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Jonathan Pershing [email protected]
Director, Climate, Energy and Pollution ProgramWorld Resources Institute
http://www.wri.org
Context Setting: United States
IISD-WRI WorkshopExploring the Challenges and Opportunities for
Establishing a North American Emissions Trading SystemNovember 14-15, 2007
2
• US Emissions• State Action• Regional Action• Federal Action• Business Action• Looking Forward
Key Points
Stakeholder initiatives on climate change
States with climate change advisory groups or commissions, by initiator
Legislature Governor/Agency NGO
2006
Stakeholder initiatives on climate change are becoming the norm
States with climate change advisory groups or commissions, by initiator
Legislature Governor/Agency NGO
2007
States with GHG targets: 30% of US Emissions
CA: 2000 levels by 2010; 1990 levels by 2020; 80% below 1990 levels by 2050
FL: 2000 levels by 2017; 1990 levels by 2025; 80% below 1990 levels by 2050
IL: 1990 levels by 2020; 60% below 1990 levels by 2050
NJ: 1990 levels by 2020; 80% below 2006 levels by 2050
HI: 1990 levels by 2020
State action will reduce national emissions
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
1990 2000 2010 2020 2030 2040 2050
Mill
ion
Met
ric
To
ns
CO
2e
Current State Action
Business as Usual (DOE-EIA)
Historical Emissions (U.S. EPA)
Business as Usual (99% above 1990 levels)
U.S. emissions if all current state targets are met (56% above 1990 levels)
Key states to watch:• Alaska
– Observer to Western Climate Initiative (WCI)– Hard hit by climate change, big oil state
• Florida– Considering joining Regional Greenhouse Gas Initiative
(RGGI)– GHG targets on par with California
• Illinois– Big coal, corn state– Governor strongly considering cap and trade
• Utah– Big coal state– Participant in WCI, legislature not behind Governor
States involved in emissions trading program/design
Regional Greenhouse Gas Initiative (and observers)
Western Climate Initiative (and observers)
State-based GHG trading is expanding
• 10 States• Power Plants• Emissions source-
based like EU ETS• Stabilize emissions
through 2014; 10% Reduction by 2018
• 13% Below 1990 Levels by 2019
NE Regional Greenhouse Gas Initiative
Source: www.rggi.org
• Quantitative Limit on Offsets: The RGGI “Offsets Valve”– Initial 3.3% limit on offset use– $7 trigger increases to 5.0%– $10 trigger increases to 10%
• Offsets—5 Initial Types with Clear Requirements:– Natural Gas, Propane, Heating Oil Efficiency;– Land to Forest;– Landfill Gas Capture & Combustion;– Methane Capture from Animal Operations; &– SF6 Leak Prevention.– Add additional types over time as appropriate.
• Geography: Initially inside the United States; but recognition of CDM Offset Credits above $10
RGGI Offsets
• Allocations– States agreed to propose minimum 25%
“public benefit allocation” in MOU– Most states will auction 100%, including
Connecticut, Maine, Massachusetts, New Jersey, New York, and Vermont
– Delaware, Maryland, New Hampshire, & Rhode Island yet to decide
• Auction Design in Progress
RGGI Allowance Distribution
• 3-year compliance period.• Emissions from combustion of sustainably
harvested biomass or bio-fuel not subject to compliance requirement.
• No cost-containment mechanism beyond offsets component
• Linking with other mandatory caps desired
Other RGGI Features
• Legislation in 5 of 10 States• Rulemakings underway• Program Launches January 2009• First Auction in 2nd Quarter 2008
RGGI Status
RGGI Update: Is the cap tight enough?
RGGI region emissions by state 2000-2006
Source: PointCarbon
Emissions drop 20 million tons below 2009 cap
Western Climate Initiative
• 6 U.S. States + 2 Canadian Provinces--AZ, CA, NM, OR, WA, UT, BC & MB
• Observers include: Colorado, Idaho, Kansas, Nevada, Wyoming, Ontario, Quebec; Saskatchewan; Sonora, Wyoming
• August 2007: regional reduction goal
• August 2008: design of a “regional market-based, multi-sector mechanism”
WCI member requirements and goals
• Requirements– Economy-wide GHG reduction goal– Multi-sector action plan to meet goal– Climate Registry membership– Adoption of CA vehicle standards
• Goals– Set regional GHG reduction target– By 2008, establish a multi-sector cap and
trade program to help meet the goal
Key Considerations for WCI
• “Multi-sector” Cap-and-Trade--will sectors be phased in?
• Electricity sector--will WCI take an emissions-source approach, a load-based approach, or a hybrid approach?
• How will offsets be incorporated into the program design?
