»California Energy Commission Energy Policies

»2007 Integrated Energy Policy Report

Foreword
~ prepared in response to Senate Bill 1389
~ scientific consensus is that temperatures in the state are expected to increase during this century and
~ precipitation patterns are predicted to change — threatening California’s environmental quality and robust economy
~ this temperature increase will result in widespread environmental consequences
~ worsening air pollution, intensifying heat waves, increasing coastal floods,
~ reducing farmland productivity, increasing wildfires and pest infestations,
~ decreasing fish populations and reducing snowpack, which means less hydropower and possible water shortages
~ 2006 CA Governor passed the California Global Warming Solutions Act of 2006
~ capping California’s greenhouse gas emissions at the 1990 level by 2020
~ the Governor’s long-term target is to reduce emissions to 80 percent below 1990 levels by 2050
~ to limit global temperature gains this century to 2-3 degrees Celsius

California at the Forefront
~ has grown to become the most populous state in the union and the eighth largest economy in the world
~ the current population exceeds 37 million and is projected to grow to more than 44 million by 2020
~ already over-burdened infrastructure — roads, pipelines, ports, refineries, power plants and transmission lines
~ will be strained further to meet increasing demand for energy
~ most of the population growth is occurring in the hotter interior areas of the state increasing the demand for air conditioning
~ limited mass transit options, particularly in the inland areas
~ the historic tendency toward suburban “sprawl” cause residents to rely more heavily on their cars
~ increasing individual vehicle miles traveled (VMT) and energy demand
~ leads the nation in the lowest electricity use per person
~ cleaner-burning natural gas fuels over 41 percent of the state’s electricity and renewables account for almost 11 percent
~ building and appliance standards have reduced the need for gas space heating and water heating for each home or business in the state
~ despite its passion for the automobile, California adopted stringent tailpipe emission standards as early as 1966
~ in 1971 adopted the first automobile nitrogen oxides standards—both the first such standards in the nation
~ the California Smog Check Program assured the effectiveness of vehicle emission control systems, went into effect in 1984
~ in 1992, the first of many phases of reformulated clean burning gasoline was introduced to California
~ in 1993 the state enacted new standards for cleaner diesel fuel
~ assembly Bill 1007 directs the Energy Commission, in partnership with the ARB, to develop and adopt a state plan
~ to increase the use of alternative fuels in the transportation sector
~ the plan describes strategies; highlights market penetration growth; and recommends new standards,
~ requirements, financial incentives, and other policy mechanisms to address petroleum and greenhouse gas reduction, and
~ in-state biofuels production and use goals as articulated in the Governor’s Executive Order S-06-06,
~ which calls for California to produce a minimum of 20 percent of its biofuels within California by 2010,
~ 40 percent by 2020, and 75 percent by 2050
~ the plan’s first phase, a full fuel cycle analysis, forms the technical basis for the ARB’s Low Carbon Fuel Standard
~ that is designed to increase the use of transportation fuels that emit lower quantities of greenhouse gases on a life-cycle basis

Greenhouse Gas Emissions
~ in 2004 produced almost 500 million metric tons of CO2
~ making it the second largest emitter of greenhouse gas emissions in the United States after Texas and about twelfth in the world
~ the transportation sector produced over 39 percent of the state’s total emissions in 2004

Current Strategies to Reduce Emissions
~ the second largest consumer of gasoline in the world behind only the United States as a whole
~ more than 16 billion gallons of gasoline and 4 billion gallons of diesel each year
~ federal law prohibits states from setting the minimum number of miles per gallon new cars and light trucks must achieve
~ in 2005, Governor Schwarzenegger appealed to the United States House of Representatives
~ “to establish new fuel economy standards that double the fuel efficiency of new cars, light trucks and SUVs”
~ in June 2007, the United States Senate voted to raise the fuel efficiency standard for cars to 35 miles per gallon by 2020
~ as of October 2007, the House had taken no action
~ Japan’s current standard is 45 miles per gallon and Europe’s more than 50 miles per gallon standard by 2012
~ the CA legislature took advantage of a federal Clean Air Act provision
~ it allows states to set their own emission standards (with a waiver from the United States Environmental Protection Agency (EPA))8
~ California’s Clean Car Law - Assembly Bill 1493, is the first such regulation in the United States
~ it limits greenhouse gas emissions from passenger cars and light trucks
~ the Clean Car Law would cut greenhouse gas emissions by 30 percent by 2016 from all cars sold in California starting in 2009

California’s Energy System: Powering a Nation-State
~ today CA over 37 million people, as a nation would rank 33rd in the world
~ will add another 7 million people in the next dozen years, moving towards 60 million residents by 2050
~ to maintain this economic output and meet the energy service demands of our citizens CA requires a significant amount of energy
~ energy represents nearly $100 billion in expenditures each year
~ with the passage of AB 32, CA has a stringent mandate to significantly reduce greenhouse gas emissions
~ requiring government, consumers and businesses to take a hard look at exactly how energy is used in the state and
~ ways to focus on choosing a system that is less carbon intensive
~ at the core of this energy system is a policy that the state's economy and environment are best served
~ by energy efficiency measures and demand response programs first,
~ then by renewable energy sources and a diversity of energy supplies
~ this approach has resulted in CA using less electricity per person than any other state from the world's most diverse electricity generation supplies
~ unfortunately CA's success in electricity has not been reflected in CA's transportation sector

Inland Population Climbs
~ by 2040 almost 40 percent of the state’s population, or over 20 million, will reside inland
~ In the summer, hotter inland areas require more air conditioning than coastal areas
~ that increases peak electricity use even faster than it pushes the overall demand for electricity
~ the Inland Empire and the northern San Joaquin Valley are two of the fastest growing metropolitan areas in the United States
~ these cities often serve as bedroom communities for workers in the Los Angeles basin and the San Francisco Bay area

Energy Consumption
~ over 40 percent of all energy consumed is used to move people and goods
~ almost all of this transportation energy is derived from petroleum
~ over 80 percent of the energy consumed in the state still comes from fossil fuels

Energy Supply
~ CA produces ca. 13.5 % of the natural gas it uses
~ 37% of the petroleum
~ over three quarters of the electricity
~ the remaining amounts are electricity and natural gas purchases from other states and Canada
~ crude oil imports from Alaska and foreign sources

Electricity
~ virtually all of new power plants burn natural gas, in 2006, 41.5%
~ relying on a single fuel source seen risky, as generators learned even before the 2000–2001 electricity crisis
~ CA's demand for electricity is on the rise, fueled by population growth and a robust economy
~ the Renewables Portfolio Standard (RPS): by 2010, 20 percent of our power from renewable sources like
~ biomass, geothermal, small hydro, solar and wind
~ Governor, the Public Utilities Commission and the Energy Commission called for 33% of CA's electricity to come from renewables by 2020
~ wind farms, geothermal power plants and large solar facilities are often located well away from population centers
~ CA is upgrading its nearly 32,000 miles of transmission lines to bring more renewable energy to market
~ 2006 CA enacted SB 1368, a law prohibiting utilities from making long-term commitments for electricity generated by plants
~ that create any more CO2 than clean-burning natural gas plants

Natural Gas (NG)
~ electricity generation uses 50%, the residential sector 22% - of that 88% is used by space and water heating
~ NG has become an increasingly important source of energy since more and more of the state’s power plants rely on the fuel
~ importing LNG by ship from foreign sources has the potential of furnishing new supply
~ so far no LNG receiving terminals have been approved in California
~ a newly constructed Mexican facility in Ensenada, Baja California is expected to begin operation as early as by the end of 2008
~ 30-50% of this Sempra-owned plant is contracted for use in Mexico, the remainder expected to be available to California markets
~ since 1970, the number of households in CA has almost doubled from 6.5 million to 12.5 million
~ total residential natural gas consumption increased from about 5,500 million therms in 1970 to about 6,700 million therms in 2007

