1. Sacramento, California
8/29/2019
Senate Bill 350 Integrated Resource Planning Electricity Sector Greenhouse Gas Planning Targets
Thanks for the remarks, Ed. Likewise, Thank you Mr. Corey. Good morning Chair Nichols, Vice Chair Berg, and members of the Board.
As Mr. Corey mentioned, today I will be presenting the Senate Bill 350 Integrated Resource Planning Electricity Sector Greenhouse Gas Planning Targets for consideration for Board approval.
July 26, 2018
Sacramento, California

2. Overview Background and Process Proposed GHG Planning Targets
Staff Recommendation
I’ll start today’s presentation with background on SB 350 Integrated Resource Plan (or IRP) GHG Planning Targets, how this initiative relates to California’s climate programs, and the process that we’ve undertaken in developing the SB 350 IRP GHG Planning Targets.
Next, I’ll discuss the proposed IRP GHG Planning Targets, including a summary of the approach taken to established the Planning Targets, and the proposed process to update the planning targets.
Lastly, I’ll provide the staff recommendation of approving the SB 350 IRP GHG Planning Targets.

3. Senate Bill 350
SB 350 (2015) requires CARB, in coordination with CPUC and CEC, to:
Establish GHG emissions reductions planning targets for the electricity sector and for each load serving entity (LSE) or publicly-owned electric utility (POU)*
Ensure that planning targets reflect electricity sector’s percentage in achieving economy-wide greenhouse gas emissions specified in SB 32
Today, we’re here to discuss one component of Senate Bill 350 that directs CARB to establish GHG planning targets for purposes of the Integrated Resource Plans that utilities will create.
Specifically, in coordination with CPUC and CEC, CARB is to establish greenhouse gas emissions reductions planning targets for the electricity sector, for each load serving entity (or LSE) subject to CPUC’s jurisdiction, and each publicly owned utility (or POU) exceeding an electrical demand threshold.
In addition, these planning targets are to reflect the electricity sector’s contribution to achieving the economy-wide GHG reductions target of 40% below 1990 levels by 2030.
* Exceeding 700 GWh annual threshold

4. Transmission and Distribution System
Integrated Resource Plans (IRPs)
IRP
GHG Emissions
RPS
Ratepayers Costs
Transmission and Distribution System
Reliability
Air Quality
IRPs are an energy resource planning tool
IRPs balance multiple requirements
IRPs help ensure that LSEs and POUs are planning for lower GHG emitting resources to meet the State’s 2030 GHG goal
In the previous slide I mentioned that the GHG planning targets are to be set by CARB for purposes of the Integrated Resource Plans that utilities create.
As such, it’s important to briefly speak about the multiple requirements that fit together to form an IRP.
In general, an integrated resource plan is a utility plan for meeting forecasted annual energy demand through a combination of supply-side and demand-side resources over a specified future period.
The requirements or variables that California utilities must balance in developing IRPs include meeting the electricity’s portion of the statewide GHG target, the 50 percent Renewables Portfolio Standard and doubling of energy efficiency by 2030, promoting transportation electrification, minimizing impacts to ratepayers, ensuring grid reliability and cost effectiveness, and the need to minimize air pollution throughout our State with priority on disadvantaged communities.
In addition, the State has a role to play in overseeing and guiding resource planning for California’s utilities, and helping ensure that the electricity sector is planning for lower carbon resources that are reflective of the economy-wide GHG emissions reductions target of 40 percent below 1990 levels by the year 2030 as mandated by Senate Bill 32.
CARB’s specific role is to establish the GHG Planning Targets for the electricity sector and for the utilities.
CPUC and CEC, through their separate processes, then work directly with the utilities to develop the individual plans to reflect how the planning target will be achieved.

5. California’s GHG Targets
As mentioned previously, one of the objectives of SB350 is for CARB to established a GHG planning target to reflect the electricity sector’s percentage in achieving economy-wide greenhouse gas emissions specified in SB 32.
You can see the progress that the State is making to achieve our economy-wide targets. The solid blue line shows that our GHG emissions have been decreasing. This slide also depicts the State’s AB 32 GHG target in 2020 and SB 32 GHG target in 2030.
Recently, CARB released the 2018 edition emission inventory, which shows that for the first time, we are below 1990 levels and below the 2020 target.
This reflects that our climate programs, as they are phased in and take root, are delivering the real GHG reductions we expected to see and, in some instances, over performing.
The Board approved the 2017 Scoping Plan Update in December of last year, which identifies the actions that the State will take to achieve the 2030 GHG target mandated by SB 32.
The approved Scoping Plan actions span all economic sectors, including the electricity sector. In the electricity sector, two of the main GHG emissions reductions measures include the 50 percent Renewables Portfolio Standard and the doubling of energy efficiency savings.
As mentioned previously, these actions are also being planned for as part of the IRP process.
Source: Scoping Plan Update, Executive Summary.

