The document discusses California's Cap-and-Trade program for reducing greenhouse gas emissions as the state approaches 2015. It provides an overview of the program, including details on compliance periods and declining emissions caps. It also mentions complementary programs that contribute to emissions reductions, such as renewable energy standards and vehicle efficiency standards. Additionally, it discusses open issues that the California Air Resources Board will need to address, such as developing a comprehensive long-term energy plan and integrating with the EPA's Clean Power Plan.
The document summarizes regulatory updates and initiatives from a presentation given by Triumvirate Environmental. It discusses the Emergency Planning and Community Right-to-Know Act, Massachusetts Toxics Use Reduction Act requirements, regional greenhouse gas initiatives, and proposed regulations from EPA and state environmental agencies regarding air emissions, hazardous waste, wastewater and stormwater permits.
Grupo Energía de Bogotá reported its key results and developments for the first quarter of 2015. Operating revenues decreased 37.8% due to anticipated dividends received in 2014 that would normally have been received in the first quarter of 2015. Net income decreased 88.4% primarily due to these anticipated dividends, losses from exchange rate differences, and higher income taxes. The company continues to make progress on expansion projects in Colombia and Brazil and reported several new projects awarded.
The document discusses the U.S. policy on carbon capture, utilization, and storage (CCUS). It outlines three themes of President's Climate Action Plan: mitigation through technologies like CCUS, adaptation and resilience of infrastructure, and international partnerships. It then provides details on challenges like low natural gas prices, upcoming EPA regulations and their compliance timelines, the Clean Air Act Section 111(b) and 111(d), and funding amounts for the DOE's CCUS and power systems research programs.
The document provides an overview and summary of key elements of Assembly Bill 649 and Senate Bill 450, which address clean energy and climate change issues in Wisconsin. The summary includes goals to reduce greenhouse gas emissions and increase renewable energy and energy efficiency. It also describes programs for energy efficiency, renewable portfolio standards, renewable tariffs, and considerations for new nuclear power plants. Additional sections cover transportation initiatives, energy efficient buildings and equipment, roles for state and local government, bioenergy, industrial efficiency incentives, and coordinating climate change programs.
On July 1st, Ontario’s Cap and Trade Regulation went into force. This can have an enormous impact on businesses’ energy-based operating costs. Now is the time to determine what this means for your business.
Van_Horn_A-California’s Cap-and-Trade Market for Greenhouse Gas Allowances, H...Andy Van Horn
This document provides an overview and analysis of California's cap-and-trade program for greenhouse gases under AB 32. It summarizes allowance prices and auction results through 2014, examines the complex holding limit and limited exemption rules, and provides examples of how these rules impact high-emitting firms. The document recommends modifications to the program, including adding a hard price cap, removing restrictions on the compliance account, and adjusting holding limits, to make the program more efficient.
A new, onerous "rule" (unlegislated law) from the Obama Dept. of Interior that will require expensive equipment to capture every last molecule of methane during oil and gas drilling on federal lands. It's meant to stop drilling on federal lands.
The document summarizes regulatory updates and initiatives from a presentation given by Triumvirate Environmental. It discusses the Emergency Planning and Community Right-to-Know Act, Massachusetts Toxics Use Reduction Act requirements, regional greenhouse gas initiatives, and proposed regulations from EPA and state environmental agencies regarding air emissions, hazardous waste, wastewater and stormwater permits.
Grupo Energía de Bogotá reported its key results and developments for the first quarter of 2015. Operating revenues decreased 37.8% due to anticipated dividends received in 2014 that would normally have been received in the first quarter of 2015. Net income decreased 88.4% primarily due to these anticipated dividends, losses from exchange rate differences, and higher income taxes. The company continues to make progress on expansion projects in Colombia and Brazil and reported several new projects awarded.
The document discusses the U.S. policy on carbon capture, utilization, and storage (CCUS). It outlines three themes of President's Climate Action Plan: mitigation through technologies like CCUS, adaptation and resilience of infrastructure, and international partnerships. It then provides details on challenges like low natural gas prices, upcoming EPA regulations and their compliance timelines, the Clean Air Act Section 111(b) and 111(d), and funding amounts for the DOE's CCUS and power systems research programs.
The document provides an overview and summary of key elements of Assembly Bill 649 and Senate Bill 450, which address clean energy and climate change issues in Wisconsin. The summary includes goals to reduce greenhouse gas emissions and increase renewable energy and energy efficiency. It also describes programs for energy efficiency, renewable portfolio standards, renewable tariffs, and considerations for new nuclear power plants. Additional sections cover transportation initiatives, energy efficient buildings and equipment, roles for state and local government, bioenergy, industrial efficiency incentives, and coordinating climate change programs.
On July 1st, Ontario’s Cap and Trade Regulation went into force. This can have an enormous impact on businesses’ energy-based operating costs. Now is the time to determine what this means for your business.
Van_Horn_A-California’s Cap-and-Trade Market for Greenhouse Gas Allowances, H...Andy Van Horn
This document provides an overview and analysis of California's cap-and-trade program for greenhouse gases under AB 32. It summarizes allowance prices and auction results through 2014, examines the complex holding limit and limited exemption rules, and provides examples of how these rules impact high-emitting firms. The document recommends modifications to the program, including adding a hard price cap, removing restrictions on the compliance account, and adjusting holding limits, to make the program more efficient.
A new, onerous "rule" (unlegislated law) from the Obama Dept. of Interior that will require expensive equipment to capture every last molecule of methane during oil and gas drilling on federal lands. It's meant to stop drilling on federal lands.
Dr Dev Kambhampati | EPA- 2014 Renewable Fuel StandardsDr Dev Kambhampati
The EPA is proposing 2014 renewable fuel standards and the 2015 biomass-based diesel volume. It is proposing to reduce the advanced biofuel and total renewable fuel standards for 2014 to address limitations from the ethanol "blend wall" and limited production capabilities. The proposed 2014 standards include 17 million gallons of cellulosic biofuel, maintaining the 2013 biomass-based diesel standard of 1.28 billion gallons, 2.2 billion gallons of advanced biofuel, and 15.21 billion gallons of total renewable fuel. The EPA is also seeking comment on petitions requesting a partial waiver of the 2014 statutory volumes.
Decision by NH PUC to Deny Request by Eversource Energy to Strike a Long-Term...Marcellus Drilling News
The New Hampshire Public Utilities Commission dismissed Eversource's petition requesting approval of a long-term gas capacity contract with Algonquin Gas Transmission and cost recovery through customer rates. The Commission determined that Eversource's proposed program is inconsistent with New Hampshire's electric utility restructuring law, which aims to introduce competition in electricity generation through functional separation of generation, transmission, and distribution services. The Commission found that the overriding purpose of the restructuring law is to shift generation investment risks away from regulated utility customers onto private investors in competitive electricity markets.
Latest developments on carbon pricing as seen by EDF, Pedro Piris-Cabezas – EDFOECD Environment
The document discusses two topics:
1. Modeling international carbon markets under Article 6 of the Paris Agreement. Modeling finds global carbon markets could double emissions reductions at the same cost as current policies. Limited trading among ready partners could still increase ambition.
2. Accounting of biofuels in carbon markets. Proper accounting is needed to avoid double counting emissions reductions from biofuels between national inventories and programs like CORSIA. Corresponding adjustments by host countries may be required.
Grupo Energía de Bogotá reported strong financial results in 2014. Net income increased 16.3% to COP 980 billion due to higher revenues from natural gas subsidiaries and anticipated dividends. EBITDA grew 44.8% to COP 2.57 trillion driven by improved performance across all business segments. Key projects made progress including the Tesalia transmission line and Quimbo hydroelectric plant. The company maintained a sound financial position with debt metrics within established limits following the acquisition of a 31.92% stake in Transportadora de Gas Internacional.
This presentation gives an overview of the carbon pricing mechanism that has been announced by the Australian government. It talks about Australia’s pollution profile and emissions, the expected changes with a price on carbon, carbon tax versus emissions trading schemes, how the carbon price will work, the biggest polluters in Australia, the changes that will be implemented, the carbon pricing mechanism explained and the impact for companies.
The Carbon Nexus - Boilers, Power Plants, and Strategic Energy ManagementVeritatis Advisors, Inc.
Lender, Insurers, manufacturers, regulators lack standardized methods to gauge the accuracy of predicted energy consumption thus financial savings from energy efficiency upgrades. This presentation captures the nexus of relevant issues in recently published case study and market experience. Author Don Macdonald of Veritatis Advisors, 2015
Xebec: The Renewable Gas Company - Investor Presentation (March 2019)Brandon Chow
The document is an investor presentation for Xebec, a renewable gas company that designs and manufactures equipment to produce renewable natural gases like biogas from organic waste. Xebec has growing revenue, a large backlog of orders, and sees significant market potential as governments implement targets to increase renewable gas usage to reduce emissions. The company presents itself as an attractive investment opportunity in the renewable energy transition with proprietary technology, commercial success, and exposure to expanding markets for renewable gases.
Cap & Trade: Implementation, Joint Government Meeting in Salem, OregonThe Climate Trust
In March 2017, Sean Penrith, Executive Director for The Climate Trust, joined the Department of Environmental Quality and the Public Utility Commission to present to the joint meeting of the House Energy and Environment and Senate Environment and Natural Resources Committees in Salem. The presentation covers international and national efforts under cap and trade mechanisms, highlighting positive economic impacts in California.
The document discusses key recent events and challenges facing the electric power industry in Brazil, including a 20.2% tariff cut, canceled auctions, and deteriorating hydrologic conditions. It outlines CPFL Energia's agenda for addressing issues like the risk of rationing in 2015, cash flow issues for distributors, and improving sector attractiveness. The document also provides an overview of CPFL Energia and its strategic focus on distribution, renewable generation, and high-value services.
Calstep action plan 2 overview for calstart membersCALSTART
The CalSTEP Partners recently unveiled the California Action Plan 2.0 for Transportation Energy Security. The report discusses the compelling reasons for state action on energy security and lays out several specific recommendations for California. The presentation--by Jamie Hall, CALSTART Policy Director, provides an overview of the report and its recommendations--was given February 17, 2011.
