Mark J. Bennett from Miller Canfield presents: An overview of carbon markets including policy and the value chain - Types of carbon projects being developed - Typical carbon transaction structures - How can I get involved in the carbon space?

1. The Carbon Impact of
Renewable Portfolio Standards (RPS)
Michigan Energy Forum
July 1, 2010
Mark J. Bennett
Climate Change Practice Leader

2. Discussion Outline
(1) What is it a Renewable Portfolio Standard (RPS)?
(A) A Carbon Reduction Policy Vehicle
(B) An Economic Development Tool – Interstate Competition
(2) How Does an RPS Affect Energy Costs?
(A) Internalizing the Externality
(3) How Will this Impact the Real Estate Industry?
(A) Transactional Energy Disclosure Laws
(B) Lessons Learned from the EU
(C) Green vs. Brown Buildings
(D) Green Building Due Diligence
The new ASTM Standard on Building Energy Performance (WK24707)
LinkedIn – “BEPA-Building Energy Performance Assessment Group”

3. Renewable Portfolio Standards RPS
Creating Renewable Energy Certificates (RECs): Means of Compliance
“Renewable” Sources: “Sell Side” Utility Assets
1. Direct combustion - Owned Facilities
BioFuels
Power
Generation
2. Capital Investment in New Renewable
Sources
(Renewable Energy Credits (RECs)
Municipal ($ per MW of output)
Methane/Sludge
Capital
The 3. Purchase of end product:
“Elements”
Direct to Grid
Power Purchase Agreement (“PPA”)
Distribution

4. Renewable Portfolio Standards
www.dsireusa.org / June 2010
VT: (1) RE meets any increase ME: 30% x 2000
WA: 15% x 2020* New RE: 10% x 2017
MN: 25% x 2025 in retail sales x 2012;
MT: 15% x 2015 (Xcel: 30% x 2020) (2) 20% RE & CHP x 2017 NH: 23.8% x 2025
OR: 25% x 2025 (large utilities)* ND: 10% x 2015 MI: 10% + 1,100 MW MA: 22.1% x 2020
x 2015* New RE: 15% x 2020
5% - 10% x 2025 (smaller utilities)
(+1% annually thereafter)
SD: 10% x 2015 WI: Varies by utility;
NY: 29% x 2015 RI: 16% x 2020
10% x 2015 statewide
NV: 25% x 2025* CT: 23% x 2020
IA: 105 MW OH: 25% x 2025†
CO: 30% by 2020 (IOUs) PA: ~18% x 2021†
10% by 2020 (co-ops & large munis)*
IL: 25% x 2025 WV: 25% x 2025*† NJ: 22.5% x 2021
CA: 33% x 2020 UT: 20% by 2025* KS: 20% x 2020 VA: 15% x 2025* MD: 20% x 2022
MO: 15% x 2021
DE: 20% x 2020*
AZ: 15% x 2025
OK: 15% x 2015 NC: 12.5% x 2021 (IOUs) DC DC: 20% x 2020
10% x 2018 (co-ops & munis)
NM: 20% x 2020 (IOUs)
10% x 2020 (co-ops)
TX: 5,880 MW x 2015
HI: 40% x 2030
State renewable portfolio standard Minimum solar or customer-sited requirement 29 states +
State renewable portfolio goal Extra credit for solar or customer-sited renewables DC have an RPS
Solar water heating eligible *
† Includes non-renewable alternative resources (7 states have goals)

5. Avoiding Carbon Occupancy Costs – Creating Real Estate Asset Value
Carbon Tax / Offset
Required
Carbon Tax / Offset
NOT Required

6. Regulatory Drivers Towards – “Carbon Transparency”
Mandatory Building
Auditing Labeling
Green
Transactional
Building
Disclosure
Codes

7. Real Estate Transaction – “Carbon Drivers”
Transactional Disclosure Laws Spreading Across the US.
Existing Policy
Austin, Texas
California
District of Columbia
New York City
Seattle, Wash.
Washington
Under Consideration
Illinois
Massachusetts
Oregon
San Francisco, Calif.
Public Building Rating Only
Denver, Colo.
Hawaii
Michigan
Minnesota
Ohio
Home Energy Disclosure*
Alaska Nevada
Arlington Co., Va. New Mexico
Austin, Texas New York
Berkeley, Calif. San Francisco
Kansas
South Dakota
Maine
Montgomery Co., Md.
*Includes utility bill disclosure

8. Energy Efficiency Finance - Tiered Project Finance Funnel Approach
Government Grants
Government Loans
Tax Credits
Carbon / Green Equity
Traditional Debt
Equity

9. Regulatory Drivers
Federal Stimulus Funding – Priming the Pump
ARRA Funding
and
“Green Strings”
Energy Policy and Conservation Act
State Energy Office
Energy Independence & Security Act (SEO)
Energy Efficiency & Conservation Block Grants Programs
$3.2 Billion $3.1 Billion
ARRA Title IV Mandate
State and Local Government Green Building Codes
Commercial Buildings: Meet or Exceed NANSI/ASHRAE/ESNA Standard 90.1-2007 or equivalent energy savings
Residential Buildings: Codes that meet or exceed most recently published International Energy Conservation Code or
equivalent energy savings
Compliance within 8 years on 90% of new and renovated residential and commercial building space including active
training and enforcement programs

10. Thank you
Mark Bennett
Senior Counsel, Climate Change Practice Leader
248.267.3269
bennettm@millercanfield.com