6. Estimated Changes in GHG Emissions by Sector*
This slide shows the expected GHG emissions by economic sectors.
The left most bars of each sector group are the 1990 level of emissions.
And the right bars are the expected GHG emissions in 2030 with implementation of the Scoping Plan.
In general, we see decreases for all sectors from 1990 levels. Some sectors reduce more than 40% by 2030 and some less.
The exceptions are the High Global Warming Potential and Waste Sectors, where we see increased emissions between 1990 and 2030 as a result of expected growth in these sectors. In addition, as part of SB 1383, we reduce those gases by 40 percent relative to 2013 levels, not 1990 levels.
For the electricity sector, we see a greater decrease in GHG emissions than in other sectors. Indeed, in 2030, we anticipate GHG emissions will be between 51% and 72% lower than 1990 levels for the electricity sector. We expect the electricity sector to reduce GHG emissions more than other sectors.
Lastly, in 2030, Cap-and-Trade is expected to deliver an additional 34 to 79 MMTCO2e throughout the economy. So there will be additional emission reductions to the covered sectors on this slide, based on where it’s most cost effective to reduce the emissions. These additional reductions are not depicted in the bar chart, since the exact apportionment of GHG reductions amongst the covered sectors is unknown.
We know the Cap-and-Trade Program is already influencing the electricity sector and reducing GHG emissions by favoring lower carbon dispatch over higher carbon dispatch.
Source: Scoping Plan Update, Board Presentation.
* High GWP and Waste emissions reductions targets are 40% from 2013 levels

7. Changes in Electricity Supply and Demand
Electricity Sector In Transition
Changes in Electricity Supply and Demand
Electricity sector plays a prominent role in the shift away from combustion of fossil fuels:
Electrification of transportation and building energy demand
Increased use of renewable energy
With effective planning, increased electricity demand can coincide with reduced electricity sector GHG emissions
ZEVs
Building Electrification
Industrial Electrification
Population Growth
Increased Industrial Production
Additional Wind, Solar, Geothermal, Biomass, Hydropower, Storage, Regionalization
Electricity Sector GHG Emissions
Electricity Demand
Residential and Commercial Energy Efficiency
Industrial Energy Efficiency
Decreased Industrial Production
As we think about the SB 350 GHG planning targets, we recognize that the electricity sector is subject to uncertainty and in a state of transition.
Greater electricity demand could result from more electric vehicles, electrification of our buildings and industry, population growth, and/or economic growth, among other factors.
Likewise, energy efficiency programs, an economic downturn, and decreased production may decrease electricity demand.
It’s important to recognize, though, that increased electricity demand does not necessarily mean higher greenhouse gas emissions.
In fact, GHG emissions should decrease as electricity supply serving California continues to be less carbon intensive. With more renewables and storage technology being deployed, and with ongoing work to better integrate renewables into our grid, we should see lower GHG emissions.
As a State, we need to achieve lower GHG emitting resources from the electricity sector, independent of energy demand. IRPs can assist in achieving this goal by supporting utilities in the proactive planning necessary to create a modernized, reliable, low-carbon grid.

8. Planning for 2030 is Critical
GHG planning target
Estimated electricity demand
Electricity supply options
Costs
Reliability
Legislated mandates
Utility Integrated Resource Plans
CPUC, POU Boards approve procurement of resources
Legislated mandates met
2030 Electricity Sector Portfolio
CARB monitors progress towards achieving the 2030 target
5-year Scoping Plan update process allows for adjustments in statewide strategy and sectors
2030 GHG Emissions Meet Statewide Target
This slide focuses on the IRP process with roles for utilities, CPUC/POU Boards, and CARB.
Load serving entities and utilities must consider numerous components when creating their IRPs. They make a number of assumptions about the future and about what electricity demand will be in They create IRPs to describe what investments they plan to make over the next decade.
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CPUC and the POU Boards will be informed by IRPs, and will make decisions to position the electricity sector to meet state-wide GHG emissions reduction targets.
Decisions may include, but not be limited to, procurement of new renewable energy supply, retirement schedules and/or operation modifications for natural gas plants, transmission and distribution infrastructure investments, procurement of storage, electric vehicle charging infrastructure.
It’s important to note that CARB tracks statewide GHG emissions and monitors progress of achieving our climate targets through the GHG Inventory.
CARB will evaluate progress and any need for adjustments in meeting our climate targets through Scoping Plan Updates, which occur at least once every five years. This update process provides an opportunity to adjust our climate strategy, and electricity sector planning targets.
In addition, interim updates to IRPs will be made.