1) MPIC's core income declined 38% to PHP5.3 billion in 1H 2020 due to reduced operations from toll roads, light rail and utilities during quarantine measures. Power remained the largest contributor at 54% though income fell 14%.
2) Toll road contribution declined 62% as traffic fell significantly under lockdowns. Water contribution fell 21% despite a small volume increase, as average tariffs lowered. Light rail had losses as operations were suspended for over two months.
3) MPIC continues investing in infrastructure projects with several toll road expansion and development projects underway totaling over PHP100 billion in construction costs.
Clean Air Strategy: Reducing Emissions of Air Pollution by Rebecca DangerfieldIES / IAQM
Rebecca Dangerfield
Joint Head of Local Air Quality with Susie Willows | Air Quality and Industrial Emissions | Environmental Quality Directorate | Department for Environment, Food and Rural Affairs
IAQM Discussion Meeting: London 6 January 2018
National Air Quality Strategy: IAQM Committee’s View by Dr Claire HolmanIES / IAQM
The document discusses the Institute of Air Quality Management Committee's views on what should be included in the UK's upcoming National Clean Air Strategy. Key points discussed include:
1) Ensuring the strategy aligns UK and EU air quality legislation and establishes independent oversight of policy effectiveness after Brexit.
2) Setting exposure reduction targets in addition to air quality standards to better protect public health.
3) Providing clear plans and timelines to meet emission ceilings for particulate matter and ammonia from sectors like transportation, agriculture, and domestic burning.
4) Strengthening the planning system to give more weight to air quality considerations in development.
5) Committing to continued research on air pollution sources,
The document discusses amendments made by the Central Electricity Regulatory Commission to the Central Electricity Regulatory Commission (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2012. Key points include:
1) Amendments made to technical norms for biomass power projects and limits placed on fossil fuel use in biomass plants.
2) Specification of Operation and Maintenance expenses for solar PV projects for FY 2016-17.
3) Clarification provided on Return on Equity rates fixed in the regulations and treatment of suggestions made by stakeholders.
4) Presentation of levelized generic tariffs determined for various renewable energy technologies for FY 2016-17.
This document provides an agenda and summary for an event on energy trends in Ireland in 2021. It includes presentations on energy trends in 2020, preliminary energy data from 2021, and energy statistics innovations. There will also be a live Q&A session and closing remarks. The event will discuss COVID-19 impacts on energy consumption in 2020, renewable energy targets, and definitive European and national renewable energy results from 2020.
Corporate Presentation CPFL Energia April 2015CPFL RI
This document summarizes CPFL Energia's history and operations. It discusses CPFL's expansion since privatization in the late 1990s through acquisitions and new projects. It outlines CPFL's diversified portfolio including distribution, generation, commercialization, services and renewables. Financial highlights from 2010-2014 are provided for each segment. The document also discusses CPFL's ambitions for continued growth and leadership across its business lines.
The document discusses carbon offset mechanisms and markets. It provides an overview of The Climate Trust, a carbon fund manager with expertise in developing climate solutions projects. It then summarizes several carbon pricing programs and markets including cap and trade systems in California and China, as well as offset standards and project types. Specific project examples discussed include livestock digesters, forestry, and nutrient management. Pricing data is provided for compliance and voluntary carbon markets.
British Columbias Renewable and Low Carbon Fuel ConsultationsJuergen Puetter
The British Columbia Ministry of Energy and Mines conducted consultations in 2014 on renewable and low carbon fuels. Based on these consultations, the government will maintain British Columbia's carbon intensity reduction targets of 10% by 2020. Fuel suppliers will need to reduce the carbon intensity of their fuels through low carbon options or acquire compliance credits from other suppliers. The Ministry will work to establish a market for trading these credits and conduct another review in 2017 to assess targets and policy based on the functioning of the credit market. The Ministry will also consult stakeholders on additional mechanisms to reduce carbon intensity and recognize new fuels under the regulation.
Dr Dev Kambhampati | EPA- 2014 Renewable Fuel StandardsDr Dev Kambhampati
The EPA is proposing 2014 renewable fuel standards and the 2015 biomass-based diesel volume. It is proposing to reduce the advanced biofuel and total renewable fuel standards for 2014 to address limitations from the ethanol "blend wall" and limited production capabilities. The proposed 2014 standards include 17 million gallons of cellulosic biofuel, maintaining the 2013 biomass-based diesel standard of 1.28 billion gallons, 2.2 billion gallons of advanced biofuel, and 15.21 billion gallons of total renewable fuel. The EPA is also seeking comment on petitions requesting a partial waiver of the 2014 statutory volumes.
Decision by NH PUC to Deny Request by Eversource Energy to Strike a Long-Term...Marcellus Drilling News
The New Hampshire Public Utilities Commission dismissed Eversource's petition requesting approval of a long-term gas capacity contract with Algonquin Gas Transmission and cost recovery through customer rates. The Commission determined that Eversource's proposed program is inconsistent with New Hampshire's electric utility restructuring law, which aims to introduce competition in electricity generation through functional separation of generation, transmission, and distribution services. The Commission found that the overriding purpose of the restructuring law is to shift generation investment risks away from regulated utility customers onto private investors in competitive electricity markets.
Latest developments on carbon pricing as seen by EDF, Pedro Piris-Cabezas – EDFOECD Environment
The document discusses two topics:
1. Modeling international carbon markets under Article 6 of the Paris Agreement. Modeling finds global carbon markets could double emissions reductions at the same cost as current policies. Limited trading among ready partners could still increase ambition.
2. Accounting of biofuels in carbon markets. Proper accounting is needed to avoid double counting emissions reductions from biofuels between national inventories and programs like CORSIA. Corresponding adjustments by host countries may be required.
Grupo Energía de Bogotá reported strong financial results in 2014. Net income increased 16.3% to COP 980 billion due to higher revenues from natural gas subsidiaries and anticipated dividends. EBITDA grew 44.8% to COP 2.57 trillion driven by improved performance across all business segments. Key projects made progress including the Tesalia transmission line and Quimbo hydroelectric plant. The company maintained a sound financial position with debt metrics within established limits following the acquisition of a 31.92% stake in Transportadora de Gas Internacional.
This presentation gives an overview of the carbon pricing mechanism that has been announced by the Australian government. It talks about Australia’s pollution profile and emissions, the expected changes with a price on carbon, carbon tax versus emissions trading schemes, how the carbon price will work, the biggest polluters in Australia, the changes that will be implemented, the carbon pricing mechanism explained and the impact for companies.
The Carbon Nexus - Boilers, Power Plants, and Strategic Energy ManagementVeritatis Advisors, Inc.
Lender, Insurers, manufacturers, regulators lack standardized methods to gauge the accuracy of predicted energy consumption thus financial savings from energy efficiency upgrades. This presentation captures the nexus of relevant issues in recently published case study and market experience. Author Don Macdonald of Veritatis Advisors, 2015
Xebec: The Renewable Gas Company - Investor Presentation (March 2019)Brandon Chow
The document is an investor presentation for Xebec, a renewable gas company that designs and manufactures equipment to produce renewable natural gases like biogas from organic waste. Xebec has growing revenue, a large backlog of orders, and sees significant market potential as governments implement targets to increase renewable gas usage to reduce emissions. The company presents itself as an attractive investment opportunity in the renewable energy transition with proprietary technology, commercial success, and exposure to expanding markets for renewable gases.
Cap & Trade: Implementation, Joint Government Meeting in Salem, OregonThe Climate Trust
In March 2017, Sean Penrith, Executive Director for The Climate Trust, joined the Department of Environmental Quality and the Public Utility Commission to present to the joint meeting of the House Energy and Environment and Senate Environment and Natural Resources Committees in Salem. The presentation covers international and national efforts under cap and trade mechanisms, highlighting positive economic impacts in California.
The document discusses key recent events and challenges facing the electric power industry in Brazil, including a 20.2% tariff cut, canceled auctions, and deteriorating hydrologic conditions. It outlines CPFL Energia's agenda for addressing issues like the risk of rationing in 2015, cash flow issues for distributors, and improving sector attractiveness. The document also provides an overview of CPFL Energia and its strategic focus on distribution, renewable generation, and high-value services.
Calstep action plan 2 overview for calstart membersCALSTART
The CalSTEP Partners recently unveiled the California Action Plan 2.0 for Transportation Energy Security. The report discusses the compelling reasons for state action on energy security and lays out several specific recommendations for California. The presentation--by Jamie Hall, CALSTART Policy Director, provides an overview of the report and its recommendations--was given February 17, 2011.
1) MPIC's core income declined 38% to PHP5.3 billion in 1H 2020 due to reduced operations from toll roads, light rail and utilities during quarantine measures. Power remained the largest contributor at 54% though income fell 14%.
2) Toll road contribution declined 62% as traffic fell significantly under lockdowns. Water contribution fell 21% despite a small volume increase, as average tariffs lowered. Light rail had losses as operations were suspended for over two months.
3) MPIC continues investing in infrastructure projects with several toll road expansion and development projects underway totaling over PHP100 billion in construction costs.
Clean Air Strategy: Reducing Emissions of Air Pollution by Rebecca DangerfieldIES / IAQM
Rebecca Dangerfield
Joint Head of Local Air Quality with Susie Willows | Air Quality and Industrial Emissions | Environmental Quality Directorate | Department for Environment, Food and Rural Affairs
IAQM Discussion Meeting: London 6 January 2018
National Air Quality Strategy: IAQM Committee’s View by Dr Claire HolmanIES / IAQM
The document discusses the Institute of Air Quality Management Committee's views on what should be included in the UK's upcoming National Clean Air Strategy. Key points discussed include:
1) Ensuring the strategy aligns UK and EU air quality legislation and establishes independent oversight of policy effectiveness after Brexit.
2) Setting exposure reduction targets in addition to air quality standards to better protect public health.
3) Providing clear plans and timelines to meet emission ceilings for particulate matter and ammonia from sectors like transportation, agriculture, and domestic burning.
4) Strengthening the planning system to give more weight to air quality considerations in development.
5) Committing to continued research on air pollution sources,
The document discusses amendments made by the Central Electricity Regulatory Commission to the Central Electricity Regulatory Commission (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2012. Key points include:
1) Amendments made to technical norms for biomass power projects and limits placed on fossil fuel use in biomass plants.