Petroleum
~ imports primarily from Saudi Arabia, Ecuador, Iraq and Mexico contribute 42% of crude oil supplies
~ Alaska imports have declined to 21% as the North Slope oil field production declines
~ 60% of the oil used by CA-based refineries and 10% of the refined petroleum products coming from outside
~ marine facilities are a vital part of the state’s petroleum infrastructure
~ no pipelines bring crude oil or petroleum products into CA, all crude supplies and products must arrive by ship
~ 46 marine terminals, 39 located in Los Angeles and San Francisco Bay
~ 7 marine terminals in San Diego, Ventura, and Humboldt counties are not directly linked to refineries,
~ but used to ship and receive refined products in areas not served by pipelines
~ over 70 distribution terminals scattered throughout the state
~ trucks deliver gasoline and diesel from these distribution centers to local stations
~ pipelines help put CA at the center of a regional petroleum market
~ CA refineries supply Nevada with almost 100% of its transportation fuels, Arizona 60% fuel from CA
~ Oregon depends on CA efiners for 25 to 35 % of its fuel
~ 21 petroleum refineries, 10 in the Los Angeles Basin and 5 in the San Francisco Bay Area
~ demand for gasoline and diesel is normally expected to increase by 1 to 2 percent each year

Bioenergy
~ CA has large, untapped biomass resources including residues from forestry, urban, and agricultural wastes
~ bioenergy cuts across all energy supply sectors because biomass can be used to create electricity, transportation fuels and biogas
~ using biomass to produce energy can reduce the waste stream in CA’s forests, landfills, and farmlands
~ and improve forest health while reducing the risk of catastrophic wildfires
~ Executive Order S-06-06 established specific biomass production and use targets for California
~ it sets a target for biomass to comprise 20% of CA's Renewable Portfolio Standard for 2010 and 2020
~ CA shall produce a minimum of 20% of its biofuels within the state by 2010, 40% by 2020, and 75% by 2050
~ it directed the Energy Commission to report on progress made toward achieving these targets in the Integrated Energy Policy Report
~ key issues to be addressed include regulatory uncertainty and adequately valuing the public benefits of biomass energy
~ CA Bioenergy Working Group; ARB, Energy Commission, CA Environmental Protection Agency, Resources Agency,
~ CA Department of Food and Agriculture (CDFA), CA Department of Forestry and Fire Protection (Cal Fire),
~ Department of General Services (DGS), Integrated Waste Management Board (IWMB), CPUC, and CA State Water Resources Control Board (SWRCB)

Bioenergy for Electricity Production
~ 2006 CA and Sweden pledged cooperation on development of renewable energy and fuels, particularly biogas
~ of particular interest to CDFA are efforts by California farmers to harness dairy and food wastes as a source of energy

Cal Fire
~ planning a small biomass cogeneration project at the Parlin Fork Conservation Camp
~ is in the process of identifying the most efficient means of harvesting and collecting the biomass to fuel that facility
~ is collaborating with the Climate Registry on urban forestry climate accounting protocols
~ that encourage “best practices” for both forest management and resource conservation,
~ while maintaining the state’s forest lands as carbon sinks
~ is working with the Tahoe Conservancy to secure state funding for a forest biomass demonstration program in the Lake Tahoe Basin
~ this program would demonstrate the significant benefits of reducing the risk of catastrophic wildfires and
~ avoiding large fire suppression costs, while thinning the forests
~ is partnering with the Energy Commission on the Western Carbon Sequestration Partnership
~ to evaluate storing carbon in both geologic and terrestrial forms

Placer County
~ has experienced four major forest fires since 2001 that have consumed over 30,000 acres of forest
~ is seeking financial and technical support from federal, state and private partners for its wildfire protection and woody biomass program
~ program will improve air quality (by avoiding forest fires) and increase renewable energy production
~ if funding is be secured, the county plans at least one forest biomass-to-energy project in the Lake Tahoe Basin

Bioenergy for Transportation
~ Biofuels, transportation fuels prepared from non-fossil feedstocks, are an essential component of CA's petroleum reduction goals
~ the Governor’s Executive Order calls for increasing amounts of California’s biofuels to be produced in state
June 2007
~ ARB adopted amendments to its CA reformulated gasoline regulations that favor the use of E10 (10 percent ethanol blends) using the CA Predictive Model
~ ARB is using $2 million in research funding to evaluate the environmental impacts and emissions performance of a range of biofuels
~ to establish fuel specifications for biodiesel blends ranging from 5 to 20 percent biodiesel
October 31, 2007
~ Energy Commission adopted its State Alternative Fuels Plan as directed by Assembly Bill 1007 (Chapter 371, Statutes of 2005)
~ the plan includes a full fuel cycle analysis of the costs and benefits of various transportation fuels
~ provides the analytic foundation for ARB’s Low Carbon Fuel Standard
~ awarded $3 million for energy conversion technologies using biomass;
~ including projects for brown grease recovery, demonstration of an integrated biofuels and energy production system,
~ CA’s first cellulose-to-ethanol biorefinery project
~ CA Biomass Collaborative developed A Preliminary Roadmap for the Development of Biomass in California,
~ a comprehensive strategy to guide research and development, address regulatory and permitting issues,
~ and recommend appropriate public education programs

The Energy Commission’s Agricultural Loan Program
~ provides approximately $3 million in loan funds for the design, purchase and installation of eligible biomass technologies
~ funding is available for fuel production from agricultural and forest residue, urban waste, food and beverage waste,
~ waste grease, and purpose-grown energy crops
~ the California Department of Food and Agriculture is also working to influence federal funding opportunities
~ in the 2007 Federal Farm Bill for conversion of agricultural residues and specialty crops to biomass power and fuels

DGS
~ continues to purchase large numbers of flexible fueled vehicles for the state fleet
~ purchased over 1,100 E-85 vehicles during the last two years
~ purchases roughly 7,000 new state vehicles each year of the total 50,000 light and heavy duty vehicles in the state fleet
~ plans to purchase more alternative fueled vehicles with the expectation that the fueling infrastructure will be established by the state’s fuel suppliers
~ to date, none of these vehicles are being operated from fuels produced from biomass!

The private sector and California universities
~ contributed to the progress in reaching the state’s bioenergy goals
~ private industry, utilities, and venture capitalists have stepped up their efforts in California
~ to finance the commercial development of biofuels projects
~ Pacific Ethanol’s plant is operating in Madera, California
~ the proposed Blue Fire Ethanol project is to be located at a southern California landfill
~ BP Biofuels developing transportation fuels using petroleum and agricultural feedstock
~ BP is addressing the challenges of cost, availability, quality and sustainability in pursuing technology solutions
~ Chevron's Biofuels Business Unit is pursuing a two-phased approach emphasizing ethanol blends
~ Amyris Biotechnologies is leveraging its own proprietary technology to develop hydrocarbon biofuels
~ which perform like conventional gasoline, diesel, and jet fuels
~ Conoco Phillips is producing a diesel fuel substitute, using agricultural, forestry, waste oils, wood, grass and cane
~ Neste Oil is investing in renewable diesel fuel, derived from vegetable oils or animal fats that can be used in today’s engines

Research Funding
~ the creation of research centers at UC Davis and UC Berkeley on advanced biofuels
~ a $500 million private grant from British Petroleum to UC Berkeley to establish the Energy Bioscience Institute
~ a $125 million grant to UC Berkeley and UC Davis from the United States Department of Energy for a Joint BioEnergy Institute
~ a $25 million grant from Chevron Corporation to UC Davis for bioenergy research

