ESM 297: Renewable Energy Law and Policy

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ESM 297 Renewable Energy Law and Policy

• Week 2 Climate Change Law and Policy, AB 32 and
  SB 1368

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Californias emissions in 1990
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Californias emissions in 2004
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Electricity mix
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Electricity emissions
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Emissions by gas type
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What tools do we have to mitigate climate change?

• Tax policies
• Carbon tax assess the carbon emissions for each
  source and then apply a tax on the producer of
  those emissions

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Other tools

• Command and control
• A standard gt SB 1368s emissions performance
  standard
• An emissions cap gt AB 32

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And

• Market-oriented policies
• and trade gt authorized by AB 32
• EUs Emissions Trading Scheme is a cap and trade
  system

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And

• Voluntary measures
• Climate Action Registry for reporting carbon
  emissions
• Doesnt currently require any additional steps
• Anything else?

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Carbon Tax

• Not really on the table in California or the U.S.
  (unfortunately)
• However, AB 32 does state
• The state board may adopt by regulation, after a
  public workshop, a schedule of fees to be paid by
  the sources of greenhouse gas emissions regulated
  pursuant to this division, consistent with
  Section 57001. The revenues collected pursuant to
  this section, shall be deposited into the Air
  Pollution Control Fund and are available upon
  appropriation, by the Legislature, for purposes
  of carrying out this division. (Section 38597).
• This provision doesnt in itself authorize a
  broad carbon tax, but this area is somewhat murky
  in light of Prop 218

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Carbon Tax

• In some ways a carbon tax is equivalent to cap
  and trade b/c the trade piece can be equated to
  a tax insofar as it adds to the cost of doing
  business, which is passed on to consumers
• Advantages
• costs can be offset through decreasing other
  taxes (income, payroll, etc.)
• Avoids allowance price volatility (like in the
  EUs pilot program)
• Others?
• Disadvantages
• cant join with other jurisdictions to trade
  allowances
• Its a tax
• Others?

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AB 32s Cap

• By January 1, 2008, the state board shall, after
  one or more public workshops, with public notice,
  and an opportunity for all interested parties to
  comment, determine what the statewide greenhouse
  gas emissions level was in 1990, and approve in a
  public hearing, a statewide greenhouse gas
  emissions limit that is equivalent to that level,
  to be achieved by 2020. (Section 38550).
• This is by far the most important provision of AB
  32

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AB 32s cap
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AB 32s cap

• Not much else of consequence is determined by AB
  32 itself
• AB 32 sets the goal and the process in motion to
  determine the rules for achieving that goal and
  thats pretty much it

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and trade?

• AB 32 states
• the state board may adopt a regulation that
  establishes a system of market-based declining
  annual aggregate emission limits for sources or
  categories of sources that emit greenhouse gas
  emissions, applicable from January 1, 2012, to
  December 31, 2020, inclusive. (Section
  38562(c)).
• The state board may include in the regulations
  adopted pursuant to Section 38562 the use of
  market-based compliance mechanisms to comply with
  the regulations. (Section 38570(a)).

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Governator takes action

• However, Gov. Schwarzenegger issued Exec. Order
  S-20-06 in October, 2006
• Directs CARB to collaborate with Cal-EPA with
  the goal of creating a program that permits
  emissions trading with the European Union,
  RGGI and other jurisdictions.
• Nunez, co-author of AB 32, considered this a huge
  slap in the face b/c it appeared to circumvent
  the AB 32 process
• Cal-EPA leaders are appointed by the Governor
  whereas CARB is an independent agency

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Dems take action

• The CPUC issued a decision last month
  recommending that CARB adopt a cap and trade
  system for utilities
• Key Democratic legislators sent a sharply worded
  letter re the need to respect AB 32s
  requirements re market mechanisms
• CARB has ultimate say
• But lawsuits may follow

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SB 1368s EPS

• The emissions performance standard requires all
  new baseload long-term electricity contracts to
  be no more polluting than a modern natural gas
  plant
• Not clear how much impact this will have b/c not
  clear how many long-term baseload contracts will
  be entered into
• Does NOT currently consider lifecycle emissions

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P.U. Code Section 8341(d)(1)

• On or before February 1, 2007, the commission,
  through a rulemaking proceeding, and in
  consultation with the Energy Commission and the
  State Air Resources Board, shall establish a
  greenhouse gases emission performance standard
  for all baseload generation of load-serving
  entities, at a rate of emissions of greenhouse
  gases that is no higher than the rate of
  emissions of greenhouse gases for combined-cycle
  natural gas baseload generation.

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P.U.C. Section 8341(d)(2)

• In determining the rate of emissions of
  greenhouse gases for baseload generation, the
  commission shall include the net emissions
  resulting from the production of electricity by
  the baseload generation.

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And

• (3) The commission shall establish an
  output-based methodology to ensure that the
  calculation of emissions of greenhouse gases for
  cogeneration recognizes the total usable energy
  output of the process, and includes all
  greenhouse gases emitted by the facility in the
  production of both electrical and thermal energy.
  
• (4) In calculating the emissions of greenhouse
  gases by facilities generating electricity from
  biomass, biogas, or landfill gas energy, the
  commission shall consider net emissions from the
  process of growing, processing, and generating
  the electricity from the fuel source.
• (5) Carbon dioxide that is injected in geological
  formations, so as to prevent releases into the
  atmosphere, in compliance with applicable laws
  and regulations shall not be counted as emissions
  of the powerplant in determining compliance with
  the greenhouse gases emissions performance
  standard.

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CECs Application for Rehearing

• We raised the issue of lifecycle emissions
• SB 1368 calls for net emissions to be
  considered for all baseload contracts but doesnt
  define this term
• Opening language also states
• In order to have any meaningful impact on
  climate change, the Governor's goals for reducing
  emissions of greenhouse gases must be applied to
  the state's electricity consumption, not just the
  state's electricity production.

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CECs Application

• CPUC denied our request for a re-hearing
• Essentially they re-stated the earlier rationale
  that no lifecycle emissions requirement existed
  in SB 1368

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Real policy problem

• Should CARB opt for a carbon tax or a cap and
  trade system?

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2nd real policy problem

• If we accept that climate change and peak oil are
  serious crises, how do we effect change on the
  time scale required?

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• Tam Hunt thunt_at_cecmail.org
• 963-0583, x. 122
• office hours just email me or call me and we
  can discuss