2) Specification of Operation and Maintenance expenses for solar PV projects for FY 2016-17.
3) Clarification provided on Return on Equity rates fixed in the regulations and treatment of suggestions made by stakeholders.
4) Presentation of levelized generic tariffs determined for various renewable energy technologies for FY 2016-17.
This document provides an agenda and summary for an event on energy trends in Ireland in 2021. It includes presentations on energy trends in 2020, preliminary energy data from 2021, and energy statistics innovations. There will also be a live Q&A session and closing remarks. The event will discuss COVID-19 impacts on energy consumption in 2020, renewable energy targets, and definitive European and national renewable energy results from 2020.
Corporate Presentation CPFL Energia April 2015CPFL RI
This document summarizes CPFL Energia's history and operations. It discusses CPFL's expansion since privatization in the late 1990s through acquisitions and new projects. It outlines CPFL's diversified portfolio including distribution, generation, commercialization, services and renewables. Financial highlights from 2010-2014 are provided for each segment. The document also discusses CPFL's ambitions for continued growth and leadership across its business lines.
The document discusses carbon offset mechanisms and markets. It provides an overview of The Climate Trust, a carbon fund manager with expertise in developing climate solutions projects. It then summarizes several carbon pricing programs and markets including cap and trade systems in California and China, as well as offset standards and project types. Specific project examples discussed include livestock digesters, forestry, and nutrient management. Pricing data is provided for compliance and voluntary carbon markets.
British Columbias Renewable and Low Carbon Fuel ConsultationsJuergen Puetter
The British Columbia Ministry of Energy and Mines conducted consultations in 2014 on renewable and low carbon fuels. Based on these consultations, the government will maintain British Columbia's carbon intensity reduction targets of 10% by 2020. Fuel suppliers will need to reduce the carbon intensity of their fuels through low carbon options or acquire compliance credits from other suppliers. The Ministry will work to establish a market for trading these credits and conduct another review in 2017 to assess targets and policy based on the functioning of the credit market. The Ministry will also consult stakeholders on additional mechanisms to reduce carbon intensity and recognize new fuels under the regulation.
Capital Power March 2016 Investor PresentationCapital Power
This document provides an overview and summary of Capital Power's presentation to investors in March 2016. It discusses:
- The Alberta Climate Leadership Plan including the carbon price, accelerated phase-out of coal by 2030, and renewable energy incentives.
- The expected financial impacts of the plan on Capital Power, including higher compliance costs offset by higher power prices and utilization of carbon credits through 2020.
- Capital Power's financial performance in 2015, growth opportunities, strong contracted cash flows, dividend growth targets, and financial strength.
- The outlook for the Alberta power market including modest demand growth and forecasts for higher power prices as coal is phased out.
Wis. climate change bill - 1/20/2010 staff presentationwispolitics
The document summarizes Assembly Bill 649 and Senate Bill 450, which address clean energy and greenhouse gas emission reduction goals in Wisconsin. The bill sets goals for renewable energy, energy efficiency, and emissions regulations. It establishes programs administered by the Public Service Commission related to energy efficiency, renewable portfolio standards, and feed-in tariffs. The bill also addresses transportation-related issues like vehicle emissions standards, idle reduction, and low carbon fuel standards.
The Committee on Climate Change published its latest advice on UK progress reducing emissions. While emissions fell 8% in 2014, uncertainties remain in power, buildings, transport and other sectors. The Committee recommends extending low-carbon policies and funding streams beyond the next few years to provide certainty. It also recommends specific actions in the power, buildings and transport sectors. The Committee sees potential for significant sustainable bioenergy supply from waste and residues, including for anaerobic digestion, but notes it is important to use this optimally and avoid lock-in to keep options open. The government must respond to the report by October, and the Committee will advise on the fifth carbon budget by end of year.
This document discusses California's climate action planning context. It notes that California aims to reduce greenhouse gas emissions to 40% below 1990 levels by 2030 and achieve carbon neutrality by 2045. It outlines the various policies that support these goals in the electricity, transportation, and other sectors. It also discusses expectations for local governments to adopt climate action plans to help meet state targets and common elements of plans adopted in the San Diego region since 2015.
Electric Vehicles - Reducing Ontario's Greenhouse Gas Emissions - A Plug'n Dr...Josh Tzventarny
This document analyzes five scenarios for electric vehicle adoption in Ontario and estimates the resulting greenhouse gas emission reductions and economic impacts. The most aggressive scenario, with a 100% annual increase in EV sales until 2020, could result in over 1.4 million EVs on the road by 2050 reducing emissions by 119 megatons and saving consumers $57 billion in fuel costs. Even more moderate growth scenarios show significant emissions reductions and savings, demonstrating that accelerating EV adoption is one of Ontario's best opportunities to meet its climate targets in a cost-effective way.
Jackalyne Pfannenstiel, CEC: Meeting Climate, Energy, and Economic Imperative...Alliance To Save Energy
1) The document discusses California's policies for reducing greenhouse gas emissions from the electric sector, including Governor Schwarzenegger's executive order setting emissions reduction targets.
2) It outlines strategies proposed by the California Energy Commission and Public Utilities Commission, including increasing energy efficiency, requiring 33% renewable energy, and implementing a cap-and-trade program.
3) The cap-and-trade program would initially distribute most allowances freely based on fuel sources and output, but transition to auctioning all allowances by 2016, with revenues funding further efficiency, renewables and technology.
Todd Williams, partner and fossil practice co-leader at ScottMadden, recently presented at the EnergyHub GenForum on the EPA’s CPP, one of the most significant environmental mandates in U.S. history. Here, he gave an overview of the requirements and impacts of the CPP. He also recapped events now unfolding in CPP litigation, politics, and legislation. Where are the battle lines drawn? Who is on what side? And, what are states doing to prepare their compliance plans?
For more information, please visit www.scottmadden.com.
Ontario Cap & Trade - Time is Running Out for Small & Medium Business to SaveDuncan Rotherham
On July 1st, Ontario’s Cap and Trade Regulation went into force. This can have an enormous impact on businesses’ energy-based operating costs. Now is the time to determine what this means for your business.
USPTO - GHG challenges, opportunities - Steven Sherman, HATCISteven Sherman
This document provides an overview of light-duty vehicle greenhouse gas emission regulations in the United States. It discusses the importance of the policy for energy and climate goals, and how the regulations are structured, including flexibilities to incentivize innovation. It also reviews vehicle fuel consumption, key technologies to improve efficiency, and automakers' compliance through 2014. Finally, it outlines the technologies needed to meet future standards and the required rate of improvement for the auto industry.
Slideshare -the_abc_of_the_crc_phase_2_energy_teamDeeply Digital
The Carbon Reduction Commitment Energy Efficiency Scheme in the UK aims to reduce carbon emissions by 2020. Phase 2 of the scheme begins in 2014 with different eligibility rules and increased allowance prices. Large organizations must report emissions annually and buy allowances to offset emissions, with the goal of decreasing allowance needs through emissions reductions. Phase 2 may see allowances auctioned or traded at higher prices.
Environmental Law for Business Seminar: Status Report on the Call for Action ...This account is closed
Six months following the release of the Environmental Commissioner of Ontario's report Looking for Leadership – The Costs of Climate Inaction, we look at what, if any, changes have occurred since that report. In this presentation, Gowlings and our multi-disciplinary panel address key issues including:
• U.S. federal and state actions in response to climate change
• Highlights from the International Bar Association’s Climate Change Justice and Human Rights Task Force Report.
• The role of voluntary markets
The current state of cap-and-trade in the U.S. and the mandatory greenhouse g...LPE Learning Center
There are currently two operational cap-and-trade programs in the US - the Regional Greenhouse Gas Initiative involving nine Northeast states, and the California market. These programs allow regulated entities to meet emissions reductions obligations by purchasing carbon offsets achieved by other businesses such as agriculture. Farmers can generate offsets by capturing carbon through anaerobic digestion of manure and selling the reductions. The EPA also has a greenhouse gas reporting rule requiring facilities emitting over 25,000 tons of CO2e annually to report emissions, though this does not currently apply to livestock due to congressional restrictions. An opportunity exists for animal agriculture to benefit financially from these programs by generating carbon offsets.
Car California Carbon Markets July 2011 FinalNellson LLC
The document provides an overview of California's carbon market regulations, trading activity, and market participants. It discusses the cap-and-trade program's goals of reducing emissions to 1990 levels by 2020. Covered entities must have annual emissions over 25,000 metric tons of CO2 and begin compliance obligations in 2013. The market includes California carbon allowances and various offset credits. Transaction structures include fixed-price contracts for allowances and offsets as well as floating price options.
The document discusses Connecticut's participation in the Federal Highway Administration's Alternative Fuel Corridor Program. It outlines how Connecticut has designated sections of Interstates 84, 91, 95, and 395 as ready for electric vehicle, compressed natural gas, and propane signage. The presentation notes Connecticut's commitment to reducing greenhouse gas emissions from transportation and improving air quality. It describes recent and upcoming activities related to installing alternative fuel corridor signage and pursuing a hydrogen fuel corridor designation.
This document provides information for NHS suppliers and innovators on becoming greener. It discusses the NHS's commitment to becoming net zero by 2045 and outlines requirements it will place on suppliers over time to reduce emissions. These include requiring suppliers of contracts over £5 million to publish carbon reduction plans by 2024 and demonstrate progress on reducing emissions, in line with the NHS's targets, by 2030. The document also provides sources for calculating carbon footprints and outlines the NHS Supply Chain's sustainability strategy and goals.
Guidance on the Streamlined Energy and Carbon ReportingEMEX
Streamlined Energy and Carbon Reporting (SECR), the proposed carbon reporting scheme is set to replace the Carbon Reduction Commitment (CRC), and its anticipated start date of April 2019 is approaching.
This session offers guidance on how organisations can prepare, what will be the qualifying criteria and how the new reporting framework will benefit the companies.