Energy Savings from Building Standards
~ the Energy Commission is in the process of developing the next version of building standards expected to be adopted in 2008
~ updated lighting and mechanical measures, cool roofs for residential applications
~ better controls for central hot water distribution
~ residential programmable communicating thermostats
~ nonresidential demand shedding controls for demand response capabilities
~ a new optional compliance tier for photovoltaic systems
~ updated nonresidential outdoor lighting requirements
~ to qualify for a photovoltaic incentive, the new home has to exceed the Title 24 building efficiency code by a minimum of 15%
~ the Department of Housing and Community Development (for residences)
~ the California Building Standards Commission (for all building sectors)
~ continue to be engaged in the goal of creating a green building guideline to publish in the California Building Code
~ the Energy Commission will pursue legislation to require an on-site audit and
~ an appropriate level of cost-effective efficiency improvements in existing buildings at time of sale
~ issued a booklet directed at homebuyers that provides information about home energy audits and rating programs
~ marketing this information through home warranty company websites

Energy Savings from Appliance Standards
~ the Energy Commission is considering what appliances may be covered in the next round of appliance standards
~ the most recent round of standards improved efficiency for a variety of consumer audio and video equipment,
~ power supplies for a variety of consumer equipment, and residential lighting, among other appliances
~ the next round of standards is likely to cover battery chargers, commercial lighting systems, and – most significantly – residential lighting efficiency

Lightning
~ improving the efficiency of electric lighting in CA offers a cost-effective path to reducing energy use and greenhouse gas emissions
~ the greatest opportunity for saving lighting energy in CA residences lies in addressing the continuing prevalence of incandescent lamps
~ the majority of sockets in existing houses are still occupied by incandescent lamps; 10–17 lumens per watt
~ 45–70 lumens per watt of currently available in compact fluorescent lamps
~ emerging LED sources achieve 40 lumens per watt, could achieve 60 lumens per watt in a few years
~ these sources currently cost significantly more than today’s common lighting alternatives but also have significantly longer lifetimes
~ the Energy Commission’s 2005 Building Standards increased requirements for fluorescent-level lamp efficiency in kitchens
~ and required either high-efficiency or sensor-controlled lights in bathrooms, laundries, garages, and utility rooms
~ Title 20 appliance regulations require more efficient lamps for general purpose uses
~ these standards removed the least efficient incandescent general service lamps from circulation in 2006
~ in 2008, the next tier of requirements will take effect, reducing wattages of general service incandescent lamps by approximately 5 percent,
~ encouraging manufacturers to pursue improvements in efficiency
~ other states have followed; Nevada, Connecticut, Minnesota, New York, New Jersey, North Carolina, South Carolina, Rhode Island ...

Using Renewable Resources to Meet Energy Needs
~ increasing renewable energy to 20 percent of electricity sales by 2010
~ and 33 percent by 2020 is an essential part of reducing California’s greenhouse gas emissions

Managing Risk and Cost to Ratepayers

Natural Gas
~ CA continues to be at risk from the potential for sustained high natural gas prices
~ in 2006, dependency on natural gas for electricity was 41.5%, up from 36.5% in 2002
~ CA's growing dependence on natural gas for electricity generation has been a major theme of the Integrated Energy Policy Reports since 2003

Future cost of carbon emissions
~ EU instituted trading of carbon emissions allowances as part of its efforts to meet the Kyoto Protocol
~ fossil fuel generation is likely to incur costs based on such emissions

Global warming
~ serious risks to public health and safety beyond costs associated with the consequences of climate change
~ increasing renewable energy generation is critical in mitigating these risks

Renewable resources costs
~ are also subject to technology price risk, including investment cost risk, operations and maintenance risk
~ risks associated with the intermittency of some technologies such as wind and solar
~ the volatility of the costs associated with these risks is much less than the volatility of the price of natural gas

Portfolio
~ what portfolio of generation assets has the best combination of risk and expected cost for California’s ratepayers ?
~ what kind of premium is justified to accelerate renewable development in light of the dangerous effects of climate change ?
~ the Energy Commission examined the use of portfolio analysis
~ portfolio analysis allows the presentation of a range of portfolios, each with a different combination of expected cost and risk,
~ allowing decision makers to choose one which matches the desired risk tolerance
~ the level of risk exposure is a policy decision
~ the current standard of comparison is based on stand-alone incremental engineering calculations of the future expected cost of electricity
~ from a new baseload natural gas-fired combined cycle generation plant
~ the resulting market price referent, 93 however, fails to properly consider the risk of price volatility
~ the weakness of relying on a particular natural gas forecast that represents a snapshot of potential future costs
~ costs for most renewables generation (other than biomass) are independent of fuel price volatility
~ they depend primarily on capital investment during project development
~ renewables generation has value as a hedge against fuel price volatility
~ in the current investor-owned utility solicitation process for long-term RPS contracts,
~ SDG&E states that renewable energy developers tend to increase their bids if natural gas prices rise
~ renewable energy is outpacing the supply
~ anticipated that prices for renewable energy will be 25% higher as the state moves to 33 percent by 2020
~ changes in the structure of the RPS program could be designed to de-link prices paid for renewable energy from natural gas
~ thereby to avoid a shortage of renewable energy
~ one way of doing so is through feed-in tariffs
~ investors in stocks and other assets know that diversification can mitigate or reduce risk
~ increasing diversity by adding a less volatile asset reduces risk,
~ more so when the values of the different assets are not perfectly correlated
~ a similar approach, focusing on expected costs and risk, should be used in determining the generation mix of most value CA's ratepayers
~ modern portfolio analysis shows that adding higher cost assets can result in lowering total portfolio risk !
~ the cost of carbon emissions represents an additional risk that is difficult to estimate
~ The EU Union Emissions Trading System credit has varied between about $21 and $38 per metric ton since January 2006
~ The CPUC intends to consider greenhouse gas adders for future years’ RPS solicitations in 2008

Additional Barriers to Renewable Energy Market Development

Shortage of Wind Turbines
~ Global demand for wind turbines has increased dramatically in recent years
~ with this rapid growth, demand for wind turbines has exceeded supply
~ manufacturers of turbines and turbine components have struggled to scale-up manufacturing capability
~ to secure wind turbines in this new environment, project developers have been required to enter into large orders for future turbine delivery and front substantial commitment fees
~ smaller wind developers who typically purchase turbines as-needed for individual wind projects are unable to compete for turbines in this environment
~ much consolidation has occurred within the development community
~ wind turbine prices, and installed wind project costs, have increased substantially
~ an increase in average wind turbine prices delivered to the U.S. market of roughly $400/kW between 2002 and 2006
~ these increases have been caused by factors such as the declining value of the U.S. dollar relative to the Euro,
~ increased materials and energy input prices
~ a general move by manufacturers to improve their profitability while demand exceeds supply,
~ an up-scaling of turbine size (and hub height) and sophistication, and shortages in certain turbine components
~ some project developers have been unable to move their projects to fruition,
~ and those developers with access to turbines dedicate them to the most-profitable wind projects in their pipeline
~ the evolving pricing environment has also made it difficult for developers to accurately predict delivered wind prices
~ in competitive solicitations, sometimes requiring price revisions to already-signed wind power contracts
~ in locations where the project development cycle is lengthy – such as California,
~ where many of the best sites are transmission-constrained –
~ developers have been reluctant to commit to long-term pricing based on uncertain future turbine costs

Economic and Permitting Barriers to Repowering and Expanding Existing Wind Facilities
~ the revenue unlikely to be earned by the repowered facility
~ may not match the profitability of the existing facility
~ the existing project owner might be better off deploying new turbines in a greenfield rather than repowered project

Least-Cost, Best-Fit Evaluation
~ transparency is necessary to ensure that all parties can fully understand the rationale for allocation of public funds
~ transparency needed so developers and transmission planners can know where renewable energy development has the greatest strategic and economic value

