Transcript RGGI: An Overview

Regional Greenhouse Gas Initiative –
Preliminary Comments on Draft Model
Rule (Question #2)
Michael Bradley
Northeast Regional Greenhouse Gas Coalition
May 2, 2006
1
Overview of GHG Coalition
Recommendations
• The draft RGGI offset provisions send the wrong signal to
the economy and to potential project developers.
• The draft provisions introduce a level of uncertainty to the
market (both on the demand and supply side) that will
substantially inhibit the supply of available offsets.
• The provisions will make the program more costly for all
and will dampen any enthusiasm for voluntary greenhouse
gas emission reductions by other sectors.
2
Offset Provisions Create Barriers that
Increase Uncertainty
Safety valve
triggers change
offset eligibility
Potential for the suspension
of offset award if new law is
enacted
2:1 discount for projects located
outside RGGI
CO2 Budget source limitations on the use of offset
allowances
Increasing uncertainty and
increasing compliance costs
Trigger
reset
Geographic restrictions on project location
Limited eligibility of offset project categories
Increasing barriers to offset allowance generation and use
3
Hypothetical Offset Project – Out of RGGI
Region
1,200,000
$2,500,000
1:1
1:1
1,000,000
$2,000,000
CO 2 Tons/Allowances
$1,500,000
2:1
2:1
600,000
_
$1,000,000
Annual offset value ($2/ton)
2:1
800,000
400,000
$500,000
200,000
-
$0
2009
2010
2011
2012
CO2 Reductions Achieved
2013
2014
RGGI Offset Allowances
2015
2016
Allowance Revenue
2017
2018
4
RGGI MOU Comments
• The GHG Coalition is currently discussing comments regarding
elimination of (or alternatives to) the RGGI offset provisions that send
the wrong signal to emerging market participants.
• The GHG Coalition believes the focus of the additionality provisions
should be on the environmental integrity of the offset projects – defined
as surplus to regulatory requirements rather than on the financial
motivations of the project developers.
• Project specific provisions are unnecessarily restrictive. Examples
include: 20% afforestation discount, exclusion of industrial sector, and
SF6 performance standard.
5