Similar to A_Van_Horn_LSI-EnergyInCalifornia-AB 32 & ARB Cap-and-Trade Program-Sept15-2014.v2d (20)
1. VHC
California’s Cap-and-Trade Program
for Greenhouse Gases −
AB 32 As 2015 Approaches
Andy Van Horn, Ph.D. Van Horn Consulting
Managing Director Orinda, CA 94563
consulting@vhcenergy.com 925 254-3358
www.vhcenergy.com September 15, 2014
Law Seminars International
16th Annual Conference: “Energy in
California,” September 15-16, 2014,
San Francisco, CA, v2c
AVH
Van Horn Consulting – All Rights Reserved
2. Van Horn Consulting
VHC
Topics
AB 32 As 2015 Approaches:
California’s Cap-and-Trade Program
ARB*Allowance Auction Results
Allowance Price Forecasts
Open Issues & What Should ARB Do Now?
EPA’s Clean Power Plan
Litigation Update
About Van Horn Consulting
Page
Van Horn Consulting – All rights reserved 2
GHG – Greenhouse Gases *ARB – California Air Resources Board
EPA – U. S. Environmental Protection Agency
3. Van Horn Consulting
VHC
Topics
Appendices: More on Related Topics
Linkage with Quebec & Others
California Carbon Offsets
The Low Carbon Fuel Standard
EPA’s Proposed New Source Performance
Standards (NSPS) for New Power Plants
EPA’s Proposed Clean Power Plan for
Existing Power Plants
Legal and Legislative Challenges
Page
Van Horn Consulting – All rights reserved 3
4. VHC
4
AB 32 As 2015 Approaches
Van Horn Consulting – All rights reserved
5. Van Horn Consulting
VHC
California’s Cap-and-Trade Program
California’s Cap-and-Trade (C&T) program
is a market-based approach that caps
overall emissions of greenhouse gases
(GHG) from electricity, industrial,
commercial and residential sectors and
transportation fuels.
C&T requires California Carbon Allowances
(CCAs) to be acquired, banked &
surrendered for each metric tonne (MT)
of emissions from facilities with CO2e
emissions over 25,000 tonnes/yr.
Van Horn Consulting – All rights reserved 5
6. Van Horn Consulting
VHC
California’s Cap-and-Trade Program
Electric power and industrial facilities are
the focus of the first cap-and-trade
compliance period (CP1: 2013-2014) with
a compliance date of November 1, 2015.
The second compliance period, CP2, is
three years, 2015-2017, with a compliance
date for CCA surrender: November 1, 2018.
In 2015 natural gas suppliers and fuel
distributors will also be covered by
California’s economy-wide C&T approach,
encompassing about 85% of California’s
statewide total GHG emissions.
Van Horn Consulting – All rights reserved 6
7. Van Horn Consulting
VHC
California’s Cap-and-Trade Program
The third compliance period, CP3, is from
2018-2020, has a compliance date of
November 1, 2020.
Each year from 2014 forward, CCAs must
be surrendered to cover 30% of the prior
year’s covered GHG emissions.
To cover the fuels and transportation
sectors, the CCA emissions cap will increase
from 162.8 MMTCO2e in 2013 to 394.5
million tonnes in 2015, then decline by
about 3.4% per year to 2020.
Van Horn Consulting – All rights reserved 7
8. Van Horn Consulting
VHC
California’s Declining Emissions Cap
The 2020 C&T emissions cap will be adjusted
to reach the overall statewide GHG goal,
depending on reductions achieved by
complementary programs.
Year Million Allowances
2012 165.8
2013 162.8
2014 159.7
2015 394.5
2016 382.4
2017 370.4
2018 358.3
2019 346.3
2020 334.2
Van Horn Consulting – All rights reserved 8
0
50
100
150
200
250
300
350
400
450
2013 2014 2015 2016 2017 2018 2019 2020
Baseline emissions
Emissions cap
9. Van Horn Consulting
VHC
Complementary Programs
Contributing to GHG reductions are
complementary measures outside of the Cap-
and-Trade program:
Energy Efficiency Standards,
Low Carbon Fuel Standard (LCFS),
33% Renewable Portfolio Standard,
Advanced Clean Cars,
CA Solar Initiative,
Mandatory Commercial Recycling,
High Speed Rail, and
Water Efficiency.
Van Horn Consulting – All rights reserved 9
10. Van Horn Consulting
VHC
California GHG Emissions by Sector
Van Horn Consulting – All rights reserved 10
From 2000 to 2012 total CA GHG emissions
decreased from 466 MMTCO2e to 459 MMTCO2e.
36%
8%
3%
22% & 20%
Transportation
Electric Power
Industrial
Commercial and Residential
Agriculture High GWP
Recycling & Waste
MillionTonnesCO2e
GWP: Global
Warming Potential
11. Van Horn Consulting
VHC
ARB’s First Scoping Plan Update
The Scoping Plan discusses California’s
programs to reduce statewide emissions of
greenhouse gases back to the 1990 level.
Every 5 years the AB 32 Scoping Plan is
updated, in order to
“continue to consider future achievement of
maximum technologically feasible and cost-
effective GHG emission reductions,” and
present the “priorities and recommendations for
achieving the State’s longer-term emission
reduction objectives.”
The first update was finished in May 2014.
Van Horn Consulting – All rights reserved 11
12. Van Horn Consulting
VHC
Van Horn Consulting – All rights reserved 12
The ARB Scoping Plan: A Path to 2050
Van Horn Consulting – All rights reserved 12
2012 reported sector emissions
Electricity (~22%): 100.4 MMTCO2e = 41.6 CA production + 14.4 cogen + 44.4 Imports
Transportation (~36%): 160 MMTCO2e
2020 BAUelectricity=110 MMTCO2e from a Business-As-Usual projection published in 2010
CaliforniaAnnualGHGemissions
(MMTCO2e)
Pre-2020 and Post-2020 emissions trajectories
13. Van Horn Consulting
VHC
ARB’s Scoping Plan Updatecont’d
How Will the 2020 Emission Target Be Met?
Van Horn Consulting – All rights reserved 13
ARB, First Update to the Climate Change Scoping Plan:
Chapter IV: Accomplishments and Next Steps, May 2014, p. 93.
509
25
23
5
2
23* up from 18
431 up from 427
AB 32 Forecast Emissions (2020 BAU)
Expected Sector-based Reductions
Energy
Transportation
High Global Warming Potential Gases
Waste
Cap-and-Trade Reductions*
2020 AB 32 Limit
14. Van Horn Consulting
VHC
ARB’s Allowance Surrender Schedule
California Carbon Allowances
(CCAs) for 30% of the prior year’s
GHG emissions must be
surrendered by November 1 of the
next year. E.g., 30% of 2013
emissions must be covered by
allowances surrendered by
November 1, 2014.
The remainder of 2013 and 2014
emissions must be surrendered by
November 1, 2015.
A similar schedule applies for CP2:
2015-2017 and CP3: 2018-2020,
where all remaining CP emissions
must be covered by November 1,
2018 and November 1, 2021,
respectively.
Van Horn Consulting – All rights reserved 14
Anheuser-Busch InBev plant
in Fairfield uses wind energy
and biogas fuel in addition to
purchasing system power.
15. Van Horn Consulting
VHC
Carbon Markets in CA & QC Are Linked
Effective January 1, 2014, the California and
Quebec allowance markets were linked with
fungible allowances and floor prices.
Quebec facts:
Covered GHG emissions ~82.5 million tonnes in
2010, with a 2020 target of 69.7 MMT, BAU
emissions in 2020 ~ 84 MMT.
95 % hydro-electric generation.
A joint practice auction was conducted on
August 7 with 28 qualified bidders.
The first actual joint auction may be carried
out on November 17, 2014.
Van Horn Consulting – All rights reserved 15
16. Van Horn Consulting
VHC
Status of CCA Compliance Accounts
As of July 1, 2014 83.7 million vintage 2013
CCAs and Quebec (QC) emissions allowances
had been placed into Compliance Accounts.
These CCAs may not be returned into holding
accounts or transferred to another participant.
The 30% annual surrender requirement in CA on
November 1, 2014, (30% of 2013 emissions)
would be about 48.8 million, if emissions were at
the 2013 cap.
Quebec does not require annual surrender, only
surrender after the compliance period.
Van Horn Consulting – All rights reserved 16
V2013: Vintage 2013 CO2e allowance
17. Van Horn Consulting
VHC
Status of CCA Compliance Accounts
As of July 1, 2014, 43.5 million V2014 CCAs
were also in “one-way” Compliance Accounts.
Allowances in Compliance Accounts can’t be traded!
Allowances are placed in Compliance Accounts
to:
Prepare for CCA surrender to comply, or
Create Limited Exemptions from each year’s
Holding Limit for “current” CCAs, or
Because of legal requirements.
No offset allowances (ARB Offset Credits)
were in Compliance Accounts as of July 1.
Van Horn Consulting – All rights reserved 17
18. Van Horn Consulting
VHC
What Are Holding Limits?
Holding Limits are intended to prevent market
manipulation.
Unfortunately, “one-size-fits-all” Holding
Limits can have unintended, adverse
consequences.
Van Horn Consulting – All rights reserved 18
Holding Limits apply to the sum of allowances held in the
Compliance Account and the Holding Account.
Separate limits apply to “current” and “advance” CCAs.
Limited Exemption (LE) allowances are CCAs in the Compliance Account
that do not count against the holding limit.
On July 1, 2014, the maximum Limited Exemption (LE) is the sum of a
firm’s verified emissions in their 2012 and 2013 annual emissions data
reports, i.e., 2011 and 2012 covered emissions.
On November 2, the LE will be increased by verified emissions in the
2014 annual emissions data report.
19. Van Horn Consulting
VHC
What Are Cost Containment Rules?
The Allowance Price Containment
Reserve (APCR) can provide
additional allowances at auction,
six weeks after regular quarterly
auctions, when a request is made.
Qualified bids will be satisfied at
one of three price tiers, escalated
from $40, $45, and $50/tonne.
To make the APCR more viable,
ARB implemented changes in 2013.
However, in 2014 the Market
Simulation Group recommended
more changes to expand the APCR.
Van Horn Consulting – All rights reserved 19
20. Van Horn Consulting
VHC
Open Issues
A comprehensive energy plan will be
prepared by the third compliance period
(CP3, 2018-2020) to describe ARB’s long-
term GHG reduction goals and address:
Post-2020 program elements, including 2030 and
mid-term emission targets,
Cost containment issues,
Integration and linkage with other geographic
regions,
Compliance with EPA’s June 2014 Clean Power
Plan, which requires reductions from the electric
power sector.
