You asked for information on initiatives in California, New Jersey, and Rhode Island in the following areas: biofuel development, energy efficient buildings, solar panel installation, geothermal technology, other renewable power technologies, and energy efficient vehicles.

SUMMARY

California has initiatives in all of these areas. Among the most notable are (1) requirements that reduce the content of transportation fuels sold in the state by 10% by 2020 (biofuels have a lower carbon content than gasoline or diesel fuel), (2) recently adopted legislation to establish programs to promote alternative fuels (including biofuels) and related infrastructure; (3) energy efficiency provisions in the state building code that go beyond those required under the Connecticut building code; (4) a program to install solar panels on one million roofs by 2017, (5) projects that reduce the overall cost of geothermal electricity generation, and (6) “clean car” standards, designed to reduce emissions of carbon dioxide and other greenhouse gases by 23% by 2012 and by 30% by 2016 (these standards are currently in litigation). While the clean car standards do not directly address fuel efficiency, in practice vehicle manufacturers would have to substantially increase fuel efficiency to meet them.

New Jersey and Rhode Island have adopted a less comprehensive set of initiatives. Both states have adopted the clean car standards (as has Connecticut). Both states have building code standards that are more stringent than Connecticut's, although less stringent than California's.

New Jersey, like Connecticut, has a renewable portfolio standard that requires electric suppliers to get part of their power from renewable resources. New Jersey, unlike Connecticut, has a specific requirement with regard to power from photovoltaic (PV) systems. New Jersey provides financial incentives, via its electric and gas utilities, for energy efficiency in new and existing buildings. (Connecticut has similar programs regarding electric efficiency. ) New Jersey offers low-interest loans to help fund sustainable energy projects. It also offers rebates for electric generators using sustainable biomass.

Rhode Island offers a 25% personal tax credit for residential PV systems, solar hot-water systems, active solar-heating systems, wind-energy systems and geothermal systems. It also has a program to install solar panels on school buildings.

Much of the information in this report comes from a Department of Energy database on state incentives for energy efficiency and renewable energy, which is available at http: //www. dsireusa. org/. Information about energy efficiency provisions in state building codes is primarily derived from a website maintained by the Building Code Assistance Project, http: //www. bcap-energy. org/.

CALIFORNIA

Biofuels

Executive Branch Actions. As noted above, California has adopted greenhouse gas emission standards for vehicles. The implementing regulations accommodate alternative fuel vehicles by adjusting the reported emissions for equivalent gasoline-fueled vehicles. For example, the regulations assume that vehicles using a blend of 85% ethanol and 15% gasoline (E85) assume that E85 reduces greenhouse gas emissions 23% relative to gasoline.

Although California consumes more than 900 million gallons of ethanol each year, the vast majority is produced out of state. In 2006, Governor Schwarzenegger issued executive order S-06-06, setting a goal to produce 20% of the state's biofuels consumption within the state by 2010, increasing to 40% by 2020 and 75% by 2050. The order also calls for biomass to provide 20% of the electricity generated to meet the state's renewable portfolio standard. This standard requires electric utilities to obtain part of their power from renewable resources.

In 2007, Governor Schwarzenegger signed Executive Order S-01-07 establishing a Low Carbon Fuel Standard for transportation fuels sold in the state.   The standard will require the carbon content of transportation fuels sold in California by 10% by 2020.   The standard applies to all refiners, blenders, producers, and importers of transportation fuels in California. The California Air Resources Board plans to adopt regulations implementing the standard in late 2008.

In December 2007, the California Energy Commission adopted its Alternative Fuels Plan. The plan recommends a combination of regulations, incentives, and market investments to achieve increased penetration of alternative and non-petroleum fuels in the market. The recommendations include increasing the use of alternative fuels to 20% of on-road transportation fuel use by 2020 and 30% by 2030. Alternative fuels include ethanol, biodiesel, natural gas, and electricity, among other things. The plan calls for on-going funding at the level of $ 100 to $ 200 million per year to advance innovative and pioneering transportation technologies.