Microgrid Research
~ a microgrid is an integrated energy system consisting of interconnected loads and distributed energy resources,
~ which as an integrated system, can operate in parallel with the grid or in an intentional island mode
~ The Energy Commission’s PIER Program and DOE have been researching and developing this technology since 2000 to allow the safe operation of microgrids
~ some of the value propositions for microgrid applications include:
• Reducing the cost of energy and managing price volatility
• Improving reliability and power quality
• Increasing the resiliency and security of the power deliver system by promoting (allowing) the dispersal of power resources
• Helping to manage the intermittency of renewables and promoting the deployment and integration of energy-efficient, environmentally friendly technologies
• Assisting in optimizing the power delivery system, including the provision of services
• Providing different levels of service quality and value to customers segments at different price points.
~ if it can be demonstrated that microgrids can operate safely,
~ a whole range of new opportunities, and value propositions like those described above will become available
~ in particular, microgrids offer the opportunity for customers to develop “micro” systems
~ that use clean generation technologies and support California’s low carbon objectives
~ working jointly with the Distributed Energy Resources Integration Program,
~ the Distribution Research Program is developing major research demonstrations of microgrid technology
~ that will feature innovative integrations of suites of clean technologies and energy storage
~ the research will focus on documenting the value of these integrated resources to provide local load reductions
~ of at least 15 percent on utility distribution feeders and to efficiently coordinate generation and customers’ resources

Sensors
~ sensors are critical to determining the condition of equipment
~ communicating sensors remain relatively expensive
~ the distribution system is expansive
~ developing small and extremely cheap communicating sensors using new technology
~ would provide a whole range of new opportunities to better monitor the distribution system for faults and equipment failure
~ the Distribution Research Program will be issuing a Research Opportunity Notice in 2008
~ to explore innovative technologies to develop new applications for small inexpensive communicating sensors

~ sensors are also the focus of a unique research effort that is being managed through the Center for Information Technology Research
~ in the Interest of Society at the University of California, Berkeley
~ the researchers will be developing a diagnostic tool or sensor that can reliably determine
~ the remaining life of a distribution cable buried in the ground
~ the team and California utilities will use innovative and new scientific instruments and scopes
~ to understand the reason for cable failure and explore new technologies
~ that can sense and relay the condition of the cable to utility engineers without interrupting service on the cable
~ a conference to bring engineers and scientists from around the country and world
~ to discuss possible solutions to this vexing problem will be held in Berkeley in January 2008
~ failing underground cable is one of the most critical problems faced by utilities in California and the U.S.
~ if new diagnostics are not developed, distribution system reliability will be negatively impacted
~ because current rates of replacement of old cable will not be able to keep up with increasing age-related failures

Integrating Distributed Generation
~ distributed generation (DG) and combined heat and power (CHP) are valuable resource options for California
~ despite many efforts, significant issues facing DG and CHP developers persist
~ in October 2007, Schwarzenegger approved Assembly Bill 1613
~ it allows the CPUC to require utilities to purchase excess electricity from CHP systems sized at 20 MW or less
~ this legislation represents a step toward opening the wholesale market for smaller CHP projects
~ it provides those operators with a market for their excess generation
~ HOWEVER, the bill does NOT compel the CPUC to impose this requirement on the utilities
~ NOR does it provide a date certain by which such a requirement would take effect
~ it stops far short of providing small CHP operators with the guaranteed access to wholesale markets recommended in the 2005 IEPR

Meeting Natural Gas (NG) Needs
~ 30 years ago, CA's serious air quality problems placed natural gas as the fuel of choice for electricity generation
~ with global warming recognized as a serious world environmental concern, the rest of the U.S, Canada and Mexico are following CA's lead
~ burning natural gas contributes to greenhouse gas emissions
~ state law mandates that CA's greenhouse gas emissions be reduced to 1990 levels by 2020
~ this reduction must be balanced with the understanding that natural gas is the fossil fuel of choice
~ and will likely play an even more important role in CA's energy future
~ NG is critical to CA's energy system, providing more than 1/3 of CA's total energy requirements
~ over 44% of NG consumed in CA is used to generate electricity
~ NG is the primary and most efficient fuel for residential cooking, space and water heating and industrial processes
~ NG demand in the power generation sector for the U.S is projected to increase by 5.5% per year
~ that puts pressure on CA's ability to obtain stable supplies without paying more
~ most of this projected growth is occurring in the states east of the Missisippi
~ these states shift more from coal-based electricity generation to cleaner natural gas-fired generation
~ CA imports large volumes of NG by pipeline and is vulnerable to weather related events throughout U.S
~ those can either disrupt production, as in the case of hurricanes, or increase demand with cold temperatures
~ in either case supplies can be constrained, causing prices to spike
~ cold winters in the East can drive up natural gas prices for California
~ hurricanes in the Gulf region can wreak havoc on natural gas production and distribution
~ Energy Information Administration (EIA) projects significant imports of natural gas from worldwide sources to increase over the next 20 years
~ LNG will be shipped as liquefied natural gas (LNG) by tanker, requiring additional infrastructure
~ by 2017, 15 % of North American natural gas supplies could be LNG
~ even with AB 32 requiring significant reductions in greenhouse gases, NG use will remain a major fuel in CA’s supply portfolio
~ over the next several decades, and if CA adopts electricity as the “fuel of choice strategy” for all sectors including transportation,
~ NG use will likely increase until displaced by renewables, coal with carbon sequestration, or nuclear generation

Natural Gas Supplies and Dependence on Imports
~ California must compete with the rest of North America as demand increases and supplies become tighter
~ some in the NG industry believe that it is more profitable to develop stranded natural gas supplies in remote corners of the world and ship it as LNG

LNG
~ currently imported into the United States through five receiving and re-gasification terminals
~ Sempra’s Costa Azul facility in Baja California will provide some United States supplies when it comes on-line in 2008
~ imports of LNG to the United States are expected to increase almost 13 percent annually
~ 12 applications to build LNG re-gasification facilities, 4 in CA, 4 in Oregon, 3 in British Colombia and one in Mexico
~ CA engaged participates discusses with the Federal Energy Regulatory Commission,
~ which manages the environmental review process for on-shore LNG facilities, and
~ the Coast Guard, which is responsible for the offshore review
~ modelling shows that LNG delivered to the U-S is cheaper, on a cost basis, than the high-cost elements of newer North American production and
~ would tend to keep prices lower than they would be if no LNG came to North America

Biogas
~ CA has a large amount of biomass resources that are suitable as feedstock for gasification technologies
~ the Energy Commission (EC) has invested almost $94 million over the last 5 years in renewable facilities and agriculture biomass projects
~ EC believes that CA should promote the use of pipeline-quality biogas from dairies and landfills
~ pipeline-quality biogas injected into CA’s natural gas pipeline system should be compensated for through a feed-in tariff mechanism paid by the gas utilities
~ EC and Public Utilities Commission should work together to establish an appropriate price per therm to be paid for pipeline-quality biogas
~ along the lines of the market price referent used in the RPS program

Meeting Transportation Needs
~ almost 40% CO2 and other greenhouse gases in CA come from burning transportation fuels, mainly gasoline and diesel in cars and trucks
~ by 2020 over 44 million Californians will consume more than 24 billion gallons of gasoline and diesel fuel each year
~ more than 40% of all energy used in CA moves people and goods
~ most transportation fuel demand is met by petroleum
~ CA's nearly 26 million registered vehicles consume about 380 million barrels of gasoline (16 billion gallons)
~ and almost 100 million barrels of diesel (4 billion gallons) each year
~ CA is the second largest consumer of gasoline in the world, behind the entire United States and just ahead of Japan
~ consumers are unable to change their driving habits quickly
~ Significant petroleum price increases; such as those experienced in 1973-74, 1979-80, and 1990; all led to national recessions
~ crude oil is the single largest cost component in producing gasoline and diesel
~ it accounts for between 42 and 56 % of the price of regular gasoline in 2006
~ world oil prices have more than doubled since 2004
~ skyrocketing demand in China and other developing nations
~ current global conflicts, particularly in Nigeria and the Middle East, are exacerbating the situation
~ weather and geopolitical events also affect crude oil and transportation fuel prices
~ by October 2007, crude oil prices had exceeded $90 per barrel
~ the price of crude oil, regardless of its origin, is affected by the worldwide price for benchmark crude oils
~ these price trends emphasize the importance of reducing CA's growing dependence on foreign oil sources
~ CA is not connected by pipeline to other domestic refining centers
~ CA's refiners cannot readily procure gasoline, diesel, and other blending components when outages occur
~ relying on imports of petroleum and finished product coming into the constrained import infrastructure
~ creates a market conducive to extreme price volatility
~ this contributes to higher and more prolonged price spikes, as has been experienced in recent years

