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United States

Coal state adopts hybrid approach -- Carefully constructed law

Pennsylvania Governor Edward Rendell announced the state's new clean energy target from the top of the largest pile of waste coal east of the Mississippi River, a fitting place to broadcast the most unusual renewables portfolio standard (RPS) yet adopted in the United States. The law takes effect in mid-2005.

Senate Bill 1030, which sets in motion Pennsylvania's two-tier mandate, is the eighteenth RPS in the US. It calls for the state's energy companies to provide 8% of sales from renewable resources by 2019 and makes provision for companies to competitively sell excesses and make up shortfalls through trade of green tags. The standard also calls for 10% of sales from other resources, including Pennsylvania's considerable supply of waste coal.

"The bill's renewable energy provisions will ensure that Pennsylvania is on the cutting edge of new energy technologies, making us more attractive to advanced energy companies seeking to take advantage of our location," says Rendell. "Likewise, the responsible use of resources such as waste coal will help to clean up mine-scarred landscapes."

Tier One, the renewables portion of the standard, includes wind, already the state's most abundant renewable with 129 MW of installed capacity and much more in planning. Some supporters of SB 1030 say that wind in the state could rise to 3600 MW by 2019 to meet the standard. It also includes solar photovoltaics, low impact hydro, geothermal, fuel cells, biomass, biologically derived methane gas and methane recovered from venting coal mines. Photovoltaics must account for 0.5% of the state's sales. Less than 1% of sales in the state currently come from Tier One resources.

Leaching acid

The Tier Two standard includes energy efficiency, waste coal and clean coal technologies, large scale hydro, municipal solid waste and timber industry by-products. More than 8% of sales today come from these resources.

Jeanne Clark from PennFuture, a statewide advocacy group for the environment and economy, says that while waste coal generation will not clean Pennsylvania's air, it will clean its waterways. Piles of coal all over the state are leaching acid into water, she says. Rendell calls it "one of the most pressing environmental problems in our commonwealth."

For most of the state's utilities, the Senate bill's requirements begin to phase in over the next two years. Among other provisions, the bill calls for the Pennsylvania Public Utilities Commission (PUC) to establish a credit-trading system to help utilities track the requirements and it sets non-compliance penalties at $45/MWh. PennFuture's John Quigley says the state will use the PJM Interconnection's Generation Attributes Tracking System, still being developed for the Pennsylvania-New Jersey-Maryland market, to track projects.

Annual goals

The legislation sets annual goals, essential for an RPS market to function properly. By 2007, 1.5% of sales must come from Tier One renewables and utilities must add 0.5% each year until 2019. Quigley expects the rulemaking agencies -- the PUC, the environment department and several other state agencies -- to be done by mid-year 2005. "We're excited. This was considered almost impossible for a state like this," says Quigley. "The people who developed the legislation have done the state a great service. Even without prompting, several legislators have said that once this proves itself, they will come back in to raise Tier One."

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