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Summary of Legislation and Included in the Annual Outlook 2021

February 2021

Independent Statistics & Analysis U.S. Department of Energy www.eia.gov Washington, DC 20585

This report was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By , EIA’s data, analyses, and forecasts are independent of approval by any other officer or employee of the U.S. Government. The views in this report therefore should not be construed as representing those of the U.S. Department of Energy or other federal agencies.

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

The version of the National System (NEMS) used for the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2021 (AEO2021) generally represents current legislation, environmental regulations, and international protocols, including recent government actions for which implementing regulations were available as of the end of September 2020. The potential effects of proposed federal and state legislation, regulations, or standards—or of sections of legislation that have been enacted but require funds and implementation regulations that have not been provided or specified—are not reflected in NEMS. A list of the federal and selected state legislation and regulations included in AEO2021, including how they are incorporated, is provided in each module’s Assumptions document. This document provides an overview of all the relevant regulations and includes summary tables that represent both new and existing legislation and regulations represented in NEMS.

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

New and regulations reflected in the Reference case

Federal The U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) jointly issued The Safer Affordable -Efficient (SAFE) Vehicles Rule for Model Years 2021–2026 Passenger Cars and Trucks in April 2020 as an amendment to and replacement of the 2012 Corporate Average Fuel Economy (CAFE) standards for light-duty vehicles. The updated standard sets fuel economy and standards, which increase 1.5% in stringency each year from model years 2021 through 2026. State In 2020, only Virginia enacted new legislation for renewable portfolio standards (RPS) programs. Existing laws and regulations reflected in the Reference case AEO2021 reflects a number of state-level that affect its projections of the generation mix.

The AEO2021 Reference case divides state regulations into two general categories: state RPS and state energy efficiency programs. Renewable portfolio standards To the extent , AEO2021 reflects state laws and regulations signed into law as of October 1, 2020, that require levels of renewable generation or capacity for utilities operating in the state. These requirements are known as renewable portfolio standards (RPS). AEO2021 projections do not include laws and regulations with either voluntary goals or targets that can be substantially satisfied with nonrenewable resources.

The AEO2021 Reference case assumes that states will meet their ultimate RPS targets, yet assumes that states will not necessarily meet targets for interim years. RPS compliance constraints in most regions are estimated; however, because NEMS is not a state-level model, each state generally represents only a portion of one of the NEMS electricity regions. In general, EIA has confirmed requirements for each state through original legislative or regulatory documentation, including the Database of State Incentives for Renewables & Efficiency (DSIRE).

Most states are meeting or exceeding their required levels of renewable generation, based on qualified generation or purchase of credits.1 A number of factors helped create an environment favorable for RPS compliance, including

• New RPS-qualified generation capacity timed to take advantage of federal incentives, some of which are set to phase out at the end of 2020 • Lower cost of , solar, and other renewable technologies

1 G. Barbose, U.S. Renewables Portfolio Standards: 2017 Annual Status Report (Berkeley, CA: July 2017).

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

• Complementary state and local policies that either reduce costs (for example, equipment rebates) or increase revenue streams (for example, ) associated with RPS- eligible technologies

The RPS requirements for each state, as modeled for AEO2021, are in Table 1.

Table 1. Aggregate renewable portfolio standards requirements as modeled for AEO2021 Qualifying other (thermal, Qualifying efficiency, nonrenewable, State Target renewables , etc.) Compliance mechanisms (AZ) 15% by 2025 Solar, wind, , Direct use of solar , Credit trading is allowed with some hydro, ground-source heat pumps, bundling restrictions. Includes (LFG), and anaerobic renewable-fueled combined distributed generation requirement, digestion built after heat and (CHP), and starting at 5% of target in 2007, January 1, 1997 fuel cells using renewable growing to 30% by 2012 and after. 60% electricity Geothermal electric, and fuel cells Credit trading is allowed with some (CA) generation by solar thermal electric, using renewable energy. restrictions. Renewable energy 2030, 100% solar , Nuclear and hydroelectric credit prices capped at $50 per carbon-free by wind (all), biomass, (large) qualify after 2030 megawatthour (MWh). 2045 toward the 100% carbon-free (MSW), LFG, tidal, by 2045 target wave, thermal, wind (small), hydroelectric (small), and Colorado 30% by 2020 for Solar, wind, biomass, Recycled energy, -mine Credit trading is allowed. (CO) investor-owned hydro, and geothermal , pyrolysis gas Renewable distributed generation utilities, 20% by produced from MSW, and requirement applies to investor- 2020 for large fuel cells owned utilities (3% of sales by electric 2020) and electric cooperatives, (0.75% or 1% of sales by 2020, 10% by 2020 for depending on size). Generation is other eligible to earn credit multipliers if it cooperatives and is associated with certain projects municipal utilities that have specific ownership or serving more transmission ties with small utilities, than 40,000 entities, or individuals. customers Connecticut 48% by 2030 Solar, wind, biomass, CHP and fuel cells Credit trading is allowed. Obligated (CT) (44% hydro (with providers may comply through an renewables, 4% exceptions), alternative compliance payment of efficiency and geothermal, $55 per MWh. The target is CHP) LFG/MSW, anaerobic composed of three class tiers that digestion, and marine have tier-specific targets. District of 100% by 2040 Solar, wind, biomass, Direct use of solar and Credit trading is allowed. The target Columbia hydro, geothermal, cofiring includes a solar-specific set-aside, (DC) LFG/MSW, and marine equivalent to 2.5% of sales by 2023. Obligated providers may also comply through a tier-specific alternative compliance payment. Delaware 25% by 2026 Solar, wind, biomass, Fuel cells Credit trading is allowed. Credit (DE) hydro, geothermal, multipliers are awarded for several LFG, anaerobic compliance specifications, including digestion, and marine a 300% credit awarded for generation from in-state distributed solar and renewable-fueled fuel cells. Target increases for some suppliers can be subject to a cost threshold. Hawaii (HI) 100% by 2045 Geothermal electric, Solar water heat, solar space Credits cannot be traded. Eligibility solar thermal electric, heat, and solar thermal of several of the qualifying other solar photovoltaics, process heat displacement technologies is wind (all), biomass, restricted after 2015. Utility

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Qualifying other (thermal, Qualifying efficiency, nonrenewable, State Target renewables distributed generation, etc.) Compliance mechanisms hydroelectric, companies can calculate , geothermal compliance over all utility affiliates. heat pumps, MSW, combined heat and power, landfill gas, tidal, wave, ocean thermal, wind (small), anaerobic digestion, and fuel cells using Illinois (IL) 25% by 2026 Solar, wind, biomass, None Credit trading is allowed. Target (3,000 megawatt hydro, anaerobic includes specific requirements for [MW] solar and digestion, and wind, solar, and distributed 1,300 MW wind) generation. The procurement process is subject to a cost cap. Iowa (IA) 105 MW of Solar, wind, some None Iowa’s investor-owned utilities are eligible types of biomass and currently in full compliance with this renewable waste, and standard, achieved primarily resources through wind capacity. Massachu- 35% by 2030 Solar, wind, hydro, Fuel cells Credit trading is allowed. The target setts (MA) (and an some biomass for new resources includes a solar- additional 1% per technologies, specific goal to achieve 400 MW of year thereafter) LFG/MSW, geothermal in-state solar capacity, which is electric, anaerobic translated into an annual target for digestion, and marine obligated providers. Obligated providers may comply through an alternative compliance payment (ACP), which varies in level by the requirement class. The ACP is designed to be higher than the cost of other compliance options. Maryland 50% by 2030 Solar, wind, biomass, Solar , ground- Credit trading is allowed. The target (MD) geothermal, source heat pumps, and fuel includes minimum levels of LFG/MSW, anaerobic cells compliance from solar and offshore digestion, and marine wind. Utilities may pay an ACP in lieu of procuring eligible sources, with a tier-specific compliance schedule. (ME) 100% by 2050 Solar, wind, biomass, CHP and fuel cells Credit trading is allowed. The Maine hydro, geothermal, Public Utilities Commission sets an LFG/MSW, and marine annually adjusted alternative compliance payment. Community- based generation projects are eligible to earn credit multipliers. Michigan 15% by 2021, Solar, wind, hydro, CHP, coal with trading is allowed. Solar (MI) with specific new biomass, LFG/MSW, capture and sequestration, power receives a credit multiplier; capacity goals geothermal electric, and energy efficiency other generation and equipment for utilities that anaerobic digestion, measures for up to 10% of a features—such as peak generation, serve more than and marine utility’s sales obligation storage, and use of equipment one million manufactured in-state—can earn customers bonus credits. Minnesota 31.5% by 2020 Solar, wind, hydro, Cofiring and hydrogen Credit trading is allowed. Target (MN) (Xcel), 26.5% by biomass, LFG/MSW, includes 1.5% solar standard for 2025 (other and anaerobic investor-owned utilities. Xcel’s investor-owned digestion target also includes 25% of sales utilities), or 25% specifically from wind and solar by 2025 (other (with a 1% maximum for solar). utilities) State regulators can penalize noncompliance at the estimated cost of compliance. Missouri 15% by 2021 Solar, wind, hydro, Fuel cells Credit trading is allowed. (MO) biomass, LFG/MSW, Noncompliance payments are set at anaerobic digestion, double the market rate for and renewables.

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Qualifying other (thermal, Qualifying efficiency, nonrenewable, State Target renewables distributed generation, etc.) Compliance mechanisms Montana 15% by 2015 Solar, wind, hydro, Compressed air energy Credit trading is allowed, with a (MT) geothermal, biomass, storage price cap of $10 per MWh. and LFG Community-based projects have specific targets. North 12.5% by 2021 Solar, wind, small Direct use of solar heat, CHP, Credit trading is allowed. Impacts Carolina for investor- hydro, biomass, hydrogen, and demand on customer costs are capped at (NC) owned utilities, geothermal, LFG, and reduction specified levels. Solar and certain 10% by 2018 for marine animal waste projects have specific municipal and targets. utilities New 24.8% by 2025 Solar, wind, small Fuel cells, CHP, Credit trading is allowed, and Hampshire hydro, marine, and microturbines, direct use of utilities may pay into a fund in lieu of (NH) LFG solar heat, and ground- holding credits. The target has four source heat pumps separate compliance classes by technology type. New Jersey 50% by 2030 Solar, wind, hydro, None Credit trading is allowed, and an (NJ) with the solar geothermal, ACP is set by state regulators. Solar portion reaching LFG/MSW, and marine and offshore wind are subject to 5.1% in 2021 separate requirements and have before gradually separate enforcement provisions. decreasing to 1.1% by 2033 New 80% renewable Solar, wind, hydro, Zero-emission technology, Credit trading is allowed. (NM) generation by geothermal, and LFG. not including nuclear 2040, 100% Carbon-free includes carbon-free by nuclear 2045 Nevada (NV) 50% renewable Solar, wind, hydro, Waste tires, direct use of Credit trading is allowed. generation by geothermal, biomass, solar and geothermal heat, 2030, 100% and LFG/MSW. and efficiency measures carbon-free by Carbon-free includes (which can account for one- 2050 nuclear quarter of the target in any given year) New York 70% renewable Solar, wind, hydro, Direct use of solar heat, CHP, Credit trading is not allowed. (NY) generation by geothermal, biomass, and fuel cells Compliance is achieved through 2030, 100% LFG, anaerobic purchases by state authorities, carbon-free by digestion, certain funded by a surcharge on investor- 2040 , and marine. owned utilities. Government-owned Carbon-free includes utilities may have their own similar nuclear programs. Ohio (OH) 8.5% renewable Solar, wind, hydro, CHP, fuel cells, anaerobic Credit trading is allowed. ACP are energy resources biomass, geothermal, digestion, and microturbines set by law and adjusted annually. by 2026 and LFG/MSW Solar has a separate target. Oregon (OR) 50% by 2040 Solar, wind, hydro, Hydrogen Credit trading is allowed, with an biomass, geothermal, ACP and a limit on expenditures of LFG/MSW, anaerobic 4% of annual revenue. Solar digestion, and marine receives a credit multiplier. Pennsylvania 18% by 2020 Solar, wind, hydro, CHP, certain advanced coal Credit trading is allowed, with an (PA) biomass, geothermal, technologies, certain energy ACP. Separate targets are set for and LFG/MSW efficiency technologies, fuel solar and two different combinations cells, direct use of solar heat, of renewable, , and and ground-source heat efficiency technologies. pumps Rhode Island 38.5% by 2035 Solar, wind, hydro, Fuel cells Credit trading is allowed, with an (RI) biomass, geothermal, ACP. A separate target exists for 90 anaerobic digestion, MW of new renewable capacity. LFG, biodiesel, and marine Texas (TX) 5,880 MW by Solar, wind, hydro, Direct use of solar heat and Credit trading is allowed, with 2015 biomass, geothermal, ground-source heat pumps capacity targets converted to LFG, and marine generation equivalents. State regulators may cap credit prices, and 500 MW must be from resources other than wind.