Van Horn Consulting – All rights reserved 20
21. Van Horn Consulting
VHC
Open Issuescont’d
Ongoing allocations to Energy Intensive,
Trade Exposed and other industries:
In April 2014, true-up allocations were approved
for certain facilities with qualified thermal output.
An amendment to be considered by ARB on Sept.
18, 2014 would allow electric generators with
legacy contracts with industrial counterparties to
receive free allocations to the end of those
contracts.
ARB may provide additional transition assistance
in the form of free allowances to industrial
producers through 2018, instead of 2017, while
new leakage studies are being conducted.
Van Horn Consulting – All rights reserved 21
22. Van Horn Consulting
VHC
Open Issuescont’d
Revisions to APCR price containment,
Revisions to Holding Limits,
An amendment scheduled for September 18,
2014 consideration would exclude allowances
held in Exchange Clearing holding accounts,
which are only for clearing purposes,
Revisions to LCFS reporting rules requiring
“chain of custody reporting” and 5-year
records retention.
Written comments to ARB must be received
by 5 p.m. on September 15, 2014.
Van Horn Consulting – All rights reserved 22
23. Van Horn Consulting
VHC
Open Issuescont’d
Future AB 32 program evaluations will include:
Ex-post assessment of the costs, benefits & cost-
effectiveness of current measures & programs,
including health impacts of co-benefits.
Updating the three-year Cap-and-Trade Auction
Proceeds Investment Plan and funding new
investments needed to achieve GHG reductions and
other environmental and public health benefits.
Allocation of auction revenues:
Actions to apply >25% of auction funds to benefit
disadvantaged communities (SB 535).
Twice a year, Investor-Owned Utility (IOU) electricity
consumers will receive a “climate credit,” which averaged
about $35 in April 2014.
Van Horn Consulting – All rights reserved 23
24. Van Horn Consulting
VHC
What Should ARB Do Now?
Improve viability of the Allowance Price
Containment Reserve by
Allowing conversion of more future-vintage
allowances, or, instead, by
Implementing a hard price cap.
Allow trading of surplus banked allowances
out of “one-way” Compliance Accounts.
Modify carbon allowance Holding Limits +
Limited Exemptions away from the existing
approach that will increase future prices and
price volatility, as well as making market
manipulation easier.
Van Horn Consulting – All rights reserved 24
25. Van Horn Consulting
VHC
What Should ARB Do Now?cont’d
Approve new “Offset” protocols and
continue to verify ARB Offset Credits
Reduce potential market volatility by
Holding more frequent auctions, for example,
between the end of a compliance period and the
CCA surrender date on the next November 1.
Simplifying market rules.
Seek additional partners for market linkage.
Evaluate how to adapt the AB 32 program to
satisfy EPA’s proposed Clean Power Plan for
reduction of state’s GHG emissions.
Van Horn Consulting – All rights reserved 25
26. Van Horn Consulting
VHC
Recommended ARB Rule Changes
A research paper discussing the effects of
existing market rules and recommendations
to modify critical rules is referenced as:
Van Horn, Andrew. “California’s Cap-
and-Trade Market for Greenhouse
Gases: AB 32 Auction Update, Effects of
Market Rules and Policy
Recommendations.” Van Horn
Consulting Working Paper. September
2014.
Van Horn Consulting – All rights reserved 26
28. Van Horn Consulting
VHC
California Allowance Auctions
California Carbon Allowance (CCA) auctions
are held in the second month of each quarter
during a 3-hour window.
Upcoming CCA auction dates are:
November 19, 2014,
February 18, 2015,
May 19, 2015,
August 18, and
November 17, 2015.
Revisions to the auction schedule, purchase
limits and transparency of results are being
evaluated.
Van Horn Consulting – All rights reserved 28
29. Van Horn Consulting
VHC
California Allowance Auctions
Allowance Price Containment Reserve
(APCR) sales will be held six weeks after
each auction, if needed.
To date, no APCR sales have been
requested. (If requested CCAs will be made
available for auction in each of the escalated
$40, $45, & $50/tonne tiers.)
Starting in 2015, APCR allowances will be
increased in each year’s sale prior to
November 1, if needed.
Van Horn Consulting – All rights reserved 29
30. Van Horn Consulting
VHC
California Allowance Auction Results
Van Horn Consulting – All rights reserved 30
Auction
Date
Vintage
Year
#
Offered # Sold
# Qualified
Bids/
Reserve
Price
Clearing
Price Bought by
#
Qualified
# Available ($/tonne) ($/tonne) Compliers Bidders
November
14, 2012 2013 23,126,11023,126,110 1.06 (3.10) 10.00 10.09 97.0% 73
November
14, 2012 2015 39,450,000 5,576,000 0.14 10.00 10.00 91.0%
February 19,
2013 2013 12,924,82212,924,822 2.47 10.71 13.62 88.2% 91
February 19,
2013 2016 9,560,000 4,440,000 0.46 10.71 10.71 100.0%
May 16, 2013 2013 14,522,04814,522,048 1.78 10.71 14.00 90.2% 81
May 16, 2013 2016 9,560,000 7,515,000 0.79 10.71 10.71 86.5%
August 16,
2013 2013 13,865,42213,865,422 1.62 10.71 12.22 95.5% 79
August 16,
2013 2016 9,560,000 9,560,000 1.69 10.71 11.10 96.3%
November
19, 2013 2013 16,614,52616,614,526 1.82 10.71 11.48 96.2% 77
November
19, 2013 2016 9,560,000 9,560,000 1.64 10.71 11.10 91.3%
31. Van Horn Consulting
VHC
California Allowance Auction Results
Van Horn Consulting – All rights reserved 31
February
19, 2014 2014 19,538,695 19,538,695 1.27 11.34 11.48 84.5% 71
February
19, 2014 2017 9,260,000 9,260,000 1.11 11.34 11.38 83.5%
May 16,
2014 2014 16,947,080 16,947,080 1.46 11.34 11.50 89.5% 74
May 16,
2014 2017 9,260,000 4,036,000 0.44 11.34 11.34 100.0%
August 18,
2014 2014 22,473,043 22,473,043 1.14 11.34 11.50 87.7% 71
August 18,
2014 2017 9,260,000 6,470,000 0.70 11.34 11.34 89.2%
November
25, 2014 2014 23,070,987 23,070,987 1.73 11.34 12.10 97.6% 83
November
25, 2014 2017 10,787,000 10,787,000 1.92 11.34 11.86 85.2%
Only about 100 of the 360 covered entities in CP1
have bid into the ARB’s quarterly allowance auctions.
Over 700 entities are reporting their GHG emissions.
Not all offered “advance” allowances have been sold.
Auction
Date
Vintage
Year
#
Offered # Sold
# Qualified
Bids/
Reserve
Price
Clearing
Price Bought by
#
Qualified
# Available ($/tonne) ($/tonne) Compliers Bidders
32. Van Horn Consulting
VHC
California Carbon Allowance Prices
Van Horn Consulting – All rights reserved 32
Mid-August prices:V2014 (Dec ‘14 delivery) $11.85/tonne,V2015 (Dec ‘14) $11.85,
V2016 (Dec ‘14) $11.65, V2016 (Dec ‘15) $12.25,V2017 (Dec ‘14 ) $11.65.
Source of Data: Intercontinental Exchange (ICE).
Graphic provided by Morgan Hagerty, CE2 Capital Partners, Solana Beach, CA.
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
8/30/2011
9/22/2011
10/17/2011
11/9/2011
12/2/2011
12/28/2011
1/23/2012
2/15/2012
3/9/2012
4/3/2012
4/27/2012
5/22/2012
6/14/2012
7/9/2012
8/1/2012
8/24/2012
9/18/2012
10/11/2012
11/5/2012
11/28/2012
12/21/2012
1/17/2013
2/11/2013
3/6/2013
4/1/2013
4/24/2013
5/17/2013
6/11/2013
7/4/2013
7/29/2013
8/21/2013
9/13/2013
10/8/2013
10/31/2013
11/25/2013
12/18/2013
1/14/2014
2/6/2014
3/3/2014
3/26/2014
4/21/2014
5/14/2014
6/6/2014
7/1/2014
$10
$12
$14
$16
$18
$20
$22
$24
tCO2e
$/tCO2e
CCA Price and Daily Total Volume
CCA V13 - Settle CCA V14 - Settle CCA V15 - Settle CCA V16 - Settle
CCA Price and Daily Total Volume
TonnesCO2e
$/TonneCO2e
33. Van Horn Consulting
VHC
CCA Trading Volumes & Open Interest
Data from Intercontinental Exchange
Graphics provided by jan.frommeyer@icis.com
ICIS – http://analytics.icis.com
Van Horn Consulting – All rights reserved 33
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014
OI - v13 OI - v14 OI - v15 OI - v16 OI - v17
Volume - v13 Volume - v14 Volume - v15 Volume - v16 Volume - v17
Volume(000tonnes)
OpenInterest(000tonnes)
OI – shaded area
Vol – vertical lines
34. Van Horn Consulting
VHC
Allowance Price Projections
Van Horn Consulting – All rights reserved 34
ICIS short-term price forecasts for spot CCAs are
based on the positions and preferences of affected
firms and their projected allowance trading behavior.
May 2014SpotCCAPrice($/tonne)
Timing Impact Model Price Forecast –
Next 8 Quarters$16
$15
$14
$13
$12
$11
$10
Data from Intercontinental
Exchange.
Graph provided by
jan.frommeyer@icis.com
ICIS –
http://analytics.icis.com
August
2014
35. Van Horn Consulting
VHC
Allowance Price Projectionscont’d
There are plausible scenarios where the price
ceiling could be exceeded.
Updated price projections by the Market
Simulation Group (MSG) suggest that it is
most likely that CCA prices
Will remain near (or even below) the price floor, or
Will spike above the first tier APCR price in
compliance period 3 (2018-2020).
Features of California’s market design make
hair-trigger price swings possible.
Van Horn Consulting – All rights reserved 35Van Horn Consulting – All rights reserved 35
Shobe, Wm, Holt, C. & T. Huetteman. “Elements of Emission Market Design:
An Experimental Analysis of California’s Market for Greenhouse Gas
Allowances.” Journal of Behavioral Economics. JEBO-3346, 2014.
