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Basic elements of Model Rule:

Basic elements of Model Rule: 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 (2009-2014)

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Basic elements of Model Rule:

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  1. Basic elements of Model Rule: • 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 (2009-2014) • b) then reduce emissions by 2.5%/yr for 2015-2018 • (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

  2. Basic elements of Model Rule: (cont) • emissions monitoring: CO2 unit must install and certify monitoring system, report quality-controlled data (borrows from EPA acid rain program) • 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?

  3. 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: • track load vs. generation • 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

  4. How did the states dole out allowances? - different than ETS, most allowances auctioned off

  5. How much money did they make? Across three past CO2 allowance auctions, cost ~$3/ton

  6. How much did it cost the average customer? Distributing the CO2 allowance costs around the ratepayers in those States, RGGI costs added $0.73/month to the average electric utility bill. Where did all this money go?

  7. Has RGGI reduced emissions? [does it matter?]

  8. National Energy/Climate Bills • How does the legislative process work? • What bills have been considered? • What are the pros and cons of each? Who stands to win and who stands to lose?

  9. The legislative process: how does a bill become law? Step 1: Bill is introduced by sponsor (and co-sponsors) assigned a # (S.#### for Senate bills and H.R.#### for House bills), printed and posted on web  http://www.govtrack.us Step 2: Committee consideration referred to one or more House or Senate committees; must receive a majority vote from committee members in order to move to the floor for a full vote Step 3: Subcommittee consideration some bills sent to special subcommittee for further study or public hearings; subcommittee may “mark up” bill by adding amendments and making changes; must receive a majority vote to send back to committee or it dies Step 4: Bill “reported” by committee; published

  10. Step 5: Floor action – legislative calendar bill scheduled for debate, or “floor action”; majority party decides order Step 6: Debate House members typically limited to 1-5 minutes each, if at all Senators have unlimited speaking time  opponents can filibuster until either a) back-door agreement reached b) 60 senators move to end debate and call a vote Step 7: Voting either electronic or verbal Step 8: Bill referred to other chamber other chamber can approve, reject, amend, or ignore the bill Step 9: Conference committee  towards “reconciliation” members from House and Senate work to compromise on differences in passed bills; changes must be approved by House and Senate, else bill dies Step 10: Signature by President if President vetoes bill, 66% of House and Senate members needed to override

  11. Bill Name Status HOUSE H.R. 2454: American Clean Energy and Security Act Passed 6/25/09 Waxman, D-CA; Markey, D-MA 219 to 212 SENATE S. 1462: American Clean Energy Leadership Act Passed Comm. Bingaman, D-NM (chairman) S. 1733: Clean Energy Jobs and American Power Act Passed Comm. Kerry, D-MA; Boxer, D-CA; Cardin, D-MD; Kirk, D-MA; 9/30/09 S. ????: Kerry, D-MA; Graham, R-SC; Lieberman, I-CT working to introduce comprehensive climate/energy bill that will muster 60 votes needed to block predictable Republican filibuster

  12. H.R. 2454: American Clean Energy and Security Act • Key Provisions: • Clean Energy • -renewable electricity/efficiency standard, CCS, new rules for new coal • plants, R&D for electric vehicles, $ for smart grid • Energy Efficiency • - building, lighting, appliance, and vehicle efficiency programs • Cap and Trade Program • Transitioning to a Clean Energy Economy • -preserve domestic competitiveness, support workers and consumers, • support for domestic and international adaptation measures • Agriculture and Forestry-related offsets (tied to #3)

  13. Waxman-Markey Cap & Trade Covers 1) stationary sources emitting >25,000 tons of GHG/yr 2) oil refineries 3) importers of petroleum 4) natural gas distributors 5) “F-gas” producers (CFCs, HCFCs, HFCs etc) [separate cap] Targets -3% of 2005 by 2012, -17% by 2020; -83% by 2050 Distribution of Allowances 20% allowances auctioned at first, 70% by 2030; funds to go to 1) protecting consumer (esp. low income) from rising electricity and gas prices 2) fund technological advances

  14. Where does the money from allowances go to? E-intensive, trade-vulnerable industry low income consumers nat’l gas consumers big coal consumers as energy divident electricity consumers for price protection

  15. Waxman-Markey Cap & Trade (cont.) • Offsets • - allows 2 billion tons of offsets system-wide (1 billion domestic; • 1 billion international); President can recommend increase or decrease • creates “Offsets Integrity Advisory Board” to oversee and qualify offsets • involves domestic offset program using agriculture and forestry • Costs to Consumers • - Congressional Budget Office cost of $175/yr/household on average • net benefit of $41/yr/household for low-income • - EPA estimates cost of $80-111/yr/household • Carbon Market Oversight • Federal Energy Regulatory Commission; Commodity Futures Trading • Commission; no over-the-counter trading of derivatives • Interaction with State and Regional Cap-and-Trade Programs • State programs put on hold 2012-2017 • Existing state CO2 allowances can be traded in for federal allowances