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Qualifying other (thermal, Qualifying efficiency, nonrenewable, State Target renewables distributed generation, etc.) Compliance mechanisms Virginia (VA) 100% carbon- Solar, wind, hydro, None Credit trading is allowed. free by 2045 geothermal, biomass, LFG, anaerobic digestion, certain biofuels, and marine. Carbon-free includes nuclear Vermont 75% by 2032 Geothermal, solar, Ground-source heat pumps The purchase of renewable energy (VT) wind, biomass, hydro, and CHP credits from plants whose energy is LFG, marine, capable of delivery within New anaerobic digestion, England is allowed, with an ACP of and fuel cells using $0.01 per kilowatthour (kWh). renewable fuels Washington 100% carbon- Solar, wind, hydro, CHP Credit trading is allowed, with an (WA) free by 2045 biomass, geothermal, administrative penalty for LFG, anaerobic noncompliance. digestion, biodiesel, and marine Wisconsin 10% by 2015 Solar, wind, hydro, CHP, pyrolysis, synthetic gas, Credit trading is allowed. (WI) biomass, geothermal, direct use of solar or biomass LFG/MSW, small heat, ground-source heat hydro, anaerobic pumps, and fuel cells digestion, and marine

One factor that could result in states missing their RPS goals is slow or no growth in electricity demand. To date, slowing demand has not affected these marginal sources, but the situation could change if demand is flat for an extended period.

Further, although more qualifying generation in aggregate than needed is now available to meet the targets, states with technology-specific goals could still have shortages related to certain technologies. In addition, the projected pattern of aggregate surplus does not necessarily imply that the projected generation would be the same without state RPS policies, which may encourage investment in places where it would not otherwise occur or in the amounts projected, even as other parts of the country see substantial growth that is higher than state targets or in the absence of targets. The results do suggest, however, that state RPS programs will not be the sole motivation for future growth in renewable generation.

Currently, 30 states and the District of Columbia have enforceable RPS or similar laws (Table 1).2 Under such standards, each state determines its own levels of renewable generation, eligible technologies,3 and noncompliance penalties. A number of modifications have been made to existing programs in recent years, building on state implementation experience and changing market conditions.

2 Summaries of state RPS policies may vary from source to source. The policies vary significantly from state to state, with no universal definition. EIA’s previous discussions of state RPS policies have included a in West Virginia that allowed several types of fossil-fueled generators to be built instead of renewable generators to meet the portfolio requirement. That policy is not included as an RPS in AEO2021. 3 Eligible technologies and even the definitions of technologies or fuel categories vary by state. For example, one state’s definition of renewables may include , but another’s may not. Table 1 provides more detail on how the technology or fuel category is defined by each state.

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

In 2020, only Virginia enacted new legislation with respect to RPS programs.

Note, as states continue adopting 100% targets, they used terms such as carbon-free, carbon-neutral, or clean energy to define their policies. However, each state has defined these terms in its own way and in some cases they include fuels not considered renewable to count toward the policy target.

Virginia In April 2020, Virginia enacted The Virginia Clean Economy Act (HB1526/SB851), establishing a renewable portfolio standard for Virginia, where previously only a voluntary renewable portfolio goal was in place. The Virginia Clean Economy Act set a target of 100% clean energy sales by 2050 and a 2045 target of 100% clean energy sales for the Virginia utility

Maryland In May 2019, Maryland enacted S.B. 516, which increased its RPS target to 50% of electricity sales from renewable generation by 2030 and requires a study to look at possible pathways to 100% clean energy by 2040.4 This policy replaces the previous target of 22.5% by 2024.

Nevada In April 2019, Nevada enacted S.B. 358, increasing its overall RPS to 100% of electricity sales from clean energy by 2050 with an interim target of 50% renewable generation by 2030.5 This new standard replaced the previous policy target of 25% renewable generation by 2025.

New Mexico In March 2019, New Mexico enacted S.B. 489, increasing its overall RPS target to 100% of electricity sales from carbon-free generation by 2045 with interim targets of 50% renewable generation by 2030 and 80% renewable generation by 2040.6 This new standard replaced the previous policy target of 20% renewable generation by 2020.

New York In July 2019, New York enacted S.B. 6599, which increased its RPS target to 100% of electricity sales from clean energy generation by 2040 with an interim target of 70% renewable generation by 2030.7 This new target was an increase from the previous target of 50% renewable generation by 2030.

Ohio In July 2019, Ohio enacted G.A. 133, which decreased its RPS to 8.5% of electricity sales from renewable generation by 2026. The previous target was 12.5% renewable generation by 2026.8

4 Maryland Legislature, S.B. 516 (May 25, 2019) 5 Nevada Legislature, S.B. 358 (April 22, 2019) 6 New Mexico Legislature, S.B. 489 (March 22, 2019) 7 New York Legislature, S. 6599 (July 16, 2019) 8 Ohio Legislature, G.A. 133-HB6 (October 22, 2019)

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Washington In April 2019, Washington enacted S.B. 5116, which increased its RPS target to 100% of electricity sales from carbon-neutral generation by 2045. The previous target was 15% renewable generation by 2020.9 In addition, the policy requires a phaseout of coal-fired electricity generation by 2025.

State requirements for offshore wind Virginia

In addition to its RPS requirements, Virginia passed legislation that requires a certain amount of offshore wind to be installed by a target date. Because the requirement is framed in terms of a megawatt (MW) target rather than as a percentage of electricity sale targets, it is implemented separately from the RPS requirements. In April 2020, Virginia enacted The Virginia Clean Economy Act (HB1526/SB851), which authorizes the state to purchase up to 5,200 MW of offshore wind installed off the coast of Virginia by 2034.10

State requirements for diurnal storage Virginia

In addition to its RPS requirements, Virginia passed legislation that requires a certain amount of diurnal battery storage to be installed by a target date. Because these requirements are framed in terms of megawatts (MW) of capacity, or megawatthour (MWh) targets, rather than as a percentage of electricity sale targets, they are implemented separately from the RPS requirements. In April 2020, Virginia enacted The Virginia Clean Economy Act (HB1526/SB851), which requires utilities in the state to install collectively 2,700 MW of diurnal battery storage in Virginia by 2035.11 State energy efficiency resource standards and goals AEO2021 does not explicitly include state energy efficiency resource standards (EERS). EERS are mandatory, long-term reduction targets spanning at least three years that

• Are sufficiently funded to allow covered entities to meet their targets • Use financial incentives or non-performance penalties • Usually increase over time

Nevertheless, these standards do inform modeling of utility and state energy efficiency incentives.

Of the 30 states with mandatory or voluntary efficiency goals, 24 meet the definition of an EERS. Efficiency policies for utilities complement efficiency gained from structural changes, federal appliance standards, and enhanced building codes. The extent of the change in demand varies by region and sector.

State legislatures and commissions (PUC) each create energy efficiency (EE) policies (Table 2). Savings targets are set as reductions from a single base year or as

9 Washington Legislature, S.B. 5116 (April 22, 2019) 10 Connecticut Legislature, H.B. 7156 (June, 7, 2019); Virginia Legislature, HB1526/SB851 (April 11, 2020) 11 Virginia Legislature, HB1526/SB851 (April 11, 2020)

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

• An average of previous years • A cumulative reduction during a compliance period • A percentage of projected electricity sales

As with the RPS, EIA has confirmed EERS requirements for each state through original legislative or regulatory documentation and used DSIRE and the Advanced Energy Economy (AEE) PowerSuite tools to support those efforts.

Table 2. Characteristics of state efficiency requirements or goals (as of December 2020)

Percent Percentage 2019 incremental age of State Type Targeted electricity savings of sales Current savings savings including annual retail [13] (requirements and goals) [14] covered [12] period (range) (MWh) [15] sales[16] AK E&G 1.2% saving from 2018 50 2020 2022 300 0.01 retail sales AZ E&G 2.6% annual saving 56 2016 2020 926,080 1.19 and 22% cumulative savings by 2020; lower for co-ops CA E&G Doubling energy efficiency 73 2015 2030 2,740,112 0.86 savings by 2030 CO E&G 5% of 2018 sales by 2028, 56 2019 2028 726,468 1.29 plus peak reductions CT E&G Average 1.1% reduction 93 2019 2021 430,102 1.02 from forecast sales DC E&G About 5% cumulative 100 2017 2021 140,408 0.74 savings by 2021 from 2016 HI Elec About 1.4% annual 100 2009 2030 130,843 1.38 incremental savings between 2009 and 2030

12 American Council for an Energy-Efficient Economy, The 2019 State Energy Efficiency Scorecard, Report U1908 (ACEEE 2019), Appendix D, pages 155–161. The percentage of affected retail sales in an EERS depends on what entities are covered by an EERS, which differs by state. EIA calculated percentages for states not included in ACEEE2019 (Louisiana, Missouri, Mississippi, and Virginia), using state EE filings and U.S. Energy Information Administration, Form EIA-861, Annual Industry Report (October 6, 2020). Information on DC’s targets is from a phone interview with Dan Cleverdon, Public Service Commission of the District of Columbia, January 21, 2018. 13 If an EERS covers electric utilities only, abbreviated as Elec; if both electric and utilities, as E&G. 14 Sales reductions refer to reductions in retail sales of electricity. Unless otherwise noted, they are incremental annual reductions, rather than cumulative savings. Base year indicates year (or average of previous years) against which targeted savings are measured. 15 Incremental annual energy efficiency savings, reported in megawatthours (MWh), on Form EIA-861, Annual Report (October 6, 2020). These savings are defined as changes in energy use caused in the current reporting year by new participants in DSM programs that operated in the previous reporting year, or by participants in new DSM programs that operated for the first time in the current reporting year). Savings as a percentage of retail sales are calculated based on utility retail sales data reported on Form EIA-861. 16 Incremental annual electricity savings divided by total retail electricity sales for 2019, as reported to the U.S. Energy Information Administration on Form EIA-861, Annual Electric Power Industry Report. State Electricity Profiles (October 6, 2020).

