Leading by Example: Californias Energy Goals and Policies

1
Leading by Example Californias Energy Goals
and Policies

• Presentation to the UCLA Energy Forum
• 11/29/06
• Laura R. Doll
• Deputy Executive Director
• California Public Utilities Commission
• San Francisco

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Worlds Largest GHG Emitters

• USA..5,661...19
• China2,795...02
• Russia..1,437...10
• Japan1,186...09
• India..1,073...01
• Germany.787...10
• UK569...09
• Canada437...13
• California.430...12
• Italy..429....07
• South Korea...428....09
• 12. Mexico.425....04

2000 Emissions Per Capita (Mt CO2)
Emissions
Sources Courtesy of CalEPA Research conducted
by Oak Ridge National Lab The Tellus Institute
3
Californias Greenhouse Gas Emissions
Source CA Energy Commission
4
California versus U.S. Electricity Supply
Renewables
1.6
Imports
Oil
3.3
Hydro
NG 15
8.5
25.5
Hydro 33
Coal 52
19.4
Nuclear
Renewables
8.4
Hydro
14.8
Natural Gas
14.8
Nuclear
12.4
50.2
Coal
Natural Gas
37.6
California (2000)
US (1999)
284 TWh
3,752 TWh
Source CA Energy Commission
5
California versus U.S. Electricity Consumption
Source CA Energy Commission
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California GHG Targets

• 2010 emissions at 2000 levels
• 2020 emissions at 1990 levels
• 2050 emissions 80 below
• 1990 levels
• Kyoto goal for U.S. would be 7 below 1990
  levels by 2012
• 6/05 Executive Order created Governors Climate
  Action Team, led by the California EPA, continued
  in 10/06 Executive Order Codified in AB32 from
  September 2006

Approximately 59 Million Tons Emission
Reductions, 11 Below business as usual
Approximately 145 Million Tons Emission
Reductions, 25 Below business as usual
7
http//www.climatechange.ca.gov/climate_action_tea
m/reports/2006-04-03_FINAL_CAT_REPORT.PDF
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Emissions Reductions from CPUC Programs
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CPUC Policy Priorities

• Energy Action Plan I II set policies
• Energy Efficiency
• Renewables
• Greenhouse Gas (GHG) Regulation
• Environmental risk adder
• Emissions Performance Standard (EPS)
• Load-Based Emissions Cap

10
http//www.cpuc.ca.gov/PUBLISHED/REPORT/51604.htm
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Energy Action Plan Goals for Efficiency

• Adopted by CPUC and CEC May 2003 EAP II in
  October 2005
• Establishes a loading order of energy resource
  procurement
• 1. Energy efficiency and conservation, plus
  demand response
• 2. Renewable generation, including distributed
  generation
• 3. Cleanest available fossil resources
• Goal Decrease per capita energy use and reduce
  toxic emissions and greenhouse gases through
  increased conservation, efficiency, and renewable
  resources. Balance cost impacts, resource
  diversity, and environmental responsibility,
  including climate change.
• The EAP can be found at www.cpuc.ca.gov/PUBLISHE
  D/REPORT/28715.htm

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Committed to All Cost Effective Energy Efficiency

• Utilities must meet at least 50 load growth
  through energy efficiency
• EE savings are real and verifiable, just like
  supply side resources
• Aggressive Savings Goals
• Adopted EE savings goals 2002-2012, with annual
  saving requirements.
• Utilities must include savings in demand
  forecast and procurement plans.
• Funding 400 million utility procurement
  spending, in addition to Public Goods Charge
  funding of 280 million annually.

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The Most Aggressive EE Program in the Nation

• Energy Efficiency goals (2004-2013)
• 26,506 GWh/year
• 5,000 MW off-peak
• 444 Million therms/year
• Eliminates need for 10 new power plants
• Eliminates 9 million tons of CO2 emissions
  (equal to 1.8 million cars)
• 10 billion in net savings to consumers

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Energy Efficiency
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Annual Energy Savings from EE Programs and
Standards
Source Rosenfeld, California Energy Commission
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Californias Green Building Initiative

• Governors Executive Order S-20-04
• Sets a goal of reducing energy use in state-owned
  buildings by 20 by 2015
• Encourages the private commercial sector to set
  the same goal

17
http//www.epa.gov/cleanenergy/eeactionplan.htm
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Renewable Portfolio Standard