The Midwest is a big emitter
Midwest India
GHG Emissions =
1.8 billion tonnes CO2e
•27% of U.S. GHG emissions•5% of global GHG emissions•24 votes in the Senate•100 votes in the House of Representatives
Midwest Governor’s Association is poised to jumpstart regional action
• Midwest Governor’s Association Energy Summit: November in Milwaukee
• Focus on regional initiatives for biofuels, energy efficiency, renewables and CCS
• Regional agreement to set GHG targets and construct a Midwest cap and trade program is on the table
Gov. Jim Doyle (D-WI)
MGA Chair
Gov. Tim Pawlenty (R-MN)
MGA Former Chair
Potential linking of state emissions trading programs
Regional Greenhouse Gas Initiative (and observers)
Western Climate Initiative (and observers)
Midwest could link state efforts, increase pressure on Washington
Midwest Governor’s Initiative (and observers)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
1990 2000 2010 2020 2030 2040 2050
Mill
ion
Met
ric
To
ns
CO
2e
Current State Action
Current State Action Plus Entire Midwest
Business as Usual (DOE-EIA)
Historical Emissions (U.S. EPA)
Midwest action could double state GHG reductions Business as
Usual (99% above 1990 levels)
U.S. emissions if all current state targets are met (56% above 1990 levels)
U.S. emissions with Midwest action (13% above 1990 levels)
Allocation distribution under S. 2191
International forestry 2.50%
Tribal governments,
0.50%
Auction73%
U.S. ag5%
States9%
Electricity (LSE)10%
International forestry2.5%
Tribal governments
0.5%
Auction23%
CCS4%
U.S. ag5%
Early Action5%
States9%
Electricity (LSE)10%
Power sector20%
Manufacturing20%
2012 2036 and beyond
Auction allocation distribution(percent of total allocations)
International forestry 2.50%
Tribal governments,
0.50%
Auction73%
U.S. ag5%
States9%
Electricity (LSE)10%
Wildlife adaptation
(4.56%) Low-income energy
consumers (4.56%)
Zero and low carbon
technologies (9.03%)
CCS (3.51%)
Climate change and security
(1.20%)
Worker training(1.14%)
State allocation distribution (percent of total allocations)
Manufacturing20%
Power sector20%
Electricity (LSE)10%
States9%
Early Action5%
U.S. ag5% CCS
4%
Auction23%
Tribal governments
0.5%
International forestry2.5%
General state allocation:based on
population, LIHEAP
expenditures and fossil fuel production
(5 %)
States that adopt model building
efficiency codes (1%)
States that decouple and adopt building
standards (1%)
States with GHG programs that exceed federal targets, (2%)
-20
-10
0
10
20
30
40
50
60
WY AK ND WV LA IN TX MT KY AL NM OK KS IA UT NE AR DE MO PA OH MS SC TN CO WI NV GA IL MN NC MI AZ VA SD HI WA FL MD NH ME OR NJ ID CA MA NY CT RI VT DC
Winning and Losing StatesPer capita allocations: power plants and & covered industry sources only
Pe
r C
ap
ita T
CO
2e
U.S. National Average = 7.39
State per capita allocation is higher than national average
State per capita allocation is lower than national average
CA NY CT
Source: Clean Air Watch analysis
NJ
USCAP Proposal• Call for a cap and trade program• Establishment of a national GHG inventory and registry• Credit for early action• Aggressive technology research and development• Policies to discourage new investments in high-emitting facilities• Policies to accelerate deployment of zero and low-emitting
technologies and energy efficiency
Alcan Inc. Alcoa American International Group, Inc. (AIG) Boston Scientific Corporation BP America Inc. Caterpillar Inc. Chrysler LLC ConocoPhillips Deere & Company The Dow Chemical Company Duke Energy
Natural Resources Defense Council The Nature Conservancy
NRG Energy, Inc. PepsiCo
Pew Center on Global Climate Change PG&E Corporation PNM Resources
Shell Siemens Corporation
World Resources Institute Xerox Corporation
DuPont Environmental Defense
Exelon Corporation Ford Motor Company
FPL Group, Inc. General Electric
General Motors Corp. Johnson & Johnson
Marsh, Inc. National Wildlife Federation
US CAP Members’ Market Capitalization: ~$2 trillion
The Democratic Presidential Candidates
Obama• 80% reduction by
2050• 100 % auction• Co-sponsor of
Sanders-Boxer• Co-sponsor of
Lieberman-
McCain in 2007
Clinton• 80% reduction
by 2050• 100% auction• Co-sponsor of
Sanders-Boxer• Co-sponsor of
Lieberman -
McCain in 2007
The Republican Presidential Candidates
McCain• Authored bill to
reduce emissions 65% by 2050
• First high-profile Republican to address climate change (2003 bill with Lieberman; re-introduced in 2005 and 2007)
• Has made climate change among top three campaign issues
Giuliani• Has not ruled out
cap and trade but prefers voluntary measures
• Has said he believes the earth is warming, but has not said definitively that humans are causing it
Romney• Willing to
consider a cap only if enacted globally
• Introduced climate plan as Gov of MA to reach a goal of 1990 levels by 2010 (largely voluntary)
• Withdrew MA from RGGI in 2005 due to cost concerns
Issues to Watch
• Additional state policies• Multi-state “national” climate registry--”The Climate
Registry”• Midwest Regional Potential• WCI design• How do state efforts inform the federal debate in
Washington, DC?– Preemption?– Derogations?
• International processes, including ICAP, EU- ETS and UNFCCC