9. Coordination with CEC and CPUC
Coordination since December 2015
Four Joint Agency Public Workshops
CPUC and CEC recommendations
Appendices A and B
Since December 2015, CARB staff has coordinated with CEC and CPUC pursuant to SB 350, and has engaged with a wide range of public stakeholders to establish the GHG planning targets. CARB, CEC, and CPUC workshops were made available via webcast, and a web-based comment system was established to provide stakeholders with a medium to publicly communicate their comments to CARB, CEC, and CPUC staff on an ongoing basis.
Public engagement and review is important with all CARB processes, and SB 350 IRP GHG Planning Target Setting is no different. We’ve held joint agency public workshops on the GHG planning target process. This is in addition to the numerous public workshops and webinars that CPUC and CEC have held with regards to the broader IRP process.
The recommendations provided to CARB by both the CPUC and the CEC regarding proposed GHG planning target methodologies are consistent with the approach CARB is proposing today, which I will describe in a few minutes.

10. GHG Planning Target Setting Public Process
Draft Staff Report released April 27, 2018
Public comment period
April 27, 2018 –June 11, 2018
Comments on Staff Report reviewed
Final Staff Report
Released July 13, 2018
In addition to public workshops, we have undertaken a public process in the development of the staff proposal.
On April 27, 2018, CARB released the “Draft Staff Report: Senate Bill 350 Integrated Resource Planning Electricity Sector Greenhouse Gas Planning Targets” containing proposed GHG planning targets for the electricity sector, and each applicable LSE and POU. This document was informed by stakeholder input during public workshops. An accompanying Draft Environmental Assessment was also released for 45-day public review starting on April 27, 2018, and ending on June 11, 2018.
Throughout the public workshops and public process, we have received and reviewed numerous written and oral public comments.
The final staff report was released on July 13, 2018.

11. Environmental Analysis
Draft Environmental Analysis (EA) completed
Potentially significant impacts found for some resource areas
Released for public comment
April 27, 2018 – June 11, 2018
CARB prepared the Final EA
Released in July 2018
As mentioned, a Draft Environmental Analysis (EA) was completed for the Senate Bill 350 Integrated Resource Planning Electricity Sector Greenhouse Gas Planning Targets (Proposed Targets) that was released in April.
Staff determined that implementation of the Proposed Targets under a conservative approach may have potentially significant indirect impacts to some resource areas; however, these impacts are mainly due to short-term construction-related activities.
Today we are focused on the planning process rather than approval of any specific project. It isn’t clear what type of projects will occur or be foregone as a result of the GHG planning targets.  As such, we’ve taken a conservative approach in identifying potentially significant impacts. Individual projects will go through their own environmental analyses, at which time specific mitigating projects and solutions can be identified to address the impacts.
The Draft EA was released for an 45-Day comment period, which ended on June 11, No comments related to environmental issues were received.
Staff prepared a final environmental analysis which was posted on our website earlier this month.

12. CARB Board Resolution Board Resolution 17-46
“…the Board hereby determines that the Final Plan should inform the preliminary 2030 GHG planning target range for the electricity sector, which in coordination with the California Public Utilities Commission and the California Energy Commission, will be evaluated and revised, as appropriate, as part of the Board’s process to establish GHG planning targets for the electricity sector and each load-serving entity for use in Integrated Resource Plans pursuant to SB 350.”
The Scoping Plan Board Resolution adopted by the CARB Board in December 2017, directed staff to use the Scoping Plan to inform the GHG planning targets for the electricity sector and each utility pursuant to SB 350.
In the adopted Scoping Plan, Table 3 summarizes the estimated range of GHG emissions by sector. This includes the MMT range in 2030 established for the electricity sector as a component of the broader 2030 target of 260 MMT. That range represents 51 to 72 percent lower emissions than 1990 levels.
Source: Scoping Plan, Table 3.

