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Illinois Governor Rod R. Blagojevich Climate Change Advisory Group (ICCAG) Modeling Assumptions July 10, 2007 Summary of Modeling Assumptions Policies were re-numbered to ensure constancy New format - AA-00-00 First two characters indicate Sub-Group responsible for developing policy. Second two characters are new numbers for policies. Final two characters represent original policy number (00 if no number assigned) 2 Modeling Assumptions Following pages describe assumptions made by the modeling group These assumptions were made where information was not specified or unclear in the “Strawman” proposals Additional details are available in the “Strawman” descriptions. 3 Code Description and Modeling Assumptions Commercial, Industrial and Agricultural Sub-Group: CI-05-04 Efficiency standards for commercial and industrial boilers and incentives for efficiency upgrades and combined heat and power (Includes Policy 14) Standard introduced in 2010 to raise efficiency of new boilers by 3% Incentive for new CHP introduced in 2009 equal to $1,000/kW for renewable fuels and $500/kW for non-renewable fuels. Capped at 10MW. CI-10-21 Expand use of no-till farming Incentive of $15/acre introduced in 2009 brings 1 million acres of additional land under CNT by 2020; reducing emissions by 0.5 MTCE/acre. CI-15-03 Encourage or require reductions in emissions of high GWP gases Assumes 40% reduction in production/release of gases with high global warming potential (listed in strawman proposal). CI-25-00 Increase Traditional Recycling Diversion Rate with Municipal Goals and by Stimulating Demand for Recycled Materials Diversion rates increased to 50% by 2017 (30% in 2010, 40% by 2012, and 50% by 2017) from current levels of 25%. An additional $62 million in incentives provided over 10 years. GHG reductions equal to 3.7MTCE/ton for aluminium, 0.85/tonne for fibre, 0.45/tonne for plastics, and 0.08/tonne for glass. Assume 40% of recycle materials exported from US; 85% from Illinois. 4 Code Description and Modeling Assumptions Commercial, Industrial and Agricultural Sub-Group: CI-30-11 Encourage or require methane capture from coal mines, landfills, livestock operations and wastewater treatment plants Incentive introduced in 2009 to provide 1¢/kWh or $2.96/mBtu for projects capturing methane. Assume that 50% of sources releasing methane take advantage of incentive and recover 90% of emissions to be used for heat or power generation. CI-35-00 New - Land use offset requirement No net impact assumed. Offsets emissions due to land conversion. CI-40-02 Programs to encourage forest management, reforestation, tree- and grass-planting. 24 million additional trees planted between 2009 and 2020 No additional conversion of existing grassland or forested lands. Cost $750,000 per year Assumes sequestration rate for 6 year old moderate growth hardwood (8.3 metric tonnes/1,000 trees). 5 Code Description and Modeling Assumptions Cap & Trade Sub-Group: CT-05-12 Carbon Offset for Electric Generation Requires generators to offset 20% of CO2 emissions Applies to all generating stations of 25MWe or greater which sell power to grid. Any expansions of greater than 25MW also included. For modeling purposes assume generation classed as industrial excluded (not selling to grid). Assume 2010 implementation CT-10-16 State-level cap and trade program Covered emissions are capped in 2012 at 2011 levels and reduced gradually to 1990 emission levels by 2020. 15% gratis permits to be issued with balance auctioned. Early action credits awarded within 15% gratis permits. Model with and without link to RGGI and use of RGGI offsets (see portfolio discussion below). For modeling purposes assume monies flow to general government revenues to allow impact of different investment strategies to be modeled separately. Up to 10% of compliance through offsets; modeled at $5 per tonne. 6 Code Description and Modeling Assumptions Electricity and Power Sub-Group: EP-05-05 CO2 emission performance standards for electricity generation or an emissions portfolio standard Sets standard for new generation and mandatory standard for power purchases. New plants must not emit in excess of 1,100 lbs. CO2/MWh LSE’s in Illinois that enter into power purchase contracts with newly operational plants may only contract with plants which do not exceed 1,100 lbs CO2/MWh Applies to purchases with new plants only Requirement starts in 2009; affects new plants coming into service after 2011 (2 years after coming into effect). Affects all plants with nameplate capacity of 25MW or greater with expected capacity factor greater than 60^. EP-10-42 Energy conservation and efficiency programs for existing state facilities 20% reduction in energy use by state-owned facilities by 2020; assumed to be phased in equally over 2008 to 2020. Energy use for state facilities provided by IEPA; modelled as a share of total energy use for government facilities (all levels). EP-15-00 Enhanced Energy Efficiency Programs Requires additional DSM spending by utilities equal to 