1a Thomas Mackie Presentation

Renewable Energy Credits and Emerging Technology SWANA Massachusetts Chapter 5th Annual Solid Waste & Recycling Conference & TradeShow

Thomas A. Mackie

Renewable Energy Credits and Emerging Technology ƒ How do “renewable energy credits” (RECs) apply to wastes and how will they affect the market? – Certain wastes can generate RECs – $ from sale of RECS can subsidize disposal costs.

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Renewable Energy Credits and Emerging Technology ƒ Recent Developments – Aug-Sept. 2007 Three Mass. C&D facilities file for conversion to MSW – August 2007 Boralex stops accepting C&D wood – August 2007 MA DOER issues new REC regulations – July 2007 Conn. DPU enforces new C&D rule – Spring 2007 ZeGen pilot plant opens – 2007 NH bans combustion of C&D Wood – June 2006 Mass. bans landfill disposal of wood – Mass. DEP permits 12 C&D processors 3

Renewable Energy Credits and Emerging Technology ƒ What is a Mass. REC worth? $54.04 – January 2007, MTC sold 24,000 MRECs for an average price of $54.04. – This resulted in $1.3M in MRECs sold by Schiller Station, a 50MW wood burning plant in Portsmouth, NH. – Long term value of RECs is uncertain. However, the MTC Massachusetts Green Power Partnership provides long term REC contracts designed to maintain REC market stability.

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Renewable Energy Credits and Emerging Technology ƒ What is the potential REC value per ton of waste? $48.60 – Assume a 30MW power plant accepting 800 TPD of “organic refuse derived fuel.” – Assume nominal operations of 24 hours x 365 (no down time) = 8760 hrs. per year – 8760 x 30 MW=262,800 MWH – Nominal REC revenue is $54 x 262,800 = $14,191,200 – Assume 800 tons of ORDF per day – 800 x 365 = 292,000 tons – Divide REC revenue of $14,191,200 by 292,000 tons of ORDF = $48.50 REC revenue per ton of ORDF. – Similar to electricity price at 5 cents per KWh.

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Renewable Energy Credits and Emerging Technology ƒ Who is Generating RECs*? – 20 Landfill Gas Projects have qualified for Massachusetts RECs ƒ 6 of these are in Massachusetts: Attleboro, Granby, Chicopee, Randolph, Fall River and Greater New Bedford

– 9 “Biomass” facilities have qualified for MRECs ƒ 3 Maine facilities use wood, including C&D wood. ƒ No Mass. facilities use C&D wood.

– 0 “waste to energy” facilities have qualified for MRECs.** – 0 MSW gasification facilities have qualified for MRECs. *From DOER’ DOER’s RPSRPS-Qualified New Renewable Generation Units ** After December 31, 1998, “waste to energy” energy” from “conventional municipal solid waste plant technology in commercial use” use” was no longer eligible for RECs. G.L. c. 25A, Sec. 11F (b).

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Renewable Energy Credits and Emerging Technology ƒ How Much Wood and Who Takes It – Massachusetts generates approximately 571,000 tons/year of C&D wood. DOER Woody BioMass Supply Study – About 50,000 tons/year of Massachusetts C&D wood is used as fuel. – Currently, no facility is accepting C&D wood fuel from Massachusetts. Until August, the only facilities accepting C&D wood fuel from Massachusetts were the Maine Boralex facilities which had a 400,000 ton/year capacity. 7

Renewable Energy Credits and Emerging Technology ƒ What is a REC? – A REC is credit that can be used by a retail electricity supplier to meet the Massachusetts Renewable Energy Portfolio Standard (RPS). One REC is created when a generator of electricity has produced one megawatt hour (MWh) of electricity from a qualified renewable energy generating source.

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Renewable Energy Credits and Emerging Technology ƒ What wastes qualify for RECs? – Eligible Biomass Fuel: ƒ Fuel sources including brush, stumps, lumber ends and trimmings, wood pallets, bark, wood chips, shavings, slash and other clean wood that are not mixed with other solid wastes; ƒ Agricultural wastes, food material and vegetative material as those terms are defined, or may be subsequently defined, by the Department of Environmental Protection at 310 CMR 16.02; ƒ Energy crops; ƒ Biogas; ƒ Organic refuse derived fuel that is collected and managed separately from municipal solid waste; and ƒ Neat biodiesel and other neat liquid fuels that are derived from such fuel sources.

– Also landfill and anaerobic digester methane gas . . . 9

Renewable Energy Credits and Emerging Technology ƒ What is Organic Refuse Derived Fuel? – ORDF is not defined but has included C&D wood in the past.

ƒ Is Conventional Waste to Energy eligible? 225 CMR 14.02

– NOT “waste to energy, which is a component of conventional municipal solid waste technology in commercial use” (expired 12/31/98)

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Renewable Energy Credits and Emerging Technology ƒ What are acceptable technologies? – Eligible Biomass Fuels must be used in a “low emission, advanced biomass power conversion unit” an undefined term. ƒ Statute references “gasification” as example of advanced technology. Query: What does “gasification” mean? See EPA, DOE, IRS definitions. See CT DPU ruling on Plainfield Renewable Energy. ƒ DOER has issued Advisory Rulings that have approved fluidized bed and related combustion technologies for C&D wood. – Focus has been on ability to meet the emissions requirements.

ƒ New rules effective August 16, 2007 would allow “advanced stoker.” Previous rules excluded “pile burn and stoker combustion.” ƒ DOER Guidelines establish low emissions standards to be met.