Legislation. In 2007 the legislature passed and the governor signed AB 117. The act creates an Alternative and Renewable Fuel, Vehicle Technology, Carbon Reduction and Clean Air Program, to be administered by the California Energy Commission. The program will provide funding in the following areas:

1. projects to develop and improve alternative and low-carbon fuels (including ethanol, renewable diesel, natural gas, and biogas) that have high potential for long-term and short-term commercialization;

2. alternative and renewable fuel deployment projects that optimize fuels for existing and developing engine technologies;

3. technology deployment projects to decrease the overall impact of a fuel's life-cycle carbon footprint and sustainability;

4. alternative and renewable fuel infrastructure, fueling stations and equipment incentive projects, including revolving loans and grants to small- and medium-sized businesses for these purposes;

5. alternative and renewable fuel and efficient vehicle technology deployment projects that accelerate commercialization of vehicle technology, including buy-down programs for products that are near-market; and

6. alternative fuel and electric infrastructure projects that promote infrastructure development for existing fleets, public transit and transportation corridors.

The act requires that $ 10 million be transferred annually to a fund it creates from an existing fund in order to pay for these programs.

Energy Efficient Buildings

Building Code. California uses the 2006 International Energy Conservation Code (IECC) as the basis of the energy efficiency provisions of its state building code. The 2006 code, like its predecessor, allows builders to meet its standards by using a prescriptive or performance approach. The former has specifications such as the amount of insulation to be placed in walls and ceilings. The performance approach instead requires builders to meet standards regarding the amount of energy used for heating and cooling.

The 2006 IECC code is somewhat more stringent than the 2003 IECC code that is incorporated in Connecticut's state building code, for example, having more stringent lighting efficiency standards for nonresidential buildings. The 2006 code also requires, under the prescriptive approach, the use of 2x6 studs be used in new home construction, rather than the 2x4 studs permitted under the 2003 code. This permits the installation of R-19 rather than R-13 insulation.

California's building code also contains several state-specific provisions that go beyond the 2006 IECC code. For example, the building code:

1. is more comprehensive than the IECC code, e. g. , setting lighting efficiency standards for residential buildings and “cool roof” requirements for commercial buildings;

2. gives energy savings produced during peak demand periods a higher value than savings during off-peak periods under the performance approach for commercial buildings; and

3. requires increased use of natural lighting in certain low rise commercial buildings.

The building code also requires that certain efficiency measures be installed, even if the builder is using the performance approach. Unlike Connecticut, California allows local governments to adopt and enforce energy standards that are more stringent than the state standards.

There are separate code compliance manuals for residential and nonresidential buildings, both of which are available at http: //www. energy. ca. gov/title24/2005standards/index. html.

Incentives for Energy Efficiency. The state allows taxpayers to deduct the interest paid on loans used to purchase energy efficient residential products or equipment from their personal taxes. The deduction is for loans from a publicly-owned utility company to buy energy-efficient heating, ventilation, air-conditioning, lighting, advanced energy usage metering, windows, insulation, zone heating products, and weatherization systems. Customers of utility companies that do not offer customer financing may be able to deduct the interest from a home equity or home improvement loan used to purchase energy efficient products and equipment.  The deduction may not be taken if a tax credit is taken for the purchase of the energy efficient equipment.

Solar Panels

The state promotes solar panels and other solar technologies. It has set a goal of placing 3,000 megawatts (MW) of new, solar produced electricity systems on rooftops by 2017, by putting solar systems on one million California roofs. (This is approximately equal to the generating capacity of five typical fossil fuel power plants. ) There are separate programs for new and existing homes (including low and moderate housing) and commercial buildings. The programs are open to customers served by electric companies and municipal electric utilities.