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Percent Percentage 2019 incremental age of State Type Targeted electricity savings of sales Current savings savings including annual retail [13] (requirements and goals) [14] covered [12] period (range) (MWh) [15] sales[16] IA E&G Varies by investor-owned 75 2019 2023 434,888 0.85 utility (IOU); average 0.89% annual incremental savings IL E&G Varies by IOU; cumulative 89 2018 2030 2,467,987 1.09 savings of 16% or 21.5% LA Elec Quick Start Energy 81 2014 ongoing 104,324 0.11 Efficiency (EE) Pilot MA E&G 17.7 trillion British thermal 85 2019 2021 1,621,941 1.98 units (Btu) from 2019 to 2021 (~2.7% of retail sales) MD Elec 2% of sales by 2023 in 0.2% 97 2016 2023 743,446 0.81 annual increments ME E&G 2.3% average annual 100 2020 2022 155,451 0.92 savings target MI E&G 1.0% of previous year’s 100 2008 2021 1,393,370 1.26 sales, with tiered performance incentives for up to 1.5% savings MN E&G 2% of previous three-year 97 2010 no end 863,599 1.29 weather-normalized average (Xcel); other IOUs 1.5% MO Elec 9.9% cumulative annual 68 2012 2020 624,668 0.79 savings by 2020 MS Elec Quick Start EE program 76 2014 ongoing 76,177 0.16 NC Elec 5% of 2021 sales from 2008 100 2009 2021 1,454,102 1.07 base; EE is an eligible renewable portfolio standard (RPS) resource NH E&G 4.5% cumulative electric 100 2021 2023 125,009 0.77 savings by 2023 NJ E&G 2% annual reduction from 100 2018 Not 558,203 0.52 previous three-year applicable average NM Elec Cumulative 8% reduction 69 2014 2025 142,346 0.57 from 2005 sales by 2020, 5% reduction from 2020 sales by 2025 NV Elec 25% RPS, of which 10% of 88 2020 2025 205,883 0.50 the requirement may be met with EE measures NY E&G 185 trillion Btu (TBtu) total 100 2020 2025 2,110,512 0.97 energy reduction, 3% annual utility electricity savings target by 2025. Overall Reforming the Energy Vision goal for

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Percent Percentage 2019 incremental age of State Type Targeted electricity savings of sales Current savings savings including annual retail [13] (requirements and goals) [14] covered [12] period (range) (MWh) [15] sales[16] buildings of 23% from 2012 levels by 2030 OH Elec 17.5% EE target 89 2009 2020 1,755,030 0.70 OR E&G Average 45 MW savings 70 2020 2020 543,525 1.02 from 2020 PA Elec Varies by utility; average 96 2016 2021 1,354,635 0.56 cumulative savings of 3.7% RI E&G Annual average 99 2021 2023 283,515 2.66 incremental savings target of 2.0% TX Elec 30% reduction in demand 74 2013 no end 960,510 0.22 growth (about 0.1% annually) UT Elec 1% annual reduction in 80 2009 no end 253,029 0.81 electricity; energy efficiency is an eligible RPS resource VA Elec 10% by 2022 relative to 100 2007 2022 161,931 0.13 2006 sales VT Elec 1.7% incremental 98 2021 2023 121,582 2.24 electricity sales savings (percentage of 2019 annual sales) and seasonal reductions WA Elec Varies by utility; about 2% 83 2020 2021 723,162 0.77 incremental for IOUs WI E&G Lifecycle goal of 22.8 100 2019 2022 807,200 1.17 terawatthours (TWh) over four years (0.6%–0.7% of sales)

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Appendix A: Federal and selected state legislation and regulations in the Annual Energy Outlook 2021 Residential sector Annual Energy Outlook Legislation Brief description (AEO) handling Basis A. National Appliance Requires the Secretary of Appliances represented in Public Law 100-12 Energy to set minimum the residential sector are Act of 1987 efficiency standards for included (NAECA1987) various appliance categories with periodic updates a. Room air In 2014, set standards for New purchases of room Federal Register Notice conditioners room air conditioners air conditioners required of Final Rulemaking to meet the standards b. Central air In 2015, set standards for New purchases of other Federal Register Notice conditioners and heat central air conditioners in air conditioners required of Final Rulemaking pumps 2015 with an update in 2023 to meet the standards c. Water heaters In 2015, set standards for New purchases of water Federal Register Notice water heaters heaters required to meet of Final Rulemaking the standards d. Refrigerators and In 2014, set standards for New purchases of Federal Register Notice freezers refrigerators/freezers refrigerators/freezers of Final Rulemaking required to meet the standards e. Dishwashers In 2010, set standards for New purchases of Federal Register Notice dishwashers; superseded by a dishwashers required to of Final Rulemaking consensus agreement meet the standards effective in 2013 f. Fluorescent lamp In 2014, set standards for New purchases of Federal Register Notice ballasts fluorescent lamp ballasts fluorescent lamp ballasts of Final Rulemaking required to meet the standards g. Clothes washers In 2015, set standards for New purchases of clothes Federal Register Notice clothes washers washers required to meet of Final Rulemaking the standards h. Furnaces In 2013, set standards for New purchases of Federal Register Notice furnaces furnaces required to meet of Final Rulemaking the standards i. Clothes dryers In 2015, set standards for New purchases of clothes Federal Register Notice clothes dryers dryers required to meet of Final Rulemaking the standards j. Boilers In 2021, set standards for New purchases of boilers Federal Register Notice boilers required to meet the of Final Rulemaking standards B. Act of Public Law 102-486 1992 (EPACT1992) a. Building codes For the International Energy All states assumed to Trend of states’ Conservation Code (IECC) adopt the IECC 2006 code adoption of codes, 2006, specifies whole house by 2017 allowing for lead times efficiency minimums for enforcement and builder compliance b. Various types In 2012, set standards for New purchases of various Federal Register Notice various lighting types lighting types required to of Final Rulemaking meet the standards C. Energy Policy Act of Public Law 109-58 2005 (EPACT2005)

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis a. Torchiere lamp In 2006, set standards for New purchases of Federal Register Notice standard torchiere lamps torchiere bulbs required of Final Rulemaking to meet the standards b. Compact fluorescent In 2006, set standards for New compact fluorescent Federal Register Notice lamp standard compact fluorescent lamps bulb purchases required of Final Rulemaking to meet the standards c. Ceiling fan and light In 2019, set standards for Miscellaneous and lighting Overall savings kit standard ceiling fans and in 2020 for electricity determined by number ceiling fan light kits reduced by appropriate of ceiling fan shipments amount and estimated kilowatthour (kWh) savings per unit d. Dehumidifier In 2019, set standards for Dehumidifier electricity Overall savings standard dehumidifiers consumption reduced by determined by number appropriate amount of dehumidifier shipments and estimated kWh savings per unit e. Energy-efficient Provides credits to Cost of applicable Federal Register Notice equipment tax credit purchasers of certain energy- equipment reduced by of Final Rulemaking efficient equipment in 2006 specified amount and 2007 f. New home tax credit Provides $1,000 or $2,000 tax Shell package cost for Cost reductions to credit to builders if they these homes reduced by consumers are construct homes that are 30% specified amount assumed to be 100% of or 50%, respectively, more the builder’s tax credit efficient than code in 2006 and 2007 g. Energy-efficient Provides tax credits to Cost savings are assumed Cost reductions to appliance tax credit producers of energy-efficient to be passed on to the consumers are refrigerators, dishwashers, consumer, reducing the assumed to be 100% of and clothes washers for each price of the appliance by the producer’s tax unit they produce that meets the specified amount credit certain efficiency specifications D. Public Law 110-140 and Security Act of 2007 (EISA2007) a. General service From 2012–2014, required Wattage for new bulbs is Federal Register Notice incandescent lamp less wattage for bulbs; a 2020 reduced by 28% in 2013 of Final Rulemaking (GSL) standard backstop standard that would have effectively eliminated incandescent bulbs was removed in December 2019 b. External power In 2016, set standards for Electricity consumption by Overall savings on supply standard external power supplies external power supplies is compact fluorescent reduced by appropriate bulbs determined by amount number of shipments and estimated kWh savings per unit c. Manufactured In 2011, set requirement for All manufactured homes Federal Register Notice housing code manufactured homes to meet shipped after 2011 are of Final Rulemaking latest IECC required to meet the 2006 IECC

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis d. Miscellaneous In 2019, set minimum Other electricity Federal Register Notice refrigeration products efficiency standards for wine consumption is reduced of Final Rulemaking coolers by appropriate amount E. Energy Improvement Public Law 110-343 and Extension Act of 2008 (EIEA2008) a. Energy-efficient Purchasers of certain energy- Cost of applicable Federal Register Notice equipment tax credit efficient equipment can claim equipment is reduced by of Final Rulemaking tax credits through 2016 specified amount b. Energy-efficient Producers of energy-efficient Cost savings are assumed Cost reductions to appliance tax credit refrigerators, clothes to be passed on to the consumer are assumed washers, and dishwashers consumer, reducing the to be 100% of the receive tax credits for each price of the appliance by producer’s tax credit unit they produce that meets the specified amount certain efficiency specifications, subject to an annual cap F. American Recovery and Public Law 111-5 Reinvestment Act of 2009 (ARRA2009) a. Energy-efficient Increases cap of energy- Cost of applicable Federal Register Notice equipment tax credit efficient equipment specified equipment is reduced by of Final Rulemaking under Section E(a) of specified amount ARRA2009 to $1,500; removes cap for solar photovoltaic (PV), wind, and ground-source (geothermal) heat pumps b. Weatherization and Increases funding for Annual funding amount is Federal Register Notice State Energy Programs weatherization and other applied to retrofit existing of Final Rulemaking programs to improve the housing; base savings for energy efficiency of existing heating and cooling on housing stock $2,600 per-home investment as specified in weatherization program evaluation G. Tax Relief, Public Law 111-312 Unemployment Insurance Reauthorization, and Job Creation Act of 2010 a. Energy-efficient Tax credits for some Reduces the cost of equipment tax credit energy-efficient applicable equipment equipment are extended, by specified amount generally to EISA2007 amounts H. (issued under Section 111(d) of the Clean Air Act); repealed a. Incentives for energy Would have allowed states to Subsidies to energy Federal Register Notice efficient residential comply with emission efficient technologies and of Final Rulemaking; technologies standards by encouraging building shells are not repealed and replaced residential purchases of currently modeled by the Affordable Clean

