Greenhouse Gas Initiatives: progress and perspective Sandra Meier Environmental Energy Alliance of New York

Objectives of RGGI: develop a regional cap and trade program for power plant CO 2 emissions develop a regional cap and trade program for power plant CO 2 emissions maintain energy affordability & reliability maintain energy affordability & reliability expand to other sources & adopt nationally expand to other sources & adopt nationally

MOU among states 12/05 Fossil-fired power plants only Fossil-fired power plants only 3 yr. compliance period, banking, early reduction credit 3 yr. compliance period, banking, early reduction credit Comprehensive program review 2012 Comprehensive program review 2012 Formed leakage and imports workgroup Formed leakage and imports workgroup Start date January 2009 Start date January 2009

MOU Stabilize emissions at current levels (2009 through 2014) Stabilize emissions at current levels (2009 through 2014) Ten percent reduction by 2019 Ten percent reduction by % below 1990; 35% below BAU Minimum 25% budget set-aside for consumer benefit or strategic energy Minimum 25% budget set-aside for consumer benefit or strategic energy Allows offsets for compliance Allows offsets for compliance

Compliance options & strategies Purchase allowances or offsets Purchase allowances or offsets Fuel switch Fuel switch Reduce output Reduce output Energy efficiency programs Energy efficiency programs Capture & sequestration? Capture & sequestration?

Regional model rule released 8/06 States currently in process of regulatory or legislative approval of the program

What are the hot issues? Allowance allocation Allowance allocation Electricity prices and reliability Electricity prices and reliability Leakage Leakage Offsets Offsets Transition to national program Transition to national program

Allowance allocation Most states in RGGI considering a full auction of allowances Most states in RGGI considering a full auction of allowances Historical allocations are considered excess profits that generators bid into the wholesale market Historical allocations are considered excess profits that generators bid into the wholesale market Auction funds to be dedicated to energy efficiency programs Auction funds to be dedicated to energy efficiency programs Auctions considered for other regulatory programs such as CAIR Auctions considered for other regulatory programs such as CAIR

How much public benefit $ NYSERDA annual budget of $175 million from SBC NYSERDA annual budget of $175 million from SBC 2400 tons NOx 4400 tons SO million tons CO 2 $190 to 320 million per year auction proceeds in NYS $190 to 320 million per year auction proceeds in NYS

Price and Reliability Modeling shows no impact to system reliability Modeling shows no impact to system reliability Modeling shows minimal changes to wholesale electric prices in the region Modeling shows minimal changes to wholesale electric prices in the region 1.6% in % in 2021

Projected RGGI Region Household Bill Impacts Negative numbers in the household bill impact columns indicate that projected bill savings due to improved end-use energy efficiency exceed the projected increase in bills due directly to RGGI retail price impact. MA Division of Energy Resources on behalf of the RGGI Staff Working Group, December 2005

Leakage Modeling predicts up to 28% leakage Modeling predicts up to 28% leakage Environmental and economic consequences to the region Environmental and economic consequences to the region Estimates based on low allowance and offset prices Estimates based on low allowance and offset prices No solution identified by the states other than to track imports No solution identified by the states other than to track imports

Offsets Only 3 to 10 percent of compliance obligation Only 3 to 10 percent of compliance obligation Strict financial and regulatory additionality Strict financial and regulatory additionality Modeling presumes low price for credits Modeling presumes low price for credits

Offset types Landfill gas capture and combustion Landfill gas capture and combustion SF 6 capture and recycling SF 6 capture and recycling Afforestation Afforestation End use efficiency for natural gas, propane, heating oil End use efficiency for natural gas, propane, heating oil Methane capture from farming operations Methane capture from farming operations

Transition to national program No decision to sunset RGGI until a national program is in place and evaluated No decision to sunset RGGI until a national program is in place and evaluated Complicated rules may preclude adoption by other states or nation Complicated rules may preclude adoption by other states or nation

California legislation Exec Order S-3-05 targets Exec Order S-3-05 targets 2000 by by % below 1990 by 2050 Senate Bill 1368 Senate Bill 1368 GPS for native + imported power Assembly Bill 32 Global Warming Solutions Act Assembly Bill 32 Global Warming Solutions Act enforceable target of 1990 by 2020 considering “first seller” compliance

Western Regional Climate Action Initiative CA, OR, WA, NM, AZ, UT and 2 provinces CA, OR, WA, NM, AZ, UT and 2 provinces MOU signed February 2007 MOU signed February 2007 Regional cap set by August 2007 Regional cap set by August 2007 Program by August 2008? Program by August 2008? Load based cap & trade system Load based cap & trade system

Illinois Exec. Order Cap and trade program to achieve 1990 levels by 2020; 60 % below by 2050 Cap and trade program to achieve 1990 levels by 2020; 60 % below by % allowances auctioned for PB 85% allowances auctioned for PB 10% use of offsets 10% use of offsets Recognizes leakage may be a problem Recognizes leakage may be a problem Advisory group recommendations by end of June 2007 Advisory group recommendations by end of June 2007

MN Next Generation Energy Initiative SF-145 Goals for emission reduction Goals for emission reduction 15% below 2005 by % below 2005 by % by % by % by % by 2050 Final report from Advisory Group 2/08 Final report from Advisory Group 2/08

PlaNYC Target of 30% by 2030 Target of 30% by MW new capacity by MW new capacity by 2015 Expansion of transmission Expansion of transmission Retire inefficient existing plants Retire inefficient existing plants Lower electric demand Lower electric demand Renewables and building codes Renewables and building codes Congestion pricing for transportation Congestion pricing for transportation