1. WRAP – MTF Meeting May 21, 2002 Salt Lake City, Utah
Market Program Issues
WRAP – MTF Meeting
May 21, 2002
Salt Lake City, Utah

2. Overview Key elements of the trading program Allocations Issues
Trading Issues
Integration with National Programs
Next Steps

3. Five Critical Elements
Measurement: Quantify emissions accurately.
Transparency: Make reporting and program operation public.
Accountability: Hold program participants accountable for meeting goals.
Fungibility: Minimize transaction constraints
Consistency: Apply fixed rules consistently and objectively.
Market Mechanisms and Global Climate Change – An Analysis of Policy Instruments, Petsonk, Dudek, & Goffman, October 1998

4. Allocations Issues
Sector allocation based on sector subtotal of the milestones
Credits should be allocated to emissions sources (I.e. no auction)
Uncertainty and new source set-aside in milestones should be allocated to utility/non-utility sectors on a pro-rata basis.
Other States opting-in – Need a transparent process to develop allocations for their sources.
Non-banked allocations will aggregate to M/S each year.

5. Allocations to New Sources
Growth allowance
Available on a 1st come, 1st serve basis.
Allocated on a BACT emissions rate or .1 lbs/mmBTU where appropriate BACT analysis not available
Allowances return to growth pool when not used after a defined amount of time (in the event source not built.)

6. Trading Existing Market Infrastructure should be used – ATS/ETS
Market needs to be allowed to work
Participants need assurance of value of allowance – (e.g. Current RAVI allows FLMs to capture allowances with uncertain and ambiguous criteria.

7. Trading (con’t.)
Banking
No restrictions
No expiration (inc. 2018)

8. Non-utilities Opt-in, in order to participate in regional market:
Similar transparency as utilities
Monitoring  CEM’s.
Emission Control level
Realistically set, creates some market value
Clear understanding on how it is set.

9. Integration with National Programs
WRAP Trading program incorporated into national program – design should reflect this.
Existing ATS/ETS should be used.
National Trading should be permitted

10. Next Steps
Determine what needs to be included in 2003 SIPs for Regional Market Program.
Non-utilities?
Develop timelines