Coal Projects

International Outreach

Climate Issues in the South Climate Issues in the South

2009 SGA Chairman’s Initiative - Governor Tim Kaine, VA

“Energy Sustainability and Climate Change”

Basis- Southern State Commonalities Unique Domestic Raw Energy Production Similar Regional Climate Change Risks

Regional Voice in the national discussion

Share Success Stories and consolidate efforts

Southern States Energy Board State Best Practices for Clean Energy Policies and Technologies Technical Support Regional High Level Technology Deployment Plan?

Outcomes of Energy Outcomes of Energy Sustainability and Climate Sustainability and Climate

Change InitiativeChange Initiative Conduct a dialogue about energy sustainability and climate

change unique to the South. Create a Regional Strategy Give the South a strong voice in the national debate

Identify issues appropriate for state action: Energy Independence Conservation and Efficiency Clean Technology Development Climate Change Adaptation

Energy Efficiency To delay/avoid supply-side resource projects, new incremental

energy efficiency measures required

Measures depend upon changing consumer behavior by providing financial incentives/subsidies

Limit to effectiveness of these energy efficiency measures Energy efficiency investments must be approved by Public Utility

Commissions, Cooperative Members or Publicly-Owned Utilities. Public Utility Commissions approve only cost-effective measures to be included in utility rate base. Balance program cost vs. performance effectiveness• Portion of market (15%) is outside Public Utility Commission

jurisdiction & control Rural Electric Cooperatives Municipal/Public Utilities

0

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1,240

1,260

1,280

1,300

1,320

1,340

1,360

1,380

1,400

CO2 Rate

CO2 Tons

CO2 Tons CO2 Rate lbs/MWh

Efficiency Improvements of Power Plants in Southern States Reduces CO2 Emission

Rates

Source: EPA Title IV State Levels CO2

Source: EIA/DOE State Net Generation

American Energy Security American Energy Security Study II Study II Initiated August 2008 by West Virginia Governor

Joe Manchin (Chairman-Elect of the Southern States Energy Board)

Strategic Action Plan – Energy Supply Blueprint Focus on 4 areas impacting American economy:

Energy ResourcesEnergy Resources

ElectricityElectricity

ClimateClimate

Transportation Fuels Transportation Fuels

Water for Utilities New Generation Continued Operation of existing capacity

New Technologies Waste Water Systems Emergency Guidelines for Disasters and Table-top

Exercise

Water for Energy in the South

The Southern States Energy Board (SSEB) – Biomass Partnership Facilitate increased use of Bioenergy

and Biobased products Co-host national webinars on

cellulosic ethanol SSEB’s unique structure - elevate

program to policymaker level and engage key state officials and leadership

Southern States Biobased Alliance Provide regional leadership to SSEB

member states advance research, development and

demonstration of biobased technologies

Regional Biomass Energy Program

The Nuclear Resurgence! The Nuclear Resurgence! Cornerstone of Southern LivingCornerstone of Southern Living

Reduce COReduce CO22 emissions emissions Reduce other pollutants Reduce other pollutants

such as SOsuch as SO22, NOx , NOx Reduce dependence on Reduce dependence on

foreign sources of energyforeign sources of energy Economically competitiveEconomically competitive Uranium fuel is abundantUranium fuel is abundant Nuclear Power is a reliable Nuclear Power is a reliable

power supply power supply Public support is growingPublic support is growing A few issues yet remain…A few issues yet remain…

Nuclear Energy – Southern Region

SSEB states have 45 nuclear reactors in operation, more than any other region in U.S.

50% of all nuclear energy is produced in the southern region

15 new nuclear reactors have been applied for by power providers in the southern region

The South is the leader in new nuclear power development

SSEB states have passed more pro-active nuclear power legislation than any other region in the U.S.