2% or more of sales from utility revenues (policy assumes no cap on spending). Target set at 0.2% of energy sales in 2008, growing at 0.2%/year to 2010 and then by 0.4% until target level of 2% reached in 2015. Assumes level of savings from Best Practices programs as per ACEEE (see strawman). Target of 2% reduction in electricity and natural gas use. 7 Code Description and Modeling Assumptions Electricity and Power Sub-Group: EP-20-00 Enhanced Renewable Portfolio Standard Starting in 2008, renewables assumed to supply 3% of electricity sales within Illinois; growing to 10% by 2015. Contribution from renewables increased by 1.5% per year to reach 17.5% in 2020 and 25% of sales by 2025. Assume 50% of renewables and resulting emission reductions occur within Illinois. 85% of new generation output (GWh) assumed to come from wind, 13% landfill gas, and 2% biomass. Transmission capacity is assumed not to be constraint EP-30-33 Phase-in of Energy Efficiency Standards for Light Bulbs Policy Type: Regulatory technology standard for Residential assume 95% of existing lighting moves to CFL’s over a 5 year period starting in 2012. for Commercial assume 10% of lighting moves to CFL’s over 3 years period Assume the 2016 improvement results in a further 30% improvement phased in over 10 years (as CFL’s replaced). EP-35-13 Establish residential and commercial energy efficiency construction codes beyond International Code Council model standards Assume code changes introduced in 2010 Changes result in 30% efficiency improvement in Residential construction and 25% improvement in Commercial construction Capital cost assumed to increase by 2% 8 Code Description and Modeling Assumptions Electricity and Power Sub-Group: EP-40-07 Small Renewable Distributed Generation: rules, legislation, incentives Regulatory and other changes start in 2008 Assume 1.5% of Illinois sales are displaced by small scale distributed renewable generation EP-45-08 Energy efficiency standards for appliances and equipment Standards introduced in 2008 Equipment list provided in strawman reviewed to estimate impact on end use categories. EP-50-09 Carbon capture and storage portfolio standard Assume that 1,800 MW of CCS capacity built by 2020 and that existing pipeline will be available for transport of CO2. Assume earliest in-service date for CCS is 2015. Initial sequestration assumed to be for EOR. Assume that all power from CCS plants is sold in Illinois by LSE’s. CCS costs based on MIT Coal report (add reference) Proposal EP-50-09: 5% CCS portfolio standard with 90% capture efficiency. 9 Code Description and Modeling Assumptions Transportation Sub-Group: TR-05-44 Fuel efficiency &/or low carbon fuel requirements for government vehicles. Extend State requirement for purchase of fuel efficient vehicles to local governments Assume 154,000 local government vehicles plus an additional 7,200 state vehicles by 2015 84% of vehicles assumed to be FFV’s; 16% hybrids Assume vehicles replaced average 24 mpg while hybrids achieve 38 mpg Average vehicle travels 18,000 miles per year FFV vehicles assumed to use E85 for 50% of distance by 2015.with average ethanol content of 80%. TR-10-18 GHG Emissions Standards for Cars (CA Vehicle Emissions Standards) 3 elements: o Low Emission Vehicle II (LEV II) to take effect in o Zero Emission Vehicles (ZEV) requires a % of zero or extra low emission vehicles (ZEV optional) o Pavley standard for GHG emissions. For modeling purposes we have accepted the California Air Resources Board estimates of vehicle cost increases. If time and resource permit the higher cost estimate presented by the Automobile Manufacturers Association will also be modeled. For modeling purposes we have assumed the regulations will come into effect in 2011. Must wait for 2 model years after adopting standard before requirements come into effect 10 Code Description and Modeling Assumptions Transportation Sub-Group: TR-15-19 Incentives for Fuel Efficient Vehicles Proposal includes both financial incentives and disincentives (feebates) as well as consideration of non-economic incentives (ie. use of HOV lanes) Assume $50 increase in inefficient vehicles combined with a $750 rebate for vehicles with fuel efficiency of 35 mpg or over. Up to 30,000 rebates could be provided annually. Assume standards for feebates increase as standards for vehicle efficiency increase. (see Policy TR-10-18) TR-20-20 Low Carbon Fuel Standard Require fuel providers to reduce carbon content by 10% on full fuel cycle basis. Implement in 2010. Based on California standard. TR-25-69 Passenger and freight rail upgrades Assume 900,000 additional riders travelling a total of 268.4 million miles by train rather than using personal vehicles. 360,000 passengers between Chicago & St. Louis (259 miles) 315,000 passengers between Chicago & Carbondale (331 miles) 225,000 passengers between Chicago & Quincy (315 miles) TR-30-17 Implement smart growth initiatives and expansion of mass transit Assume 11 million miles shifted from personal vehicle travel to transit as a result of Smart Growth initiatives. 11