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis energy efficient technology Energy (ACE) rule in and building shells June 2019 I. Consolidated Public Law 114-113 Appropriations Act of 2016 (H.R. 2029) a. Residential solar Extends the EPACT2005 30% Tax credit is incorporated Federal Register Notice investment tax credit investment tax credit for solar into cash flow for solar of Final Rulemaking through 2019, generation systems; decreasing to 26% in 2020, investment cost for solar 22% in 2021, and expiring water heaters is reduced after 2021 by appropriate percentage J. Bipartisan Budget Act Public Law 115-123 (BBA) of 2018 (H.R. 1892) a. Residential energy Retroactively extends existing Cost of applicable BBA2018, Section efficiency and non-solar federal 25C tax credits for equipment is reduced by 40401-40402 (26 USC renewable energy tax home energy efficiency specified amount; tax 25) credits upgrades and equipment credit is incorporated into through 2017. It also extends cash flow for non-solar the 25D credit for non-solar generation systems based technology tax credits with on updated timeline the same ramp down as solar through 2021 K. Certainty and Passed in December 2019, Cost of applicable Disaster Tax Relief Act this act retroactively equipment is reduced by of 2019 (H.R. 3301) extended existing federal 25C specified amount tax credits for home energy efficiency upgrades and equipment through 2020. L. Energy Policy and Public Law 94-163 Conservation Act of 1975 (EPCA1975) a. Dedicated-purpose Expands EPCA coverage of Other electricity Federal Register Notice pool pumps pump efficiency to pool consumption is reduced of Final Rulemaking pumps, effective 2021 by appropriate amount Commercial sector Annual Energy Outlook Legislation Brief description (AEO) handling Basis A. National Appliance Requires the Secretary of Appliance categories Public Law 100-12 Energy Conservation Energy to set minimum represented in the Act of 1987 efficiency standards for commercial sector are (NAECA1987) various appliance categories included with periodic updates a. Room air In 2014, set standards for Room air conditioner Federal Register Notice conditioners room air conditioners efficiency, including of Final Rulemaking metric, is changed from 9.8 Energy Efficiency Ratio (EER) to 10.9 Combined Energy Efficiency Ratio (CEER) in 2014 b. Other residential-size In 2015, set standards for Central Federal Register Notice air conditioners (<5.4 central air conditioners with and heat pump efficiency of Final Rulemaking tons) an update in 2023 is set to 10 Seasonal Energy Efficiency Ratios

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis (SEER) before 2006, 13 SEER in 2006, 14 SEER in 2015, and 14.4 SEER in 2023 c. Fluorescent lamp In 2014, set standards for Purchases are limited to Federal Register Notice ballasts fluorescent lamp ballasts electronic ballasts by of Final Rulemaking setting a 0.90 and a minimum efficacy factor for F40 and F96 lamps based on lamp size and wattage, increasing to higher efficacy factor in 2005 B. Energy Policy Act of Public Law 102-486 1992 (EPACT1992) a. Building codes Directs U.S. Department of Incorporated into Based on Science Energy (DOE) to participate in commercial building shell Applications development of model energy assumptions. Efficiency of International codes and help states adopt new shell is represented Corporation and implement more efficient relative to existing shell in commercial shell energy codes shell efficiency indexes. indexes for 2003 Shell efficiency is assumed developed for EIA in to improve 6.9% and 2008 and 2011 15.0% by 2040 for existing buildings and new construction, respectively b. Window labeling Helps consumers determine Incorporated into Based on Science which windows are more commercial building shell Applications energy efficient assumptions. Efficiency of International new shell is represented Corporation relative to existing shell in commercial shell shell efficiency indexes. indexes for 2003 Shell efficiency is assumed developed for EIA in to improve 6.9% and 2008 and 2011 15.0% by 2040 for existing buildings and new construction, respectively c. Commercial furnaces Effective in 2023, sets Natural gas-fired furnace Federal Register Notice and boilers standards for furnaces and boiler thermal of Final Rulemaking efficiency is set to 80%; oil furnace thermal efficiency is set to 81%; oil boiler thermal efficiency is set to 83% d. Commercial air Sets standards for air Not modeled; superseded Federal Register Notice conditioners and heat conditioners and heat pumps by EPACT2005 standards of Final Rulemaking pumps e. Commercial water In 2003, set standards for Natural gas and oil Federal Register Notice heaters water heaters thermal efficiency is set to of Final Rulemaking 78%, increasing to 80% thermal efficiency for gas units in 2003 f. Lamps In 2012, set standards for Incandescent efficacy is Federal Register Notice various lighting types set to 16.9 lumens per of Final Rulemaking for and fluorescent fluorescent efficacy to 75 and 80 requirements;

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis lumens per watt for 4- incandescent and 8-foot lamps, requirements respectively superseded by EISA2007 g. Electric motors Specifies minimum efficiency End-use services are Federal Register Notice levels for a variety of motor modeled at equipment of Final Rulemaking types and sizes level (motors contained in new equipment must meet the standards) h. Federal energy Requires federal agencies to Federal share of the Superseded by management reduce commercial sector uses Executive Order 13123, 20% by 2000 relative to 1985 the 10-year Treasury note EPACT2005, and rate as a discount rate in EISA2007 equipment purchase decisions i. Business investment Provides a permanent 10% Tax credit is incorporated Federal Register Notice tax credit for solar investment tax credit for solar into cash flow for solar of Final Rulemaking energy property property generation systems; investment cost is reduced for solar water heaters by 10% C. Executive Order 13123: Requires federal agencies to Federal share of the Superseded by Greening the reduce energy consumption commercial sector uses EPACT2005 and Government Through 30% by 2005 and 35% by the 10-year Treasury note EISA2007 Efficient Energy 2010 relative to 1985 through rate as a discount rate in Management cost-effective life-cycle equipment purchase energy measures decisions D. Energy Policy Act of Public Law 109-58 2005 (EPACT2005) a. Commercial package In 2018, set minimum Air-cooled air conditioners Federal Register Notice air conditioners and efficiency levels with an and heat pumps are set in of Final Rulemaking heat pumps update in 2023 technology menu (with assumed capacity of 90,000 British thermal units [Btu]) to 12.4 integrated energy efficiency ratio (IEER) and heating coefficient of performance (COP) of 3.3 in 2018 and 14.4 IEER and heating COP of 3.4 in 2023 c. Lamp ballasts In 2008, banned manufacture Mercury vapor lighting Federal Register Notice or import of mercury vapor system is removed from of Final Rulemaking lamp ballasts; in 2009 and technology choice menu; 2010, set minimum efficacy minimum efficacy of T12 level for T12 energy saver ballasts is set at specified ballasts, based on application standard levels d. Compact fluorescent In 2006, set standards for Efficacy level of compact Federal Register Notice lamps medium base lamps to fluorescent lamps is set at of Final Rulemaking ENERGY STAR specifications required level e. Illuminated exit signs In 2006, set standards to Miscellaneous electricity Number of shipments, and traffic signals ENERGY STAR specifications consumption is reduced share of shipments that by appropriate amount currently meet standard, and estimated kWh savings

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis per unit determine overall savings f. Distribution In 2007, set standards as The estimation of the Federal Register Notice National Electrical share of miscellaneous of Final Rulemaking Manufacturers Association electricity consumption Class I Efficiency levels , with attributable to an update effective in 2016 losses includes the effects of the standard g. Pre-rinse spray valves In 2019, set maximum flow Energy use for water Number of shipments, rate to 1.28 gallons per heating is reduced by share of shipments that minute appropriate amount currently meet standard, and estimated kWh savings per unit determine overall savings h. Federal energy Requires federal agencies to Federal share of the Superseded by management reduce energy consumption commercial sector uses EISA2007 20% by 2015 relative to 2003 the 10-year Treasury note through cost-effective life- rate as a discount rate for cycle energy measures equipment purchase decisions as opposed to adding premiums to the 10-year Treasury note rate i. Business investment Provides a 30% investment Tax credit is incorporated Extended through 2008 tax credit for fuel cells tax credit for fuel cells and a into cash flow for fuel by Public Law 109-432 and microturbines 10% investment tax credit for cells and microturbines and through 2016 by microturbines installed in the Energy 2006 through 2016 Improvement and Extension Act of 2008 (EIEA2008) j. Business solar Provides a 30% investment Tax credit is incorporated Extended through 2008 investment tax credit tax credit for solar property into cash flow for solar by Public Law 109-432, installed in 2006 through generation systems; through 2016 by 2016 investment cost for solar EIEA2008, and through water heaters is reduced 2019 and then phased by 30% out to 10% by Public Law 114-113 k. Vending machines In 2019, set standards to Vending machines that do Federal Register Notice ENERGY STAR specifications not meet standards are of Final Rulemaking removed from technology choice menu E. Energy Independence and Security Act of 2007 (EISA2007) a. Commercial walk-in Requires use of specific Walk-in refrigerator and Federal Register Notice coolers and walk-in energy efficiency measures in freezer systems that do of Final Rulemaking freezers equipment manufactured in not meet standards are or after 2009, with an update removed from technology effective in 2017 choice menu b. Incandescent and Sets maximum allowable Incandescent and halogen Federal Register Notice halogen lamps wattage based on lumen general service lighting of Final Rulemaking output in 2012 to 2014. A systems that do not meet 2020 backstop standard that standards are removed would have effectively

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis eliminated incandescent from technology choice bulbs was removed in menu in 2012 December 2019 c. Metal halide lamp Sets minimum efficiency Metal halide lighting Federal Register Notice ballasts levels for metal halide lamp systems that do not meet of Final Rulemaking ballasts starting in 2009, with standards are removed an update effective in 2017 from technology choice menu; minimum system efficiency includes specified standard levels for ballasts based on type d. Federal use of Requires use of energy- All existing and new Federal Register Notice energy-efficient lighting efficient lighting fixtures and federal floorspace uses of Final Rulemaking bulbs in federal buildings to 10-year Treasury note the maximum extent possible rate for lighting purchase starting in 2009 decisions in 2009 e. Federal energy Requires federal agencies to Federal share of the Federal Register Notice management reduce energy consumption commercial sector uses of Final Rulemaking per square foot 30% by 2015 the 10-year Treasury note relative to 2003 through cost- rate as a discount rate in effective life-cycle energy equipment purchase measures decisions as opposed to adding risk premiums to the 10-year Treasury note rate to develop discount rates for other commercial decisions F. Energy Improvement Public Law 110-343 and Extension Act of 2008 (EIEA2008) a. Business solar Extends the EPACT2005 30% Tax credit is incorporated Federal Register Notice investment tax credit investment tax credit for solar into cash flow for solar of Final Rulemaking property through 2016 generation systems; investment cost is reduced for solar water heaters by 30% b. Business investment Extends the EPACT2005 30% Tax credit is incorporated Federal Register Notice tax credit for fuel cells investment tax credit for fuel into cash flow for fuel of Final Rulemaking and microturbines cells and 10% investment tax cells and microturbines credit for microturbines through 2016 c. Business investment Provides a 10% investment Tax credit is incorporated Federal Register Notice tax credit for combined- tax credit for CHP systems into cash flow for CHP of Final Rulemaking heat-and-power (CHP) installed in 2009 through systems systems 2016 d. Business investment Provides a 30% investment Tax credit is incorporated Federal Register Notice tax credit for small wind tax credit for wind turbines into cash flow for wind of Final Rulemaking turbines installed in 2009 through turbines 2016 e. Business investment Provides a 10% investment Investment cost for Federal Register Notice tax credit for tax credit for geothermal heat geothermal of Final Rulemaking geothermal heat pumps pump systems installed in systems is reduced by 2009 through 2016 10% G. American Recovery and Public Law 111-5 Reinvestment Act of 2009 (ARRA2009)