Location of Projected New Nuclear Power Reactors

Source: Nuclear Regulatory Commission

Natural Gas Price Risk from GHG Regulation

5 SSEB states continue to depend heavily upon natural gas for power generation (FL, LA, MS, OK, TX). Natural gas price changes will significantly influence regional power prices

Increased shift toward natural gas based options from future GHG regulation will increase demand, increase market prices and cost for switching to natural gas based alternatives. • GHG demand increase in combination with depletion of conventional gas

supplies (>10 TCF by 2030) creates significant natural gas supply risk. • Large new shale gas supplies will require capital and much higher prices to

develop• US will become increasingly dependent upon LNG imports and arctic gas to

meet increasing natural gas demand

Governmental studies have underestimated this market price risk by assuming significant gas market demand losses from higher prices and continued inter-supplier competition to keep cost-based pricing

State Energy Strategies

Over half states in South developing energy plans

Additionally, Climate Action Plans being developed

U.S. Virgin Islands North Carolina Kentucky West Virginia Texas Georgia

Innovative Legislation/Governor’s

Initiatives – SGA Region Gov. Sonny Perdue, GA: “Conserve Georgia” Initiative

Gov. Tim Kaine, VA: Energy Sustainability and Climate Initiative

Gov. Joe Manchin, WV: Declaration of Energy Independence

Gov. Steve Beshear, KY: Comprehensive Energy Strategy

Gov. Charlie Crist, FL: Greenhouse Gas Initiative

Gov. Phil Bredesen, TN: Clean Energy Technology Summit

Gov. Rick Perry, TX: Carbon Capture & Sequestration

Governor Mike Easley, NC: Renewable Energy and Energy Efficiency Portfolio Standard

More than 600 energy and environmental bills

passed by legislatures in southern states in 2008

Electrical System Interconnections - Southeast

ALABAMA

ARKANSAS

DISTRICT OF COLUMBIA

DELAWARE

FLORIDA

GEORGIA

IOWA

ILLINOIS INDIANA

KANSAS

KENTUCKY

LOUISIANA

MICHIGAN

MISSOURI

MISSISSIPPI

NORTH CAROLINA

NEBRASKA

NEW JERSEY

NEW YORK

OHIO

OKLAHOMA

ONTARIO

PENNSYLVANIA

SOUTH CAROLINA

TENNESSEE

TEXAS

VIRGINIA

WEST VIRGINIA

Planning Transmission Systems in the New World

Transmission & energy planning -more important and complex as intermittent resources & demand response programs increase

Planning must integrate deployment of sensor & automation technologies

Applications of electricity are changing November 2008 NERC Report on Climate Policy & Grid Reliability

Broad Fuel-Switching from Coal to Natural Gas Transmission Infrastructure & Planning Mechanism Demand-Side Resources – Critical Component National Climate Change Policy Needed- Regulatory Certainty

2008 NERC Long Term Reliability Assessment Transmission miles increase 9.5% from 2008-2017 (projected) More Transmission needed for bulk system reliability & to integrate new

generation (much remote) Siting difficult: local opposition; time-consuming; expensive; state rules

different Smart grid technologies necessary for improved efficiencies

In Summary:In Summary:2007 SSEB Electric Generation 2007 SSEB Electric Generation

Mix Mix Fossil fuels account for 78% of the 2007 regional power Fossil fuels account for 78% of the 2007 regional power

supplysupply

Coal52%

Natural Gas25%

Nuclear18%

Oil1%

Renewable4%

In The Future:In The Future:SSEB States Have SSEB States Have Much Higher Costs to Reduce GHG Emissions Much Higher Costs to Reduce GHG Emissions than the than the

Western and Northeastern States that Have a Higher Mix of Western and Northeastern States that Have a Higher Mix of Nuclear and Hydro PowerNuclear and Hydro Power

52%

18%

25%

4%1%

Coal

Nuclear

Gas

Renewable

Oil

24%

12%

32%

32%

58%31%

7% 4% 22%

31%

31%

12%4%

7 State Western Climate Initiative16 SSEB States

6 State Midwest Regional Greenhouse Accord

10 State Regional Greenhouse Gas Initiative

Kenneth J. Nemeth, SecretaryKenneth J. Nemeth, Secretary

Southern States Energy BoardSouthern States Energy Boardnemeth@sseb.orgnemeth@sseb.org

(770) 242~7712(770) 242~7712

PLEASE VISIT:PLEASE VISIT:

www.sseb.orgwww.sseb.org

www.americanenergysecurity.orgwww.americanenergysecurity.org

www.secarbon.orgwww.secarbon.org