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Update on Regional Greenhouse Gas Initiative (RGGI)

Update on Regional Greenhouse Gas Initiative (RGGI). Jim Platts System Planning, ISO-NE May 4, 2005. What is RGGI?. Open stakeholder process developing a “Model CO2 Cap and Trade Rule” for nine Northeastern states Target for developing Model Rule is 2005

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Update on Regional Greenhouse Gas Initiative (RGGI)

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  1. Update on Regional Greenhouse Gas Initiative (RGGI) Jim Platts System Planning, ISO-NE May 4, 2005

  2. What is RGGI? • Open stakeholder process developing a “Model CO2 Cap and Trade Rule” for nine Northeastern states • Target for developing Model Rule is 2005 • Representatives from a broad cross section of government, industries, utilities, NGOs, etc. • ISO-NE, NYISO and PJM are participants • Initiated by Governor Pataki

  3. The Nine RGGI States

  4. Significance of RGGI to ISO-NE • Nine States will implement regs for state CO2 Cap based on Model Rule over next several years • ME, NH, VT, MA, RI, CT, NY, NJ and DE • Other States/Provinces are observers: • PA, MD, DC, ECP • Eventually could be basis for a national CO2 Cap • Will affect the relative competitiveness of all types of generation in the Northeast

  5. RGGI Organization Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  6. RGGI Structure: Tiers of Participants • Staff Working Group: State regulatory staffs (environmental and rates) – The Decision Makers • Stakeholder Group: • State DEPs, generators, utilities, environmental groups, PIRGs, interest groups, NGOs, industries, etc • Resource Group: 3 ISOs, NGOs, emission brokers • Subgroups for specific issues • Public observers: Many diverse groups • Facilitator: Raab Associates • Website: www.rggi.org

  7. The RGGI Process Simplified Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  8. RGGI Process (simplified) • Present and discuss CO2 Cap and Trade issues • Develop modeling assumptions • Present and discuss results of model runs • Decide on X% CO2 reductions by 2024 from 1990 baseline and related issues • Develop Model Rule • States implement regs based on Model Rule

  9. CO2 Policy Issues • Cap Size • Electricity Markets • CO2 allowance allocations • Use of offsets • Additionality • Leakage: seams issue • Early Banking • Non RGGI Imports

  10. RGGI Modeling • Used ICF’s IPM model to simulate electricity sector operation and emissions for selected years between 2006 to 2024. • Model is well known and widely used for policy and regulatory analysis and integrated resource planning • Represents US by NERC regions and sub-areas • Use REMI Model to examine economic consequences of various policy options

  11. RGGI Modeling Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  12. RGGI Technical vs. Policy Assumptions Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  13. RGGI Technical Assumptions • ISOs provided base plans and energy growth; extrapolated beyond 10 yrs • IPM modeled RTEP sub-areas • ISO-NE used RTEP03 capacity assumptions with RTEP04 static transmission interface limits to reflect planned upgrades

  14. RGGI Generation Assumptions • New renewables • RPS requirements • New gas-fired combined cycle • New coal allowed only in “High Emissions” Reference Case • Only existing nuclear planned upgrades allowed • Assumes further SO2, NOx and Hg reductions

  15. RGGI Gas and Oil Assumptions Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  16. RGGI Pollution Assumptions Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  17. RGGI Renewable Resource Assumptions Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  18. RGGI RPS Demand (Adjusted) Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  19. RGGI: Renewables Cost and Potential Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  20. RGGI Modeling Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  21. RGGI Reference Case New England 2006 CO2 Emissions RGGI 42 million tons RTEP04 57 million tons Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  22. RGGI Capacity Additions – Ref Case Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  23. RGGI CO2 Cap Cases Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  24. RGGI Reference Case (2003 $) Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  25. RGGI Reference Case - Imports Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  26. RGGI Reference Case Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  27. RGGI Alternative Reference Cases Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  28. RGGI New Generation Mix Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  29. RGGI CO2 Emissions Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  30. RGGI Energy Prices – Ref Cases Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  31. RGGI Ref Cases: US/Canada CO2 Caps Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  32. CO2 Allocation Options • 3 Basic Approaches • Historical • Auction • Updating • Resources for the Future (RFF) Study of these and hybrid approaches Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  33. RFF Allocation Study Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  34. Use of 3 Approaches Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  35. RFF Allocation Conclusions Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  36. Economic Impacts of RGGI Cap: REMI • Macro-economic forecasting tool [to 2050] –assemble reference case & alternative forecasts as related to the Initiative • Scenario-specific inputs derived predominantly from ICF’s IPM model runs (+ other desired aspects developed apart from IPM) • Identify the economic impacts on businesses & households in each of 12 states (total impacts, numerous metrics, ripple-effects across model region) as a result of the initiative Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  37. RGGI Next Steps • Staff WG will meet in late April and again in June with regulatory agency heads from nine States to review RGGI results • Stakeholders meeting May 19 • Additional modeling results • “Bricks” for Model Rule and MOU Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  38. RGGI Model Rule Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  39. RGGI MOU Source: www.rggi.org. This information is public and provided to the PAC by ISO-NE

  40. RGGI Implications for ISO Participants • Fossil plants may incur additional costs for CO2 emissions by 2008-2009 • Value of renewable and other non-emitting resources may increase • Final details won’t be known until 6 New England states implement regs

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