WEST COAST CARBON UPDATE WSPP Spring Operating Committee Meeting March 9, Kevin Poloncarz

Transcription

1 WEST COAST CARBON UPDATE 2018 WSPP Spring Operating Committee Meeting March 9, 2018 Kevin Poloncarz

2 AGENDA: WEST COAST CARBON PRICING UPDATE 2 Washington Carbon Tax Oregon Cap and Invest California-Ontario-Québec Linked Market California Cap-and-Trade Scoping Plan Update Cap-and-Trade Regulation Amendments Complementary Measures: RPS/ IRP Appendix: Additional Resources on California Capand-Trade Program

3 WASHINGTON CARBON TAX 3 SSB 6203 (at request of Gov. Inslee) I-732: revenue neutral carbon tax 42% vote Four carbon tax bills in 2017 Gov. to fund K-12; another funding K-12; two funding clean energy July 1, 2019: $12/ton, raising $1.80 each year starting in 2021 until reaches $30/ton. Applies to sale or use within this state of all fossil fuels, except to generate electricity in state, and generation within or import for consumption of electricity generated through the combustion of fossil fuels. First taxable event Natural gas taxed on sale to utility to generate electricity

4 WASHINGTON CARBON TAX 4 SSB 6203 (cont d) Electricity imports on first deliverer Utilities may assume tax liability if in accordance with approved clean energy investment plan Asset Controlling Suppliers get own rate Unspecified power at default emission factor to be established in consultation with DEQ or, if none established, MTCO2e/MWh Constitutionality and preemption by CAA and FPA asserted by MT and WY

5 WASHINGTON CARBON TAX 5 SSB 6203 (cont d) Exemptions for taxing imports where unconstitutional, Centralia coal transition power, intra-hour (qualified) exports, sales to and onsite use by EITEs Credit allowed where subject to comparable carbon pollution tax or charge on carbon content imposed by another jurisdiction or allowances required to be purchased by another jurisdiction Utilities may claim credit up to 100% for clean energy investments. Stakeholder group to examine integration with western markets (including CAISO) to improve carbon transparency and market liquidity

6 WASHINGTON CARBON TAX 6 Protect Washington Act Ballot measure filed by Alliance for Jobs and Clean Energy on March 2, 2018 Starting Jan. 1, 2020, the fee of $15/MTCO2e; starts increasing on Jan by $2 per year until 2035 greenhouse gas reduction goal is met and the state s emissions are on a trajectory that indicates that compliance with the state s 2050 goal is likely. Source: Alliance for Jobs and Clean Energy

7 WASHINGTON CARBON TAX 7 Protect Washington Act (cont d) Similar coverage Must select a default emission factor that maximizes the incentive for utilities to specify power sources without also unduly burdening the ability to purchase electricity from the market Source: Alliance for Jobs and Clean Energy

8 OREGON CAP AND INVEST PROGRAM 8 Clean Energy Jobs Bill SB 1507/ HB 4011 ODEQ study Intended to link with CA/ON/QC market. Similar coverage, except that point of regulation for electricity imports is LSE, unless determined that alternative is better. Through 2050 Source: Sightline Institute

9 OREGON CAP AND INVEST PROGRAM 9 Clean Energy Jobs Bill SB 1507/ HB 4011 (cont d) Minor differences in offsets Failed to advance in 35-day short session; as consolation prize, legislative leaders formed a joint committee to work on a carbon cap plan over the next year and come back with a bill in Gives Gov. Brown $1.5 million to create a Carbon Policy Office to flesh out the plan Source: Sightline Institute

10 CAP-AND-TRADE California-Ontario-Québec Linked Market First joint auction with Ontario held Feb. 21, 2018 All current vintage allowances sold, including allowances reintroduced from previously unsubscribed auctions at $14.61, above floor of $14.53 Despite political uncertainty above Progressive Conservatives Despite Utah s plans to sue CARB for regulation of imported power. If we don t protect our coal resources in the state of Utah we have capitulated to a foreign entity. I consider California a foreign entity, said Noel, an alumnus of the University of California at Berkeley. They have a whole different set of values than we do here in Utah. Source: Are California s climate policies unfair to Utah?, Salt Lake Tribune, Feb. 12, 2018

11 CAP-AND-TRADE SB 32 (Pavley) (2016), amended AB 32 to require CARB to adopt rules that ensure statewide GHG emissions are reduced to at least 40% below 1990 levels by Dec. 31, AB 197 (E. Garcia) (2016), amended AB 32 to require CARB, in adopting rules and regulations under AB 32, to prioritize rules and regulations that result in direct emission reductions at large stationary sources, mobile sources and other sources. AB 398 (E. Garcia) (2017), passed by bipartisan supermajority on Jul. 17, 2017, signed Jul. 25, 2017 Requires CARB to establish price ceiling considering full social cost per ton of GHGs, cost per ton to meet 2020 and 2030 statewide limits, 2020 APCR tier prices, auction reserve price, potential for environmental/economic leakage, and need to avoid adverse impacts on residential households, businesses and economy. Health and Safety Code 38562(c)(2)(A)(i). AB 617 (C. Garcia) (2017). Passed with AB 398 by simple majority vote.

