Section 11F 1/2. (a) The department shall establish an alternative energy portfolio standard for all retail electricity suppliers selling electricity to end-use customers in the commonwealth. Every retail electric supplier providing service under contracts executed or extended on or after January 1, 2009 shall provide a minimum percentage of kilowatt-hour sales, as determined by the department, to end-use customers in the commonwealth from alternative energy generating sources and the department shall annually thereafter determine the minimum percentage of kilowatt-hour sales to end-use customers in the commonwealth which shall be derived from alternative energy generating sources. For the purposes of this section, ''alternative energy generating source'' shall mean a source which generates energy using any of the following: (i) combined heat and power; (ii) flywheel energy storage; (iii) energy efficient steam technology; (iv) any facility that generates useful thermal energy using sunlight, biomass, biogas, liquid biofuel, waste-to-energy that is a component of conventional municipal solid waste plant technology in commercial use or naturally occurring temperature differences in ground, air or water, whereby 1 megawatt-hour of alternative energy credit shall be earned for every 3,412,000 British thermal units of net useful thermal energy produced and verified through an on-site utility grade meter or other means satisfactory to the department; provided, however, that facilities using biomass fuel shall be low emission, use efficient energy conversion technologies and fuel that is produced by means of sustainable forestry practices; (v) fuel cells; or (vi) any other alternative energy technology approved by the department under an administrative proceeding conducted under chapter 30A. The following technologies and fuels shall not be considered alternative energy supplies: (A) coal; (B) petroleum coke; (C) oil; (D) natural gas, except when used in combined heat and power or as a biogas generating useful thermal energy or fuel cell technology; (E) construction and demolition debris including, but not limited to, chemically-treated wood and (F) nuclear power.

(b) The department, in consultation with the department of environmental protection, shall set: (i) emission performance standards that are protective of public health, including standards for eligible biomass, biogas and liquid biofuel technologies that limit eligibility only to best-in-class commercially-feasible technologies, inclusive of energy conversion and emissions controls, with regard to reducing emissions of particulate matter sized 2.5 microns or less and carbon monoxide and other air pollutants; (ii) for eligible biomass, biogas and liquid biofuel technologies, a requirement of 50 per cent reduction in life-cycle greenhouse gas emissions compared to a high efficiency unit utilizing the fuel that is being displaced or, for a new load, a high-efficiency natural gas unit, if natural gas is available at reasonable cost to the site or otherwise the fuel that is most likely to be utilized; (iii) for eligible biomass, biogas and liquid biofuel technologies, requirements for thermal storage or other means to minimize any significant deterioration of efficiency or emissions due to boiler cycling, if feasible; (iv) for eligible biomass, biogas and liquid biofuel technologies, fuel conversion efficiency performance standards achievable by best-in-class commercially-feasible technologies; and (v) in consultation with the department of conservation and recreation, for forest-derived biomass, requirements that fuel shall be provided by means of sustainable forestry practices; provided, however, that the department shall adopt any existing or new biomass fuel sustainability standards if deemed appropriate by the department after a public comment process.

(c) The department shall adopt regulations allowing for a retail supplier to discharge its obligations under this section by making an alternative compliance payment in an amount established by the department. Such regulations shall outline procedures by which each retail supplier shall annually submit for the department's review a filing illustrating the retail supplier's compliance with the requirements of this section.

(d) A municipal lighting plant shall be exempt from the obligations under this section so long as and insofar as it is exempt from the requirements to allow competitive choice of generation supply under section 47A of chapter 164.

(e) Notwithstanding the determination that 1 alternative energy credit is to be earned per 3,412,000 British thermal units in subsection (a), the department may provide that for fuel cells and certain nonemitting renewable thermal technologies, an alternative energy credit shall be earned for less than 3,412,000 British thermal units of net useful thermal energy so as to stimulate the development of new on-site energy generating sources.