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1.4.1 MassachusettsRenewablePortfolio Standard The Massachusetts RPS program currently mandates that all retail electricity suppliers must include minimum percentages of RPS Class I Renewable Generation, RPS Class II Renewable Generation, and RPS Class II Waste Energy in the retail electricity they sell to consumers. For 2010, the Class I requirement is 5%, the Class II Renewable requirement is 3.6%, and the Class II Waste requirement is 3.5%. The definition of “eligible biomass fuel” under the RPS program is: Fuel sources including brush, stumps, lumber ends and trimmings, wood pallets, bark, wood chips, shavings, slash and other clean wood that are not mixed with other unsorted solid wastes; by-products or waste from animals or agricultural crops; food or vegetative material; energy crops; algae; organic refuse-derived fuel; anaerobic digester gas and other biogases that are derived from such resources; and neat Eligible Liquid Biofuel that is derived from such fuel sources. It is notable that this definition contains no “sustainability” requirement. The RGGI definition, by contrast, does contain such a requirement, though the criteria for sustainability in that definition are not fleshed out at this time. This definition also includes liquid biofuels, which are expressly excluded from the definition of “eligible biomass” for purposes of the Massachusetts RGGI program. Biomass facilities may qualify as RPS Class I or Class II genera- tion units as long as they are classified as “low-emission, advanced biomass Power Conversion Technologies using an Eligible Biomass Fuel.” Both the Class I and Class II RPS regulations also allow generators that co-fire to qualify as RPS Renewable Generation as long as certain requirements are met. This provision in the RPS program is analogous to the biomass exemption from carbon dioxide emissions accounting in the RGGI program. In 2008, the Massachusetts Green Communities Act established new Renewable and Alternative Energy Portfolio Standards (RPS and APS) allowing Combined Heat and Power facilities to be included as an eligible technology, provided the thermal output of a CHP unit is used in Massachusetts. APS eligible CHP units receive credits for the useful thermal energy of a CHP unit deliv- ered to Massachusetts end-uses, subject to the formula included in the regulations. The DOER rules issued for this program will, for the first time in the Commonwealth, promote the installation of new CHP units for residential, commercial, industrial, and institutional applications. A central component of the Massachusetts RPS program is the issuance of Renewable Energy Credits (REC’s) for biomass-fueled electric power generation, providing a significant incentive and market driver for large-scale biomass electric power generation. While the market price for REC’s varies significantly based on state RPS requirements, the available pool of qualifying renewable energy sources, and overall demand for electricity, they are a very significant factor in the economics of biomass power generation and a significant factor in negotiating Power Purchase Agree- ments. The current market price for REC’s is between $20–$40 per MWh and the average monthly price for electricity in the ISO New England region from March 2003—February 2010 is $62/MWh (ISO New England, 2010). At these rates (which have been even higher in past years with REC’s bringing up to $50/MWh) REC’s are clearly a major, though variable, factor in a biomass power plant’s return on investment. 1.4.2 MassachusettsRGGIImplementation As a member of the Regional Greenhouse Gas Initiative (RGGI), Massachusetts has agreed with ten other states to cap carbon dioxide emissions from large (i.e. > 25 MWe) fossil fuel-fired electric power plants in the ten-state region, and to lower this cap over time. Each individual state has adopted regulations to create allowances corresponding to their share of the cap, and to implement accounting, trading, and monitoring regulations necessary to control emissions. Any allowance can be used for compliance with any state’s RGGI regulation. The RGGI Model Rule provides a template on which all state regulations are based. The RGGI Model Rule includes three provisions related to the combustion of biomass fuels. The first exempts facilities whose fuel composition is 95% or greater biomass from the program. The second allows projects that achieve emissions reductions by switching to certain biomass-derived fuels for heating to apply to create offset allowances. The third applies to regulated facilities that co-fire biomass fuels with fossil fuels, or switch completely from fossil to biomass fuel. In such cases, emissions that result from the combustion of “eligible biomass” fuels are not counted toward compliance obligations. Massachusetts’ RGGI regula- tion includes all three of these provisions, but no power plant or offset project in the state has yet applied to take advantage of the co-firing or offset provisions. The definition of below is from Massachusetts’ RGGI regulation: Eligible biomass. Eligible biomass includes sustainably harvested woody and herbaceous fuel sources that are available on a renewable or recurring basis (excluding old-growth timber), including dedicated energy crops and trees, agricultural food and feed crop residues, aquatic plants, unadulterated wood and wood residues, animal wastes, other clean organic wastes not mixed with other solid wastes, and biogas derived from such fuel sources. Liquid biofuels do not qualify as eligible biomass. Sustainably harvested shall be determined by the Department [of Environmental Protection]. In addition to the complete exemption from the RGGI system for generators whose fuel composition is 95 percent or greater biomass, the RGGI Model Rule and all participating states except for Maine and Vermont provide partial exemptions for facilities that co-fire with smaller percentages of biomass. This partial exemption provides that any carbon dioxide emissions attributable to “eligible biomass” may be deducted from a facil- BIOMASS SUSTAINABILITY AND CARBON POLICY STUDY MANOMET CENTER FOR CONSERVATION SCIENCES 16 NATURAL CAPITAL INITIATIVEPDF Image | NATURAL CAPITAL INITIATIVE AT MANOMET
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