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis a. Business investment Removes the cap on the Tax credit is incorporated Federal Register Notice tax credit for small wind EIEA2008 30% investment tax into cash flow for wind of Final Rulemaking turbines credit for wind turbines turbines through 2016 b. Stimulus funding to Provides funding for All existing and new Federal Register Notice federal agencies efficiency improvement in federal floorspace uses of Final Rulemaking federal buildings and facilities the 10-year Treasury note rate for purchase decisions in years in which stimulus funding is available to account for new, replacement, and retrofit projects; some funding is assumed to be used for solar PV, small , and installations c. State Energy Program Provides grants for state and All public commercial Federal Register Notice funding and energy local governments for energy sector buildings use the of Final Rulemaking efficiency and efficiency and renewable 10-year Treasury note conservation block energy purposes (State rate for purchase grants Energy Program funding decisions in years in which conditioned on enactment of stimulus funding is new building codes) available. New building shell efficiency is 10% better than 2003 by 2018 for improved building codes. Some funding is assumed to be used for solar PV and installations d. Funding for smart Provides funding for smart Consumers are assumed Federal Register Notice grid projects grid demonstration projects to become more of Final Rulemaking responsive to electricity price changes resulting in higher price elasticity of demand for certain end uses H. Clean Power Plan (issued under Section 111(d) of the Clean Air Act); repealed a. Incentives for energy Would have allowed states to Subsidies to energy Federal Register Notice efficient commercial comply with emission efficient technologies and of Final Rulemaking; technologies standards by encouraging building shells are not repealed and replaced commercial purchases of currently modeled by the Affordable Clean energy efficient technology Energy (ACE) rule in and building shells June 2019 I. Consolidated Public Law 114-113 Appropriations Act of 2016 (H.R. 2029) a. Business solar Extends the EPACT2005 30% Tax credits are Federal Register Notice investment tax credit investment tax credit for solar incorporated into the cash of Final Rulemaking property through 2019, flow for solar generation decreasing to 26% in 2020, systems; investment cost 22% in 2021, and then for solar water heaters

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis remaining at 10% in 2022 and are reduced by after appropriate percentage J. California Global Warming Solutions Act of 2006: emissions limit (SB-32) a. Limits California Limits the statewide Additional subsidies are Apply assumptions of gas emissions applied for energy SB-350 as it sets a goal level to the 1990 level to be efficient technologies in of doubling energy achieved by 2020 the Pacific Census efficiency savings Division; all increase in targets by 2030 efficiency is attributed to California K. Tax Cuts and Jobs Act Public Law 115-97 (TCJA) of 2017 (H.R. 1) a. 100% expensing for Introduces 100% expensing 100% expensing and 50% TCJA2017, Section qualified renewable for qualified property, bonus depreciation for 13201 (26 USC 168) energy property including geothermal heat geothermal heat pumps pumps, solar PV, and solar and solar thermal water thermal water heating placed heating are incorporated, in service by 2022. Qualified reducing the investment property placed in service cost from 2023 to 2026 receives 50% bonus depreciation L. Bipartisan Budget Act Public Law 115-123 (BBA) of 2018 (H.R. 1892) a. Commercial Extends ITC provisions for The tax credits are BBA2018, Section investment tax credit several technologies not incorporated into cash 40411 (26 USC 48) (ITC) for distributed and covered by the 2016 flow for applicable renewable technologies Consolidated Appropriations distributed generation Act (see below), including systems; investment costs geothermal heat pumps, for geothermal heat qualified fuel cell and pumps are reduced microturbine equipment, combined heat and power, and qualified small wind beginning construction before January 1, 2022 Industrial sector Annual Energy Outlook Legislation Brief description (AEO) handling Basis A. Energy Policy Act of 1992 (EPACT1992) a. Motor efficiency Specifies minimum efficiency Not modeled because EPACT1992, Section standards levels for a variety of motor participation is voluntary; 342 (42 USC 6313) types and sizes actual reductions will depend on future, unknown commitments b. Boiler efficiency Specifies minimum All package boilers are Standards specified in standards combustion efficiency for assumed to meet the EPACT1992, 10 CFR 431 package boilers larger than efficiency standards. 300,000 Btu/hour; natural gas Although the standards boilers: 80%; oil boilers: 83% do not apply to field- erected boilers, which are

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis typically used in steam- intensive industries, EIA assumes they meet the standards in the AEO B. Clean Air Act Amendments of 1990 (CAAA1990) a. Process emissions Numerous process emissions Not modeled because CAAA1990, 40 CFR 60 requirements for specified they are not directly industries and activities related to energy projections b. Emissions related to Numerous emissions Not modeled because CAAA1990, 40 CFR 60 hazardous/toxic requirements relative to they are not directly substances hazardous and toxic related to energy substances projections c. Industrial sulfur Sets annual limit for industrial Industrial SO2 emissions CAAA1990, Section 406 dioxide (SO2) emissions SO2 emissions at 5.6 million are not projected to reach (42 USC 7651) tons. If limit is reached, the limit (Source: EPA, specific regulations could be National Air Pollutant implemented Emissions Trends: 1990– 1998, EPA-454/R-00-002, March 2000, p. 3-4.) d. Industrial boiler Requires industrial boilers Costs of compliance that U.S. Environmental hazardous air pollutants and process heaters to are not offset by Protection Agency, conduct periodic tune-ups or efficiency gains (non- National Emissions meet emissions limits on recoverable costs) are Standards for hazardous air pollutants to modeled as an additional Hazardous Air comply with the Maximum capital cost in the Pollutants for Industrial, Achievable Control Macroeconomic Activity Commercial, and Technology (MACT) floor. Module (MAM) based on Institutional Boilers, Regulations finalized proposed regulations as Major Source (40 CFR December 2012 of September 2012 63, Subpart DDDDD) and Area Source (40 CFR 63 Part JJJJJJ) e. Emissions from Requires engine New stationary engines 40 CFR Parts 60, 85, 89, stationary diesel manufacturers to meet the meet the standards 94, 1039, 1065, and engines same emission standards as 1068 nonroad diesel engines. Fully effective in 2011 C. Energy Policy Act of 2005 (EPACT2005)

a. Physical energy Voluntary commitments to Not modeled EPACT2005, Section intensity reduce physical energy 106 (42 USC 15811) intensity by 2.5% annually for 2007–16 b. Mineral components Increase in mineral Not modeled EPACT2005, Section of cement or concrete component of federally 108 (42 USC 6966) procured cement or concrete c. Tax credits for coke Provides a tax credit of $3.00 Not modeled. No impact EPACT2005, Section oven per barrel oil equivalent, on U.S. coke plant activity 1321 (26 USC 45K) limited to 4,000 barrels per is anticipated day average. Applies to most producers of coal coke or coke gas

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis D. The Energy Independence and Security Act of 2007 (EISA2007) a. Motor efficiency Supersedes EPACT1992 Purchases of motors must EISA2007. 10 CFR Part standards Efficiency Standards no later meet the EPACT1992 431 as amended than 2011 standards through 2010; afterwards purchases must meet the EISA2007 standards. Motors manufactured after June 1, 2016, are required to comply with higher efficiency standards E. The Energy Improvement and Extension Act of 2008 (EIEA2008) a. Combined-heat-and- Provides an investment tax System costs are adjusted EIEA2008, Title I, Sec. power tax incentive credit for up to 15 megawatts to reflect the tax credit 103 of capacity in combined-heat- and-power systems of 50 megawatts or less through 2016 F. California Global Warming Solutions Act of 2006 (AB-32); as amended, 2016 (SB-32) a. Limits the statewide The California Assembly Bill Energy prices in Census California Code of greenhouse gas (GHG) 32 (AB32) sets GHG reduction Region 4 (West) are Regulations, California emissions level to the goals for 2020 for California. increased based on GHG Cap on Greenhouse Gas 1990 level to be A cap-and-trade program cap and trade prices and Emissions and Market- achieved by 2020; SB- applies to multiple economic assumed emissions. The Based Compliance 32 in 2016 requires a sectors including electric Industrial Demand Mechanisms, 40% reduction from the power plants, large industrial Module is unable to Subchapter 10 1990 GHG emission facilities, suppliers of model emissions at the Change, Article 5, level by 2030 transportation fuel, and state level Sections 95802 to suppliers of natural gas 96022, Title 17, (Sacramento, CA: May 2014) Transportation sector Annual Energy Outlook Legislation Brief description (AEO) handling Basis A. Energy Policy Act of Requires that government, Composite mandates are Energy Policy Act of 1992 (EPACT1992) business, and fuel-provider created for government, 1992, Public Law 102- fleets meet minimum electric power sector, and 486-Oct. 24, 1992 requirements for alternative- fuel provider fleets based fuel new vehicle purchases on fleet vehicle stocks and the use of alternative fuels used in those vehicles B. California’s Advanced The Clean Air Act allowed The ACCP—which includes Section 177 of the Clean Cars program California to implement the Low Emission Vehicle Clean Air Act, 42 U.S.C. (ACCP), Zero Emission vehicle emission standards Program as amended on sec. 7507 (1976) and Vehicle (ZEV) Program, that exceed federal standards March 22, 2012, and the CARB, California and includes a provision Zero Emission Vehicle Exhaust Emissions

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis and the Low Emission allowing other states to opt in Program from July 10, Standards and Test Vehicle Program (LEVP) to the California program. 2014—are incorporated. Procedures for This program has been Credit compliance Passenger Cars, Light- adopted by 13 other states. requirements are met for Duty Trucks, and The ZEV program, affecting California, Connecticut, Medium-Duty Vehicles, model year 2018 and later, Maine, Maryland, August 4, 2005, as requires a percentage of , New amended March 22, manufacturers’ sales to be Jersey, New York, Oregon, 2012; Zero-Emission zero-emission vehicles with Rhode Island, and Vehicle Standards for compliance met through the Vermont, through both 2018 and Subsequent use of credits, which can be sales and use of limited Model Year Passenger banked banking and traveling of Cars, Light-Duty Trucks, these credits. See item C and Medium-Duty Vehicles, July 10, 2014

C. Safer Affordable Fuel- Preempts state programs that The state-based ZEV The Safer Affordable Efficient (SAFE) Vehicles regulate vehicle GHG, fuel mandates from item B Fuel-Efficient (SAFE) Rule Part One: One economy, and ZEV programs above are set to zero after Vehicles Rule Part One: National Program based on the U.S. 2019. The transportation One National Program, Environmental Protection module retains the U.S. Environmental Agency’s (EPA) and the capability to model these Protection Agency and National Highway Traffic programs U.S. Department of Safety Administration’s Transportation, statutory authority to set National Highway nationally applicable vehicle Traffic Safety emission and fuel economy Administration; Federal standards Register Vol. 84, No. 188, Friday, September 27, 2019 D. The Safer Affordable Amends Corporate Average Fuel economy standards The Safer Affordable Fuel-Efficient Fuel Economy (CAFE) are decreased in model Fuel-Efficient (SAFE) (SAFE) Vehicles Rule for standards for model year years 2021–2025, Vehicles Rule for Model Model Years 2021 light duty vehicles and compared with the 2012 Years 2021–2026 2021–2026 Passenger sets new fuel economy CAFE standard, and Passenger Cars and Cars and Light standards for model years technology options and Light Trucks, U.S. Trucks 2022–2026; promulgated attributes (cost, Environmental jointly with an average performance, weight) are Protection Agency and greenhouse emissions updated to align with the U.S. Department of standard; cars and light trucks latest associated Final Transportation, are regulated separately Regulatory Impact National Highway Analysis (FRIA) Traffic Safety Administration; Federal Register Vol. 85, No. 84, Thursday, April 30, 2020 E. Vehicle Federal tax credits are The tax credits for 26 USC 30B, Energy Tax Credits provided to encourage the qualified plug-in electric Policy Act (Public Law purchase of electric, hybrid, drive motor vehicles and 109-58, 2005), Energy and/or alternative-fuel electric vehicles are Independence and vehicles included in the sales Security Act (Public Law projections 110-140, 2007), and Energy Improvement and Extension Act (Public Law 111-5, 2008)