• Geothermal, Biomass, Wind, Solar, small Hydro
• Original 2002 statute 20 of electricity
  delivered by 2017
• 33 goal by 2020 would require legislative
  changes
• Energy Action Plan and new law (SB 107)
  accelerated 20 goal to 2010
• Annual Solicitations
• - Open Issues Transmission, Tradeable RECs and
  tracking, Muni participation

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Solar Initiative

• 10 year program adopted January 2006 with 3000
  MW statewide installation goal
• Budget is approximately 2.8 billion over ten
  years
• CPUC administers existing residential and
  commercial
• CEC administers residential new construction
  program
• Subsidies decline over time, starting at 2.50
  per watt in 2007
• Incentives paid on system performance, not
  capacity
• Set-asides for low-income and affordable housing

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Environmental Risk Adder

• aka carbon adder
• CPUC requires utilities to include an 8/CO2 ton
  proxy for carbon based resources when evaluating
  procurement choices.
• First step to require utilities to internalize
  carbon cost.

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GHG Emissions Performance Standard

• CPUC adopted policy statement in October, 2005.
  CA Energy Commission adopted in 2005 Integrated
  Energy Policy Report. Now codified as SB 1368.
• Requires IOU energy contracts and generation
  sources to meet or beat GHG emissions levels of a
  combined-cycle natural gas turbine for all
  long-term procurement activities (over 5 years)
  for baseload generation.
• CPUC currently conducting proceeding to decide
  how to implement the standard on an interim
  basis decision expected by 2/1/07 CEC will
  conduct proceeding to determine how to apply to
  municipal utilities.

The GHG Performance Standard Policy Statement is
posted at www.cpuc.ca.gov/word_pdf/REPORT/50432.d
oc
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GHG Interim EPS Staff Proposal

• Designed to prevent backsliding from current
  profile
• Applied
• To all jurisdictional load-serving entities
• At time build or buy commitment is proposed
• To baseload resources with capacity factors of
  60 or greater
• To all new utility commitments of five years or
  longer and 25 MW or greater
• Emissions limited to 1100 pounds of CO2 per MWh
• Potential RD exemptions on case by case basis,
  (e.g., for advanced coal proposals)
• No offsets or market price safety valves during
  interim period
• Report is posted at http//www.cpuc.ca.gov/publis
  hed/REPORT/60350.htm

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Load-Based GHG Cap Decision

• February 2006 Decision adopted load-based GHG
  emissions cap for all load-serving entities
• chose load-based cap to avoid leakage issues
• Decision made initial calls on implementation
  issues
• Emissions allowances based on tons of CO2
  equivalent for all six GHGs
• Baseline established on historical year basis,
  with 1990 as the preference year to comport with
  Kyoto and Governors GHG targets
• Emissions allowances to be allocated
  administratively (not auctioned)
• Flexible compliance to be allowed (details to be
  worked out), based on verifiable and feasible
  reductions
• Preference for allowing alternative compliance
  payments, as well as sales of excess allowances
  for shareholder profit
• Approach will need to be docked with statewide
  reporting and compliance regime under AB32

Decision is posted at www.cpuc.ca.gov/word_pdf/FI
NAL_DECISION/53720.doc
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Possible Sequencing of Load-Based Cap
Implementation Topics

• Likely to proceed over next two years (in
  R.06-04-009) beginning October 2006
• Reporting requirements
• Baseline development
• Structure (size and slope) of cap ratchet
• Flexible compliance mechanisms
• Modeling of costs and benefits specific to energy
  sector
• Final decision on energy sector cap, in
  cooperation with Air Resources Board timing

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Mandatory vs. Market-Based Solutions

• Mandatory
• Renewables Portfolio Standard
• Energy Efficiency
• Environmental Risk Adder
• GHG Performance Standard

• Market-based
• Load-based GHG cap

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Interaction of Cap with Other Policy Initiatives
Represents GHG emissions cap
Emissions Reductions
Time
Current System
Initial GHG Cap
First GHG Cap Ratchet
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(No Transcript)
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Contact information

• Laura Doll
• Rich Oppenheim
• California Public Utilities Commission
• Emails lrd_at_cpuc.ca.gov
• rto_at_cpuc.ca.gov
• Web site www.cpuc.ca.gov