Transportation Fuel Demand Trends
~ in the past 20 years, CA’s population has increased at an annual average rate of 1.7 %
~ personal income has increased at 1.58 % per year
~ over the 2005 to 2030 time period, projections forecast a slowing of growth for both population and income,
~ to 1.04 percent and 1.08 percent per year, respectively
~ nevertheless, CA's population is estimated to exceed 44 million by 2020
~ even if not climbing at historic high rates, the total growth will be considerable and
~ result in substantial increases in transportation fuel demand for the state
~ the policies that result from the state’s Assembly Bill 1007 (AB 1007) plan,
~ from the programs that will be funded by Assembly Bill 118 (AB 118), and
~ from California’s overall AB 32 protocols will have a major impact on
~ what fuels are used in the state to meet this rising transportation fuel demand

Diesel
~ diesel fuel is expected to steadily increase its share of the transportation fuel market
~ diesel consumption in freight, transit, and off-road uses is expected to continue to grow with population and economic growth
~ in these sectors, diesel use will also be largely insulated from dramatic changes in vehicle fuel efficiency
~ at the same time, diesel is poised to make major penetrations in the light-duty vehicle market
~ because of its marked fuel efficiency advantages compared to gasoline vehicles
~ total CA diesel use is projected to grow at an annual average rate of 3 percent to 3.5 percent per year through 2020

Commercial jet fuel
~ estimated to grow at an annual average rate of 2.9 to 3 percent in CA
~ future commercial jet fuel use is calculated by using forecasts of the number of passengers boarding each plane and
~ depends on population growth and projections of revenue per passenger mile
~ different paths for future jet fuel prices may cause airlines to change the quantity of jet fuel used
~ federal projections of airport capacity at Los Angeles International, San Francisco International, and San Diego International airports
~ indicate that constraints largely limit growth so that demand levels in the High and Base Demand cases
~ do not differ very much through 2020
~ fuel prices are around 25 percent of total airline expenses
~ the price signals that might otherwise alter demand are dampened

California Ethanol Demand
~ about 6 % ethanol is blended into the gasoline pool
~ CA ethanol demand is expected to increase, primarily from changes to California’s gasoline regulations and
~ other efforts to increase the use of alternative fuels, such as the Low Carbon Fuel Standard
~ EC staff believes the majority of CA’s gasoline market will contain 10 % ethanol (E-10) by 2012
~ ethanol demand in CA under the Base Case gasoline demand scenario is expected to increase a 10% average annual rate of growth
~ the additional imports needed to meet this anticipated growth will depend on how many additional CA ethanol production facilities are constructed
~ in-state ethanol production capacity is estimated to increase to at least 5.5 million barrels per year by 2009
~ emerging fuels, such as ethanol and biodiesel, can potentially displace a significant volume of petroleum
~ many of these alternative fuels, in particular renewable fuels, may also require their own additional segregated import facilities
~ including pipelines and storage tanks

California’s Petroleum Infrastructure
~ CA cannot reliably meet its increasing fuel demand without a robust petroleum infrastructure
~ that includes refineries, storage, pipelines, distribution terminals and marine facilities
~ although some necessary improvements have made to portions of the infrastructure,
~ CA must further expand its marine terminal capacity, marine storage and the pipelines connecting these facilities with the refineries and other pipelines

Effects of Competition for Existing Terminal and Storage Capacity
~ as transportation fuel demand and imports increase,
~ facilities that accommodate the increased number of vessels carrying cargoes of crude oil, gasoline, diesel, and jet fuel must also expand
~ without an adequate import infrastructure supplies of transportation fuels will not be sufficient for the state
~ marine terminals are naturally limited in their ability to operate at their theoretical maximum capacity
~ it is difficult to precisely calculate a tanker’s travel time and arrival (because of changing sea conditions) and
~ unexpected delays in unloading cargo (lengthy inspections, processing delays in paperwork, and interruption of pumping operations during cargo discharge)
~ automatically reduce the number of vessels a terminal can manage
~ most marine terminals operate at 50 to 70 percent of their capacity,
~ which is considered at or near maximum economic and safe operating levels
~ having tankers wait at anchor in the harbor is impractical, from both economic and safety perspectives, and costly
~ vessels unable to unload cargoes despite an immediate need for the product not only impact the tankers’ owners,
~ with delay costs of $30,000 to $100,000 per day,
~ but also consumers, with increased retail fuel costs
~ a 10-cent per gallon increase in gasoline, diesel, and jet fuel prices can mean over $6 million per day increased direct consumer expenditures on these fuels, depending on demand levels
~ congestion leads to additional tankers at anchor in the port or nearby,
~ which raises risk of serious accidents and even spills, and possibly increased emissions
~ many harbors and waterways in California already experience significant marine vessel traffic
~ over the past 15 years approximately 6 million barrels of storage tank capacity has been removed from Southern California
~ the potential loss of more existing marine terminal capacity from voluntary business decisions,
~ involuntary forced closure due to current lease termination or refusal to renew existing marine terminal operating leases,
~ erodes the ability to meet California’s transportation fuel demand
~ constrained storage capacity also limits increased imports of alternative fuels,
~ in particular the biofuels necessary to meet the state’s goals for reducing petroleum use

Fuel Substitution Options - Assembly Bill 1007 Alternative Fuels Plan
• evaluate alternative fuels using a full fuel cycle analysis
• set goals to increase the use of alternative fuels in 2012, 2017, 2022
• recommend policies, such as standards, financial incentives, research and development programs,
~ to stimulate the development of alternative fuel supply, new vehicles and technologies, and fueling stations
~ the Plan, developed in partnership with the ARB, was adopted by the Energy Commission on October 31, 2007
~ The Plan presents actions CA must take to increase the use of alternative fuels and
~ make alternative fuels a significant option to meet the state’s transportation energy needs in an environmentally sound and sustainable way
~ sustainability requires the state to meet its future transportation energy needs
~ with a growing viable supply of alternative fuels, and
~ to ensure that in accessing biofuels as alternative fuels, food access and energy crops needs are balanced,
~ biodiversity is protected, and water demands and use of agricultural chemicals do not harm the environment

The Plan recommends mechanisms to concurrently address multiple state policies in an integrated fashion:
• petroleum reduction: joint recommendations by EC and ARB in response to Assembly Bill 2076 (Chapter 936, Statutes of 2000)
• greenhouse gas reduction: Assembly Bill 1493, Governor’s Executive Order S-3-05 on Climate Change (2005), Assembly Bill 32,
~ the Global Warming Act (2006), and Governor’s Executive Order S-1-07 on the Low Carbon Fuels Standard
• CA biofuels production and use goals: California Bioenergy Action Plan and the Governor’s Executive Order S-06-06 on Biomass.
• CA air quality goal: on-going reductions in criteria pollutants and toxic air contaminants

The Plan concludes that existing programs and regulations alone cannot achieve the state’s multiple policy goals;
~ CA needs a portfolio of alternative, low-carbon fuels to meet the multiple goals of petroleum use and
~ greenhouse gas emission reduction, and biofuels production and use
The Plan recommends multiple strategies which combine private capital investment, financial incentives, and technology advancement approaches
Achieving CA’s petroleum use reduction, climate change air quality, and biofuels goals will require
substantial investment in fueling infrastructure, production facilities, vehicle components, and
commercial development of “second generation” alternative fuels and advanced technology vehicles

Federal and state incentives will be needed to complement mandates, standards and regulations, and
they must be coordinated, sustained and consistent over the 20 to 30 year period
Substantial capital investment by the private sector must be properly directed toward advanced technology and infrastructure.
With these strategies, the Plan identifies the potential for steady and substantial growth in the use of many alternative fuels,
the mix of which will change and evolve over the near term (2007-2015), mid term (2016-2030,) and long term (2031-2050).

