California policies to drive up use of renewable fuels and electricity will grow clean energy markets across western states, California Energy Commission member John Geesman told the opening session of the eighth annual Harvesting Clean Energy Conference Monday.

“California is not always regarded as the best neighbor in other states of the west,” said Geesman, who chairs CEC’s renewable energy efforts. “For those of you interested in selling renewable energy, I’m here to tell you I’m your best friend.”

He spoke to an audience of farmers, renewable energy developers and other clean energy players gathered in Portland for the largest annual agricultural energy conference in the Northwest and one of the largest in the U.S.  Volatile energy markets and a booming clean energy sector drove this year’s pre-conference registrations to 630, exceeding last year’s record attendance of 600.

California, which aims to meet 33 percent of its electric power demand with new renewable sources, will be a significant market for producers in the Northwest and other western states, Geesman predicted.  Also vice chair of the American Council on Renewable Energy, ACORE, he overviewed major renewables markets both nationally and regionally.  

RENEWABLE ELECTRICITY

Wind/Hydroelectric – Geesman noted California utilities are buying Northwest wind power balanced with large hydro plants.  To directly meet the California standard hydro plants must be 30 megawatts (MW) or under.  Because wind is concentrated away from population centers, wind growth will require expanded transmission, which represents “one of the most difficult challenges. Nobody wants a transmission line in their backyard.”  

Geothermal – Nationally it has a 500 gigawatt (GW) potential, or the equivalent of 500 large coal plants.  Unlike other renewables that vary with wind and sun geothermal is a 24/7 resource that could replace coal. It is concentrated in the west.  But added transmission capacity will also be needed for remote resources.  “Oregon has a commercial quality resource,” Geesman noted.

Biomass – National potential is 100 GW by 2020.  “One of key imports to California is likely to be biomass electricity.”  This will involve overcoming California laws likely unenforceable under the interstate commerce rules banning wood-fired electricity that does not meet California forestry rules, Geesman noted.  Not reflected in the national potential is biogas from feedlot manure.  Already biogas is being fed into natural gas pipelines, and California utilities can earn renewable generation credits for putting pipeline quality gas into system anywhere in western states.  “I suspect you will see California utilities creeping around your feedlots.”

Solar Thermal – Concentrating solar heat to generate electricity, the prime opportunity is the Southwest.  “Very large efforts” are underway there. “European companies dominate and that’s a shame.  We developed the first solar thermal electricity in California over 20 years ago. Why we turned our backs on the technology will remain a mystery.”  

RENEWABLE FUELS

Ethanol – California has now become the largest U.S. ethanol market with a 5.7 percent state standard to meet clean fuel requirements formerly filled by MTBE, banned because of its association with cancer. “We didn’t particularly like it when ethanol was introduced into the fuel stream. There was parochialism among Congressional members about sending money to Midwest, but the public is enthusiastic.  They have shown a clear preference for sending money to the Midwest over the Mideast.”

The California Air Resource Board had been holding back on a greater ethanol share due to concerns it would allow more volatile organic compounds from gasoline to be released on hot days. But the computer models on which that concern was based were “bought, paid for and maintained by petroleum companies and auto industry,” Geesman noted.  “The numbers could not hold up under public scrutiny.”  So California will move to a 10 percent standard by 2010.  

At this point, Geesman said, “Most questions are around whether corn ethanol is desirable. Be very clear – Corn ethanol is simply priming the pump.” The new federal Renewable Fuel Standard will push to fuels based on wastes and energy crops. “We are convinced we will be able to invent and innovate our way into the fuel stock of the future.”

Such cellulose-based ethanol is seen as a market opportunity particularly for the Northwest, with large production capacity in farms and forest.  

Biodiesel – Geesman predicted California will move to a five percent biodiesel standard by 2010.  One exciting development already taking place is local fleet purchase requirements.  “For those of you looking longingly into our eyes, I think we’ll be a good market.”  California’s first-of-a-kind Low Carbon Fuel Standard, calling for a 10 percent reduction in the global warming intensity of fuels by 2020, will drive growth.  “The biodiesel market should look at this.  We soon will be the largest biodiesel market in the U.S.”

RENEWABLE ENERGY POLICY UPDATE

Geesman also overviewed the national policy environment from the standpoint of ACORE, “the only organization that attempts to take into perspective all renewable energy technologies and fuels.” The most crucial issue is the failure of Congress to extend the 1.9-cent Production Tax Credit (PTC) which expires at the end of this year.  As when this has occurred in the past, that will bring a quick end to the wind boom now sweeping the U.S.  It also affects tax credits for solar, geothermal and biomass.

“There is no bigger issue for renewable electricity in Congress this year,” Geesman said.

The PTC is held hostage to various political maneuvers.  Under pay-go rules, extending the credit would require removing other tax credits.  Logically they would come from the oil industry, but “oil is not about to give away any of its tax incentives,” Geesman noted.  The president threatened to veto any bill that removed oil industry tax credits.  

The new stimulus package does not mandate pay-go and could be a vehicle to extend PTC, but it is not included. The Senate might consider this, but he sees no more than a 50 percent chance of passage.  Geesman said the Democrats do not have the impetus to push this because using they could find Republican votes for oil tax breaks against renewables useful ammunition in the fall elections, Geesman added.

Lacking long-term tax credits that provide investment certainty prevents the U.S. from developing a domestic supply chain for wind turbines, he noted.

“It is important to make clear to elected leaders public wants progress and will not tolerate partisan divisions,” Geesman said.  “Tell Congress stop messing around with this and focus on the long-term needs of the country.”  

Meanwhile, with the exception of transportation fuels, most of the productive policy initiatives for renewables have come at the state level, the ACORE vice chair said.   

“We go to international conferences with a mixed message, good performance in 18-19 states but only 3 percent of U.S. energy from renewable sources.”  With different parts of the U.S. having varying potential among renewable sources, “The challenge is to craft national policy. We have many different regional interests in the U.S.  It is not a situation where one size or technology is likely to fit all.”