Transcript WCI: WHAT MATTERS FOR NORTHWEST INDUSTRIES

Davis Wright Tremaine LLP
Western Climate Initiative:
What Matters for
Northwest Industries
Craig Gannett
DAVIS WRIGHT TREMAINE LLP
1201 Third Avenue, Suite 2200
Seattle, WA 98101-3045
(206) 757-8048
[email protected]
Davis Wright Tremaine LLP
Overview

What matters to business

How we got here
Where we are in terms of
market design


What lies ahead
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What matters to business

As in all regulatory matters,
businesses want:
-- a single set of rules
-- clarity
-- predictability
-- cost containment
-- opportunity
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How we got here
Leadership vacuum at
federal level, 1994-2006

Increasing scientific and
public concern, 1992-Present

Frustration at state and local
level

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How we got here
State and local governments
moved to fill vacuum

But now the vacuum is
closing (Congress plus all
three Presidential candidates
now on board)

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Market Design

Scope

Allowance allocation

Point of regulation

Offsets

Reporting
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Scope

WCI much broader than RGGI:
-- WCI includes all 6 GHGs;
RGGI only regulates CO2
-- WCI includes Canadian
Provinces; RGGI only states
-- WCI intends to cover all
sectors of economy; RGGI only
electricity
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Allowance allocation

Unclear how many allowances

Each jurisdiction:
-- must auction 25-75% (TBD)
-- may retire allowances
-- has discretion to allocate
within its jurisdiction
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Point of Regulation
Problem: leakage in
electricity sector

Plan A: all WECC
jurisdictions join WCI

Plan B: first jurisdictional
deliverer, with exceptions

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Offsets
Projects outside of regulated
sectors
 Purposes: lowest hanging
fruit first, and lower
compliance costs
 Already a burgeoning market
under Kyoto Protocol

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Offsets
WCI will limit use of offsets
(limit TBD)

Each jurisdiction may have
its own offset program

Priority to projects within
WCI

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Reporting
Backbone of WCI
 All regulated emissions must
be quantified and reported to
The Climate Registry
 Includes sectors under
consideration for later
inclusion

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What lies ahead
Federal integration, or a race
to the finish line?

Lieberman-Warner allows
states broad latitude

CA well-positioned in
Congress

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What lies ahead
No WCI subcommittee on
integration

Constitutional hurdles under
Commerce Clause,
Supremacy Clause, and
Compact Clause

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What lies ahead

Single set of rules?

Clarity?

Predictability?

Cost containment?

Opportunity?
Davis Wright Tremaine LLP
Craig Gannett
Partner – Seattle, Washington Office
DAVIS WRIGHT TREMAINE LLP
Suite 2200
1201 Third Avenue
Seattle, Washington 98101-3045
[email protected]
(206) 622-3150
Craig Gannett is a partner in the Seattle office of Davis
Wright Tremaine, and a member of the firm's Climate
Change Practice Group. He regularly advises clients on
climate-change related legislative and regulatory
developments at the federal, regional, and state levels. He
also teaches climate change policy at the University of
Washington's Jackson School of International Studies, and
is a frequent speaker on the subject. Craig is a former
Senior Counsel to the U.S. Senate Committee on Energy
and Natural Resources, where his responsibilities included
the electric utility industry and the use of risk assessment
and cost-benefit analysis regarding major environmental
regulations. He is a 1979 graduate of the University of
Washington Law School, and a former law clerk to U.S.
District Judge Barbara J. Rothstein.