Full Fuel Cycle Evaluation
~ the greenhouse gas and petroleum reduction performance of new light-duty vehicles on a well-to-wheels (WTW) basis
~ for selected alternative non-petroleum fuels as a function of feedstock, compared to Phase 3 Reformulated Gasoline (RFG3)
~ the greenhouse gas emissions are dependent on feedstock origins and production pathways
~ alternative fuels can provide substantial greenhouse gas reduction benefits when used in mid-size passenger cars and urban buses
~ depending on the fuel pathway chosen, fuels such as ethanol, natural gas, liquefied propane gas (LPG),
~ electricity, and hydrogen have decided advantages over conventional gasoline and diesel fuels
~ most of the alternative fuels have a 10 percent or better carbon intensity, when compared to petroleum fuels
~ EC plans to update the full fuel cycle analysis in future cycles to address sustainability issues and land use conversion impacts of biofuels

Recommendations
• stress to local and state authorities the connection between infrastructure expansion requirements and measures that reduce demand for petroleum fuels, as shown in this report by the impact of the greenhouse gas regulations.

• propose a new law that allows state appeals in the petroleum marine infrastructure lease renewal process at the Ports of Los Angeles and Long Beach.

• monitor the impact on infrastructure development of the State Lands Commission Marine Oil Terminal Engineering and Maintenance Standards, especially on clean fuels marine terminals in the Ports of Los Angeles and Long Beach.

• press for a firm federal funding mechanism to maintain an adequate depth for tanker traffic in the Pinole Shoal in San Francisco Bay.

• update and reissue every to years, the State Alternative Fuels Plan, as part of the Energy Commission’s biennial Integrated Energy Policy Report, to include specific recommendations, sate agency and private sector responsibilities, and timetables necessary to increase the use of alternative fuels in California.

• work collaboratively with ARB, key stakeholders, and other relevant agencies to regularly update the full fuel cycle analysis in an open and transparent manner.

• continue to refine the underlying economic analysis, assessment of alternative fuels current status and market potential for alternative fuels.

• improved its analytical ability to better quantify the agricultural land conversion and water consumption effects of biofuels production.

• develop and recommend sustainability standards to guide the future development of alternative fuels in California, in partnership with ARB.

• move quickly to implement AB 118, beginning with forming the advisory body as directed in the legislation.

• develop a strategic investment plan for alternative fuel and vehicle incentives, as required by AB 118 (Nuñez, Chapter 750, Statutes of 2007), to be updated annually.

MITIGATING ENERGY NEEDS WITH SMART GROWTH
~ the neighborhoods we live in and the cars we drive around them are major contributors to greenhouse gas emissions
~ adding 24 million new CA residents by 2050 will push greenhouse gas emissions from vehicle and home energy use even higher
~ the location and size of the average home in CA have changed significantly in the past several decades
~ returning World War II veterans married and flocked to the suburbs
~ a thriving economy increased automobile ownership, an expanded urban road network, and available land continued the trend
~ the result was a dispersed urban geography, often called sprawl,
~ which characterized both suburbs and large cities like Los Angeles
~ more expensive housing and less land available for development have pushed suburbs even farther from city centers,
~ with potential homeowners employing the “drive ‘til you qualify” mortgage option in the hopes of finding affordable housing
~ this 60-year legacy of suburban growth, increased auto use, and an inexpensive and reliable fuel supply
~ have increased the miles we drive to work, to the grocery store, to soccer games, and social events
~ the resulting vehicle miles traveled (VMT) account for 27 % of CA’s greenhouse gas emissions
~ and are increasing at a rate markedly faster than the population
~ residential home styles have changed as well
~ nationally, single-family homes have doubled in size from just less than 1,000 square feet (92.9030 m²) in 1950 to 2,265 square feet(210.425 m²) in 2000
~ residential energy use (electricity and natural gas) accounts for 14% of CA’s greenhouse gas emissions
~ the type of housing (such as multi-family) and the size of a house have strong relationships to residential energy use
~ residents of single-family detached housing consume over 20 % more primary energy than those of multifamily housing
~ and 9 % more than those of single-family attached housing
~ CA’s efforts to reduce greenhouse gas emissions lead the nation Programs to replace petroleum with cleaner alternative fuels,
~ reduce greenhouse gases from new cars sold in the state, and
~ reduce the amount of carbon in our fuels are some of the leading edge policies
~ the state is implementing to reduce the impact of transportation on California’s climate
~ even these programs, added together, are not enough to meet AB 32 goals due to the significant expected increase in VMT,
~ which is impacted by our community design choices
~ given the long-term nature of neighborhoods, there are also likely significant indirect energy savings
~ from improved infrastructure design attributes, such as narrower streets, more efficient street lighting,
~ enhanced tree shading, reduced imperviousness of pavement, and maintenance of natural drainage courses that should be considered. A new land use dynamic is needed. Planning that results in a larger proportion of more compact and energy and resource-efficient homes close to transit, work and services — smart growth — must be a state priority

~ the length and number of work trips seem to be growing
~ because of an imbalance between the availability and affordability of housing with the number and earning power of jobs
~ In the San Francisco Bay Area, average commuting vehicle miles grew by 23% between 1980 and 1990
~ as rising housing prices forced more and more people to move farther out and commute into San Francisco
~ if jobs were brought into balance with housing, (all) things being equal,
~ every 10 % increase in the number of jobs in the same occupational category within four miles of one's residence
~ (would be) associated with a 3.29 percent decrease in daily work-tour VMT

According to the National Household Travel Survey 2001 Highlights Report
~ 45 % of daily trips were made for family and personal reasons, such as shopping and running errands
~ 27 % for social and recreational purposes
~ 15 % for commuting to work

Nonwork is the major reason for travel even in peak travel periods !
Transit-oriented developments, for example, may be more successful
if they are designed to facilitate non-auto errand trips as well as transit commutes
The relationships between possible explanations and travel behavior are complex, and
researchers are just beginning to try to understand them.

Irvine Great Park
~ local governments and utilities are joining forces to plan new communities from inception to full build-out
~ military base closures and reuse present a particular opportunity to explore these concepts
~ Southern California Edison and Southern California Gas Companies have joined forces with the City of Irvine, Lennar Corporation, and
~ energy and land use experts to develop a new energy infrastructure for the proposed Irvine Great Park
~ the Great Park will use energy efficiency and fuel diversity to meet a goal of net zero energy use
~ the target is homes that use 40 percent less energy than required by California Building Energy Efficiency Standards (Title 24)
~ and non-residential facilities that use 30 percent less energy than is required by the standards
~ the Great Park will incorporate advanced metering infrastructure, solar photovoltaics,
~ district heating and cooling, distributed generation, transportation strategies, lighting technology,
~ waste to energy and grid islanding

The Road to Better Land Use Planning
~ land use planning, although linked to transportation and air quality planning, is not integrated with these activities
~ opportunities exist at all levels of government for integrated planning that would reduce energy demand and
~ greenhouse gas emissions as well as eliminating redundant or conflicting efforts
~ at the local level, general plans and zoning codes are incorporating more growth management and energy measures
~ at the regional level, hundreds of millions of dollars are spent annually on transportation, land use,
~ and air quality planning and better coordinating these efforts will reduce energy demand

