Transcript Slide 1

Regional
Climate
Alliances
Spring 2008
2/27/2007
15% below 2005 by 2020
cap and trade
11/15/2007
set emissions targets by 11/15/08
~60-80% cuts by ???? (2040?)
cap and trade; C inventory, reporting
full implementation by mid-2011
12/20/2005
cap emissions at
current levels
by 2009,
by 10% by 2019
http://www.pewclimate.org/what_s_being_done/in_the_states/regional_initiatives.cfm
Regional
Climate
Alliances
Spring 2010
Dec 20, 2005, eff. 1/1/09
Nov 15, 2007, in devt
Feb 26, 2007, eff. 1/1/12 (goal = -15% of 2005
levels by 2020)
June 25, 2008, not eff. yet
Regional
Climate
Alliances
Spring 2012
Transportation Climate Initiative
(2010 declaration from 11 states)
Regional
Climate
Alliances
Spring 2013
X
X
X
X
X
X
* no action since 2010
* now only CA and Canadian provinces
Regional Greenhouse Gas Initiative (RGGI)
-set regional limits on GHG emissions from electric power plants & transportation
-based on “Model Rule”, but each state can design their own strategy
for implementation (state targets set for 2009 emissions)
-came into force in 2009
-power plant emissions remain constant through 2014, fall by 10% by 2018
-“cap & trade” mechanism: each state will set GHG limits and then issue
permits equal to the tons of CO2 allowed by the cap
Basic elements of Model Rule:
1) applicability: applies to fossil fuel-fired electric generating units >25MW
(covers 25% of regional GHG emissions)
2) size & structure of cap:
a) states must stabilize power sector CO2 emissions at 2009
emissions during implementation (2009-2014)
b) then reduce emissions by 2.5%/yr for 2015-2018
(total reductions of 10% below 2009 levels by 2018)
3) permitting: each CO2 source must have approved CO2 budget
emission monitoring plan (EMP); developed by state energy
regulators
4) allowance allocation: most CO2 allowances auctioned off (vs. ETS)
25% allowances to support consumer benefit programs
5) temporal flexibility mechanisms:
facilities can “bank” or “rollover” CO2 allowances
early reduction allowances granted for early demonstrated
reductions
extended compliance period
6) price triggers:
stage 1: if CO2 allowance cost >$7, CO2 offsets can increase
stage 2: if CO2 allowance cost >$10, CO2 offsets increase more,
compliance period extended, international CO2 credits
Basic elements of Model Rule: (cont)
7) emissions monitoring: CO2 unit must install and certify monitoring
system, report quality-controlled data (borrows from EPA acid rain
program)
8) offsets: awards CO2 offset allowances to projects outside capped
sector that sequester/reduce CO2 emissions (limited to 3.3% of unit’s total
compliance obligation)
- must prove “additionality”
Who stands to gain here?
Who stands to lose?
Or is it that simple?
What would you do as a power company in a RGGI state?
What is leakage? and how does it impact RGGI?
LEAKAGE
- a shift of electricity generation from capped sources subject to RGGI to
higher-emitting sources not subject to RGGI.
-impossible to predict ahead of time (market and political forces unknown)
-RGGI proposes to:
1) track load vs. generation
2) monitor C-intensive nature of non-RGGI power
policy options:
1) reduce electricity demand (efficiency), so indirectly reduce leakage
2) limit the amount of CO2 (<xx lbs CO2/MWh) that could be “emitted”
through long-term purchasing agreements between RGGI utilities and
regional power plants
3) emissions portfolio standard
How did the states dole out allowances?
- different than ETS, most allowances auctioned off;
- last auction in December, 2012: 100% of allowances auctioned off
How much money did they make?
State
Cumulative First
Control Period
Allowances Sold
Cumulative Second
Control Period
Cumulative Proceeds
Allowances Sold
Connecticut
22,953,057
6,703,016
$65,167,702.91
Delaware
9,952,619
3,598,987
$29,690,897.09
Maine
11,797,376
3,383,526
$34,246,621.95
Maryland
74,943,417
22,579,565
$219,115,648.80
Massachusetts 62,024,346
17,557,926
$178,921,781.07
New Hampshire 14,479,101
4,635,489
$42,452,628.87
New York
142,786,651
40,462,985
$410,586,619.96
Rhode Island
6,244,404
1,756,408
$17,977,844.73
Vermont
2,877,123
809,649
$8,284,461.54
Total for States
Participating in
348,058,094
Second RGGI
Control Period
101,487,551
$1,006,444,206.92
New Jersey*
46,266,477
2,217,293
$113,344,551.27
Total
394,324,571
103,704,844
$1,119,788,758.19
* See New Jersey’s Notice of Withdrawal of Agreement to the RGGI MOU.
Across three past CO2 allowance auctions, cost ~$1.93/ton
y Economy
How much did it cost the average customer?
Distributing the CO2 allowance costs around the ratepayers in those
e has developed
its own
for$0.43/month
investing itstoshare
of CO2electric
allowance
States, RGGI
costsplan
added
the average
utility bill.
ts its own investment strategy, overall, states have allocated proceeds
Where did all this money go?
y
ergy
y bill
g
of
s to
carbon
Has RGGI reduced emissions? [does it matter?]
Market dynamics, coupled with the portfolio of programs implemented by the RGGI states, have
made the region a leader in reducing greenhouse gas emissions from 1990 levels, even as the
region’s economy has continued to expand as shown in Figures 4 and 5.
Figure 4
Figure 5
.
*Converted from short tons
6
source: rggi.org
Improvements Feb 13 2013
-will cut 2014 allowance by 45%, decrease by 2.5% thereafter
(goal is to reduce emissions by 45% below 2005 levels by 2020)
-cost containment = $4/ton in 2014, $6 in 2015, up to $10 in 2017
(estimate additional $2.2billion in funds for reinvestment)
-new forestry offset protocol
-better tools to address “leakage”