The NEG-ECP Climate Change Action Plan and the Northeast Regional Greenhouse Gas Initiative (RGGI) Western Regional Air Partnership Information Sharing Meeting on Climate Change Santa Fe, NM – August 25-26, 2005 Ken Colburn Center for Climate Strategies (CCS)

Why Are the States Acting? Defensively: –Sense of urgency; exposure to climate risks –Protecting existing economies (forests, tourism, etc.) Offensively: –Learning curve; early adopters secure competitive advantage (e.g., BP, Dupont, UTC) Aggressively to protect: –Public Health; Quality of Life Significant relative impact Prior success leading by example

Long History Working Together New England Governors (NEG) formed NESCAUM to address air quality issues – Many states adopted regs ahead of feds (acid rain; air toxics) – and kept robust economy 1990 – Ozone Transport Commission (12 states, under Clean Air Act Amendments) Not just history… –Not alone in this –Cross-pollination; better ideas & vetting –Greater punch; strength in numbers –Competitive advantage; learning curve

NEG-ECP Climate Change Action Plan Governors and Premiers identified climate change as a key issue affecting the region July 2000 – Tasked regional environment & energy energy agencies with developing a climate change action plan March 2001 – Convened scientific & policy forum in to get input from scientists, businesses, & NGOs; 250+ participants Action Plan Drafting Committee established August 2001 – Climate Change Action Plan 2001 adopted by NEG/ECP

50% additional reduction nationally 50% by 2003 “Virtual elimination” 1990 GHG levels by % below 1990 by % ultimately Reaffirmed post-2002

Regional Plan, Individual Action… States moved forward with plans to implement –CT GHG plan, RPS, LEV, appliances, CHP –MA 4-P regulations, RPS –NH 4-P legislation, registry –ME GHG legislation, plan –RI plan –NJ consent decree & 20% initiative –NY LEV, plan, NYSERDA energy efforts –Even WV mandatory GHG reporting –Pacific states joining in: OR, CA, WA

Initiated – April 2003 letter from Governor Pataki (R-NY) to 10 Northeast and Mid- Atlantic states Purpose – Invitation to develop a regional “Cap-and-Trade” system for GHGs Process – Start with power sector and CO 2 ; then possibly expand to other sectors, GHGs, & offsets Timeline – Targeted April 2005 Regional Greenhouse Gas Initiative (RGGI)

Nine states chose to participate – CT, DE, MA, ME, NH, NJ, NY, RI, VT – World’s 3rd largest economy 14% US GHG Emissions 3.4% of Global GHG (  Germany) Others observing: PA, MD, DC, Provinces Staff Working Group created, plan developed, endorsed by energy & environmental chiefs RGGI (continued…)

The Model Rule Memorandum of Understanding The Groundwork Data Assembly IPM Modeling REMI Modeling and Benefits Analysis Stakeholder Process Post- Model Rule Legislation and/or Rulemaking Regional Organization Key RGGI Components

The RGGI Model Rule Applicability: 25 MW+ Banking Compliance Period Offset Provisions Early Action Credits Monitoring & Reporting Penalties & Enforcement Regional Emissions Cap State Allowance Budgets New Source Allowance “Pool” Opt-In Provision

The RGGI MOU State-by-State Allocations of Allowances to Sources Commit to Initiate Rulemaking Recommendations on Collateral Energy Policies Link with other Trading Systems Method for Accounting for Additional States, or Subtracting States that Withdraw from RGGI Emissions & Allowance Tracking/Regional Registry Establish Regional Body Future Offset Design

Prospective International Linkages Amendment to EU Trading Directive –“1a. Prior to third countries listed in Annex B to the Kyoto Protocol ratifying the Protocol, agreements may be concluded with regional authorities in those countries to provide for the mutual recognition of allowances between the Community scheme and mandatory greenhouse gas emissions trading schemes capping absolute emissions established by those authorities.” –Amend. 8, Article 25, adopted by Envir. Comm. 3/16/04 Australian states starting a RGGI-like effort Link with Canada in registry/trading?

RGGI Next Steps Better to take a bit longer & get it right… NY Times Story –“Generally accurate, but…” – : Stabilize at levels – : reduce 10% lower Many issues remain: –Leakage, allowance allocations, offsets (type & amount), consumer allocations/EE, etc. Stakeholder reaction & revision? Legislative approval / regulatory processes Litigation?

Thank you for your time and attention!

ECONOMIC EFFICIENCY Lower Higher TIME Energy Efficiency & Renewables Path (MORE jobs, reliable, secure, clean, and exportable) Energy Intensity Path (LESS jobs, reliable, secure, clean, and exportable) Competitive Advantage Lost to Delay Now Later Sustainability Old or New Energy Path?