by David R. Wooley²

The elegance and popularity of renewable energy resources stem in large part from their "green" qualities. Wind, solar, and geothermal energy can provide light, heat, air conditioning, hot water, and transportation with little damage to air, water, and land resources. And while biomass energy resources are not pollution-free, they emit little or no sulfur dioxide (SO₂) and, when managed conscientiously, may produce no net greenhouse gases. The nitrogen oxide and particulate matter emissions from new biomass sources are no worse than, and are sometimes better than, well-controlled fossil-fired energy sources. Given the right incentives and market rules, reliance on renewable energy resources could increase dramatically in the next 20 years, which could have substantial air quality benefits. Currently, however, markets often ignore the public benefits of renewable energy, and regulators generally do not recognize the potential of these energy sources as a low-cost emission control strategy.

Renewable energy resources will not gain a sustainable foothold until energy markets fully recognize, value, and compensate these sources for air quality and other social benefits. One step toward this is to modify air pollution control regulations to allow renewables to participate fully in emissions trading applicable to the electric power sector. As a result of recent federal court decisions, it is increasingly likely that Congress will revisit clean air issues. When it does, renewable energy representatives could push for statutory changes that reward wind, solar, and biomass generators for the air quality benefits they provide. The air quality policy instruments described in this paper can be used in combination with other policies, including renewable portfolio standards, public benefit funds, and net metering, to advance renewables.

Air Pollution Associated with Electricity Generation

The production of electricity from fossil fuels—coal, oil, and, to a lesser extent, natural gas—exacts a growing toll on human health and our environment.³ Most people in the United States do not associate electricity use with air pollution. But our light switches, air conditioner controls, and production lines are linked to the largest sources of acid rain, smog, regional haze, and climate change pollutants in the country.⁴ (See Table 1.)

• Acid Rain: Power plant emissions of sulfur dioxide and nitrogen oxides (NO_x) react in the atmosphere to form compounds that are transported long distances and cause acidification in lakes, streams, and soils; nutrient saturation of coastal waters and river basins; crop damage; forest decline; and loss of biodiversity. Power plants are responsible for 64% of SO₂ emissions and 27% of NO_x emissions in the United States.

• Photochemical Smog: Power plant NO_x emissions react with volatile organic compounds (such as gasoline vapors or solvents) in sunlight to produce ground-level ozone, or "smog". This can cause lung damage and exacerbate asthma and emphysema. Increased emergency room visits for respiratory causes have been linked with exposure to ozone. Children active outdoors in the summer, when ozone levels are higher, are the most susceptible.

• Regional Haze: The pollutants from fossil fuel combustion also degrade visibility in national parks. Very small sulfate and nitrate particles (less than a few microns in diameter) scatter and absorb light in the atmosphere, creating hazy conditions in parks from the Grand Canyon to Acadia Park in Maine. The particles also cause lung disease.

• Mercury Contamination: Power plants are responsible for nearly one-fourth of total U.S. emissions of mercury, a neurotoxin that accumulates in human tissue and causes serious human neurological impairment. Humans are exposed primarily through repeated consumption of fish that accumulate mercury compounds from a contaminated food chain.

• Climate Change: Electricity generation produces one-third of U.S. emissions of carbon dioxide (CO₂), an important greenhouse gas that traps heat near the ground to destabilize the climate.

Renewable Energy: A Clean Energy Resource

In recent years, the technological readiness and market availability of renewable energy have advanced to the point where renewable energy can be developed at a scale that makes it a viable emissions reduction tool. A 1997 study by a group of clean energy advocacy groups estimated the impacts of adopting a comprehensive set of policies to reduce U.S. carbon emission 10% below 1990 levels by 2010. The researchers found that non-hydro renewables could supply 14% of U.S. electricity use by 2010 and 40% by 2030 when combined with aggressive energy efficiency investments. (Electricity use was 17% lower than "business as usual" by 2010 and 52% lower by 2030.)⁵

These increases in renewable energy production would have dramatic air quality benefits. Wind farms and photovoltaic energy create little or no air pollutant emissions. And geothermal and bioenergy plant developers cite very low emission levels in comparison to coal, oil, and even clean-burning natural gas. The 1997 study mentioned above found that the combination of renewable energy and energy efficiency in 2010 reduces annual SO₂ emissions by 78%, NO_x emissions by 48%, and particulates by 36%.

Numerous studies suggest that the use of renewable energy resources can expand rapidly.⁶ Two studies by the U.S. Department of Energy considered the potential increase in generation of these sources if Congress were to ratify the Kyoto Protocol on climate change. (See Table 2.)

Clean Air Opportunities and Risks for Renewables

The current structure of the Clean Air Act (CAA) not only fails to promote renewables, it can actually hurt them substantially. The industry is at serious risk of losing its ability to claim that renewables improve air quality. Under some forms of cap-and-trade systems (described later), the addition of new renewable generation will have no effect on the total amount of pollution emitted. By entering the debate on the "next Clean Air Act" and by selective involvement in key Environmental Protection Agency (EPA) and state rule-making cases, the renewables industry could influence the structure of emissions trading programs and retain one of the most persuasive arguments for developing wind, solar, biomass, and geothermal energy resources.

Moreover, the Clean Air Act can be modified so that renewable energy developers receive revenue for the air quality benefits they provide. For instance, legislators and regulators could modify emission cap-and-trade systems to carve out a distinct role for renewables in emission allowance trading. The potential rewards, in the form of increased project revenue, are large (as documented later), particularly if a mechanism is developed to address the multi-pollutant reduction values of renewables.

Changes to the Clean Air Act also present a good opportunity to push for other forms of renewable energy incentives, including a national renewable portfolio standard, federal funding for capital cost buy-downs, emission taxes, net metering, or production tax credits.⁷ These policy reforms have been included in tax and electric utility restructuring bills, but could just as well emerge in Clean Air Act amendments. The next congressional debate on clean air will undoubtedly focus on pollution from the energy sector. The renewables industry therefore needs a basic understanding of air pollution regulation in order to position itself to achieve energy policy reforms in the next Clean Air Act.

A Guide to the Clean Air Act for the Renewable Energy Community

Abstract
Message from REPP Staff
Executive Summary

1. The Clean Air Act and Renewables
2. An Introduction to the Clean Air Act
3. Emissions Trading Under the Clean Air Act
4. Future Cap-and-Trade Programs
5. Recommendations and Action Plan

copyright © 2000 by Renewable Energy Policy Project