1 / 21

Market-Based Approaches in AB 32 Implementation

Environmental Law Conference at Yosemite. Market-Based Approaches in AB 32 Implementation. October 20, 2007 Charles M. Shulock California Air Resources Board. Definitions. Market-based compliance mechanism

wader
Download Presentation

Market-Based Approaches in AB 32 Implementation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Environmental Law Conference at Yosemite Market-Based Approaches in AB 32 Implementation October 20, 2007 Charles M. Shulock California Air Resources Board

  2. Definitions • Market-based compliance mechanism • System of market-based declining annual aggregate emission limitations for sources or categories of sources • GHG emissions exchanges, banking, credits, and other transactions that result in the same reduction as direct compliance

  3. Statutory Framework • Scoping Plan • “Shall identify and make recommendations on direct emission reduction measures, alternative compliance mechanisms, market-based compliance mechanisms, and potential monetary and nonmonetary incentives…” • Board shall consult with PUC and CEC on elements of plan that pertain to energy matters

  4. Statutory Framework • In adopting regulations to implement Scoping Plan, the Board shall • Be equitable, minimize costs and maximize total benefits, encourage early action • Avoid disproportionate impacts • Ensure that voluntary reductions get appropriate credit • Consider cost-effectiveness, overall societal benefits • Minimize administrative burden • Minimize leakage • Consider significance of sources

  5. Statutory Framework • Regulations may include use of market-based compliance mechanisms • Regulation must ensure • Reductions are real, permanent, quantifiable, verifiable, and enforceable • Reductions are in addition to any reduction that is required or would otherwise occur • If applicable, reduction is equivalent to direct emission reduction in timing and amount

  6. Statutory Framework • Prior to inclusion of market-based approaches, to extent feasible the Board shall • Consider potential for cumulative and localized impacts • Design system to prevent increase in criteria or toxic emissions • Maximize additional environmental and economic benefits

  7. Statutory Framework • Board to adopt • Methodologies for quantification of voluntary reductions • Regulations to verify and enforce any voluntary reductions used to comply with emission limits

  8. Major Issues • Role of markets in overall program • Many existing regulations have market components • Design issues • Scope and point of regulation • Load based, first seller • Allowance allocation • Use of offsets--should there be restriction (quantitative, geographic)

  9. Process • October Board meeting • Discuss development of methodologies for quantification of voluntary reductions • Scoping Plan workshops • November 30—plan structure • December 14—sector-based potential reductions (will look at suitability for market) • January 16—further design and evaluation of mechanisms

  10. Market Advisory Committee • Committee appointed by CalEPA • Final report released June 29, 2007 • Presented to ARB at July Board meeting • ARB will review Committee input and consider as part of public process • ARB responsible for program adoption

  11. Key MAC Recommendations • Eventually incorporate all major GHG-emitting sectors into cap-and-trade program • Take “first-seller” approach to cap emissions associated with electricity • Use combination of free allocation and auction • Allow offsets, both within and outside state • Provide linkage with similar initiatives in other jurisdictions

  12. Joint Development of Electricity Sector Recommendations • CPUC and CEC will jointly develop recommendations for AB 32 implementation for entire electricity sector (IOU, muni, other) • Recommendations will be integrated into broader economy-wide approach

  13. Emissions Cap Policy Development • Development of policy being handled jointly by CPUC and CEC • Designed to dovetail with Air Resources Board implementation of AB 32 • CPUC/CEC will develop guidelines forelectricity sector (investor-owned and publicly-owned utilities) for ARB adoption; separate track will also address natural gas distribution utilities • Major outcome of proceeding: size of contribution to 2020 required reductions from electricity and natural gas sectors • CPUC adopted policy framework in February 2006 (prior to AB 32 consideration), based on workshops and rulemaking conducted in 2004-2005

  14. Proceeding Organization Work happening on six separate tracks: • Reporting issues • Baseline development • Emission reduction measures and annual emissions caps • Flexible compliance mechanisms • Allowance Allocation • Modeling to support evaluation of costs

  15. Allowance Allocation • Currently evaluating policy issues surrounding allowance allocation – track addresses issues about how to set emissions caps for each entity in the electricity and natural gas sectors • CPUC held workshop on June 22 to discuss options with stakeholders. • CPUC staff preparing a set of questions and a straw proposal on which to take comments from parties in writing.

  16. Flexible Compliance • Track encompasses such issues as trading, compliance periods, banking, borrowing, and offsets • CPUC staff held workshop in April • CPUC staff preparing a proposal to be issued in September for comment • Comments on this will help narrow what scenarios are being modeled

  17. Summary • The CPUC and the CEC will jointly adopt a “framework” policy decision in the February/March 2008 timeframe to give some key initial policy recommendations to CARB before their multi-sector integration workshop in March or April 2008. • The CPUC and CEC will continue to refine analysis during 2008 and MAY issue a subsequent decision in September 2008 in time for CARB to incorporate into their final scoping plan.

  18. Western Regional Climate Action Initiative • Set overall regional goal consistent with state by state goals • Developing design for regional market-based multi-sector mechanism to achieve goal

  19. Western Regional Climate Action Initiative • Subcommittees established • Allocations: Steve Owens, AZ • Data Reporting: Jim Norton, NM • Electricity: Dave Van't Hof, OR • Offsets: Tim Lesiuk, BC • Scope: Michael Gibbs, CA

  20. California Recommendations for Federal Legislation • Effective and enforceable targets are critical • Encouraged by inclusion of emissions trading; recommend careful review of MAC report • Cost containment • Efficient trading system • Banking, offsets, linkage • Safety valves or circuit breakers jeopardize integrity of cap and prohibit linkage • Allocation • Majority of allowances should be auctioned • Any free allocation should be transitional

  21. Contacts and More Information • ARB Climate Change Web Site • http://www.arb.ca.gov/cc/cc.htm • Stay informed - sign up for list serve • California Climate Change Portal • http://www.climatechange.ca.gov • Chuck Shulock (916) 322-6964 cshulock@arb.ca.gov

More Related