  16. Waxman-Markey on Coal • Focuses on CCS (Carbon Capture and Storage) • creates Carbon Storage Research Corporation ($1 billion/yr for 10 years funded from small tax on electricity rates); oversee 5 large commercial CCS operations • -for 10 years, gives bonus allowances to companies that do CCS (equivalent to $100/ton of CO2); second 10 years bonus allowances are auctioned

  17. ACES gives $250 billion in CCS incentives by 2050!

  18. Waxman-Markey on Nuclear and low-C Energy • Creates sustained federal funding for low-C energy • creates Clean Energy Deployment Administration (initially funded by $7.5 billion in “green bonds” granted by US Treasury); 20yr charter; oversee distribution of allowances granted to clean energy projects • Removes regulatory and financing hurdles for nuclear • places sole responsibility for nuclear permitting and financing in the DOE; heavy oversight by Energy Secretary; $19 billion available in financing right now

  19. Electricity generating capacity by 2050 in BAU and with ACES

  20. Remaining slides from Dr. Ken Mitchell, EPA 2010 Climate Change and Energy • An EPA Priority • Reducing greenhouse gases (GHG) is a top priority for Administrator Jackson • Some key actions taken: • Endangerment Finding • Mandatory Reporting • Renewable Fuels Standard • Light-Duty Vehicle GHG Emissions Standards and CAFE Standards • GHG permitting requirements on large industrial facilities (Tailoring Rule) • Carbon Capture & Sequestration • A variety of voluntary and other initiatives DRAFT PRESENTATION

  21. Endangerment Finding • Endangerment Finding: Current and projected concentrations of the six key well-mixed GHGs in the atmosphere threaten the public health and welfare of current and future generations • Cause or Contribute Finding: The combined emissions of these well-mixed GHGs from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas pollution which threatens public health and welfare • Final Rule published in Federal Register December 15, 2009 • Greenhouse Gases (GHGs) • Carbon Dioxide (CO2) • Methane (CH4) • Nitrous Oxide (N2O) • Hydrofluorocarbons (HFC) • Perfluorocarbons (PFC) • Sulfur Hexafluoride (SF6)

  22. GHG Reporting Rule • Covered GHGs • Carbon Dioxide (CO2) • Methane (CH4) • Nitrous Oxide (N2O) • Hydrofluorocarbons (HFC) • Perfluorocarbons (PFC) • Sulfur Hexafluoride (SF6) • Nitrogen Trifluoride (NF3) • Hydrofluorinated Ethers (HFE) Expressed in metric tons of carbon dioxide equivalent (mtCO2e) First report for CY10 Final Rule Published in Federal Register on October 30, 2009 * We delayed inclusion of certain source categories as we consider comments and options

  23. Renewable Fuels Standard (RFS2) • Revision to current RFS (RFS1) as required by the Energy Independence and Security Act (EISA) • Significant increase in renewable fuels to displace petroleum consumption (36 billion gallons by 2022) • CO2 Lifecycle analysis • Final Rule Signed 2/3/2010 a The 20% criterion generally applies to renewable fuel from new facilities that commenced construction after December 19, 2007.

  24. Mobile Source GHG/CAFE Proposed Rule • First national GHG emissions standards under the Clean Air Act • Satisfies requirements under both Federal programs and the standards of California and other states • Applies to passenger cars, light-duty trucks, and medium-duty passenger vehicles, covering model years 2012 through 2016 • Meet an estimated combined average emissions level of 250 g CO2 per mile in model year 2016, equivalent to 35.5 mpg if the automotive industry were to meet this CO2 level all through fuel economy improvements • Proposed in Federal Register September 28, 2009

  25. Proposed Tailoring Rule • Focused on large facilities emitting over 25,000 tons of CO2e/year • Facilities required to obtain construction permits that would demonstrate they are using the best practices and technologies to minimize GHG emissions • The rule proposes new thresholds for greenhouse gas emissions (GHG) that define when Clean Air Act (CAA) permits under the New Source Review (NSR) and title V operating permits programs would be required for new or existing industrial facilities. • Would cover nearly 70 percent of the national GHG emissions that come from stationary sources, including those from the nation’s largest emitters—including power plants, refineries, and cement production facilities. • Small farms, restaurants and many other types of small facilities would not be subject to these permitting programs • Proposal in Federal Register on 10/27/09

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