State and Regional GHG Initiatives What are the individual states doing to mitigate GHG emissions? What are the common elements? and regional differences? How does the first multi-state cap and trade program (RGGI) work? What implications do these non-federal programs have for pending federal legislation?

Categories of State GHG activities 1)Vehicle Emissions Standards 2)Renewable Portfolio Standards 3)Efficiency Standards/Programs 4)Cap and Trade programs

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Vehicle Greenhouse Gas Emissions Standards – It’s all about California 2002: CA passes law requiring 30% emissions reductions by : EPA stalls on granting CA waiver to step outside federal emissions standards in response to industry complaints 2007: CA files lawsuit against EPA for stalling 2009: EPA grants CA waiver to set standards *if* changes to 2016 timelines to be consistent with Obama CAFÉ standards

Renewable Portfolio Standards Ranges from: CA: 33% by 2020 TX: 5% by 2015 NY: 25% by 2013 CO: 20% by 2020 NC: 12.5% by 2021

through electricity bills and/or utility charges allows costumers to sell electricity back to grid

through electricity bills and/or utility charges allows costumers to sell electricity back to grid in GA, $4.50/kwhr; pure green power ~ $40/month additional cost

Appliance Efficiency Standards

State Building Efficiency Requirements

2/27/ % 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 Regional Climate Alliances Spring 2008

Nov 15, 2007, in devt Dec 20, 2005, eff. 1/1/09 Feb 26, 2007, eff. 1/1/12 June 25, 2008, not eff. yet Regional Climate Alliances Spring 2010

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) -comes into force in power plant emissions remain constant through 2014, fall by 10% by “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 ( ) b) then reduce emissions by 2.5%/yr for (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 allowed

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 There could be 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