36. Van Horn Consulting
VHC
MSG eight-year CCA
supply curve (emissions -
CCAs) is quite steep and
assumes no banking of
CCAs will occur.
Uncertainties in emissions
and shortfall in reductions
from complementary
policies, electricity imports,
or offsets could lead to
price shocks past 2017.
MSG’s Allowance Supply Curve
Van Horn Consulting – All rights reserved 36Van Horn Consulting – All rights reserved
“Report of the Market Simulation Group on
Competitive Supply/Demand Balance in the California
Allowance Market and the Potential for Market
Manipulation.”
Severin Borenstein, James Bushnell, Frank A. Wolak, and
Matthew Zaragoza-Watkins. June 2014 36
GHG Reductions Needed
(million metric tons)
AllowancePrice($/tonne)
Marginal Costs of Allowance Supply
(2013-2020)
Figure 1.
MSG Report
below Business-As-Usual
38. Van Horn Consulting
VHC
Will the Cap-and-Trade Program
Function Effectively?
Van Horn Consulting – All rights reserved 38
Compliance is a paramount concern for all
regulated firms.
Prudent firms will acquire a CCA bank:
to ensure compliance needs will be met, and
to minimize expected compliance costs,
especially in markets with rising floor prices.
By assuming NO banking & perfect trading of
allowances by market participants, MSG may
have under-estimated the probability that
prices exceed the APCR price after 2017.
39. Van Horn Consulting
VHC
Will Cap-and-Trade Function Effectively?
Van Horn Consulting – All rights reserved
39
Compliance Account rules & Holding Limits +
Limited Exemptions will restrict trading by the
highest emitters and tighten CCA supplies for
trading at the ends of CP2 and CP3.
Year Holding Limit
(million tonnes)
2013 5.945
2014 5.868
2015 11.738
2016 11.435
2017 11.135
2018 10.833
2019 10.533
2020 10.230
UVA/PEAR, Inc. Report: “Investigation of the Effects of Emission
Market Design on the Market-Based Compliance Mechanism of the
California Cap on Greenhouse Gas Emissions,” February 12, 2013.
40. Van Horn Consulting
VHC
Will the Cap-and-Trade Program
Function Effectively?
Van Horn Consulting – All rights reserved 40
Factors leading to tradable CCA
shortages:
Uncertainties about future emissions and
market conditions,
Imperfect market information,
Participant behavior:
Many need to minimize near-term cash flows
and will rely on the spot market,
Others buy early to ensure compliance.
Unneeded regulatory restrictions that could
trigger hyper-sensitive market responses.
41. Van Horn Consulting
VHC
Will the Cap-and-Trade Program
Function Effectively?
Van Horn Consulting – All rights reserved 41
Some of ARB’s market design rules were
developed to prevent market manipulation.
Unfortunately, some rules are too complex
and may have unintended consequences.
“One-way” Compliance Accounts,
Holding Limits, and
Limited Exemptions – All may
Encourage, rather than prevent, market
manipulation
Reduce flexibility needed for a well-
functioning market.
42. Van Horn Consulting
VHC
Will the Cap-and-Trade Program
Function Effectively?
Van Horn Consulting – All rights reserved 42
Bank sizes and firm behavior can be simulated.
2012 CO2e Emissions from the Largest Emitters
45. Van Horn Consulting
VHC
Quebec facts:
Covered GHG emissions ~82.5 million tonnes in 2010, w
2020 target of 69.7 MMT, BAU emissions in 2020 ~ 84
MMT.
95 % hydro-electric generation.
Elements of the CA-Quebec linkage agreement
effective January 1, 2014, include:
Completely fungible GHG allowances using the CITSS.
Linked allowance auction floor prices,
Provisions for termination of the agreement. However,
Quebec has
Different offset location and liability/risk requirements
from CA, and
Like CA, Quebec allowance holding limits are lower than
the annual allowance needs of some large emitters.
Van Horn Consulting – All rights reserved 45
Linking Allowance Markets in CA & QC
46. Van Horn Consulting
VHC
Linking Allowance Markets in CA & QC
On August 7, 2014, CA and Quebec
conducted a practice auction to test the
updated auction platform using Compliance
Instrument Tracking System Service (CITSS)
accounts.
New features supported the joint auction, such as
handling both Canadian and U.S. currency.
28 qualified bidders participated in the practice
auction: 23 were covered entities, opt-in covered
entities, and emitters, while 5 were general market
participants.
Canadian participants could choose either U.S. or
Canadian currency, with a fixed exchange rate of
1.0926 USD to CAD.
Van Horn Consulting – All rights reserved 46
47. Van Horn Consulting
VHC
Linking Allowance Markets in CA & QC
On August 18, 2014 California held its most
recent carbon allowance auction, while
Quebec will hold its auction separately on
August 26, 2014.
Subject to ARB approval, the first real, joint
CA-QC allowance auction may be held
November 17, 2014.
The relative numbers of participants in the
auction from each jurisdictional will be affected
by the timing of the first allowance surrender
date in each program:
CA – November 2014, QC – November 2015.
Van Horn Consulting – All rights reserved 47
48. Van Horn Consulting
VHC
Linking Allowance Markets
Expanding C&T linkages to other areas will lower capital,
operating and administrative costs below the costs
imposed by command-and-control regulations that cover
the same geographic scope.
CA has MOUs with Australia and China’s National
Development and Reform Commission, as well as climate
change cooperation agreements with Peru and Israel.
In July 2014, Governor Brown signed an environmental
and trade agreement with Mexico to coordinate efforts in
Pricing carbon pollution,
Increasing renewable energy use and development,
Addressing short-term climate pollutants,
Cleaning up the transportation sector, and
Reducing emissions from deforestation and forest
degradation.
Van Horn Consulting – All rights reserved 48
49. Van Horn Consulting
VHC
Linking Allowance Markets
The EPA’s June 2014 Clean
Power Plan offers the prospect of creating a
common cap-and-trade program with other
states or devising other forms of linkage.
Linking with Regional Greenhouse Gas Initiative
(RGGI) states located in the Northeast poses very
difficult fungibility issues.
Linking with other Western Climate Initiative
states, e.g., Oregon and Washington, is more
likely, but may be politically difficult to accomplish
before 2018, when multi-state plans are due.
Van Horn Consulting – All rights reserved 49
51. Van Horn Consulting
VHC
Carbon Offsets Help Reduce GHG
Companies can meet up to 8% of their compliance
requirement in each year by surrendering offset
credits, which are rigorously verified emission
reductions that occur from projects outside the scope
of the Cap-and-Trade program.
Offsets are governed by explicit protocols for
reductions that are “additional” to any regulatory
requirement and not business-as-usual.
Two crediting periods apply:
Non-sequestration projects (7-10 years, two renewals),
Sequestration projects (10-30 years, unlimited renewal)
Verification, invalidation and liability are ongoing
concerns.
Van Horn Consulting – All rights reserved 51
52. Van Horn Consulting
VHC
Carbon Offset Protocols
Prior to 2014, there were
only four adopted ARB offset
protocols:
U.S. forest projects,
Ozone Depleting
Substances (ODS),
Urban forests, and
Livestock manure
(anaerobic digesters).
A protocol for Mine Methane
Capture (MMC) abatement
from active underground
mines, active surface mines
& abandoned underground
mines was approved in 2014.
CP1 – Compliance Period 1
(2013-2014)
EAOC – Early Action Offset
Credit
CRT – Climate Reserve Tonne
ROC – Registry Offset Credit
ROCs and CRTs are not
convertible.
ROCs can be traded between
Offset Project Registry
accounts.
EAOCs & ROCs must be
converted to ARB Offset
Credits (ARBOCs) to be used
for AB 32 compliance.
Van Horn Consulting – All rights reserved 52
Acronyms & Rules:
53. Van Horn Consulting
VHC
New Protocols Are Being Developed
Additional protocols are being developed for ARB
consideration:
A rice cultivation protocol could be adopted in 2014.
There is a placeholder for potential international
sector-based offsets from programs to Reduce
Emissions from Deforestation and Forest
Degradation (REDD).
REDD policy recommendations were provided in July 2013
for consideration by ARB, Acre (Brazil), and Chiapas
(Mexico).
“ARB will continue to evaluate additional offset
protocols with an emphasis on in-state
opportunities.”
Van Horn Consulting – All rights reserved 53
54. Van Horn Consulting
VHC
Offsets Are Needed
Offsets are important to keep costs down and expand the scope
of GHG reductions.
Offsets (CCOs or ARBOCs) will be cheaper than CCAs because of
Verification risk,
Invalidation and Liability risk,
Non-standard transactions (but IETA has a proposed contract),
Timing relative to market demand,
The usual uncertainties.
In August 2014, fully compliant California Carbon Offsets (CCOs)
are valued at a discount to the prevailing price of California
Carbon Allowances (CCA futures.)
CCOs vs. CCAs ($9/tonne vs. ~$11.85/tonne, 2014 vintage)
Non-guaranteed California eligible protocol offsets @ ~$8-
8.50/tonne,
Forestry version 3.xx CRTs ~$7-8.50/tonne,
Voluntary offsets @ ~$0.50-$0.90/tonne.
Van Horn Consulting – All rights reserved 54
55. Van Horn Consulting
VHC
Status of ARBOCs
In September 2013, ARB issued the first ARB Offset Credits
(ARBOCs) under the early action and compliance programs.
ARBOCs are issued on 2nd & 4th Wednesdays each month.
By November 1, 2013, 1.1 million ARBOCs had been issued.
In July 2014, a record-low 35,983 ARBOCs were issued.
However, on July 9, the CT Lakes forestry project was issued
1,442,579 Registry Offset Credits (ROCs) by the American
Carbon Registry (ACR). These ROCs are greater than the
total number issued to all other ACR compliance projects and
have been submitted to ARB.
In early August 171,077 ARBOCs were awarded to four
projects, three of which were livestock digesters.
By mid-August 2014, only 11.45 million ARBOCs have been
issued, while up to 13 million ARBOCs could, in principle, be
retired for compliance by November 1, 2014.
