Determining a State's Contribution to the GCVTC Regional 

Renewable Energy Goals and to what Extent a State's Renewable 

Energy Programs are Helping to Meet its Contribution 

A WRAP AP2 Forum Discussion Document

I. Introduction 

A central theme underlying efforts to improve visibility in the West is that visibility 

degradation is a regional problem requiring a regional solution. At the same time, there is 

the recognition that the existing air quality regulatory structure contains no regional 

organization with the authority to implement solutions. Instead, this authority rests with the 

states. Like other aspects of the GCVTC regional haze recommendations, the challenge of 

meeting the renewable energy goals is how to assign responsibility for solving a regional 

problem to individual states and to how to coordinate their activities to meet the goal in the 

most efficient way possible. 

The issue of developing regional solutions while maintaining individual state responsibility is 

present in the Pollution Prevention section of the GCVTC component of EPA's regional haze 

rule. Section 309(d)(8)(i) of the rule requires states to include in there regional haze state 

implementation plans their anticipated contribution to the regional renewable energy goals 

that 10% of regional power needs be met by renewable generation by 2005 and that 20% 

be met by 2015. In addition, Section 309(d)(8)(vi) requires a state to provide descriptions 

of the programs it is relying on to achieve its contribution toward the 10/20 goals. The rule, 

however, does not provide guidance on how to determine either a state's contribution or the 

extent to which programs adopted by a state are helping to meet its contribution. As the 

WRAP forum charged with helping the states design policies to achieve the renewable 

energy goals, the AP2 Forum is an appropriate place to make recommendations on these 

issues. As a starting point for discussion, this paper presents some preliminary ideas on how 

these issues might be addressed. 

II. Determining a State's Contribution to the Regional Renewable Energy Goals 

One potential way to determine a state's contribution to the overall regional renewable 

energy goal is to multiply the end-use electricity consumption in the state by the regional 

renewable energy percentage targets. This method bases a state's contribution on its share 

of overall regional electricity demand. Under this approach, states with greater electricity 

use (presumably due to a larger population or greater economic activity) would make a 

larger contribution to the regional goals in terms of the MWh of renewable energy their 

renewable energy programs induce. However, when measured as a percentage of electricity 

use, all states would be contributing equally. 

This approach is based on the following public policy rationale. The GCVTC renewable 

energy goals were recommended to help solve the problem of regional visibility degradation 

which is caused, in part, by conventional power production. If one agrees that electricity 

production is driven by the demand for electricity, then ultimately it is electricity 

consumption that causes the problem the renewable energy goals are seeking to address. If 

one also agrees that a fair way to assign a state's responsibility for the solution of a regional 

problem is based on a state's contribution to the problem, then determining a state's 

contribution to the renewable energy goals based on its share of regional electricity demand 

is a fair way to apportion the renewable energy goals across the states. 
III. Determining the Extent to which a State's Renewable Energy Programs are 

Helping to Meet its Contribution to the Regional Renewable Energy Goals 

Once a state's contribution to the regional goal is determined the next step is to ascertain 

the extent to which the state's renewable energy programs are helping to meet its 

contribution. It is suggested here that, for the purposes of counting a programs contribution 

toward a state's share of the regional goal, the location of the production or consumption of 

the renewable energy is not important. Instead, a policy should count toward a state's 

contribution so long as it induces increased renewable energy production or consumption 

anywhere within the region. Several examples will help illustrate the concept. 

Example 1: Suppose the cost of producing renewable electricity is 2¢/kWh more than the 

cost of producing conventional electricity. To eliminate this cost differential and spur 

renewable energy development, State A adopts a 2¢/kWh renewable energy production tax 

credit. As a result of the tax credit, a power supplier invests in a renewable production 

facility in State A, the power from which is sold and consumed in State B. In this case, the 

renewable energy production would count toward State A's share of the regional renewable 

energy goal. 

Example 2: Again, suppose that the cost of producing renewable electricity is 2¢/kWh more 

than the cost of producing conventional electricity. A power supplier in State B commits to 

deliver a renewable energy product to customers willing to pay a 2¢/kWh premium. To 

supply the power for the product, the power supplier invests in a renewable energy 

production facility in State A. In this case, the renewable production would count toward 

State B's share of the regional renewable energy goal. 

In each of the above examples a single policy adopted by single state was responsible for 

inducing the renewable energy production. The situation is more complicated when multiple 

polices across multiple states are responsible for the increase in renewable energy 

production. Consider the following example. 

Example 3: Again, suppose the cost of producing renewable electricity is 2¢/kWh more than 

the cost of producing conventional electricity. Suppose that state A offers a 1¢/kWh 

production tax credit that narrows, but does not eliminate, the cost differential. Because of 

the tax credit, power suppliers in State B are able to offer their customers renewable energy 

from a State A production facility at a premium of 1¢/kWh rather than 2¢/kWh. In this case, 

both the State A production tax credit and the willingness of State B consumers to purchase 

renewable energy at a premium have combined to increase renewable energy production in 

the region. Because 50% of the renewable/conventional cost differential is made up by 

State A and 50% is made up by State B, 50% of the renewable energy production is 

counted toward State A's contribution to the regional renewable energy goals and 50% is 

counted toward State B's. 

III. Conclusions 

The ideas presented in this paper are preliminary and intended as a starting point for 

discussion. Alternative approaches for determining a state's contribution to the regional 

renewable energy goals exist that are not discussed in this paper. For example, rather than 

using the "bottom up" approach of determining a state's contribution based on its share of 

overall regional power demand, as is suggested here, some within the Forum have 

suggested that a "top down" approach may be more appropriate. The idea behind the "top 

down" approach would be to survey the renewable energy potential in the region, identify 
where the renewable energy production necessary to meet the regional goals could come 

from, and then, using available policy tools, design a least-cost regional strategy for 

meeting the goals. A state's progress toward achieving the goals would be measured by the 

extent to which the state was adopting its part of the overall strategy. This type of "top 

down" approach should also be developed and discussed within the Forum. 

In addition, in this paper, the method for determining the extent to which a state's 

renewable energy programs are helping to meet its contribution to the regional renewable 

energy goals is illustrated with some very simple examples. In reality there are likely to be 

many factors that will complicate this determination, especially in situations where different 

policies across different states are acting together to cause the renewable energy 

development. Moreover, for policies such as disclosure, that provide consumer information 

rather than a direct financial incentive, quantifying the effects on renewable energy 

development may be difficult. In short, much more work is needed on this topic.