Local Government Plans Need to Address Energy and Greenhouse Gas Emissions Reductions
~ the state has limited authority in direct land use planning
~ local governments hold the majority of land use authority in California
~ they express their legally enforceable policies through required general plans and zoning codes
~ general plans set forth objectives, principles, standards, and proposals for development
~ state law requires these general plans to address land use, circulation, housing, open space, conservation, safety, and noise
~ no state mandate requires that a general plan include an energy element
~ only about 10% of CA’s general plans include such elements
~ over half of the state’s jurisdictions have general plans more than 10 years old
~ there is no state guidance for how local governments should assess, report, avoid or mitigate
~ greenhouse gas emissions resulting from their land use decisions
~ the passage of SB 97 requires the Governor’s Office of Planning and Research to develop, and
~ the Resources Agency to adopt, guidelines for the feasible mitigation of greenhouse gas emissions or the effects of greenhouse gas emissions
~ this will lead to local governments performing analysis of, and offering mitigation efforts for,
~ the potential greenhouse gas emissions impacts of growth within their jurisdictions and
~ will require them to address greenhouse gas considerations in their general plan and other planning efforts
~ issues such as housing, transportation and congestion, economic development and air pollution and
~ greenhouse gas reduction lend themselves to, and in some cases require, a more regional approach
~ city and county boundaries and authority can limit an agency’s ability to affect change
~ as it may require collaboration from regional peers to effectively attain its policy goals

Regional Blueprint Planning Efforts Show Promise
~ CA's Regional Blueprint Planning Program provides a model example of the potential benefits of regional planning
~ it is based on the principles of regional collaboration, stakeholder involvement,
~ more efficient land use patterns, and more housing and transportation choices
~ it provides funding to help regional governments create long-term growth plans consistent with the above principles
~ the Blueprint Learning Network coordinates state and regional agencies to share experiences and
~ best practices in making better infrastructure investment decisions
~ as a result, nearly all of the state’s metropolitan planning organizations (MPOs) are developing long-range growth and transportation plans
~ the program involves the proactive engagement of all segments of the population,
~ as well as critical stakeholders in the community, business, academia, developers, construction,
~ and environmental organizations, to foster consensus on a vision and preferred land use pattern in a given region
~ the regional blueprint planning grants are intended to build capacity for regional collaboration and
~ integrated planning that will, in turn enable regions to plan to accommodate all their future growth, thereby reducing sprawl
~ if implemented aggressively, blueprint planning could reduce future VMT
~ projections to 2050 showed that the scenario preferred by Sacramento stakeholders and
~ adopted by the regional governing body could use 46 percent less new land,
~ reduce VMT by 12.3 miles per household per day, and
~ produce 15 percent less CO2 and particulate matter per capita,
~ as compared to the business-as-usual case Base Case 2050
~ Sacramento total regional VMT per day grows from 43 million in 2000 to 53 million in 2050
~ because the number of households more than doubles during that timeframe
~ the completed Blueprints are in early stages of implementation
~ they will need technical, financial, and regulatory assistance to achieve maximum results
~ smaller MPOs, with less staff and modeling capability, could benefit from mentoring assistance from the larger MPOs
~ that have been able to move faster and generally further with their Blueprint programs
~ the state can replicate best-practices completed in some Blueprint programs
~ to help other regions to form a value-added data collaborative
~ these collaboratives could pull city and county geographic information system (GIS) data into one place
~ where the members of the collaborative could cost-effectively update, coalesce and amend the data
~ into one fully accessible, integrated database needed for quality Blueprint planning
~ aggregated data increases the capacity of regional transportation planning,
~ air quality planning and local general planning to coordinate for improved energy and greenhouse gas efficiency
~ each of the MPOs is unique, with its own approach to travel modeling, VMT analysis and greenhouse gas emission quantification
~ third-party review of the range of methods for the purpose of producing a set of research, data development,
~ and modeling improvements to advance all MPO programs to a single, standardized level of excellence is needed as soon as possible
~ model improvements will lend better accuracy to VMT quantification and enhance the state, regional and
~ local ability to deploy resources to reduce energy use and greenhouse gas emissions
~ Blueprint practitioners have requested state support to better assess new challenges presented by the land use demands
~ of energy crops and the effect they have on long term food production, water demand, and
~ land use patterns affecting VMT and greenhouse gases
~ interagency support and funding is needed to develop a knowledge base and
~ integrate it into land use planning programs for fully-informed decision making with
~ energy, environmental, economic and social tradeoffs clearly defined
~ the state must provide assistance to build the many levels of strong leadership necessary to shape land-use practices and
~ to guide the development of methods to measure and track the effects of land use on the state’s energy and climate goals
~ a state growth plan, prepared in conjunction with regional and local interests, is essential
~ a state plan should be composed of regional plans, developed by local governments,
~ in a process facilitated by regional agencies, modeled on the Blueprint success
~ once regional plans are adopted, the state should compile their data and programs into a statewide growth management plan
~ upon adoption of such a plan, state policies and programs should be modified to align with and support the plan
~ the statewide plan should be updated every ten years, adding maturing regional and local data and plans, to keep the state plan current

The State’s Regulatory Authority and Purse Strings should be used to Better Advantage
~ the state took a major step toward encouraging smarter growth with the passage of AB 857
~ it laid out three planning priorities for state agencies: promote infill development and social equity in existing communities;
~ protect and conserve environmental and agricultural resources; and
~ achieve more efficient use of land, transportation, energy and public resources outside the infill areas
~ unfortunately, AB 857 has had little effect
~ while it provided the framework for guiding state agency land use practices,
~ there is no consequence for agencies that do not comply
~ currently, the Governor’s Office of Planning and Research only has the authority to collect annual reports of agencies self-reported compliance with the law
~ the state has limited land use authority
~ it does have some key leverage points (California Environmental Quality Act, housing elements, and others)
~ that can be used to assist local governments in reducing energy use and greenhouse gas emissions
~ that result from land use planning choices
~ the state can use the disbursement of transportation and housing funds to motivate collaborative planning at a regional level
~ in an attempt to significantly reduce grrenhouse gas emissions
~ a common methodology for reporting and measuring greenhouse gas emissions contributions for communities is needed
~ infrastructure funding policies influence the design and use of local government infra-structure and development projects
~ CA has a unique opportunity to direct infrastructure investments contained in the Governor’s Strategic Growth Plan
~ and approved by voters in November 2006 to those communities that reduce greenhouse gas emissions associated with given projects
~ the Strategic Growth Plan contained a few programs to encourage energy-efficient, climate-friendly land use
~ but project funding criteria (where they exist) currently contain no energy or climate considerations
~ the funding criteria ultimately developed for Propositions 1B, 1C, 1D, and 84
~ will determine the extent to which bond monies contribute to less energy-intensive land use and reduce VMT
~ the state should build upon the Governor’s Strategic Growth Plan by requiring that
~ all state financing for infrastructure incorporate energy use reduction strategies and climate considerations

California Should Learn from Other States
~ Oregon, New Jersey, and Maryland are conducting similar land use planning efforts
~ some of which are specifically targeted toward greenhouse gas emission reductions
~ some of the states and regions within states have tied financial and technical assistance to smart growth planning areas
~ New Jersey has issued regulations that specifically integrate smart growth principles into utility service policies
~ anyone building in state-determined non-smart growth areas must pay the full cost of utility line extensions
~ some of the programs are already showing reductions in VMT:
~ Portland residents decreased their daily per capita VMT by 4 percent between 1996 and 2005,
~ while the nation and California both increased daily per capita VMT by 5.7 percent and 6.6 percent, respectively

Utility Partnerships with Local Planning Efforts are Essential
~ while electric utilities have been instrumental in supporting local building energy efficiency measures
~ they have played a limited role in local government planning
~ planning for intrastate transmission lines is underway and must address local and regional issues
~ if future infrastructure has any hope of being developed
~ utilities are partnering with local governments to plan new residential and commercial developments
~ the state’s investor-owned utilities and municipal utilities need to play an even greater role in planning and development programs and projects
~ investor-owned utilities have stated that their ability to do so is hamstrung by current energy efficiency program time and funding constraints