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis F. Plug-in Electric Drive The American Recovery and Federal tax credits for 26 USC 30D, Energy Vehicle (PEV) Tax Credit Reinvestment Act of 2009 PEVs are incorporated Improvement and (ARRA2009) grants a tax Extension Act (Public credit of up to $2,500 for Law 111-5, 2008), as PEVs with at least 4 kWh of amended by the battery capacity, with larger ARRA2009 (Public Law batteries earning an 111-5, Section 1141, additional $417 per kWh in 2009) excess of 5 kWh, up to a maximum of $7,500 for light- duty PEVs. The credits are phased out once cumulative sales of qualified vehicles reach 200,000 for a manufacturer G. State electric, hybrid, More than 30 states provide State and other Various state laws in and alternative-fuel incentives to encourage the incentives for hybrid, place: Arizona, vehicle tax and other purchase of electric, hybrid, electric, and other Arkansas, California, incentives and/or alternative-fuel alternative-fuel vehicles Colorado, Connecticut, vehicles; the tax incentives are not incorporated Delaware, District of are in the form of income Columbia, Florida, reductions, tax credits, and Georgia, Hawaii, , exemptions. Other incentives Illinois, Louisiana, include use of High Maryland, Occupancy Vehicle lanes and Massachusetts, exemptions from emissions Michigan, Missouri, inspections and licensing fees. Montana, Nevada, New The incentives offered and Jersey, New York, North the mix varies by state. For Carolina, Ohio, Oregon, example, Colorado offers a Pennsylvania, Rhode tax credit of up to $5,000 for Island, Tennessee, the purchase of qualified Texas, Utah, Virginia, electric or plug-in hybrid Washington, and electric vehicles through 2019 Wisconsin H. Heavy-Duty (HD) Establishes greenhouse gas HD National program Section 202 of the National Program; emissions and fuel Phase I and Phase II Clean Air Act Title 49 Greenhouse Gas consumption standards for standards are modeled, USC, Chapter 32902[k]; Emissions and Fuel onroad heavy-duty trucks and with both engine and Energy Independence Consumption Standards their engines. Standards chassis technologies; and Security Act of for Heavy-Duty Vehicles begin for model year 2014 compliance is modeled 2007, Title 1, Section vehicles and engines and are among 13 heavy-duty 102; Federal Register, fully phased in by model year vehicle V regulatory Vol. 76, No. 179, 2018 (Phase I); a second classifications that September 2011; round of standards for represent the discrete Federal Register, Vol medium- and heavy-duty vehicle categories set 81, No. 206, October vehicles begins for model forth in the rule; the 2016 year 2021 vehicles and is fully standards are held implemented by model year constant in model years 2027 (Phase II); the second after 2027 round adds heavy-haul tractors and trailers I. The International Sets limits on sulfur oxides MARPOL Annex VI fuel MARPOL 73/78, (33 Convention for the and oxides of nitrogen sulfur mandates are U.S.C 1901(a) (4) & (5), Prevention of emissions from ship exhausts reflected in domestic and 1902(a)(1)&(5), and from Ships (MARPOL) and prohibits deliberate international shipping fuel 1907 (a), as amended Annex VI emissions of ozone depleting choices starting in 2015 by the Maritime

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis substances. First entered into Pollution Prevention force on May 19, 2005. Act of 2008 (MPPA), Requirements added on RESOLUTION January 1, 2015, set a MEPC.320(74), Public maximum of 0.1% sulfur fuel Law 110-280, 122 Stat use or exhaust scrubber use 2611) in Emission Control Areas (ECA), from a previous 1% limit. In October 2016, IMO members agreed to the 2008 MARPOL amendments that implement a new global limit in 2020 for sulfur emissions from ships; under the new requirement, vessel operators must use fuel oil on board (which includes main and auxiliary engines and boilers) with a sulfur content of no more than 0.5% /mass Electric power sector Annual Energy Outlook Legislation Brief description (AEO) handling Basis A. Clean Air Act Establishes a national limit on SO2 cap-and-trade Clean Air Act Amendments of 1990 electricity generator program is explicitly Amendments of 1990, (CAAA1990) emissions of sulfur dioxide modeled, choosing the Title IV, Sections 401 (SO2) to be achieved through optimal mix of options for through 406, Sulfur a cap-and-trade program meeting the national Dioxide Reduction emissions cap Program, 42 U.S.C. 7651a through 7651e Requires the EPA to establish These standards are not Clean Air Act National Ambient Air Quality explicitly represented, but Amendment of 1990, Standards (NAAQS) for the Cross State Air Title I, Sections 108 and criteria pollutants. Currently Pollution Rule is 109, National Ambient two designation processes incorporated (described Air Quality Standards are underway: 1) for the SO2 below) and was for Ozone, 40 CFR Part NAAQS issued in 2010 and 2) developed to help states 50, Federal Register, for the Ozone NAAQS 2015 meet their NAAQS Vol. 68, No. 3, January issued in 2015. EPA is 8, 2003. National designating areas for the Ambient Air Quality 2010 SO2 NAAQS in four Standards for rounds, of which the final Particulate Matter, 40 three are court-ordered CFR Part 50, Federal deadlines, with final round Register, Vol. 62, No. ending December 2020. 138, July 18, 1997 States have until March 2026 to comply. For the Ozone NAAQS, the EPA Administrator extended the deadline for final designations until October 2018. Areas falling into the designation of moderate nonattainment have until late 2023 to comply

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis Requires EPA to develop By withdrawing the ruling, Review of Standards of standards for emissions from EPA has affirmed its Performance new power plants; in intention that new coal for Greenhouse Gas December 2018 EPA plants without CCS can be Emissions From amended the earlier 2015 built, and AEO2021 allows New, Modified, and findings that carbon capture coal plants (using ultra- Reconstructed and storage (CCS) was the supercritical technology) Stationary Sources: best system of emissions without CCS to be built if Electric Utility reductions (BSER) for GHG economical Generating Units, 83 FR reductions, replacing it with 65424, December 20, the most efficient 2018 demonstrated steam cycle, resulting in higher proposed CO2 emission rate targets for new steam and combined- cycle technologies Requires EPA to require The electricity model Repeal of the Clean states to establish CO2 requires existing coal Power Plan; Emission standards for existing plants; generating units with heat Guidelines for in June 2019, EPA issued the rate improvement options Greenhouse Gas Affordable Clean Energy (ACE) to upgrade their efficiency Emissions From Existing rule, which revised EPA’s or retire by 2025; heat Electric Utility BSER finding for existing rate improvement options Generating Units; power plants to include only are based on a 2015 study Revisions to Emission heat rate efficiency developed for EIA’s Guidelines improvements; the rule original CPP analysis Implementing provides states a list of Regulations, candidate technologies that Environmental can be used to establish Protection Agency, 84 performance standards in FR 32520, July 8, 2019 state plants but does not set specific technology-based standards B. Cross-State Air CSAPR requires states to Cap-and-trade programs U.S. Environmental Pollution Rule (CSAPR) reduce SO2 and/or nitrogen for SO2 and NOX are Protection Agency, oxides (NOx) emissions from modeled explicitly, Cross-State power plants. CSAPR consists allowing the model to Rule, website of four individual cap-and- choose the best method epa.gov/air . trade programs, covering two for meeting the emission Federal Register, Vol. different SO2 groups: an caps. Updated budgets 70, No. 91 (May 12, annual NOx group and a and dates are 2005), 40 CFR Parts 51, seasonal NOx group. A total incorporated 72, 73, 74, 77, 78, and of 23 states are subject to 96 annual limits, and 25 states are subject to seasonal limits. In September 2016, EPA finalized an update to the CSAPR ozone season program emission budgets and target dates

C. Mercury and Air Toxics MATS sets standards to The U. S. Environmental Standards (MATS) reduce air pollution from Module (EMM) assumes Protection Agency, coal-and oil-fired power that all coal-fired Mercury and Air Toxics plants greater than 25 generating plants above Standards, website megawatts. The rule requires 25 megawatts have

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis plants to achieve the complied by 2016. Plants maximum achievable control are required to reduce technology for mercury, mercury emissions by 90% hydrogen chloride (HCl), and relative to uncontrolled fine particulate matter (PM levels 2.5) D. Energy Policy Act of Created a class of generators Represents the Energy Policy Act of 1992 (EPACT1992) referred to as exempt development of EWGs or 1992, Title VII, wholesale generators (EWG), what are now referred to Electricity, Subtitle A, exempt from Public Utility as independent power Exempt Wholesale Holding Company Act as long producers (IPPs) in all Generators as they sell wholesale power regions E. The Public Utility PUHCA is a federal statue that EIA assumes that holding Public Utility Holding Holding Company Act was enacted to legislate companies act Company Act of 1936 of 1935 (PUHCA) against abusive practices in competitively and do not the utility industry. The act use their regulated power grants power to the U.S. businesses to cross- Securities and Exchange subsidize their Commission (SEC) to oversee unregulated businesses and outlaw large holding companies that might otherwise control the provision of electrical service to large regions of the country. It gives the SEC power to approve or deny mergers and acquisitions and, if necessary, force utility companies to dispose of assets or change business practices if the company’s structure of activities is not deemed to be in the public interest

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis F. Federal Energy FERC has issued two related These orders are Promoting Wholesale Regulatory Commission rules, Orders 888 and 889, represented in the Competition Through (FERC) Orders 888 and which are designed to bring forecast by assuming that Open Access, Non- 889 low-cost power to consumers all generators in a given Discriminatory through competition, ensure region are able to satisfy Transmission Services continued reliability in the load requirements by Public Utilities; industry, and provide for anywhere within the Public Utilities and open and equitable region. Similarly, Transmitting Utilities, transmission services by transactions between ORDER NO. 888 Issued owners of these facilities. regions are assumed to April 24, 1996), 18 CFR Specifically, Order 888 occur if the cost Parts 35 and 385, requires open access to the differentials between Docket Nos. RM95-8- transmission grid currently them make it economical 000 and RM94-7-001; owned and operated by to do so Open Access Same- utilities. The transmission Time Information owners must file System (formerly Real- nondiscriminatory tariffs that Time Information offer other suppliers the Networks) and same services that the Standards of Conduct, owners provide for ORDER NO. 889, (Issued themselves. Order 888 also April 24, 1996), 18 CFR allows these utilities to Part 37, Docket No. recover stranded costs RM95-9-000 (investments in generating assets that are unrecoverable as a result of consumers selecting another supplier). Order 889 requires utilities to implement standards of conduct and an Open Access Same-Time Information System (OASIS) through which utilities and non- utilities can receive information regarding the transmission system. Consequently, utilities are expected to functionally or physically unbundle their marketing functions from their transmission functions