The New Solar Homes Partnership merges the goals of energy efficiency and solar production to accomplish the installation of 400 MW of solar electric systems on energy efficient new homes in California over the next ten years. The Energy Commission will work with builders and developers to create a self-sustaining market for solar homes that incorporate high levels of energy efficiency and high-performing systems on 50% of new homes by 2017. The program will target new residential construction, both single family and multi-family, including affordable housing. The program provides incentives based on the system's expected performance plus technical and market support for builders participating in the program. The program is open to builders and developers who install qualifying solar electric systems on new, highly energy efficient residential buildings that are served by the state's electric companies. (Municipal utility customers are not eligible for this program).

The California Public Utilities Commission, through its California Solar Initiative, will provide incentives over the next decade for existing residential homes and existing and new commercial, industrial, and agricultural properties.

The initiative provides:

1. incentives starting at $ 2. 50 per watt for photovoltaic systems up to one megawatt in size,

2. funds for solar installations for existing and new low-income and affordable housing, and

3. a pay-for-performance incentive structure to reward high-performing solar projects.

The initiative is coordinated with the state's energy efficiency, "smart" metering, and building standards programs at the Public Utilities Commission and Energy Commission.

Further information about the state's solar programs is available at http: //www. gosolarcalifornia. ca. gov/index. html. The state also exempts solar panels and various other solar equipment from the property tax.

Geothermal

The California Energy Commission's Geothermal Program began in 1981. The program primarily focuses on electricity generation. In several parts of the state, magma rises close to the earth's surface. The heat from the magma is used to produce steam or hot water that is used to generate electricity. In contrast, in Connecticut, “geothermal” usually refers to ground based heat pump systems, which are used for heating and cooling buildings. These systems take advantage of the fact that the temperature a few feet below the earth's surface is nearly constant throughout the year.

The program has supported research, development, and demonstration (RD&D) partnerships with over 160 public and private entities. It supports the development of new geothermal resources and technologies for low temperature uses and electricity generation while protecting the environment and promoting energy independence.

The program funds:

1. RD&D projects that reduce the life-cycle cost of geothermal electricity generation or that reduce the uncertainty and cost of enhancing geothermal reservoir systems,

2. projects that mitigate the adverse impacts of geothermal development, and

3. projects that provide significant environmental enhancement.

Further information about the program is available at http: //www. energy. ca. gov/geothermal/index. html.

Other Renewable Energy Technologies

In 2006, the California Public Utilities Commission authorized $ 2. 6 million for a pilot solar water heating program. The budget includes program administration, inspections, performance monitoring, program metering and verification and $ 1. 5 million for incentives. The program began operations in July 2007 and is administered by the California Center for Sustainable Energy. It is available only to retrofit systems for residential, commercial, agricultural, and industrial electricity customers of San Diego Gas & Electric.  For residential and small commercial customers, the maximum incentive is $ 1,500 and is based on estimated system performance, solar orientation factors, and other inputs.  Pool and spa heating systems are not eligible for the credit. For larger commercial systems, the incentive is a function of collector area, adjusted for system type, collector rating, and solar orientation. The system must be metered and one month of successful meter data is required to demonstrate the system is working properly before the incentive is paid.  The maximum incentive is $ 75,000.

In addition, the state exempts solar space and water heating systems from the property tax. Pipes and ducts that are used to carry both solar energy and energy derived from other sources qualify for a 75% exemption.
 

Energy Efficient Vehicles

California has adopted vehicle emissions standards designed to reduce emissions of carbon dioxide and other greenhouse gases by 23% by 2012 and by 30% 2016. While the standards do not directly address fuel efficiency, in practice vehicle manufacturers would have to substantially increase fuel efficiency to meet the standards. The rules were set to begin taking effect with the 2009 model year. Twelve states, including Connecticut, New Jersey, and Rhode Island have adopted the California standards and governors of Arizona, Colorado, Florida, and Utah have announced plans to do so. (Under the federal Clean Air Act, California can adopt its own emission standards and other states can adopt these standards as an alternative to the federal standards, but they cannot adopt their own standards. )

In order to implement its standards, California needs a waiver from the Environmental Protection Agency (EPA). On December 19, 2007, EPA denied California's request, citing provisions in recently adopted federal energy legislation that will require vehicle manufacturers to increase fuel efficiency. On January 2, 2008, the state appealed the decision to the U. S. Court of Appeals for the Ninth Circuit and 15 states (including Connecticut, New Jersey, and Rhode Island) petitioned to intervene in support of California. Unless and until the EPA decision is reversed, the states will not be able to implement the California standard.