13. CARB’s Proposed Approach
Electricity sector GHG planning target range for use in IRPs
30-53 MMTCO2e in 2030
Apportion electricity sector target to each POU and LSE
CARB staff is proposing to establish the SB 350 IRP GHG planning targets as summarized here. I’ll provide additional details on subsequent slides.
I’ll note that CARB’s proposed approach is consistent with the recommendations from CPUC and CEC
CARB is proposing to establish a GHG planning range for the electricity sector of 30 to 53 million metric tons. This range is equivalent to the range set in the Scoping Plan. CARB determined in this process that this planning range remains the best option going forward
In order to establish the specific load serving entity and publicly owned utility targets, we apportion the sector target to each entity.
Staff proposes to apportion the electricity sector target among all POUs and investor owned utilities (or IOUs) using information that was provided by utilities as part of Cap-and-Trade Electrical Distribution Utility Allocation for the year This was part of the Cap-and-Trade rulemaking and approved by the Board in 2017.
There’s one additional step for IOUs, since in IOU territories, load is served by Community Choice Aggregators (or CCAs), Electric Service Providers (or ESPs), and host-IOUs.
This additional step is further apportioning the IOU planning targets to CCAs, ESPs, and host-IOUs based on forecasted electricity demand in 2030.
The GHG planning target ranges CARB establishes will be used by POUs and LSEs in their IRPs, and by CPUC and CEC in their respective IRP processes.
NOTES: The allowance allocation methodology includes multiple data sources, including individual LSE and POU supply resources and retail sales, and has gone through its own public process via Cap-and-Trade rulemaking, concluding with Board approval in 2017.
NOTES: The use of data from the EDU Allowance Allocation methodology as a basis to set individual GHG planning targets is for IRP planning purposes only and does not affect EDU compliance obligations or allowance allocation within the C&T Program.
NOTES: Apportion Direct Access share of target among Energy Service Providers (ESPs) based on three-year historical average electricity demand.
POU and Investor Owned Utility (IOU) share based on estimated 2030 GHG emissions from Cap-and-Trade Allocation Methodology
IOU share further divided among CCAs, ESPs, and host-IOUs based on load share

14. Apportionment to IOUs and POUs
Percentage of
2030 GHG Emissions by EDU
𝐸𝐷𝑈 %= 𝐸𝐷𝑈 𝐺𝐻𝐺 𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝐸𝐷𝑈 𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝑓𝑜𝑟 𝑎𝑙𝑙 𝐸𝐷𝑈𝑠
This slide depicts the apportionment to Investor Owned Utilities and Publicly Owned Utilities as a pie chart and an equation.
Each IOU and POU’s contribution to 2030 GHG emissions is based on estimated GHG emissions in the Allocation Spreadsheet that was developed to support the Cap-and-Trade allowance allocation for electrical distribution utilities (or EDUs). Estimated 2030 EDU-specific emissions for each EDU are divided by the sum of estimated 2030 GHG emissions for all EDU’s to obtain a percentage of the 2030 electricity sector GHG emissions.
This EDU percentage is multiplied by the electricity sector range, or million metric tons, to obtain an individual EDU GHG planning target. As discussed earlier, the planning target for an IOU is further apportioned to the CCAs and ESPs that operate in its territory based on shares of electricity demand.
Approximately 77% of the target is apportioned to 6 IOUs reporting to CPUC, which are the blue colors in the pie chart.
Approximately 21% to the 16 POUs reporting to CEC, which are brown colors in the pie chart.
The gray colors are the remaining 1.7%. These are the EDUs below the 700 GWh threshold stipulated in SB 350, meaning they do not have to file Integrated Resource Plans. The majority of these are POUs representing approximately 1.7% of the target with the remainder reflecting the four co-ops subject to CPUC jurisdiction.
It is important to note, this is a zero sum situation. If planning targets are adjusted higher or lower for one utility, it impacts the share of the sector range available to the other utilities.
NOTE: 32 EDUs representing 1.7%. Of these, four are cooperatives that report to the CPUC (0.07%).
𝐸𝐷𝑈 𝑃𝑙𝑎𝑛𝑛𝑖𝑛𝑔 𝑇𝑎𝑟𝑔𝑒𝑡 𝑅𝑎𝑛𝑔𝑒
=𝐸𝐷𝑈 %∗30 𝑡𝑜 𝐸𝐷𝑈 %∗53 𝑀𝑀𝑇𝐶 𝑂 2 𝑒
Blue: 6 IOUs – CPUC jurisdiction (76.9%)
Brown: 16 POUs report to CEC (21.4%)
Grey: 28 POUs and 4 cooperatives below 700 GWh threshold (1.7%)
EDUs include IOUs, POUs, and cooperatives