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Clean Harbors’ ARBOCs Under Review
In May 2014, 4.4 million ARBOCs from destruction of
Ozone Depleting Substances (ODS) were subjected
to an invalidation review to examine the project’s
potential regulatory non-compliance with the federal
resource conservation and recovery act (RCRA).
Most of these ARBOCs are being held in a jurisdictional
holding account to prevent transfers.
2.3 million Early Action Offset Credits and 190,000
Registry Offset Credits generated by Clean Harbors
remain unconverted to ARBOCs.
The review includes a 25-day information submission
period and a 30-day formal investigation period,
which did not start immediately following the
information gathering period.
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VHC
The LCFS Program
California’s transportation sector contributes about
40 percent of California’s GHG emissions.
The Low Carbon Fuel Standard (LCFS) is intended
to reduce the carbon intensity of fuels sold in
California by ten percent by 2020, under Health
and Safety Code Sections 38500-38599 (AB 32).
In 2010, the LCFS was projected to achieve ~15 x
106 tonnes per year of GHG emission reductions.
Any shortfall in LCFS reductions will increase the
reductions required by the cap-and-trade program,
which in 2010 were projected to be about 18
million tonnes per year in 2020, and are now
projected to require about 23 million.
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The LCFS Program
LCFS covered fuels must have approved
lifecycle carbon intensity pathways, which
generate credits or deficits compared to
declining carbon intensity targets.
Tradable credits can be generated and
banked by
Biofuel blending – corn, sugarcane, and cellulosic ethanol,
biodiesel, renewable diesel and renewable gasoline.
Biofuels should account for 60% of LCFS credits through
2020.
Advanced vehicles – electric, natural gas (CNG, LNG, biogas),
and hydrogen.
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The LCFS Program
Monthly credit trading activity reports are published on
the second Tuesday of every month.
LCFS credit prices rose from about $12/tonne in August
2012 to about $65+/tonne CO2e in September 2013,
and in July 2014 ranged from $20 to $43 with an
average price of $28.
Some analysts believe LCFS credits may be short in
2017-2018.
Later this year, ARB will propose enhancements to
strengthen the LCFS program.
ARB will also consider extending the LCFS beyond
2020, perhaps, seeking a 15 to 20 percent reduction in
average carbon intensity below 2010 levels by 2030.
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62. VHC
U.S. EPA’s Proposed GHG Emission
Performance Standards for New
Power Plants (NSPS)
VHC
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New Source Performance Standards
In September 2013, the U.S. EPA proposed NSPS for
fossil-fired electric generating units under §111(b).
Large natural gas units: 1,000 lb CO2/MWh
New coal & small gas units: 1,100 lb CO2/ MWh.
Coal units may average emissions over 7 years, if they meet
a standard between 1000 and 1050 lb CO2/ MWh.
California’s AB 1368 performance standard for
contracts of 5 years or more is 1,100 lb. CO2/MWh.
EPA assumes partial Carbon Capture & Sequestration
(CCS), ~40% removal, is an adequately
demonstrated “Best System of Emission Reduction”
(BSER) for coal, but not for natural gas.
EPA concludes CCS costs are reasonable for coal-
fired plants, but not for natural gas-fired plants.
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New Source Performance Standards
The EPA’s technology forcing approach regarding
CCS under §111(b) is different from prior NSPS
applications, when baghouses and FGD were
demonstrated BACT in the 1977 and 1990 Clean Air
Act (CCA) amendments.
If CCS systems fail, new coal plants could not
operate nor recover their costs.
For many reasons, very few coal plants are now
being built, so GHG emissions reductions from NSPS
would be relatively small.
Since year 2000, more than 150 proposed coal plants have
been cancelled.
No current or foreseeable coal-fired power plants could
meet the proposed NSPS limits without carbon capture.
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65. VHC
EPA’s Proposed Clean Power Plan for
Existing Power Plants
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EPA’s Proposed Clean Power Plan
The plan, announced on June 2, 2014*, covers
existing electric power plants.
In contrast, AB 32 is an economy-wide approach.
The goal is to cut carbon emissions from existing power
plants in the U.S. by 30% from 2005 levels by 2030.
Power plants are the largest source of U.S. GHG
emissions, accounting for 40% of total GHG.
Existing power plants are the highest CO2 emitters,
but before existing facilities can be regulated under
section §111(d), new and modified plants must be
regulated under section §111(b) of the CAAA.
NSPS and §111(b) regs to be finalized in early 2015.
Clean Power Plan regs to be finalized in June 2015.
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*Federal Register, June 18, 2014, initiating a 120-day comment period.
67. Van Horn Consulting
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EPA’s Proposed Clean Power Plan
Each state can adopt a state-specific, “tailored”
permitting process to comply with the Prevention
of Significant Deterioration (PSD) regulation under
§111(d).
Under CAA sections 111(a)(1) and (d), the EPA is
authorized to determine the Best System of
Emissions Reduction (BSER) and to calculate the
emissions reduction achievable through BSER.
Each state is authorized to identify the standard(s)
of performance and measures to implement and
enforce those standards.
The state must submit its plan to the EPA, and the
EPA must approve the plan.
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EPA’s Proposed Clean Power Plan
The primary metric is a “rate-based” approach
measured by MWh-weighted CO2e lbs./net MWh,
across all affected Electric Generating Units (EGUs).
A mass-based approach would also be allowed.
The net MWh denominator includes nuclear, but no hydro.
States shall apply "the Best System of Emissions
Reduction" (BSER) to existing power plants.
Does BSER include flexible actions outside the plant
boundary?
Will flexible, multi-state plans, including regional cap-and-
trade programs, be judged to comply with the Clean Air
Act?
What happens if a state chooses not to submit a plan, or
to contest EPA’s suggested target rates, or if a state
implementation plan (SIP) is not approved?
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EPA’s Proposed Clean Power Plan
EPA’s proposal has four primary building
blocks.
Heat rate/efficiency improvements at
individual power plants,
Increased dispatch of natural gas-fired
plants to substitute for coal-fired generation,
Increased use of zero or low-carbon
generation technologies to substitute for
fossil-fired generation, and
Demand-side energy efficiency
improvements that will reduce emissions.
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EPA’s Proposed Clean Power Plan Schedule
EPA is accepting comments on the proposal until
October 16th, 2014.
Post-2020 State Implementation Plans (SIPs) are
due by June 2016, or June 2017, if a delay is
requested, or June 2018, if the plan is part of a
multi-state compliance plan.
An “Option 1” plan would be fully implemented by
2030, with averaging between 2020 and 2029 to
meet an interim target, or an “Option 2” plan
would implement fewer reductions, but would
reach its emissions rate goal by 2025.
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State Elements of EPA’s Clean Power Plan
Each state plan must contain the following:
Identification of affected entities,
Description of plan approach and geographic scope,
Identification of state emission performance level,
Demonstration that the plan is projected to achieve
the required emission performance level,
Identification of emission standards,
Identification of monitoring, reporting, and
recordkeeping requirements,
Identification of milestones, and
Identification of backstop measures.
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Emission Rate Targets from EPA’s Analysis
Option 1 interim rate targets can be met by averaging
across years between 2020 and 2029.
After 2030, the goal is intended to be met each year.
The EPA is proposing emission guidelines for states to
use in developing their plans. (Some will be litigated.)
California will need to reduce its existing power plant
emissions by 23% from 2012 = 698 lbs./MWh.
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How Will California Adapt Its AB 32 Plan?
California faces some complex hurdles to
adapt its cap-and-trade program:
California’s program only goes to 2020, not 2030,
California’s program is economy-wide, not specific
to the electric sector,
California’s program covers both new and existing
sources and exempts some cogeneration facilities,
Offset credits aren’t allowed under the EPA plan,
Accounting for “leakage,’ the GHG content of
imported power and the treatment of exported
power may not agree with other states’ plans,
Regional multi-state plans will take time (and
legislation) to develop.
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CA Estimated CO2e Emissions in 2030
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ARB Clean Power Plan Workshop, September 9, 2014
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Questions About Our Compliance Plan?
How difficult will it be for California’s existing power
plants to comply with the EPA requirements after
Older fossil steam plants retire,
California’s generation mix moves beyond 33% renewables,
System heat rates fall significantly, and
Energy efficiency programs succeed? (If they do…)
How robust must our plan be, in order to account for
Low hydro years,
Increasing coastal and Central Valley temperatures,
Additional nuclear plant retirements,
Population growth,
Changes in technology,
Actions of other states and the federal government, and
Unforeseen events.
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76. VHC
Legal & Legislative Challenges
VHC
76The Electricity Journal, Volume 6, Number 9, November 1993, p74
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Is AB 32 an Illegal Tax or a Fee?
In November 2012, CalChamber and tomato
processor, Morningstar, represented by Pacific Legal
Foundation, sued ARB about the legality of AB 32
allowance auctions, alleging AB 32 imposes an
unconstitutional tax on business.
New state taxes require a 2/3 majority vote in both the
Senate and Assembly. Fees are o.k.
See the 1997 California Supreme Court ruling in the case
Sinclair Paint Co. v. State Bd. of Equalization, 15 Cal. 4th
866, 876 (1997).
On November 12, 2013 Judge Timothy M. Frawley
of the Superior Court of California, County of
Sacramento, issued a ruling that affirmed ARB’s
authority to distribute allowances.
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Low Carbon Fuel Standard Litigation
The measurement of lifecycle carbon intensity was
alleged to violate the dormant commerce clause of
the U.S. Constitution by imposing a different
requirement on out-of-state fuels.
On December 29, 2011 a U.S. District judge in
Fresno ruled that ARB’s method for assigning a
higher carbon intensity (CI) value to ethanol
produced in the Midwest and to crude oil from
Canada infringes on Congress’s constitutional
authority over interstate commerce.
On January 6, 2012 the state appealed, arguing
that the LCFS does not discriminate based on the
geographic location of the seller.
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Low Carbon Fuel Standard Litigationcontd
On January 24, 2012, U.S. District Judge O’Neill
denied ARB’s motion, stating that the LCFS program
is unconstitutional and violates the Interstate
Commerce Clause. ARB appealed.
In September 2013, the 9th U.S. Circuit Court of
Appeals upheld the LCFS program, but remanded the
decision back to the District Court.
