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MN can meet EPA CPP standards using tools state already has

April 29, 2015, FierceEnergy
By: Jaclyn Brandt

Minnesota can achieve the long-term pollution reductions called for by the U.S. Environmental Protection Agency's (EPA) Clean Power Plan (CPP) -- if it would properly use the tools it already has available, like its natural resources and current policy-making trajectory.

That is according to a new report from Bloomberg New Energy Finance (BNEF) developed in partnership with the Business Council for Sustainable Energy (BCSE).

Minnesota does face challenges in meeting the EPA's CPP. The state faces the 10th most stringent EPA carbon dioxide emissions reduction targets in the country. However, the report contends, the state can comply thanks to a combination of strong state policies, energy-efficiency leadership, and falling prices for natural gas and renewables.

"Minnesota is using renewable energy sources more than ever before, with 21 percent of its electricity coming from renewables in 2013," said Nathan Serota, BNEF analyst for U.S. Power and Clean Energy Economics and co-author of the report. "Natural gas is also a growing part of the state's electricity mix, up more than twofold since 2008, and Minnesota is a leader in energy efficiency thanks to strong state policies."

The report identifies several recent local trends that could bode well for the state in complying with the EPA's pollution targets.

The report found an increase in natural gas' role as a power source in Minnesota, providing 14 percent of the state's electricity and accounting for 33 percent of installed capacity in 2012. Meanwhile, coal-fired electricity generation fell from 59 percent in 2008 to 46 percent in 2013 and 396 megawatts (MW) of coal plants have announced plans to retire between 2015 and 2017.

Renewables, including wind, biomass and others grew from 12 percent of the state's annual power generation in 2008 to 21 percent in 2013 thanks to falling prices and strong state policy support. The report found that between 2008 and 2012, Minnesota built 1.7 gigawatts (GW) of utility-scale renewable (mainly wind) capacity; wind is already cost-competitive with coal in Minnesota, even without subsidies.

Solar power has grown in Minnesota with installed capacity quadrupling from 4 MW to 16 MW between 2012 and 2014, according to the report.

Minnesota's strong leadership on energy efficiency is being driven by the state's Energy Efficiency Resource Standard (EERS), the report contends, saving Minnesota electricity consumers millions of dollars, according to a Minnesota Department of Commerce report; Minnesota was ranked fifth in the U.S. by The American Council for an Energy Efficient Economy (ACEEE) for utility and public benefits programs and policies in 2013.

BNEF notes that the role of energy efficiency in Minnesota can increase significantly. A study prepared for Xcel Energy, the state's largest utility, found that Minnesota can economically achieve 7 terawatt-hours of cumulative annual energy savings by 2020.

"What we see in Minnesota is similar to what we have seen in other parts of the country -- states can benefit from complying with EPA's Clean Power Plan," said Lisa Jacobson, president of the Business Council for Sustainable Energy. "Thanks to the state's policy leadership and the Clean Power Plan's flexibility, Minnesotans can look forward to seeing more cheap sustainable energy and less pollution from traditional energy sources. We're encouraged by these results and look forward to watching as the sector continues to grow."