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Temporal Flexibility in the Context of RGGI

Temporal Flexibility in the Context of RGGI. Nancy L. Seidman Massachusetts DEP. Temporal Flexibility and Regional Cap Size Decisions Are Related. Temporal Flexibility Mechanisms. Banking Borrowing True-up Period Early Reductions. Banking. Benefits

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Temporal Flexibility in the Context of RGGI

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  1. Temporal Flexibility in the Context of RGGI Nancy L. Seidman Massachusetts DEP RGGI Stakeholder Meeting 6/24/04

  2. Temporal Flexibility and Regional Cap Size Decisions Are Related RGGI Stakeholder Meeting 6/24/04

  3. Temporal Flexibility Mechanisms • Banking • Borrowing • True-up Period • Early Reductions RGGI Stakeholder Meeting 6/24/04

  4. Banking • Benefits • Would allow facilities to carry-over unused allowances to future years. • Challenges • Few RGGI Stakeholder Meeting 6/24/04

  5. Borrowing • Benefits • Allows the use of future year allowances during the current year • Challenges • Managing Default Risk • Administrative Complexities • Allowance Tracking System capabilities? • Interest Calculation? RGGI Stakeholder Meeting 6/24/04

  6. Borrowing Options • Include Borrowing • Do Not Include Borrowing • Include Borrowing for a Narrow Set of Circumstances RGGI Stakeholder Meeting 6/24/04

  7. True–up Period • True-up period • a year minimum • longer? • Benefits • Possible administrative savings • Spreading short-term demand over a longer timeframe • Challenges • Inconsistent with other programs (e.g. Acid Rain) RGGI Stakeholder Meeting 6/24/04

  8. Credit for Early Reduction • Benefit • Creating an incentive for early action • Challenge • Designing requirement(s) for quantifying early reductions RGGI Stakeholder Meeting 6/24/04

  9. Possible Requirements for Quantifying Early Reductions • Reductions must result from controlling an emission rate below the more stringent of: • A Facility’s Baseline • A Specified Average Emission Rate • Normalized for capacity utilization (e.g., accounting for weather related changes) RGGI Stakeholder Meeting 6/24/04

  10. Overarching Question • Do states need to be consistent in their temporal flexibility rules? RGGI Stakeholder Meeting 6/24/04

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