The court found that LCFS is neither facially discriminatory
in violation of the Commerce Clause nor does it
impermissibly regulate extra-territorial activities.
This state appeals court decision keeps the current LCFS
targets in place through 2014.
Ultimately, this case could go to the U.S. Supreme Court.
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U.S. EPA & State Regulatory Litigation
In 2007 the Supreme Court ruled in Massachusetts
vs. EPA that CO2 is an air pollutant that must be
regulated by EPA.
A 2011 Supreme Court decision allowed EPA to
require permits to meet Prevention of Significant
Deterioration (PSD) standards for GHG under §111
of the Clean Air Act.
In April 2014, the Supreme Court upheld the EPA's
rule to limit "cross-state air pollution” (CSAPR)
The Cross-State Air Pollution Rule requires 28 states in the
eastern half of the U. S. to reduce power plant emissions that
cross state lines and contribute to ground-level ozone and fine
particle pollution in other states.
A cap and trade system would be used to reduce the target
pollutants—sulfur dioxide and nitrogen oxides.
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VHC
U.S. EPA & State Regulatory Litigation
On October 15, 2013, the U.S. Supreme Court agreed
to hear UARG v. EPA on the question:
Does EPA’s authority to regulate GHG emissions from mobile
sources under Title II, which was upheld in Massachusetts v.
EPA, 2007, extend to stationary sources under Title I?
The court declined to review EPA’s finding that GHG
emissions endanger the public health and safety.
On June 23, 2014, the Supreme Court issued a split
decision in Utility Air Regulatory Group v. EPA,
striking down part of an EPA rule requiring pre-
construction permits for large sources of greenhouse
gas (GHGs) emissions, while upholding EPA's
authority to require inclusion of GHGs in pre-
construction permits mandated for other pollutants.
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U.S. EPA GHG Regulatory Litigation
In its decision on June 23, 2014, in Utility Air Regulatory
Group v. EPA, the Court invalidated the "Tailoring Rule,"
whereby EPA rewrote statutory emissions thresholds to
allow it to operate a pre-construction permit process for
large sources of GHG emissions.
The Court held that the Clean Air Act neither compelled
nor required EPA to apply GHG regulations to stationary
sources, once it set GHG limits for cars and trucks.
The Court also concluded that EPA had the discretion to
require sources to apply the "Best Available Control
Technology" to GHG emissions, when securing pre-
construction permits based on emissions of conventional
pollutants.
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Litigation Against the Clean Power Plan
In the future, the Supreme Court may examine EPA
actions that would impact the power sector at-large
and reduce energy demand.
Opponents argue that §111 (d) does not authorize EPA to
implement such sweeping regulation of the power sector,
acknowledging tension between EPA’s state-centric
approach and the regional structure of energy markets.
Arguments regarding the “Best System of Emission
Reduction” will go first to the U.S. Court of Appeals
for the District of Columbia.
In the last year, four new Obama appointees have joined
this court, tilting the majority in favor of Democrats over
Republicans for the first time since the 1980s.
Nevertheless, this matter will almost certainly go the
Supreme Court and be resolved in the next administration.
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Legislation Against CA Cap-and-Trade
In January 2013, California Assemblyman Henry
Perea put forward AB 69 to delay the 2015 entry of
fuels and transportation into the cap-and-trade
program for one compliance period.
On April 25, 2013 the amended bill was passed by
the Assembly, Ayes: 53, Noes: 23, Abstain: 3.
On July 1, 2014, a Joint Letter was sent to Mary
Nichols by a list of economic and energy experts
about “Maintaining Beneficial, Low-Carbon
Transportation Policies in California.”
After deliberations throughout 2014, on July 3, the
amended AB 69 was withdrawn from the California
Senate’s Agricultural Committee.
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85. VHC
More on Price Containment
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Price Containment Rules
The rising allowance auction price floor and the
Allowance Price Containment Reserve (APCR) are
intended to collar the range of potential CCA prices.
“Of the 2,508.6 million metric tonnes (MMT) of allowances
in the program over the 8-year period, 121.8 MMT of
allowances are assigned to the price containment reserve
to be made available in equal proportions at allowance
prices of $40, $45, and $50 in 2012 and 2013. In later
years, these price levels increase by 5% plus the rate of in
inflation in the prior year.” (MSG report, May 2014, p. 14.)
Setting a hard allowance price ceiling would contain
rising prices in the event of allowance supply
scarcity.
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“Report of the Market Simulation Group on Competitive Supply/Demand Balance in
the California Allowance Market and the Potential for Market Manipulation.”
Severin Borenstein, James Bushnell, Frank A. Wolak, and Matthew Zaragoza-
Watkins. July 2014
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2013 Revised Cost Containment Rules
Starting in 2015, in the last reserve
sale prior to the November 1
compliance date, up to 10% of
future vintage allowances will be
made available to the Allowance
Price Containment Reserve, when
the number of allowances bid for in
the Reserve exceeds the number
of available reserve allowances.
Qualified bids will be satisfied at
the price of the highest price tier.
However, in 2014 the Market
Simulation Group recommended
more changes to expand the APCR.
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Proposed Price Containment Rules
To ensure the APCR is not exhausted over the eight- year
program and to minimize price manipulation, the Market
Simulation Group recommended in 2014:
1. Expanding the allowance pool by:
(i) authorizing ARB to sell post-2020 vintage allowances to use for
compliance before 2020, or
(ii) allowing market participants to use compliance instruments
from other carbon allowance markets, such as the European Union
Emissions Trading System or the Regional Greenhouse Gas
Initiative, or,
2. Allowing Conversion of Future-Year Vintages for compliance
by paying a price premium or cutting tonnes covered by
these allowances by 25%, and
3. Increasing publicly available data on CCA holdings.
A hard price cap would be simpler and more reliable.
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Behaviors & Uncertainties to Evaluate
Free allowances will allow many industrials to avoid
near-term purchases of allowances.
High-emitting entities must cover short-falls in free
allocations and, then, transfer allowances to
Compliance Accounts to take advantage of the
ARB’s Limited Exemption, eliminating trading of
potential surpluses that may arise.
Hydro and renewables generation, emission rates
for asset controlling suppliers, safe-harbor resource
re-alignment (aka “resource shuffling”), and offset
availability all affect CCA supply and demand.
Regulatory complexity and restrictions can limit
trading, increasing prices and volatility.
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Van Horn Consulting
Founded in 1987, Van Horn Consulting (VHC) helps its clients
examine energy and environmental markets, technologies,
regulations and contracts, evaluate competitive and regulatory
issues, review projects, devise business strategies, prepare
expert testimony and value assets.
We have developed and analyzed strategies and conducted
major studies for EPRI, EPA, electric and gas utilities & market
participants, large and small.
VHC provides independent reviews, evaluations, litigation
consulting and expert testimony regarding electricity, fuels,
technology and emissions markets, regulations and contracts.
VHC advises utilities in soliciting and contracting for combined
heat and power, renewables, conventional and demand-side
resources, serves as an Independent Evaluator for electric
utilities in California and analyzes the California electricity and
GHG allowance markets.
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VHC Senior Consultants
Michael Katz, M.S., P.E., Senior Consultant, has over 25 years experience in electric
and natural gas markets, risk management, strategic planning and operations of physical
assets. Mike leads VHC’s Independent Evaluator assignments for renewable, conventional and
combined heat & power contracts for San Diego Gas & Electric and previously for Southern
California Edison. At Pacific Gas & Electric Company (PG&E), he led PG&E’s Power Generation
Department and was Director of Generation Portfolio Management and Power Generation
Business Planning, after holding positions in Electric Resources Planning. He provides analysis
and advice regarding procurement, operations, planning, technologies and management.
Edward Remedios, Ph.D., MBA, Senior Consultant, formerly worked for Chevron
Research and for Pacific Gas & Electric Company (PG&E). While at PG&E, Ed coordinated long-
range planning and was the head of the Economics and Forecasting Department with
responsibilities for economic and sales forecasts and project evaluations, including financial,
economic and technical assessments. Ed provides evaluations of projects, RFO offers, contract
terms and analyses of markets, tariffs and regulations.
Andrew Van Horn, Ph.D., Managing Director, has 35 years experience evaluating
electricity, natural gas, coal and emissions markets, regulations, technologies and contracts.
He advises market participants and serves as an Independent Evaluator for utilities procuring
power and natural gas. He developed EPRI’s first Integrated Resource Planning model,
provided a price for the first SO2 allowance trade in 1992, analyzed the 1977 and 1990 Clean
Air Act Amendments and projected impacts of greenhouse gas (GHG) policies from 2000 to
2050. He advises clients on electricity and natural gas procurement processes, SO2 and GHG
markets and compliance planning, technology cost and performance, R&D, price forecasting,
plant valuation and strategic planning. He has testified before the FERC, state agencies and
courts about power, natural gas, steam and emissions contracts, economic damages, resource
planning, reasonableness reviews, tariffs and the impacts of regulations.
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Selected Clients
Alberta Department of Utilities
American Electric Power
Amgen
Arizona Public Service Company
Cinergy
Cogeneration Association of California
Colorado Independent Energy Association
Consolidated Edison of New York
Consolidated Natural Gas Transmission
CIGNA Insurance
City of Huntington Beach
Drummond Coal
Duke Energy
Electric Clearinghouse (Dynegy)
Electric Power Research Institute (EPRI)
Harvard Management Corporation
National Acid Precipitation Assessment Program
Northern California Power Agency
Orinda Union School District
PacifiCorp Power Marketing
PPL Corp
Pacific Gas and Electric Company
Pacific Gas Transmission
Pinnacle West
Port of Long Beach
San Diego Gas & Electric Company
Sithe Energies
Southern Company
Southern California Edison Company
SeaWest Wind Corp
Tennessee Valley Authority
The Emissions Exchange
Utility Air Regulatory Group
Universal Studios
U.S. Environmental Protection Agency
U.S. General Accounting Office
U.S. Natural Gas Consumption 1990-2050
(Quads per year)
Business As Usual - Reference Case
0
10
20
30
40
50
1990 2000 2010 2020 2030 2040 2050
Electric
Trans
Ind
Com
Res
Van Horn Consulting
Orinda, CA 94563
(925) 254-3358
www.vhcenergy.com
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