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Renewable Energy Credits and Emerging Technology ƒ What is the Massachusetts Renewable Energy Portfolio Standard or RPS? –

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By statute, every retail electric supplier in Massachusetts must annually demonstrate that the electricity it supplies includes a certain percent of electricity generated from renewable energy sources. G.L. c. 25A, 11F. The RPS grows 1/2% per year until 12/31/09 to 4% and then by 1% (until suspended by the DOER). The RPS refers to the minimum annual percent of renewable energy required by law. Suppliers can satisfy the RPS by either generating electricity from renewable sources or acquiring RECs from renewable sources. Suppliers who do not satisfy the RPS must pay an Alternative Compliance Payment (ACP), currently $57.12 per MWh. In 2005 DOER collected about $20M in ACPs. RPS programs exist in 30 states including Maine, Vermont, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Maryland, Delaware and in certain mid-western and western states. Database of State Incentives for Renewables & Efficiency 12

Renewable Energy Credits and Emerging Technology ƒ What is the Policy Underlying the RPS Standard? – Increase the Share of our electricity generated by new renewable resources – Decrease atmospheric pollution from the regional fleet of power plants that serve Massachusetts customers – Diversify the fuels used to generate power that serves Massachusetts customers – Decrease the reliance of Massachusetts on fossil fuels imported from other regions – Moderate electricity price volatility in Massachusetts caused by reliance on imported fossil fuels* DOER Summary of the Proposed Final Regulations for the Massachusetts Renewable Energy Portfolio Standards at 225 CMR 14.00 November 6, 2006

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Renewable Energy Credits and Emerging Technology ƒ What is a MWh? – A megawatt (MW) is one million watts – Watts (W) are the yardstick for measuring power. A one hundred watt light bulb, for example, is rated to consume one hundred watts of power when turned on. If such a light bulb were on for four hours it would consume a total of 400 watthours (Wh) of energy. – Watts measure instantaneous power while watt-hours measure the total amount of energy consumed over a period of time. For instance, a 100 MW rated wind farm is capable of producing 100 MW during peak winds. – One MWh is the amount of energy produced by a facility generating one million watts for one hour.

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Renewable Energy Credits and Emerging Technology ƒ How much power is a MWh? – A rule of thumb is that one megawatt will power 1,000 homes. – According to 2001 Energy Information Administration (EIA) data, New England residential customers consume the least amount of electricity, averaging 653 kilowatt hours (kWh) of load in a month. – SEMASS Covanta produces about 650,000 MWh/year equivalent to a 75 MW plant.

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Renewable Energy Credits and Emerging Technology ƒ How much renewable energy is being supplied? – More than ½ of the 2005 RPS was supplied by renewable energy. – According to DOER in 2005 664,000 MWh of renewable energy was delivered out of a total of 51.6 MMWh of electricity. – This is the equivalent of one 75 MW renewable energy facility running 24 hours/365 days/yr. The average biomass plant would provide 35 MWh. – For 2007 to fulfill the RPS = 176 MWh, more than double the 2005 level.

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Renewable Energy Credits and Emerging Technology ƒ MassDEP Solid Waste Master Plan on use of waste to energy? – “MassDEP will maintain the municipal waste combustion moratorium to maintain progress that has been made in reducing mercury emissions under the state’s Zero Mercury Action Plan.”

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Renewable Energy Credits and Emerging Technology ƒ

MassDEP Regulations –

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Effective July 1, 2006, MassDEP banned the disposal or transfer for disposal at landfills of wood. 310 CMR 19.017 “Recycling does not mean to recover energy from the combustion of a material.” 310 CMR 16.02 Mass DEP will give BUDs for properly processed C&D wood fuel.

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Renewable Energy Credits and Emerging Technology MassDEP Guidelines – MassDEP’s April 2007 Best Available Control Technology (BACT) Guidance Biomass-Fired Electric Generating Units ƒ Guidance on Best Available Control Technology (BACT) for biomass fuel and technology combinations for which MassDEP has experience (solid biomass fuel).

– MassDEP’s March 2007 Draft Addendum to “Revised Guidelines for Determining Closure Activities at Inactive Unlined Landfill Sites, July 6, 2001” Use of Construction and Demolition Fines and Residuals ƒ Maximize Diversion of Clean Wood –Clean wood shall be separated from the C&D waste stream to the maximum extent feasible prior to processing and shall be diverted to recycling/reuse activities. 19

Renewable Energy Credits and Emerging Technology ƒ What has happened in Massachusetts? – No current proposals for energy conversion of MSW or food waste – C&D wood power conversion projects ƒ ZeGen-In pilot stages. ƒ Russell Biomass – dropped C&D wood due to local opposition ƒ Ecopower – dropped proposed New Bedford project ƒ GenPower – proposed Barre project unknown status ƒ Others in pipeline

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Renewable Energy Credits and Emerging Technology ƒ Conclusion – Certain wastes can qualify as a renewable fuel source – RECs can be a significant source of revenue and offset disposal costs – Traditional Waste to Energy will not qualify for RECs – Advanced gasification or other fuel creation technology will be required for MSW to be a renewable fuel – Landfill gas is a well established REC generator – Biomass (wood) is a well established REC generator with some C&D wood included (Maine only) – C&D wood can be the next renewable fuel – New solid waste facility development will likely incorporate energy generation to tap into REC revenue stream 21