15. Alternatives Evaluated
30-42 MMTCO2e: Increased action beyond existing statutes or requirements
May not be achievable for all POUs and LSEs due to cost- effectiveness and other unique regional factors
42-53 MMTCO2e: Some increased action beyond existing statutes or requirements
Not sufficiently broad to signal and enable deeper reductions possible for some LSEs and POUs
65 MMTCO2e: 40% below 1990 levels of electricity sector GHG emissions
This is higher than the estimated electricity sector GHG
emissions in 2030 under business-as-usual conditions
As part of the process, we also evaluated three alternatives to the 30 to 53 million metric ton planning target range for the electricity sector.
The 30 to 42 million metric ton planning target range reflects increased action beyond existing statutes or other requirements, such as greater deployment of renewable energy and increased energy efficiency, or potentially new responses and innovative technologies developed by POUs and LSEs.
Based on stakeholder input, we recognize that this low end of the range may be difficult to achieve for some of the smaller POUs due to cost-effectiveness, and unique regional factors such as physical system constraints.
A second alternative evaluated was 42 to 53 million metric tons. This high end of range is not sufficiently broad enough to provide an ambitious signal to utilities to seek lower GHG emissions. This is especially true in light of some of the larger utilities appearing to already be on track to exceed 50 percent RPS before 2030.
The last alternative evaluated was 65 million metric tons, which was the “fair share” concept of the electricity sector being responsible for 40 percent reductions by 2030 of 1990 levels. Existing mandates such as 50% RPS are likely to result in lower GHG emissions for the sector, so this alternative is actually higher than the estimated electricity sector GHG emissions in 2030 under business-as-usual conditions.

16. Scoping Plan and IRP Updates*
This slide depicts the various timelines that we’re coordinating.
Yellow arrows indicate periods between IRP filing or Scoping Plan adoption.
Green stars indicate CARB Scoping Plan adoption.
Blue stars indicate the January 1 POU adoption deadline as part of the CEC process, and the May 1 LSE filing deadline with CPUC, with the exception of this year, during which CPUC extended the filing deadline to August 1.
This depiction of IRP and Scoping Plan process timelines does not account for exceptions, such as expedited Scoping Plan development due to Executive Orders or other factors, or updated POU IRP filings based on the date of POU governing board adoption.
We know that the GHG planning targets will change over time as better information becomes available, as will individual IRP plans.
At CPUC, the IRP process occurs every other year. Meanwhile, POUs must submit IRPs to CEC at least once every five years.
To coordinate these timelines, streamline this process, and alleviate administrative burden, staff is proposing to seek Board approval for updates to the GHG planning target for the electricity sector (and corresponding LSEs and POUs) in coordination with the Scoping Plan process, which also occurs at least once every five years.
In interim years, we propose that authority be delegated to the CARB Executive Officer to coordinate with CPUC and CEC through a public process should individual entity planning targets change.
This is particularly relevant to CPUC IRP updates, where individual LSE target adjustments are likely, for example, when a new community choice aggregator shifts load away from an IOU.
As long as these individual entity adjustments do not result in changes to the electricity sector target, and the current proposed methodology is used, then we propose that the Executive Officer is delegated authority to approve revised utility GHG planning targets.
Board approval required for updates to electricity sector GHG planning targets and associated updated POU and LSE GHG planning targets in coordination with Scoping Plan Updates
Delegation of authority to EO for LSE planning target updates to accommodate new CCAs/ESPs when there would not result in any changes to electricity sector target
* The CPUC filing deadline for 2018 was extended to August 1

17. Staff Recommendation Approve the proposed Resolution, which includes:
Certification of the Final EA, and making the required CEQA findings
Approval of the electricity sector, LSE, and POU GHG planning targets
Approval of the methodology to update GHG planning targets
Staff recommends the Board:
Certify the Final Environmental Analysis
Adopt the required CEQA findings and statement of overriding considerations
Approve the Proposed GHG Planning Targets for the electricity sector, the load serving entities, and the publicly owned utilities
And to approve the proposed approach to update the GHG planning targets.