Officialsfrom the Regional Greenhouse Gas Initiative should look to tighten the program'semissions cap and possibly do away with the cost containment reserve, or CCR,various stakeholders said during a stakeholder review meeting held April 29 inBoston.
TheRGGI is made up of Connecticut, Delaware, Maine, Massachusetts, Maryland, NewHampshire, New York, Rhode Island and Vermont. The participating states use amarket-based cap-and-trade program to reduce greenhouse gas emissions fromregional power plants, selling nearly all emissions allowances through auctionsand investing proceeds in energy efficiency projects in the residential,commercial and municipal sectors.
Aheadof the meeting, in stakeholder commentsdated April 14, various groups, including the Sierra Club and the AcadiaCenter, reiterated their position that the participating RGGI states shouldimplement a tighter emissions cap between 2020 and 2030, as well as the removalof the CCR.
Followinga comprehensive review in 2013 in an attempt to recalibrate the program's capwith actual emissions levels, the RGGI states decided to cut the programemissions cap by 45%, to 91 million tons, starting in 2014. The RGGI capdeclines 2.5% each year thereafter through 2020.
"TheRGGI states have proposed to model a future carbon cap that falls by 2.5percent per year, while eliminating the current Cost Containment Reserve (CCR).We support modeling this scenario. The CCR as currently designed enablesmillions of additional tons of carbon pollution, and undermines both RGGI's capand the states' broader climate goals," the April 14 comments said.
In2014, the RGGI states implemented the use of the CCR during the program'squarterly auctions, creating a fixed additional supply of CO2 allowances thatare available for sale only if prices exceed certain levels — $4 in 2014, $6 in2015, $8 in 2016 and $10 in 2017, rising by 2.5% each year thereafter.
"Wealso strongly encourage the states to model a more ambitious cap reduction of 5percent below 2020 levels per year, in line with the annual reductions achievedunder RGGI to date, while likewise assuming elimination of the CCR. A 5 percenttrajectory would put the states on a clearer path to achieve a 40 percentreduction in economy-wide greenhouse gas emissions by limiting power sectorcarbon pollution to less than 40 million tons in 2030," according to thestakeholder comments.
Duringthe previous RGGI stakeholder meeting held in early February, participantsreviewed potential policy scenarios in light of the Clean Power Plan, includingmodeling by Synapse Energy Economics Inc. in partnership with the Sierra Club. Inan updated modeling scenario report, dated March 4, the groups again said thata stricter emissions cap would be required from the RGGI participating statesin order to achieve a goal of a 40% economy-wide reduction in emissions below1990 levels by 2030. The report found the least-cost strategy forthe RGGI states to meet their 2030 climate goals would result in a 40% CO2emission reduction in the nine states by 2030 by lowering the program cap onelectric sector emissions from 78 million short tons in 2020 to 39 millionshort tons in 2030. This strategy would also include the addition of newemission reduction measures in the transportation, buildings, and industrialsectors.
Alsoduring the April 29 meeting, RGGI officials again asked for stakeholdercomments on the expansion of the program, calling for comments regarding theminimum compatibility requirements under which the current RGGI states coulddecide to trade allowances with states that are not participants of the program.
"TheRGGI states still anticipate complying with the Clean Power Plan (CPP) using amass-based emissions standards approach. When considering whether to trade withnon-RGGI states, what program design features and other conditions, at aminimum, should be aligned with RGGI program elements in order for RGGI statesto be able to trade with those other states," RGGI said in a priornotice.
Althoughits implementation is on hold due to a stayfrom the U.S. Supreme Court, the Clean Power Plan establishes statewide carbondioxide emission standards for existing fossil fuel-fired electric generatingunits, with the goal of cutting CO2 emissions 32% as measured from a 2005baseline by 2030.
Topicsfor stakeholder exploration and comments include the fungibility of allowances;treatment of newly constructed emission sources; overall stringency; allowancetracking systems; market monitoring and reporting; distribution of allowances;auctioning; use of proceeds from sale of allowances; administrative costs;additional linkages with other states or regions; and implications for RGGIstates' use of emissions standard approach for Clean Power Plan implementation.
Writtenstakeholder comments are due to RGGI by 5 p.m. ET on May 9.