NEW JERSEY

Biofuels

The state offers rebates for electric generators using sustainable biomass. Systems with up to 10 kilowatts (kW) are eligible for rebates beginning at $ 5 per watt, up to a maximum of 50% of a system's cost. Larger systems receive incrementally lower rebate amounts, with a 30% maximum. (Single-family rebate applications are limited to the first 10 kW of project capacity. ) The rebate schedule is as follows:

1. $ 3. 00 per watt for the first 10 kW for systems greater than 10 kW  

2. $ 2. 00 per watt for the next 90 kW of system size  

3. $ 1. 50 per watt for the next 400 kW of system size  

4. $ 0. 15 per watt for system capacity in excess of 500 kW, up to 1 megawatt (MW, i. e, 1,000 kW).

Energy Efficient Buildings

New Jersey's SmartStart Buildings program is sponsored by the New Jersey Board of Public Utilities (BPU) in partnership with the state's gas and electric utilities. The program has three main components: new commercial/industrial construction, commercial/industrial retrofits, and schools. The incentives provided through this program are available to non-residential retail electric and gas service customers of the state's utilities. Incentives for new construction (other than schools) are only available for projects within New Jersey Smart Growth areas while retrofit incentives are available to all commercial and industrial customers. The program offers technical assistance and incentives for energy-efficient design. It also offers rebates for energy efficient heating, ventilation, and air conditioning equipment; lighting; premium motors; natural gas water heaters; and variable frequency drives, and custom

measures approved by the participating utility. The rebate amounts are all determined by the equipment type, size, and efficiency level.  The program is funded through New Jersey's societal benefits charge on electric and gas bills.

BPU, in conjunction with the utilities, offers the Energy Star Homes Program, which provides incentives to builders who construct homes that are 30% more efficient than required under the national Model Energy Code. In order to achieve this classification, a home must score 86 out of a possible 100 points on the Home Energy Rating Scale. Builders can qualify for two types of incentives under this program, core incentives and supplemental incentives. For core incentives, if the home is rated as an Energy Star home, the builder will receive a base amount that depends on the type of residence (single-family or multi-family), as well as an incentive per square foot of the house, up to a maximum incentive of $ 2,900. Supplemental incentives are available for energy efficient heating, ventilation, and air conditioning systems and appliances. Energy Star rated homes must have at least three Energy Star labeled lighting fixtures that are wired into the building; additional fixtures qualify for incentives.  

Connecticut has programs similar to these for electric company customers.

Solar Panels

New Jersey, like Connecticut, has a renewable portfolio standard that requires utilities and other electric suppliers to get part of their power from renewable resources. New Jersey, unlike Connecticut, has a specific requirement with regard to power from photovoltaic (PV) systems. Currently, BPU rules require that solar power be the source of at least 0. 0817 % of the electricity sold in New Jersey; this proportion will increase over time, rising to 2. 12% for the year beginning June 1, 2020.

To comply with the solar electric generation portion of the portfolio standard, suppliers obtain and use Solar Renewable Energy Certificates (SRECs). Owners of PV systems earn certificates for the power they produce from their systems. The maximum price for an SREC is approximately $ 300 per MWh ($ 0. 30 per kWh). As of late 2007, the SREC program has compensated system owners an average rate of about $ 200 per MWh ($ 0. 20 per kWh) generated.

In late 2007, BPU amended the incentives provided for solar electricity, after finding that the previous incentives would cost an estimated $ 9. 6 billion if continued through 2021, adding about 6. 5% to electricity rates during this period.

