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Broad coalition asks FERC to hold technical conference on carbon pricing

A diverse coalition that includes merchant generators, renewable energy advocates and a gas trade group is calling on the Federal Energy Regulatory Commission to explore how a price on carbon emissions could be embedded within wholesale power markets.

The coalition submitted a petition to FERC on April 14 seeking a technical conference that picks up where a previous May 2017 workshop left off: examining how competitive power markets can survive as states pursue aggressive clean energy goals.

Since FERC convened that conference nearly three years ago, the commission has riled clean energy advocates by moving to set price floors in regional power markets that could keep state-sponsored resources from clearing those markets.

At the same time, states such as New York have significantly ramped up climate commitments and the New York ISO is developing a proposal to establish a carbon price in its energy market. The PJM Interconnection, which operates in all or part of 13 states, is also studying the potential impacts of implementing carbon pricing. PJM's footprint includes 10 states, along with the District of Columbia, that have varying renewable portfolio standards. Meanwhile, the ISO New England has publicly stated its support for carbon pricing.

"Currently, certain FERC-jurisdictional wholesale electric energy and capacity markets are grappling with how to reconcile wholesale markets and state policies related to reducing carbon emissions, which has a bearing on FERC's jurisdictional scope, such as how these markets function and the prices charged therein," signatories to the April 13 petition said.

The full group included Advanced Energy Economy, the American Council on Renewable Energy, the American Wind Energy Association, Brookfield Renewable Partners LP, Calpine Corp., Competitive Power Ventures, the Electric Power Supply Association, PJM Power Providers Group, the Independent Power Producers of New York, the Natural Gas Supply Association, LS Power Group, NextEra Energy Inc., the R Street Institute and Vistra Energy Corp.

Noting that the parties "do not necessarily agree" on all aspects of the role of carbon pricing in wholesale markets, the group stressed that it is not asking FERC to initiate a rulemaking proceeding.

"FERC convening a dialogue on carbon pricing would be a good first step toward a much-needed conversation about how the entire suite of state policies can be better integrated into competitive wholesale electricity markets," Jeff Dennis, general counsel and managing director of Advanced Energy Economy, said in a statement.

The April 13 petition noted that some grid operators have already created rules to accommodate regional carbon pricing schemes such as the Regional Greenhouse Gas Initiative and the California-Quebec cap-and-trade agreement.

"The parties to this petition simply believe the proposed technical conference or workshop will be helpful to the commission and stakeholders in the electric energy industry in deciding how best to move forward at the state and regional levels on these issues and in the relevant organized markets," the petition said. "This dialogue would complement state, regional, and national discussions currently taking place."