12 CAP-AND-TRADE AB 398 (cont d) Requires CARB to offer unlimited number of additional metric tons at the price ceiling if needed for compliance in the event actual supply and APCR exhausted. Health and Safety Code 38562(c)(2)(A)(ii). All monies generated from sales must be spent by CARB on reductions on at least a one-for-one basis, under criteria similar to those AB 32 establishes for offsets. Id (c)(2)(A)(ii)(II). Requires CARB to establish two price containment points at levels below ceiling, to be established using two-thirds divided equally of allowances remaining in APCR as of Dec. 31, Id (c)(2)(B). Use of offset credits restricted to 4% from 2021 through 2025 and 6% from 2026 through 2030, of which no more than half may be from projects that do not provide direct environmental benefits in the state. Id (c)(2)(E). CARB must establish banking rules to discourage speculation and avoid financial windfalls. Id (c)(2)(H). CARB must evaluate and address concerns related to overallocation in determining number of available allowances for 2021 through Id (c)(2)(D).

13 CAP-AND-TRADE AB 398 (cont d) CARB must evaluate and address concerns related to overallocation in determining number of available allowances for 2021 through Id (c)(2)(D). Source: Borenstein, Bushnell & Wolak, as reinterpreted by Chris Busch, Ph.D., Energy Innovation

14 SCOPING PLAN UPDATE 14 CARB 2030 Scoping Plan Update (Jan. 20, 2017) Draft Scoping Plan considered 5 scenarios: Cap-and-Trade and Refinery Measure Direct regulation Carbon Tax in lieu of Cap-and-Trade Cap-and-Trade with no Refinery Measure and LCFS maintained at 10% Cap-and-Tax Final Scoping Plan amended as per AB 398 adopted Dec Source: ARB 2030 Scoping Plan

15 CAP-AND-TRADE AMENDMENTS 15 CARB Amendments to Cap-and-Trade Regulation. Adopted July 27, 2017, extends program through 2030, aligns with CPP, and approves linkage with Ontario. CARB beginning process to amend regulation as per AB 398: Oct. 12, 2017 Workshop Presentation. March 2, 2018 workshop concept paper Source: ARB 2030 Scoping Plan 2030 ceiling of $ APCR no lower than $70. (2015$)

16 COMPLEMENTARY MEASURES: RPS/IRP 16 SB 350 (de Leon) (2016) increased RPS to 50% by 2030; requires IRPs to assure LSEs meet GHG reduction targets established by ARB, with CPUC and CEC, that reflect electricity sector s percentage in achieving the 2030 goal Decision Feb. 8, 2017 recommends 42MMTCO2e target (61% reduction from 1990 levels), adopts GHG Planning Price of $150 MTCO2e in 2030 for utilization as part of IRPs and as GHG adder in evaluating distributed energy resources Reference System Portfolio SB 100 (de Leon) (2017) would increase RPS to 60% by 2030 and 100% by 2045 Source: ARB 2030 Scoping Plan

17 APPENDIX Additional Resources on California Cap-and-Trade Program National Press Club, Resources for the Future and Stanford Woods Institute for the Environment, Jan. 2018, California s Climate Action: Leadership from the States (video) Justin Gillis and Chris Busch, A Landmark California Climate Program is in Jeopardy, The New York Times, Dec. 12, 2017 Dallas Burtraw, Resources for the Future, A Landmark California Climate Program Enjoys New Opportunities, Dec. 18, 2017 California Legislative Analyst s Office Report, Dec. 2017, Cap-and-Trade Extension: Issues for Legislative Oversight California Legislative Analyst s Office Report, Feb. 2017, The Budget: Cap-and-Trade California Legislative Analyst s Office Report, Aug. 23, 2017, Cap-and- Trade Expenditure Plan, presented to Assem. Budget Subcommittee No. 3 American Carbon Registry, California Carbon.Info report, Jul. 2017, An Impact Analysis of AB398 on California s Cap-and-Trade Market Chris Busch, Energy Innovation Policy & Technology, LLC, Mar. 2017, Recalibrating California s Cap-and-Trade Program to Account for Oversupply: An original quantitative analysis and policy recommendations Energy Institute at Haas, Haas Working Paper 281, S. Borenstein, J. Bushnell and F. Wolak, Jul. 2017, California s Cap-and-Trade Market Through 2030: A Preliminary Supply/Demand Analysis An Economic View of the Environment, Robert Stavins Blog, Aug. 25, 2017, Learning from Thirty Years of Experience with Cap-and-Trade Systems 17