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Summary of Legislation and Regulations Included in the Annual Energy Outlook 2021

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Summary of Legislation and Regulations Included in the Annual Energy Outlook 2021 Summary of Legislation and Regulations Included in the Annual Energy 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 law, 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 Energy Modeling 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 laws 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 Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021–2026 Passenger Cars and Light 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 carbon dioxide 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 policies that affect its projections of the electricity 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 possible, 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 renewable energy 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 wind, 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, net metering) 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 distributed generation, etc.) Compliance mechanisms Arizona (AZ) 15% by 2025 Solar, wind, biomass, Direct use of solar heat, Credit trading is allowed with some hydro, landfill gas ground-source heat pumps, bundling restrictions. Includes (LFG), and anaerobic renewable-fueled combined distributed generation requirement, digestion built after heat and power (CHP), and starting at 5% of target in 2007, January 1, 1997 fuel cells using renewable growing to 30% by 2012 and after. fuels California 60% electricity Geothermal electric, Energy storage and fuel cells Credit trading is allowed with some (CA) generation by solar thermal electric, using renewable energy. restrictions. Renewable energy 2030, 100% solar photovoltaics, Nuclear and hydroelectric credit prices capped at $50 per carbon-free by wind (all), biomass, (large) qualify after 2030 megawatthour (MWh). 2045 municipal solid waste toward the 100% carbon-free (MSW), LFG, tidal, by 2045 target wave, ocean thermal, wind (small), hydroelectric (small), and anaerobic digestion Colorado 30% by 2020 for Solar, wind, biomass, Recycled energy, coal-mine Credit trading is allowed. (CO) investor-owned hydro, and geothermal methane, 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 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 hydrogen, 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 renewable fuels 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) biodiesel 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 small hydro 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
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