1. Initial Comments on RGGI Draft Model Rule The Climate Trust May 2, 2006

2. Offset Additionality Should the program allow for capture of incentives from other RE programs: Yes, but not in all instances. –To extent RPS is a requirement, not an incentive, may preclude eligibility because cost recovery in system and GHG reductions become baseline. –Other instances exist in which RE should be allowed to generate GHG offsets –Will refer to RE Working Group paper from 2005

3. Should the program allow for capture of incentives from other SBC programs: Yes, but not in all instances. –The Climate Trust has collaborated with the Energy Trust of Oregon (SBC fund focused primarily on EE) to identify projects that meet market or program additionality tests Maximum simple payback thresholds Program funding capacity constraints Historical market penetration data –This could also apply for RE technology funds Offset Additionality

5. RGGI Offset Pilot Program Public-Private Partnership managed by a third party, “public benefits corporation” –Governance: controlled entities, RGGI regulators, third-party administrator, stakeholder representation Purpose: Solicit, evaluate and contract offset projects for future delivery: –Secure reductions outside of entities’ area control –Provide ongoing market information (price, transaction costs, etc.) –Identify other eligible project sectors –Continue reducing in “non-capped” sectors –Disseminate information on offset project quality

6. Potential Roles for Partners Energy Companies Obligations: –Carbon funding Expectations: –Credit for emissions reductions –Mitigation of regulatory risk and uncertainty RGGI Regulators Obligations: –Risk mitigation for participating companies –Compliance oversight Expectations: –Real emissions reductions –Entity collaboration / cooperation Third-Party Administrator Obligations: –Solicitation, Evaluation, Contracting, Contract Management Expectations: –Cost recovery Stakeholder Representation Obligations: –Oversight and support –Technical expertise Expectations: –Accountability –Transparency

7. Potential Pilot Structure Market info Offset process info & review Lessons learned: additionality, project types, etc. RGGI Regulators (Advisory Body) Energy Companies $ Oversight Risk Mitigation CO2 Offset Projects $ CO2 Third-Party Administrator RGGI Regulators (Advisory Body) Controlled Entities $ Oversight Risk Mitigation CO2 Stakeholder Representation

8. Accept Some Dissonance to Optimize the Regulatory Moment The challenge to reduce emissions on an economy wide basis means we must accelerate and/or re-direct investment into sectors and projects measurably reducing GHGs Monetizing future streams of reductions from project activities will achieve that goal Project life-cycle approach provides standardized processes that can lead to standardized accounting for “non-RGGI” sectors

9. Thank You. Detailed written comments to follow Michael S. Ashford Deputy Director The Climate Trust mashford@climatetrust.org Phone: (503) 238-1915 Fax: (503) 238-1953