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Executive Summary
As the new home of CALPIRG's environmental work, Environment California
can be contacted with any questions regarding this report.
The debate over California’s energy
future has focused attention on a
growing sector of the energy market.
Homeowners and businesses are generating
electrical energy near the place it
is used as an alternative or supplement to
the statewide power grid.
Known as distributed generation
(DG), this family of technologies holds
great promise for locally controlled
power generation. But continued reliance
on polluting technologies poses a threat
to public health.
As elected officials wrestle with solutions
to the short-term energy crisis and
as all policy makers strive to promote energy
efficiency, state agencies are working
to assure that clean, reliable technologies
are available to encourage greater energy
generation flexibility.
The California Air Resources Board
(ARB) and the 35 regional air districts are
setting air pollution standards for distributed
generation technologies. They are
seeking to establish a single standard
across all technologies and applications
that reduce environmental emissions and
protect public health.
The ARB should set strict standards
that fully protect human health and the
environment, and these standards
should be phased in over time to allow
manufacturers to prepare for change.New standards should encourage clean
technologies such as solar and wind, allow
developing technologies such as fuel cells
and microturbines to gradually decrease
emissions, and prohibit use of the most
polluting technologies such as diesel.
The most prevalent forms of distributed
generation are fueled by diesel. These generators
have been installed outside many
public buildings and advertised for home
use as a solution to the “energy crisis.”
Due to severe environmental and public
health impacts from the growing use of diesel generators, emissions standards
must be set at levels that limit diesel applications
to emergency situations and
only when generators are operated in conjunction
with emission-control measures.
Distributed generation is at a crossroads.
New standards should promote
clean technologies, no longer allowing
dirty technologies to proliferate and pollute
the air. These standards need to establish
uniform treatment of the various
DG technologies and applications.
We have produced this report to point
the way to a clear future direction for energy
use. As we simultaneously work to
promote the highest possible level of efficiency
in our use of energy, we must also
support sustainable, reliable, versatile
technologies that can bring efficient energy
generation right to the source of use
while reducing harmful air pollution.
California must encourage existing and
emerging technologies that work to reduce
the threat to public health posed by diesel
generators and other dirty forms of DG.
Policy Recommendations
To ensure that public health is protected
and that new technologies to reduce pollution
are encouraged, distributed generation
policy should be based on the
following principles:
• Distributed generation must be as
clean as or cleaner than the cleanest
central power plant technology.
• State rules and incentives must
promote the cleanest energy industry
for the future of California.
• Regulations should be as simple as
possible so manufacturers can
anticipate changes and comply with
new technology requirements.
The ARB and regional air districts can help move distributed generation in the
right direction as they determine uniform
emissions standards for these technologies.
To protect the health of Californians
and the air quality of the state while helping
to assure reliable local power generation,
we recommend the following
immediate ARB policy actions:
• Set stringent emissions and efficiency-
based standards for all distributed
generation units operated in
California.
• Streamline the permitting process for
clean units that meet or beat state or
air district standards.
• Ensure adequate enforcement of
standards and establish significant
penalties for violation.
In addition, many other specific policies
could advance clean DG while curbing
the use of dirty DG. We recommend that
state agencies:
Establish standards and rules for DG
operation:
• Require that all DG units operated in
California receive ARB certification
or air district permit in order to be
interconnected to the electric grid.
• Require that transmission grid
operators draw on clean, efficient
distributed generation power before
similarly priced dirty installations.
• Require emission-control equipment
for diesel generators used for emergency
back-up power supply.
• Require that all new residential and
commercial construction be “solarready”
with the basic infrastructure
to ease future installation of photovoltaic
panels.
Provide funding for clean DG:
• Establish priority funding for clean distributed generation technology
advancement.
• Continue and expand the availability
of financial incentives, including
financing assistance, buy-down
programs, and grants, for the
installation of clean distributed
generation.
• Provide incentives for developers to
include clean DG at new residential
or commercial construction projects.
• Create a dedicated revenue stream to
defray the costs of cleaning up
polluting distributed generation by
taxing the purchase of dirty diesel
fuels.
• Extend the Carl Moyer Program,
which provides incentives for the
trade-in and upgrade of dirty diesel
equipment, to include polluting
distributed generation installations.
Clear hurdles to the implementation of
clean DG:
• Streamline the permitting and utility
interconnection process for clean
distributed generation installations.
• Develop incentive tariffs and reduced
stand-by and exit fees for clean
distributed generation installations.
• Establish a renewable purchase
obligation, such as a renewable
portfolio standard or renewable
purchase requirement for state and
local governments, that allows
aggregation of distributed resources
or includes distributed generation.
• Inventory clean distributed
generation sources operating in
California.
The adoption of these recommendations
will help to promote a vital distributed generation
system that reduces the negative
public health impacts associated with
diesel and other dirty DG technologies.
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