April 14, 2008
STATE MANDATES AND GOALS REGARDING RENEWABLE ENERGY
By: Kevin E. McCarthy, Principal Analyst
You asked for a description of (1) Governor Rell's renewable energy goals; (2) the renewable portfolio standard (RPS), and how biofuels are treated under its requirements; and (3) state grants for biofuels distributors. We answer each question in turn.
In September 2006, Governor Rell announced a long-term energy “blueprint.” The blueprint sets goals that, by 2020: (1) 20% of all energy used and sold in Connecticut will come from clean or renewable energy sources, (2) the state will achieve a 20% reduction in energy-peak consumption, and (3) state fossil fuel consumption will be reduced by 20%. The governor also proposed that the state mandate that (1) all commercial transportation fuels sold in the state include a mixture of 20% alternative fuels and (2) all residential and commercial heating oil contain 20% biofuels. These mandates have not been adopted to date.
RENEWABLE PORTFOLIO STANDARD
The RPS, initially adopted under PA 98-28, requires electric companies and competitive suppliers to get an increasing part of their supply from renewable resources. By law, they must obtain 5% of their supply from class I renewable resources in 2008. This proportion will increase in stages to 20% by 2020. Class I resources include power produced from the sun, wind, and fuel cells. It also includes power derived from certain types of sustainable biomass, so long as it meets statutory air emission limits.
The electric companies and suppliers must obtain a further 3% of their power from either class I or class II renewable resources every year. Class II resources include other types of biomass that meet a less stringent emissions standard. Finally, the companies and suppliers must obtain part of their power from class III resources, such as savings from conservation programs and power from small scale distributed generation facilities, such as microturbines, which are usually located on a customer's premises.
In March 2005, Representative Hovey asked the Department of Public Utility Control to rule that biodiesel fuel is a Class I renewable resource. In docket 05-03-13 (attached), the department ruled that biofuel facilities can count as a class I or class II resource, depending on their air emissions. For these purposes, the department defined biodiesel as “a fuel comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats, designated B100, and meeting the requirements of ASTM D 6751.” The department noted that biodiesel fuels are often blended with conventional diesel fuels. For example, B20 consists of 20% biodiesel and 80% conventional diesel. When a biodiesel facility applies to the department for certification as Class I or II, the department will examine the characteristics of the fuel. Only the portion of output that is attributable to combustion of biodiesel fuel counts towards the RPS. Thus, a facility that burns B20 will receive credits towards the RPS for 20% of the power it produces. The facility must also meet the statutory emissions requirements for Class I or II biomass facilities, as appropriate.
INCENTIVES FOR BIOFUEL DISTRIBUTORS
PA 07-4, June Special Session encourages the production and use of biodiesel fuel for transportation and heating. Among other things, it provides grants to biodiesel producers and distributors and encourages the use of biodiesel in state buildings. Under the act, each distributor is eligible for a grant of up to $50,000 for each distribution site. These grants may be for the actual monthly costs of creating biodiesel storage and distribution capacity, but cannot be used to buy equipment or build, modify, or retrofit facilities. The Department of Economic and Community Development (DECD), in consultation with the entity it selects to implement the grant, must create an application process and adopt guidelines to administer this grant. (PA 07-5, June Special Session specifies that distributors are only eligible for grants to help buy equipment or construct, modify, or retrofit biofuel facilities.)
DECD must (1) create guidelines to administer this and the other grant programs established by the act and (2) submit an annual report to the Energy and Technology, Commerce, and Environment committees.
In addition, PA 07-242 allows the state's Clean Energy Fund to invest in alternative fuel for electric generation, including ethanol, biodiesel, or other fuel, produced in Connecticut and derived from agricultural produce, food waste, or waste vegetable oil, if the Department of Environmental Protection determines that these fuels reduce greenhouse gas emissions and fossil fuel consumption.