Climate Change and Alternative Energy Program - Part 3

Finally Denver is living up to its reputation as a 300 sunny days a year city – it’s a beautiful morning. Yesterday we had three great meetings, starting at the Governors’ Energy Office.

Colorado’s Governor, Bill Ritter, is a fan of renewable energy, and there are good reasons for him to be so in Colorado. The State has good wind and solar resources and is also a farming and forestry State. The presence of a number of national laboratories, including NREL, and a number of Universities, means that there is a highly educated and motivated workforce and good support for cleantech businesses. Colorado has a Climate Change Plan (20% GHG reduction by 2020 based on 2005 levels) and also a Renewable Energy Standard (RES, 20% renewable power by 2020). Interestingly the RES was then result of a populous movement – a bottom-up demand rather than a top-down one.

In case it’s not clear, Standards in America, like the RES, are targets that must be met. In the case of Colorado, consumers are protected from steep price hikes by a cap on the maximum increase on energy bills of 2%. If measures would take the price above this, the obligation on suppliers is removed.

Colorado, like all States, has received Recovery Funds. In this case the annual energy budget has risen from $10M to $90M. The majority of this fund is being deployed towards weatherisation of homes (insulation and the like). The increase means that up to $6K can be spent on homes (up from $2K) and the qualifying income bracket has been increased so that more homes can be refurbished. Also energy companies have schemes such as low-carbon design assistance for new buildings and also price reduction on best in class technologies for business such as fridges.

Colorado is aggressively promoting itself to companies and has had major success in attracting wind companies (including Vestas) and solar companies. Companies are offered tax incentives and help with staffing if they move to Colorado.

There is a forthcoming Renewable Energy Deployment Initiative which has mapped out Colorado’s energy priorities, which are essentially:

• More investment in wind and solar
• Greater emphasis on energy efficiency
• Improved HV transmission infrastructure
• Coal power (Colorado has significant coal resources)
• Natural gas development and its integration in a high RE grid

After the Governors’ office we moved a couple of blocks over to meet with the Western Governors’ Association (WGA). As you are probably aware, in the absence of National action on global warming, individual States, such have California, have taken it upon themselves to commit to action. Additionally, groups of States have cooperated, and the WGA is an example of this.

WGA represents 19 Western States, including Colorado, Washington (which we visit on Monday) and California. Such associations are a good way to “beat up on” Federal Government and are also a route to explore climate change measures such as GHG cap and trade schemes. Currently a number of Western States and also four Canadian Provinces (who have autonomy to set law) are exploring setting up such a system, although it’s unlikely to be operational until 2012. There are two other State collaborations in the US, a mid-West group (comprising 5 States) and a North East (comprising 13 States) how are active in developing cap and trade systems and in fact the NE market is active, although the carbon price is low (a couple of dollars per tonne).

The WGA noted the problems in building new transmission and distribution (T&D) infrastructure that we heard about in Washington DC; citing particular issues around habitats, water, NIMBYISM – all of which are typically dealt with by different authorities at both the State and Federal level. WGA are looking to carry out a project to examine the Western energy resources (and limits such as water availability) and then map out a potential transmission system to move the power around (at a size commensurate with the resource rather than the initial development). They are hoping to get around $20M to carry out this work. Once again the problems with bringing renewable electricity from the resource (i.e. the north for wind) to the demand (i.e. California) through numerous States was emphasised – there is no good model to work how pays/benefits.

We discussed the possibility of a National policy on Climate Change and once again it was apparent that this is still a ways off. One opinion was that it could be 3-5 years before there is such a policy, which means that the emphasis remains very much on State level initiatives. I should also say that WGA has an agreement on climate adaptation as a number of States, including Colorado are already seeing significant impacts, such as reduced water and forest degradation. It was noted that the rather conservative water utilities are already leading the way on adaptation measures.

Interestingly we also learned that there have been no new coal power stations built in the US since the 80’s, nor any nuclear new build. Most new power has been derived through natural gas, which there have recently been new finds nationally, improving security of supply.

I have to say that this was a really interesting meeting – lots of knowledge exchange and some opportunities for further discussions. Good luck to the WGA!

Out final meeting was with the Colorado Cleantech Industry Association (CCIA), which is a relatively new body (8 months old). The CCIA already has 115 members, 90% of which are SMEs, with clusters around smart grids, biofuels, transportation and solar. A key role of the CCIA is to keep track of policy at both the Federal level and State level, which is a pretty tough task considering so far there are only two employees!

A key priority for CCIA is investment in innovation, particularly for small companies; the State tends to prefer relationships with large companies. It was noted that the Waxman-Markey Bill contains a proposal for innovation hubs, one of which (solar, wind or energy efficiency) might well come to Colorado. It was also clear from the meeting that a there is a shortage in the executive workforce (e.g. business savvy directors etc) particularly for SMEs, which is a similar situation to the UK. There are some interesting programmes in the US to encourage skilled people into the sector, although the schemes are quite small currently.

CCIA will also be active in networking its members and encouraging technology transfer between them.