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis G. New Source Review On August 28, 2003, EPA It is assumed that coal EPA, 40 CFR Parts 51 (NSR) issued a final rule defining plants will be able to and 52, Deterioration certain power plant and increase their output as (PSD) and Non- industrial facility activities as electricity demand Replacement Provision routine maintenance, repair, increases. Their maximum of the Vol. 68, No. 207, and replacement, which are is set at page 61248, Prevention not subject to NSR. As stated 65%; no increases in the of Significant by EPA, these changes capacity of existing plants Attainment New Source provide a category of is assumed Review (NSR): equipment replacement Equipment Routine activities that is not subject to Maintenance, Repair major NSR requirements and Replacement under the routine Exclusion; Final Rule, maintenance, repair, and Federal Register, replacement (RMRR) October 27, 2003 exclusion. Essentially a facility’s engagement in RMRR activities will not have to get preconstruction approval from the state or EPA and will not have to install best available emissions control technologies that might be required under the NSR process H. State Renewable Several states have enacted The AEO Reference case The states with RPS or Portfolio Standards laws requiring that a certain represents the renewable other mandates (RPS) Laws, Mandates, percentage of their portfolio standard (RPS) providing quantified and Goals generation come from or substantively similar projections are detailed qualifying renewable sources. laws from states with in Table 1 Among these states, some established enforcement have implemented provisions for their technology specific carve- targets. As described in outs, requiring that a certain the Renewable Fuels percentage of required Module section of the generation come from a Assumptions to AEO2021 specific document, mandatory source targets from the various states are aggregated at the regional level, and achievement of nondiscretionary compliance criteria is evaluated for each region

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis I. Regional and State Air The Northeast Regional The impact of RGGI is Regional Greenhouse Emissions Regulations Greenhouse Gas Initiative included in the EMM, Gas Initiative Model (RGGI) applies to fossil-fueled making adjustments when rule, www.rggi.org power plants over 25 needed to estimate the megawatts in 11 states in emissions caps at the New England and the mid- regional level used in Atlantic region of the United NEMS. AEO2021 States. New Jersey withdrew incorporates the latest in 2011, but it rejoined in model rule specifications, 2019. Virginia joined on including adding Virginia January 1, 2021. The rule caps to the program beginning CO2 emissions and requires in 2021. that states account for CO2 emitted with allowances purchased at auction. In February 2013, program officials announced a tightening of the cap beginning in 2014. In December 2017, an Updated Model Rule was released, specifying a cap through 2030, modifications to the Cost Containment Reserves, and the creation of an Emissions Containment Reserve The California Assembly Bill The EMM models the cap- California Code of 32 (AB32) sets GHG reduction and-trade program Regulations, goals for 2020 for California. explicitly for CO2 for Subchapter 10 Climate A cap-and-trade program was California through an Change, Article 5, designed to enforce the caps. emission constraint that Sections 95800 to The cap-and-trade program accounts for emissions 96023, Title 17, applies to multiple economic from the other sectors. California Cap on sectors including electric Limited banking and Greenhouse Gas power plants, large industrial borrowing of allowances Emissions and Market- facilities, suppliers of as well as an allowance Based Compliance transportation fuel, and reserve and offsets are Mechanisms, suppliers of natural gas. incorporated as specified (Sacramento, CA: July Emissions resulting from in the bill 2011) electricity generated outside California but consumed in the state are also subject to the cap The California Senate Bill 32 AEO2021 assumes the California Senate Bill (SB32) sets GHG reduction cap-and-trade program 32, California Global goals for 2030 for California, developed for AB32 will Warming Solutions Act at 40% lower than 1990 continue, and it sets new of 2006: emissions limit levels, requiring additional annual targets through (September 8, 2016); declines from the AB32 goals. 2030 to achieve the California Assembly Bill The California Assembly Bill SB32/AB398 goals. After 398, California Global 398 (AB398), passed in July 2030, the target remains Warming Solutions Act 2017, provided more flat of 2006: market-based clarification on how the new compliance targets will be achieved mechanisms: fire prevention fees: sales

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis and use tax manufacturing exemption (July 25, 2017) J. American Recovery and ARRA2009 provides $4.5 In the EMM, EIA assumes American Recovery and Reinvestment Act of billion for that line losses would fall Reinvestment Act of 2009 (ARRA2009) demonstration projects. slightly and customers 2009, Title IV, Energy These projects generally would be more responsive and Water include a wide array of to price signals Development, Section measurement, 405 communications, and control equipment employed throughout the transmission and distribution system that will enable real-time monitoring of the production, flow, and use of power from generator to consumer ARRA2009 provides $800 AEO2021 does not American Recovery and million to fund projects under assume any new coal with Reinvestment Act of the Clean Coal Power sequestration plants will 2009, Title IV, “Energy Initiative program focusing on come online directly from and Water the capture and this initiative because Development” sequestration of greenhouse most of the selected gases demonstration projects have since had their funding withdrawn or suspended K. Consolidated As part of this act, Congress AEO2021 explicitly models Consolidated Appropriations Act, extended the qualifying the revised dates for Appropriations Act, 2016 deadlines for the production these tax credits. It also 2016, Public Law 114- tax credit (PTC) and models the revised dates 113, Sec. 187, investment tax credit (ITC) for for these tax credits December 2015 renewable generation subject to the Internal technologies. The deadline Revenue Service (IRS) for PTC-eligible technologies issued guidance on the to receive the full production date construction begins, credit was extended by two which allows wind years. Wind technologies are projects four years to be eligible to receive the PTC completed, provided that after the two-year extension, the project owner has but the value of the PTC invested 5% of total declines gradually over time project costs at the before final expiration. This beginning of construction extension is unlike the and engages in continual treatment in previous years, construction through the in which the tax credit four-year period maintained a constant inflation-adjusted value. The five-year ITC extension for solar projects also includes a gradual reduction in the value of the credit, as well as a provision that allows it to begin when construction starts

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis L. Furthering carbon The FUTURE Act amended the The 45Q tax credit is U.S. Congress, Senate capture, Utilization, IRS Code, section 45Q, to represented explicitly in Bill 1535, FUTURE Act Technology, expand and extend the credit the EMM to plants with 2018 Underground storage for CO2 sequestration; credits CCS; credits are available and Reduced Emissions are available to power and to plants that start (FUTURE) Act, 2018 industrial sources that construction or begin a capture and permanently retrofit before January 1, sequester in geologic storage, 2024, and are assumed to and for use in enhanced oil be applied for the first 12 recovery (EOR) years of operation. The credit values vary depending on whether the CO2 is stored or used for EOR M. New York (NY) Clean The Clean Energy Standard In the EMM, the State of New York Energy Standard creates two mechanisms to renewable standard is Public Service achieve New York’s goal to modeled explicitly as for Commission, Order reduce carbon emissions other state RPS programs. Adopting a Clean through greater use of For states with programs Energy Standard, renewable and other zero designed specifically to August 1, 2016 emission generation. A provide support to renewable energy standard existing nuclear requires 50% of New York generating plants (as is electricity sales to come from the NY Clean Energy renewable energy sources by Standard), the supporting 2030. The zero emission subsidy is modeled by credit (ZEC) program requires requiring the existing load serving entities to eligible units to remain purchase ZECs based on their operable during the share of state sales. Certain program and by existing nuclear units are calculating any payment eligible to receive the ZECs if needed to keep them their profitability is profitable. The calculated determined at risk because of payment is passed low market prices through to retail prices N. Illinois Future Energy The Future Energy Jobs Bill In the EMM, the State of Illinois, Future Jobs Bill revised the state’s RPS renewable standard is Energy Jobs Bill, Public program and created a zero modeled explicitly in the Act 099-0906, June 1, emission credit program for same manner as other 2017 existing nuclear units. The state RPS programs. For Illinois Power Agency must states with programs purchase ZECs to cover 16% designed specifically to of utility electricity sales in provide support to 2014. Existing nuclear units existing nuclear serving Illinois are eligible to generating plants (as is receive the ZECs the Illinois Future Energy Jobs Bill), the supporting subsidy is modeled by requiring the existing eligible units to remain operable during the program and by calculating any payment needed to keep them profitable. The calculated

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis payment is passed through to retail prices O. New Jersey Zero New Jersey Senate bill S2313 For states with programs State of New Jersey, Emission Certificate establishes a zero emission designed specifically to Senate Bill No. 2313, program for nuclear certificate (ZEC) program for provide support to May 23, 2018 power plants existing plants; existing nuclear a maximum of $300 million is generating plants (as is available annually over 10 the New Jersey Zero years to nuclear plants that Emission Certificate demonstrate they make a program), the supporting significant contribution to subsidy is modeled by New Jersey air quality and requiring the existing that they are at risk of closure eligible units to remain within three years operable during the program and by calculating any payment needed to keep them profitable, subject to the cap. The calculated payment is passed through to retail prices P. Creates Ohio Clean Air Ohio House Bill 6 provides For states with programs State of Ohio, House Program, House Bill payments for qualified designed specifically to Bill No. 6, July 23, 2019 Number 6, 133rd nuclear resource credits for provide support to General Assembly each megawatthour existing nuclear produced for a period of generating plants (as is seven years (2020–26) based the Creates Ohio Clean Air on a price of $9.00 per credit, Program), the supporting provided from an annual subsidy is modeled by $150 million Nuclear requiring the existing Generation Fund collected eligible units to remain through ratepayer operable during the surcharges. Plant owners are program and by required to provide financial calculating any payment and operational data and cost needed to keep them and production projections profitable, subject to the through 2026 cap. The calculated payment is passed through to retail prices Q. Connecticut Senate Bill Connecticut passed Senate As the Connecticut Connecticut General No. 1501 Bill No. 1501 in June 2017, legislation creates a Assembly, Senate Bill permitting nuclear power to general clean energy No. 1501, June 2017 compete in zero-emissions auction, rather than state energy auctions and specific support for solicitations as required existing nuclear under Public Act 17-3. In generating plants, the December 2018, standard modeling Connecticut’s Department of approach used to model Energy and Environmental other state programs is Protection selected a 10-year not applied to proposal from Millstone for Connecticut. In the about half of its 2.1 gigawatt AEO2021 core cases, output. Between 2022 and nuclear plants in New 2029, Millstone will receive England tend to be higher prices based on economical and are not environmental, economic,

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis and grid benefits. Seabrook projected to retire NPP, in New Hampshire, was through at least 2030 also selected, and its contract begins in 2022 Oil and gas supply Annual Energy Outlook Legislation Brief description (AEO) handling Basis A. The Outer Continental Requires that all tracts Incorporates royalty rates 43 USC SS 1331-1356 Shelf Deep Water offered by November 28, based on water depth (2002) Royalty Relief Act 2000, in deep water in certain (DWRRA) areas of the Gulf of Mexico must be offered under the new bidding system permitted by the DWRRA. The Secretary of the Interior must offer such tracts with a specific minimum royalty suspension based on water depth B. Energy Policy and Requires the To date, the USGS has Scientific Inventory of Conservation Act Geologic Service (USGS) to completed its Rocky Onshore Federal Lands: Amendments of 2000 inventory oil and natural gas Mountain oil and natural Oil and Gas Resources resources beneath federal gas resource inventory. and Reserves and the lands The results of this Extent and of inventory have been Restrictions or incorporated in the Impediments to their technically recoverable oil Development: The and natural gas resource Paradox/San Juan, volumes used for the Uinta/Piceance, Rocky Mountain region Greater Green River, and Powder River Basins and the Montana Thrust Belt; Prepared by the U.S. Departments of Interior, , and Energy, January 2003 C. Section 29 Tax Credit The Alternative Fuel The Section 29 Tax Credit Alternative Fuel for Nonconventional Production Credit (Section 29 expired on December 31, Production Credit Fuels of the IRC) applies to qualified 2002, and it is not (Section 29 of the nonconventional fuels from considered in new Internal Revenue wells drilled or facilities production decisions. Code), initially placed in service between However, the effect of established in the January 1, 1980, and these credits is implicitly Windfall Profit Tax of December 31, 1992. Natural included in the 1980 gas production from parameters that are qualifying wells could receive derived from historical a $3 (1979 constant dollars) data reflecting such per barrel of oil equivalent credits credit on volumes produced through December 31, 2002. The qualified fuels are oil produced from shale and tar sands, natural gas from

