Transcript Murrow Roundtable Presentation 6.17.05

The Regional Greenhouse
Gas Initiative
A Design that Maximizes
Environmental & Economic
Benefits
Derek K. Murrow, Director of Policy Analysis
Massachusetts Restructuring Roundtable
June 16, 2005
Program Goal
Reduce global warming pollution –
putting us on the pathway to deep
reductions by mid-century
 Maximize economic development
 Drive technical innovation
 Maintain reliability and fuel diversity

Key Policy Issues:
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Cap Level & Design
Allowance Apportionment & Allocation
Support for Energy Efficiency
Flexibility Mechanisms & Offsets
Cap Level & Design
RGGI - Historical CO2 Emissions & Potential Cap Levels
160,000,000
120,000,000
25% Reduction
by 2020
100,000,000
80,000,000
Deep Reductions
by Mid-Century
60,000,000
40,000,000
RGGI Units - State Working Group Data
All Electric Plants - EIA Electric Pow er Annual (Fuel Use)
20,000,000
Potential Cap Level & Rate of Decline
20
25
20
20
20
15
20
10
20
05
20
00
19
95
0
19
90
CO2 Emissions (Short Tons)
140,000,000
Allocation of Allowances

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The state regulators are creating a new market with new
permits or CO2 allowances and they need to think
carefully about how to distribute the allowance value
Generators build the opportunity cost of allowances into
their bid prices – passing costs onto consumers
Consumer Allocation: Keep the total cost of the program
low by investing in energy efficiency, the clean energy
technologies of tomorrow (R&D), or customer rebates
The states should commit to using the allowance value
to lower the cost of the program – majority to efficiency
programs in the near term
A Little Energy Efficiency Goes a
Long Way
Potential to Reduce Demand
GrowthExisting and New EE Strategies Can Offset ISO
Forecasted Energy Requirements (GWH) and Beyond
Existing EE
Programs at
3.1¢/kWh
150,000
ISO GWh Forecast (w/out DSM)
1.2% Avg. Annual Increase at
Marginal Avoided Energy Supply Cost of 9.4¢/kWh
145,000
Building
Codes at
2.9¢/kWh
140,000
135,000
Addt'l EE Can Offset Growth
(at 3.1¢/kWh)
Standards at
1.0 ¢/kWh
GWh
130,000
Addt'l
Savings
Opport.
Beyond
Offsetting
Growth (at
3.1¢/kWh)
Actual Energy Requirement (2003)
125,000
120,000
115,000
Total Achievable Energy Savings Potential
-1.38% Avg. Annual Reduction
110,000
Total EE
Potential in
2013 Can
Reduce
Energy Req.
to 1993 Level
105,000
100,000
2004
2005
Source: NEEP, 2004
2006
2007
2008
2009
2010
2011
2012
2013
How to Realize the Benefits of
Efficiency

Consumer allowances could substantially increase
funding for EE programs

Utility regulation and procurement

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Require Portfolio Management (allow efficiency to compete
directly with supply; require investment in cost effective
efficiency)
Adopt Energy Efficiency Portfolio Standards
Launch Decoupling Proceedings
Codes and standards


Adopt state appliance standards - as CT, MD, and NJ have done
Improve building energy codes
Flexibility Mechanisms

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Banking – unlimited
Borrowing – none
Limited Offset Program
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Our focus is on the process and the criteria
Environmental integrity
Limited offset quantity – most emissions reductions
from the regulated entities
Within the RGGI region
Regional rule and pre-approval body
Why You Should Support RGGI

Climate Change: “The scientific understanding of climate change is now
sufficiently clear to justify nations taking prompt action. It is vital that all nations
identify cost-effective steps that they can take now, to contribute to substantial and
long-term reduction in net global greenhouse gas emissions.” (11 National Academies, 2005 )
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Catalyst for Federal & International Action (states lead)
Position the Region Economically
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Invest in the right energy mix now – those regions that have low
emissions rates will pay less for RGGI and a national program
Continue to develop new clean energy technologies
Increase Efficiency


Continued use of robust market based systems that keep costs
low (compliments restructuring and completion of market rules)
Expanded efficiency programs will reduce consumers energy
bills, contribute to job growth, keep our energy $$ at home, and
reduce RGGI allowance prices
Contact Information
Derek K. Murrow
Director, Policy Analysis
[email protected]
Environment Northeast
101 Whitney Avenue
New Haven, CT 06510
(203) 495-8224