States ratchet up RPS requirements, incentivize biomass utilization

By Bryan Sims
Renewable portfolio standards (RPS) are being developed and proposed in Massachusetts and California, and Michigan passed a law that encourages biomass harvest, a possible step in meeting RPS goals.

In January, the Massachusetts Department of Energy Resources released regulations that expanded support for renewable energy and alternative energy technologies mandated by the Green Communities Act, energy reform legislation enacted in July. The act called for changes to the state's RPS that would double the rate of increase in the use of new renewable energy and create a new Class 2 RPS to support the continued operation of older (pre-1998) renewable-energy-generating facilities.

Geothermal, hydroelectric and marine, and hydrokinetic energy are now eligible technologies under RPS Class 1. Liquid biofuels eligible for RPS Class 1 are required to meet life-cycle greenhouse gas emissions and other standards set by the Clean Energy Biofuels Act of 2008. This includes algae-based fuel.

RPS Class 2 is limited to generation that began on or before Dec. 31, 1997. Utilities and other electricity suppliers are required to purchase renewable energy credits from Class 2 facilities equal to at least 3.6 percent of sales, or make alternative compliance payments (ACPs) per megawatt-hour to meet the Class 2 RPS obligation. The initial ACP rate is $25 per megawatt-hour for 2009 and will be adjusted each year with the Consumer Price Index.

Staying consistent with California Gov. Arnold Schwarzenegger's executive order, which requires utilities to procure 33 percent of their electricity from renewable generation by 2020,
Assembly Bill 64 was proposed in December. It would increase the current requirement of 20 percent renewable procurement by 2010 but maintain the current standard for investor-owned utilities. It would also require publicly owned electric utilities to meet the 20 percent by 2010 target. Under current law, publicly owned utilities are required to have a plan in place for renewable procurement but are not required to meet a specific target. By 2015, utilities would be required to procure 25 percent of their electricity from renewable sources, with the percentage increasing to 35 percent by the end of 2020.

In Michigan, farmers who purchase machinery that can harvest biomass material will receive a sales tax exemption under Public Act 415 of 2008. Introduced by state Rep. Dick Ball, the law provides a sales tax exemption on machinery such as combines that can harvest grain and other crops while collecting the biomass residue used to produce alternative energy.