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basis geopressurized brine, Devonian shale, coal seams, tight formations, and biomass. Liquid, gaseous, or solid synthetic fuels produced from coal, fuel from qualified processed formations or biomass, and steam from agricultural products also qualify D. Energy Policy Act of Establishes a program to Additional oil resources Title III, Section 354 of 2005 provide grants to enhance oil were added to account for the Energy Policy Act of and natural gas recovery increased use of CO2- 2005 through CO2 injection enhanced oil recovery Natural gas market Annual Energy Outlook Legislation Brief description (AEO) handling Basis A. Federal Motor Fuels Taxes are levied on each Current federal motor 26 USC 4041 Excise Taxes for -gallon equivalent of fuels excise taxes on Compressed Natural compressed natural gas and natural gas fuel for road Gas and Liquefied each diesel-gallon equivalent vehicles and ships are Natural Gas in Vehicles. of liquefied natural gas used included in retail prices Liquefied natural gas in road vehicles and ships and are assumed to be tax changed as of extended indefinitely in January 1, 2016, under nominal dollars the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236) B. State Motor Fuels Taxes Taxes are levied on each Current state motor fuels Determined by review for Compressed Natural gallon, gasoline-gallon excise taxes on natural of existing state laws Gas and Liquefied equivalent, or diesel-gallon gas fuel for road vehicles Natural Gas in Vehicles equivalent of natural gas for are included in retail road vehicles prices and are assumed to be extended indefinitely in nominal rates Liquid fuels market Annual Energy Outlook Legislation Brief description (AEO) handling Basics A. Ultra-Low-Sulfur Diesel Since mid-2012, all diesel for Reflected in diesel 40 CFR Parts 69, 80, 86, (ULSD) regulations domestic use (highway, specifications 89, 94, 1039, 1048, under the Clean Air Act nonroad, locomotive, marine) 1065, and 1068 Amendment of 1990 may contain at most 15 parts per million (ppm) of sulfur B. Mobile Source Air Establishes a list of 21 Modeled by updating 40 CFR Parts 60 and 86 Toxics (MSAT) Controls substances emitted from gasoline specifications to Under the Clean Air Act motor vehicles that are most current EPA gasoline Amendment of 1990 known to cause serious survey data (2005), which human health effects, represents anti- particularly benzene, backsliding requirements formaldehyde, 1.3 butadiene, acetaldehyde, diesel exhaust

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basics organic gases, and diesel particulate matter; establishes anti-backsliding and anti-dumping rules for gasoline C. Low Sulfur Gasoline Gasoline must contain an Reflected in gasoline 40 CFR Parts 80, 85, Regulations Under the average of 30 ppm sulfur or specifications and 86 Clean Air Act less by 2006; small refiners Amendment of 1990 may be permitted to delay compliance until 2008 D. Tier 3 Vehicle Emission Gasoline must contain an Reflected in gasoline 40 CFR Parts 79, 80, 85, and Fuel Standards average of 10 ppm sulfur or specifications beginning in et al., final rule Program less by January 1, 2017; small 2017 refiners may be permitted a three-year delay E. Methyl Tertiary Butyl 25 states ban the use of MTBE Ethanol assumed to be State laws in Arizona, Ether (MTBE) Bans in 25 in gasoline by 2007 the oxygenate of choice California, Colorado, states for all motor gasoline Connecticut, Illinois, blends Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Dakota, Vermont, Washington, and Wisconsin F. Regional Clean Fuel States with air quality Reflected in State implementation Formations problems can specify Administration for plans required by the alternative gasoline or diesel Defense District (PADD)- Clean Air Act formulations with EPA’s level gasoline and diesel Amendments of 1990, permission. California has specifications as approved by EPA long had authority to set its own fuel standards G. Federal Motor Fuels Taxes are levied on each Gasoline, diesel, and 26 USC 4041 Extended Excise Taxes gallon of transportation fuels ethanol blend tax rates by American Jobs to fund infrastructure and are included in end-use Creation Act of 2004 general revenue. These taxes prices and are assumed to are set to expire at various be extended indefinitely times in the future but are at current nominal rates expected to be renewed, as they have been in the past H. State Motor Fuel Taxes Taxes are levied on each Gasoline and diesel rates Determined by review gallon of transportation fuels. are included in end-use of existing state laws The assumption that state prices and are assumed to performed semi- taxes will increase at the rate be extended indefinitely annually by EIA’s Office of inflation supports an in real terms (to keep of Energy Statistics implied need for additional pace with inflation) highway revenues as driving increases I. Diesel Excise Taxes Phases out the 4.3 cents Modeled by phasing out American Jobs Creation excise tax on railroads Act of 2004, Section between 2005 and 2007 241

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basics J. Energy Policy Act of 2005 (EPACT2005) a. Biodiesel mixture tax Petroleum product blenders The tax credits are applied 26 USC 40, 26 USC credit (BTC) may claim tax credits for against the production 6426, and 26 USC40A; blending biodiesel or costs of the products into Tax credits extended renewable diesel into diesel which they are blended. through December 31, fuel or heating oil. Qualified Biodiesel and renewable 2016, by Public Law producers or blenders are diesel is assumed to be 114-113) eligible for an income tax blended into highway credit of $1.00 per gallon. The diesel, nonroad diesel, or current BTC was signed into heating oil law in December 2019, was retroactively applied to 2018 and 2019, and currently expires at the end of 2022. b. Renewable Fuel This section has largely been Energy Policy Act of Standard (RFS) redefined by EISA2007 (see 2005, Section 1501 below); however, EPA rulemaking completed for this law was assumed to contain guiding principles of the rules and administration of EISA2007 c. Elimination of oxygen Removes the 2% oxygen Oxygenate waiver already Energy Policy Act of content requirement in requirement for reformulated an option of the model. 2005, Section 1504 reformulated gasoline gasoline (RFG) nationwide MTBE was phased out in 2006 as a result of the petroleum industry’s decision to discontinue use d. Coal Investment tax credit Two CTL units are Energy Policy Act of provisions program for qualifying available to build with 2005, Section 1307 advanced clean coal projects lower capital costs, including coal-to-liquids (CTL) reflecting the provision’s projects funding K. Energy Independence and Security Act of 2007 (EISA2007) a. Renewable Fuel Requires the use of 36 billion The RFS is included; 40 CFR Part 80, Subpart Standard (RFS) gallons of ethanol per year by however, it is assumed M; RFS Program: 2022, with corn ethanol that the schedule for Standards for 2014, limited to 15 billion gallons. cellulosic is 2015, and 2016 and Any other biofuel may be adjusted downward, Biomass-Based Diesel used to fulfill the balance of consistent with waiver Volume for 2017, page the mandate, but the balance provisions contained in 4/100 must include 16 billion gallons the law per year of cellulosic biofuel by 2022 and 1 billion gallons per year of biodiesel by 2012 L. State Heating Oil A number of northeastern All state regulations Vermont Energy Act of Mandates states passed legislation that included as legislated. 2011, Maine State reduces the maximum sulfur 2013 EIA heating oil Legislature HP1160, content of heating oil to consumption data are New Jersey State between 15 ppm and 50 ppm used to calculate Department of in different phases through respective state census Environmental 2016 division shares for new Protection,

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basics consumption of low sulfur Amendment N.J.A.C. diesel as heating oil 7:27-9.2, New York State Senate Bill 51145C M. California Low Carbon California passed legislation The LCFS is included as California Air Resources Fuel Standard (LCFS) that is designed to reduce the legislated for gasoline and Board, Final carbon intensity (CI) of motor sold in Order: Subarticle 7. Low gasoline and diesel fuels sold California and for other Carbon Fuel Standard in California by 10% between regulated fuels 2012 and 2020 through the increased sale of alternative low-carbon fuels. In 2018, the LCFS was extended through 2030 with an additional 10% planned reduction in carbon intensity, for a total 20% reduction relative to the 2010 baseline. N. California Assembly Bill The California Assembly Bill The AB32 cap-and-trade California Code of 32 (AB32) 32 (AB32), the Global was more fully Regulations, Warming Solutions Act of implemented in AEO2013, Subchapter 10 Climate 2006, authorized the in which industrial Change, Article 5, California Air Resources Board facilities, refineries, fuel Sections 95800 to (CARB) to set GHG reduction providers, and non-CO2 96023, Title 17, goals for 2020 for California. GHG emissions were California Cap on A cap-and-trade program was added to the Greenhouse Gas designed to enforce the caps. representation already in Emissions and Market- The cap-and-trade program the electrical power Based Compliance applies to multiple economic sector of NEMS. In Mechanisms, sectors including electric addition, limited banking (Sacramento, CA: July power plants, large industrial and borrowing, as well as 2011) facilities, and suppliers of an allowance reserve and natural gas. Emissions offset purchases, were resulting from electricity modeled, providing some generated outside California compliance flexibility and but consumed in the state are cost containment also subject to the cap O. EPA ETS Waiver EPA approved two waivers for These two waivers were EPA–HQ–OAR–2009– the use of ethanol motor included and modeled 0211; FRL–9215–5, gasoline blends of up to 15% based on forecast vehicle EPA–HQ– OAR–2009– in 2001 vehicles and newer fleets and potential 0211; FRL–9258–6 infrastructure and liability setbacks P. U.S. Department of The definition of crude oil Processed API 50+ crude Crude oil was defined in Commerce, Bureau of excludes oil is assumed to be Section 754.2 of the Industry and Security mixtures that have been processed condensate EAR on December 30, (BIS): clarification on processed through a crude oil and is allowed to be 2014, and was the export of crude oil distillation tower exported subsequently moved to under the Export Section 772.1 on May Administration 12, 2016; see page 13 Regulations (EAR) Q. U.S. Congress, H.R. Sec. 401-403 requires a test Explicitly represents the H.R.1314 – Bipartisan

1314–Bipartisan Budget drawdown, actual drawdown, crude oil withdrawals Budget Act of 2015 Act of 2015, Title IV – and sale of crude oil from the from the Strategic Strategic Petroleum Strategic Petroleum Reserve Petroleum Reserve (SPR) Reserve, Sec. 401-403, during FY 2018–FY 2025 as specified by the act

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021

February 2021

Annual Energy Outlook Legislation Brief description (AEO) handling Basics 114th Congress (2015– 2016) R. U.S. Congress, H.R. 22 – Sec. 32204 requires Explicitly represents the H.R.22 – Fixing FAST Act, Sec. 32204, drawdown and sale of crude crude oil withdrawals America’s Surface

Strategic Petroleum oil from the SPR during a from the SPR as specified Transportation Act Reserve drawdown and specified timeframe by the act sale, 114th Congress (2015–2016) S. U.S. Congress, H.R. Title 1, Sec. 101 ends the ban Any crude oil produced in H.R.2029 – 2029 – Consolidated on U.S. crude oil exports; the United States is Consolidated Appropriations Act, however, under extenuating allowed to be exported Appropriations Act,

2016, Division O – circumstances, the President 2016 Other matters, Title I – may restrict U.S. crude oil Oil Exports, Safety exports for no more than one Valve, and Maritime year Security, 114th Congress (2015–2016) Source: U.S. Energy Information Administration, Office of Energy Analysis

U.S. Energy Information Administration Summary of Legislation and Regulations included in the Annual Energy Outlook 2021