The state also exempts solar energy systems from the sales tax. All major types of solar energy equipment, including equipment for passive solar design, is eligible for the exemption.

Other Renewable Technologies

The Office of Sustainability in the Commerce and Economic Growth Commission administers a sustainable development low-interest loan fund to assist in capitalizing sustainable projects. Eligible measures include sustainable energy production. Eligible capital expenditures include, but are not limited to equipment, machinery, land, buildings, and production and marketing costs. Loans can cover up to 85% of project costs up to a maximum of $ 250,000, with a maximum loan term of 10 years.

Energy Efficient Vehicles

As noted above, New Jersey has adopted the California “clean car” standards and is seeking to participate in the appeal of EPA's decision not to grant a waiver to implement these standards.

RHODE ISLAND

Biofuels

The state exempts biodiesel produced from sources such as virgin or waste vegetable oil from the motor fuels tax.

Energy Efficient Buildings

Rhode Island uses the 2006 IECC as the basis of the energy efficiency provisions of its state building code. However, it continues to allow the use of 2x4 studs in new residential construction. On the other hand, it imposes a more stringent requirement for ductwork, requiring R-8 insulation.

Solar Panels

Rhode Island offers a personal tax credit for PV systems. The system must have a minimum module size of 24 square feet, and must either be connected to the grid or a battery-storage system. The tax credit is equal to 25% of the system cost and applies only to residential installations. The credit is available to the resident or business that pays for the system.  Systems up to $ 15,000 are eligible for the full 25% credit. (A resident or business that pays for a system that exceeds $ 15,000 in cost will receive a credit based on a $ 15,000 system cost. )

The state exempts various components of PVs from the sales tax. In addition, PV systems must be assessed as though they were conventional energy sources for purposes of the property tax.

The state's Solar on Schools Initiative provides participating school systems with a PV installation, as well as web-based data display on the PV system performance. Participating schools receive a 2,000-watt PV system; a data monitoring system; an energy curriculum that includes teacher training, mentoring, course materials; and internet access to the PV system output data of the schools and institutions participating in the program. The data collection and display system allows teachers and students to access system performance data and use it in science or other curricula. Through the web-based system, participating schools and other education-oriented institutions can compare the operating results of their PV systems to that of other schools in the program. Most of the funding for the PV system and the educational support comes from the Renewable Energy Fund and the Office of Energy Resources. Participating schools must provide a nominal amount toward the cost of the program.

  
Geothermal

Geothermal systems are eligible for a 25% tax credit, with a cap of $ 7,000. (A resident or business that pays for a system that exceeds $ 7,000 in cost will receive a credit based on a $ 7,000 system cost. ) Geothermal systems must have either a minimum coefficient of performance of 3. 4, or an efficiency ratio of 16 or greater. All geothermal systems must have a commissioning sign-off by the manufacturer or distributor of the equipment to verify the proper installation and performance of the system. The state also exempts geothermal heat pumps from the sales tax.

Other Renewable Energy Technologies

Active solar-heating systems and wind energy systems are eligible for the same credit as PV systems. Active solar-heating systems must have a minimum collector area of 125 square feet, and must include a system for storing or distributing heat to the living area of a house. Wind-energy systems must have a rotor diameter of at least 44 inches and a minimum factory-rated output of at least 250 watts at 28 miles per hour.

Solar hot-water systems are eligible for the same credit as geothermal systems, i. e. , the credit applies to systems costing up to $ 7,000. The system must have a minimum collector area of 60 square feet and must include a storage tank that holds at least 80 gallons.

The state exempts solar thermal systems and wind turbines and towers from the sales tax. In addition, active solar heating and solar hot water systems must be assessed as though they were conventional energy sources for purposes of the property tax. There is a local option property tax exemption for other types of renewable energy systems.

Energy Efficient Vehicles

As noted above, Rhode Island has adopted the California “clean car” standards and is seeking to participate in the appeal of EPA's decision not to grant a waiver to implement these standards.

KM: tjo