Issues with Tracking Environmental Attributes Environmental Tracking Network of North America San Francisco, CA April 14-15, 2008

Ed Holt & Associates, Inc. Outline n Review certificate definitions n Identify four issues ä Different definitions ä Keeping track of individual attributes ä Tracking derived attributes ä Attributes for null power n Work group challenge

Ed Holt & Associates, Inc. WREGIS 2007 ERCOT 2001 M-RETS 2007 GATS 2005 North American Tracking Systems GATS footprint is rough; includes small part of IN, IL, KY, MI and NC

Ed Holt & Associates, Inc. Certificate Tracking Systems n Support environmental disclosure or facilitate RPS compliance ä If RECs are imported they must be accompanied by an equivalent delivery of energy n Substantiate voluntary environmental marketing claims ä Buyers and sellers make claims about the environmental benefits and some make specific claims about greenhouse gas emission reductions ä Voluntary RECs may be sourced from all across North America, not just from an adjacent region

Ed Holt & Associates, Inc. Interportability Challenge n Using RECs from one region in another, even if accompanied by an energy delivery, may present compatibility issues between tracking systems. n Information may be difficult to verify because of how RECs are defined and what is tracked

Ed Holt & Associates, Inc. All attributes, all renewable attributes, or all renewable and environmental attributes Texas, GATS, WREGIS and M-RETS No definition but certificates include source and emission attribute data GIS REC Definitions Reporting Direct Attributes Direct Attributes Definition Tracking system records direct emission data for each certificate GIS, GATS, Tracking system does NOT record direct emissions data M-RETS, WREGIS, Texas

Ed Holt & Associates, Inc. Yes, recording derived attributes (emission reductions, credits, allowances, etc.) None NOT recording derived attributes (emission reductions, credits, allowances, etc.) Texas, GATS, GIS, M-RETS, WREGIS REC Definitions Reporting Derived Attributes Derived Attributes Definition Any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled, (directly) attributable to the generation from the generating unit GATS, M- RETS, WREGIS (with exceptions) Not addressed in certificate definition Texas, GIS APX default tracking system will have capability to track emissions reductions

Ed Holt & Associates, Inc. How important are the differences? n Does it matter that one tracking system specifies the inclusion of the emissions reductions, offsets, and allowances directly attributable to the generating unit, an the other tracking system omits the word “directly?” n Does it matter that one tracking system (WREGIS) specifies that such attributes do not include emission reduction credits encumbered or used by the generating unit for compliance with local, state, provincial or federal operating and/or air quality permits? n Can differences, if material, be resolved at the tracking system, or need they be addressed at the state level?

Ed Holt & Associates, Inc. Can tracking systems deliver on definitions? n Do they track individual attributes to know that none have been transferred separately? ä A question for each tracking system internally, not just for certificate import-export n Should they add the capability to track individual attributes, and would that contradict the goal (of some) to maintain whole certificates? n Is it sufficient to allow certificate owners to remove certificates from the tracking system if they want to disaggregate? n If there is no tracking of individual attributes, can final consumers be confident in what they are getting with the purchase of RECs?

Ed Holt & Associates, Inc. Should derived attributes be tracked? n In uncapped markets, how will buyers (or states that require allowances for RPS) know if an allowance has been retired? n In capped markets, would tracking emission reductions in parallel with allowance tracking systems duplicate infrastructure and lead to double- counting? n Should emission allowances and generation certificates be tracked by the same systems? n Is further coordination needed among generation certificate tracking systems, climate action registries and emissions allowance tracking systems? ä If coordination is needed, what is it and how should it be pursued?

Ed Holt & Associates, Inc. How do tracking systems treat null power? n GIS and GATS track all generation and assign the average attributes of the residual system mix to null power for electricity labels n Other systems track only RECs--what happens to null power? n Some LSEs may comply with disclosure requirements by reporting the attributes of the generators even though the RECs have been sold to a separate buyer ä If these RECs are exported to another tracking system, the LSE with the energy and the REC buyer in an adjacent region may both be claiming the same attributes Energy whose attributes have been sold to a third party

Ed Holt & Associates, Inc. For each issue… n Identify the preferred solution, or n List specific steps that should be undertaken to reach a solution n Report back

Ed Holt & Associates, Inc. How important are the differences?

Ed Holt & Associates, Inc. Do tracking systems deliver on definitions? If not, how should they?

Ed Holt & Associates, Inc. Should derived attributes be tracked? If so, how?

Ed Holt & Associates, Inc. How should tracking systems treat null power?