Research is a Critical Tool for Ensuring Future Success
~ land use impacts on energy demand, energy generation, and transmission and on greenhouse gas emissions are in the early stages of exploration
~ further research and development is necessary to explain and quantify the effect land use has on energy systems
~ research is needed to develop and update existing modeling and decision-support tools
~ to improve the integration of energy considerations into future planning and development efforts
~ differences in land development patterns result in differences in trip mode choice, number and length
~ mechanisms to account for the Five Ds - Density, Diversity, Design, Destination, accessibility & Distance to transit
~ — have been developed and successfully used to improve the ability of travel models to assess
~ how VMT is affected by land use patterns
~ many local governments and regional agencies, however, find that access to information and a lack of funding prevent
~ them from improving their models to develop and implement climate-friendly and energy-efficient plans and programs
~ other MPOs have used internal funding and grants to successfully integrate land use and transportation planning,
~ embedding the Five Ds sensitivity into their travel models to better assess smart growth options
~ best practice data, modeling and public education methods found in some California MPOs
~ should be packaged and shared with all MPOs
~ the 2006 Integrated Energy Policy Report Update charged the Energy Commission’s Public Interest Energy Research (PIER) group
~ with providing tools and conducting research to assist the energy and greenhouse gas reduction planning efforts of local governments
~ a number of currently funded projects support this charge
~ in 2008 over $2 million will be allocated for sustainable communities research
~ this funding will support initiatives designed to better understand the interaction between energy demand and
~ environmental design principles, to identify infrastructure design impacts on energy and the environment,
~ and to identify design improvements that would reduce energy use in California
~ land use modeling tools and methodologies are critical to these initiatives

~ transportation research also is underway through PIER funding,
~ with research designed to reduce petroleum consumption and greenhouse gas emissions
~ through increased vehicle efficiency and lower carbon fuels
~ creation of new, and validation of existing, modeling tools used in these and similar research efforts are important elements
~ understanding the role of smart communities - those that employ information technology
~ to change how the community uses its physical space - in reducing VMT needs to be explored

Recommendations

• The state should collect required regional plans and adopt a statewide growth management plan
~ to align State planning, financing, infrastructure and regulatory land use policies and programs

• The state should require regional transportation planning and air quality agencies
~ to adopt 25-year and 50-year regional growth plans that provide housing, trans-portation and community services
~ for expected population increases while reducing greenhouse gas emissions to state-determined climate change targets

• The Air Resources Board should
~ adopt regional greenhouse gas emission reduction levels to guide regional growth management plans in their AB 32 scoping plan
~ the Board should include in the scoping plan clear guidance on greenhouse gas emissions accounting
~ for urban land use activities and a local government protocol
~ for assessing and tracking greenhouse gas emissions in jurisdictions

• The Air Resources Board should
~ require local jurisdictions to adopt plans to reduce their greenhouse gas emissions

• The Climate Action Team’s Land Use Subgroup
~ should convene a proceeding to develop recommendations for measuring and reducing vehicle miles traveled

• The Legislature should
~ mandate local governments to develop regional growth management plans
~ that will accommodate 25-years and 50 years of housing, transportation and community service growth needs
~ while meeting Air Resources Board-set regional greenhouse gas emission targets

• The Legislature should:
~ require regional growth management plans to be adopted through a joint process between
~ a region’s Municipal Planning Organizations and/or Council of Governments (MPO/COGs) and
~ the local air quality management district (AQMDs)

~ require local governments to adopt the portion of the regional plan and greenhouse gas emission reduction target
~ that impact their jurisdiction into their General Plans
~ the plans should clearly identify areas where growth and development should and should not occur

~ require MPO/COGs and AQMDs to incorporate the plan and targets into their planning, financing and regulatory programs

~ require the Governor’s Office of Planning and Research to collect the regional growth management plans and
~ integrate them to create a statewide growth management plan

~ require state agencies to modify all programs and policies that affect land use,
~ including but not limited to, planning, financing, capital outlay and compliance,
~ to incorporate, and support, the statewide growth management plan
~ colleges, universities and state buildings should also be required to be consistent with the growth management plan

~ require that the regional and statewide plans, and the local governments, MPO/COGs and AQMDs adoption of them, shall be updated on ten-year schedule

• State infrastructure financing
~ should encourage development that is consistent with the state’s greenhouse gas emission and energy consumption goals
~ the Legislature should require all remaining Strategic Growth Plan bond programs
~ to incorporate climate change and energy consumption reduction measures
~ if the state adopts growth management legislation as described above,
~ all state infrastructure planning, financing and compliance programs should only allow resources, financial, technical
~ or otherwise, to be spent for development of projects in identified growth areas
~ the Legislature should require that all state infrastructure planning, financing and compliance programs
~ only allow resources, financial, technical or otherwise,
~ to be spent for development of projects in complete consistency with regional Blueprints
~ the Legislature should require that all state infrastructure planning, financing and compliance programs
~ not allow resources, financial, technical or otherwise,
~ to be spent for development of projects in areas not consistent with existing regional Blueprint plans

• The state should expand efforts to provide technical and financial assistance
~ to regional agencies and local governments to facilitate climate-friendly and energy efficient planning and development

~ the state should continue to fund the Blueprint Regional Planning Grant Program and
~ Blueprint Learning Network (the Network) to assist regional agencies and local governments
~ in developing improved regional land use plans
~ the grant program should include energy consumption and greenhouse gas emission reduction
~ as primary outcomes of the blueprints developed within the program

~ the state should work with the Network to develop new analytical capacity needed to better inform
~ the long-term planning decisions presented by increased demand for energy crop land allocations,
~ and the integrated environmental, energy, economic and social tradeoffs
~ that will be presented to both rural and urban regional and local governments

- the state should work with the Network to explore best practices and develop a set of recommendations
~ to improve and to standardize the level of accuracy of VMT and greenhouse gas quantification
~ produced by each MPO and to develop a standardized methodology for applying this information
~ in climate change and energy action plans, Blueprint planning and local planning

- when growth management legislation is passed, the Grant program and the Network should be modified
~ to support development of the regional growth management plans as specified in the legislation

~ the Legislature should pass legislation that implements the Proposition 84 Sustainable Communities Program
~ the Program should focus on assisting regional and local governments in developing, implementing and
~ incorporating into existing policies the above mentioned growth management plans, Blueprints and climate action plans

~ the Energy Commission should convene a group of stakeholders, both within and outside of State government,
~ to update its Energy Aware Planning Guide to provide guidance for regional and local governments
~ attempting to adopt local growth management, energy and climate action plans

~ once the Sustainable Communities program is established and the Commission should coordinate with the California Department of Transportation’s
~ existing research efforts to convene a land use research group to identify research needs,
~ carry out research and develop and disseminate tools and resources to land use stakeholders

• State government should be a model for climate friendly and energy efficient development patterns.
- the legislature should pass legislation that builds upon AB 857’s intentions by adding greenhouse gas emissions reduction
~ and energy consumption as priority planning goals of the state
~ the legislation should require that state agencies engaging in or financing the development of infrastructure
~ or capital outlay projects report on the project’s compliance with state planning policies
~ during each stage of its administrative and legislative budget approvals
~ the legislation should require that projects that do not meet the state planning priorities
~ should not be funded except in situations where compliance would be proven infeasible by the sponsoring agency

- the Climate Action Team Land Use Subgroup should develop greenhouse gas emissions reduction and energy efficiency guidelines
~ for state agency programs that affect land use
~ state agencies should adopt the guidelines to the greatest extent feasible

~• The state should determine the extent to which state and local tax policies
~ affect and guide land use practices and correct polices that encourage growth inconsistent with the state’s growth management plan
~ the Governor’s Office of Planning and Research, working with local governments, the building community,
~ the university system and other stakeholders should conduct a study of the impacts of state and
~ local tax policy on land use practices in the state
~ the report should contain recommendations for changing identified tax policy that leads to detrimental land use practices

• California’s utilities
~ should play an active role in regional and local government planning and development efforts
~ at both the plan and project level to encourage climate friendly and energy efficient development in their service areas
~ the California Public Utilities Commission should allow utility-incentive and technical-assistance programs
~ with longer lead times to enable greater collaboration by utilities with developers and local governments

• The state should work with its Congressional delegation
~ to ensure that future federal highway and other transportation and land use related legislation and programs
~ include energy reduction and climate stabilization considerations