Regional Greenhouse Gas Initiative RGGI Draft Model Rule Overview

1
Regional Greenhouse Gas Initiative (RGGI) Draft
Model Rule Overview

• NH Stakeholders Meeting
• March 29, 2006
• Joe Fontaine
• NH Department of Environmental Services
• 271-6794 or jfontaine_at_des.state.nh.us

2
Review of NH Stakeholder Meetings

• October 2004 - Overview
• January 2005 - Environmental Organization
  Industry Presentations
• March 2005 - Preliminary Modeling Results
• September 2005 - Staff Working Group Proposal
  Overview

3
Designing RGGI A Cap-and-Trade Program
Determine Total Emissions from Covered Sources
Set Cap
Sources Cover Emissions with Allowances and/or
Offsets
Issue Allowances (1 per ton) Distribute
Identify Sources to be Covered
Trade
4
RGGI draft Model Rule Components

• MA and RI not in (yet!), but MD may join
• Covers fossil fuel sources 25 Megawatts
• 2-Phase CO2 Capstabilization through 2014 10
  reduction by 2018 (2.5 per year for 4 years)
• Phase I Regional Cap 121,253,550 tons
• Phase I NH Cap 8,620,460 tons
• Start Date of 2009
• Built-in Review of Program in 2012

5
RGGI draft Model Rule Components

• Compliance Options
• Reduce Emissions
• Energy efficiency
• Fuel switching
• Changes in dispatch
• Emerging control technologies
• GreenFuel Emissions-to-Biofuels system
• CO2 capture injection into oil fields
• Buy allowances (from VT) or offsets

6
RGGI draft Model Rule Components

• Additional Compliance Flexibility Mechanisms
• 3-Year Compliance Period
• Banking (with typical tracking, monitoring,
  recordkeeping, and reporting requirements)
• Early Reduction Credits

7
RGGI draft Model Rule Components

• Offsets
• GHG reductions from projects outside the power
  sector
• May be used for up to 3.3 of each sources
  emissions
• Projects include landfill gas capture sulfur
  hexafluoride capture agricultural methane
  capture reforestation end-use heating fuel
  efficiency
• Offsets may come from RGGI region at 11 or from
  rest of US at 12
• Safety valves built in to increase use of offsets
  for economic relief if necessary

8
Projected Regional Impacts

• Electricity prices are projected to decrease by
  2020
• Wholesale electricity price increase above BAU
  between 0.5 and 1.3
• With higher natural gas prices, impacts increase
  up to 5 above BAU
• Allowance price of 1 to 5 per ton

9
Individual State-Specific Allocations

• 25 Set Aside for Consumer Benefit or Strategic
  Energy Purposes
• Promote renewable projects such as biomass?
• Promote energy efficiency?
• Directly mitigate ratepayer impacts?
• 75 of the allocations left to each state to
  allocate (6,465,345 allowances for NH)
• Use output-based fixed on a historic period?
• Use output-based updated periodically?
• Use emissions-based for gas plants?
• Other?

10
Allocation Method Example 1 Output-based fixed
on 2003 generation

• PSNH 60 x 6,465,345 core allowances
  3,879,207 allowances
• Granite Ridge NEL 40 x 6,465,345 2,586,138
  allowances

11
Allocation Method Example 2 Emissions-based
fixed on 2005 gas plant emissions

• Granite Ridge 1,747,954 allowances
• NEL 1,160,064 allowances
• PSNH 3,557,327 allowances

12
Next Steps

• 60-day public review/comment period
• Final Model Rule by July 2006
• Request Proposals from NH Stakeholders on Desired
  Allocation Method, Projected Future Emissions,
  and Projected Costs
• Participate on Imports Leakage Workgroup
• Legislation and Rulemaking
• Early 2007, seek NH legislation authorizing
  rulemaking
• Late 2008, may adopt NH final state rule

13
Historical Emissions
14
Historical Emissions