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RGGI Draft Rule Comments: Recommendations for Offset Additionality and Market Participation

This document discusses The Climate Trust's comments on the Regional Greenhouse Gas Initiative (RGGI) Draft Model Rule, focusing on offset additionality and the potential for capturing incentives from renewable energy (RE) and system benefit charge (SBC) programs. The Climate Trust supports allowing certain incentives but emphasizes the need for criteria that ensure true additionality and compliance through various partnership frameworks. The comments highlight funding capacities, historical market data, and the importance of transparency, accountability, and stakeholder representation in managing offset projects for maximum effectiveness in reducing greenhouse gas emissions.

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RGGI Draft Rule Comments: Recommendations for Offset Additionality and Market Participation

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  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. Offset Additionality • 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

  4. 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

  5. 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 Potential Roles for Partners Third-Party Administrator • Obligations: • Solicitation, Evaluation, Contracting, Contract Management • Expectations: • Cost recovery Stakeholder Representation • Obligations: • Oversight and support • Technical expertise • Expectations: • Accountability • Transparency

  6. Controlled Entities RGGI Regulators (Advisory Body) Risk Mitigation $ Oversight CO2 Potential Pilot Structure Energy Companies RGGI Regulators (Advisory Body) Risk Mitigation $ Oversight CO2 Third-Party Administrator Stakeholder Representation $ CO2 Offset Projects

  7. Accept Some Dissonanceto 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

  8. 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

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