1. 1 Clean Energy, A Strong Economy, and a Healthy Environment William J. Keese Western Governors’ Association June 1, 2007 European Insulation Manufacturers General Meeting

2. 2 Western Governors’ Association Represents governors of 19 States and 3 U.S. Flag Pacific Islands Address – Policy and governance issues in the Western U.S. Focus - natural resources, the environment, human services, economic development, international relations and state governance.

3. 3 Energy Policy - Clean and Diversified Driven by the Environment Reduce Greenhouse Gas Emissions Decrease reliance on fossil-fired generation through the use of energy efficiency and renewable resources Balance new and traditional technologies to strengthen economic growth, stabilize energy prices, maximize reliability, and mitigate environmental impacts

4. 4 Clean and Diversified Policies The CDEAC Report  Bring 30,000 MW of new clean energy online by 2015  Increase energy efficiency 20% by 2020  Meet transmission needs over the next 25 years Western Governors sought technically and financially viable incentive-based recommendations to:

5. 5 Potential Generation Capabilities in the Western U.S. - 2015 Biomass 10,000 MW Geothermal 5,600 MW Advanced Coal 5,000 MW Solar 8,000 MW 5,000 – 54,000 MW 48,000 MW

6. 6 Clean and Diversified Energy - Energy Efficiency is First  Easiest, cheapest and least controversial strategy  No need to wait for “untested” and expensive technologies  Successful implementation of energy efficiency requires some governmental intervention National and regional energy efficiency standards and building standards Tax credits for energy efficiency investments

7. 7 Clean and Diversified Energy - Renewable Energy is Next  Renewable energy sources can compete with other energy sources  Short-term financial support needed Need to extend production and investment tax credits Increase cap on residential investment tax credit Clean Renewable Energy Bonds for public power and cooperatives  Development of adequate transmission is a must

8. 8

9. 9

10. 10 United States Geothermal Resources

11. 11

12. 12 Clean and Diversified Energy - Fossil Fuels Are Still Important  Natural gas is a “clean” energy option but other fossil alternatives must be pursued  Coal must be a part of a clean energy future  WGA supports development of zero-emission technologies  R&D critical to realizing clean energy goals

13. 13

14. 14 Moving into Implementation - CDEi Governors called for implementation of the CDEAC’s recommendations  Formation of a D.C. strategy group to push for adoption of federal recommendations  Creation of partnerships and formal coalitions  Western Renewable Energy Generation Information System (WREGIS) development

15. 15 States are Leading the Way 23 states and the District of Columbia have Renewable Portfolio Standards  Arizona: 15% by 2015  California: 20% by 2010, with 3000 MW Solar goal  New Mexico: Targeting 15% by 2015, 20% by 2020  Washington: 15% by 2020 National standard being debated in Congress

16. 16 States are Leading the Way West Coast Governors Global Warming Initiative  15% savings: Residential buildings by 2015 California Green Building Initiative  20% savings: Non-residential standards by 2015 Seven Western States  State buildings built to LEED Silver standards

17. 17 Energy Action Plan California ’ s Loading Order First resource of choice: all cost-effective energy efficiency and demand response. After all energy efficiency and demand response is deployed, utilize renewables and distributed generation If energy efficiency, demand response, renewables, and distributed generation cannot satisfy increasing needs, California can turn to clean and efficient fossil-fired generation. The Loading Order is integrated into all major CPUC decisions governing energy policy and procurement. Enacted in 2003

18. 18 Energy Savings from California Efficiency Programs and Standards 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 1975198019851990 1995 2000 GWh/year ~15% of California Annual Energy Use: 2003 Utility Efficiency Programs at cost of ~1% of electric bill Building Standards Appliance Standards

19. 19 California IOU’s Investment in Energy Efficiency Forecast Profits decoupled from sales Performance Incentives Market Restructuring Crisis IRP 2% of 2004 IOU Electric Revenues Public Goods Charge

20. 20 Additional Information To learn more about the WGA and these Initiatives, please visit www.westgov.org

21. 21