The NEG-ECP Climate Change Action Plan and the

Northeast Regional Greenhouse Gas Initiative (RGGI)

Western Regional Air PartnershipInformation Sharing Meeting on Climate Change

Santa Fe, NM – August 25-26, 2005

Ken ColburnCenter for Climate Strategies (CCS)kcolburn@symbioticstrategies.com

617-784-6975

Why Are the States Acting?

• Defensively:– Sense of urgency; exposure to climate risks– Protecting existing economies (forests, tourism, etc.)

• Offensively:– Learning curve; early adopters secure

competitive advantage (e.g., BP, Dupont, UTC)

• Aggressively to protect:– Public Health; Quality of Life

• Significant relative impact

• Prior success leading by example

Long History Working Together

• 1967 - New England Governors (NEG) formed NESCAUM to address air quality issues

• 1985-87 – Many states adopted regs ahead of feds (acid rain; air toxics) – and kept robust economy

• 1990 – Ozone Transport Commission (12 states, under Clean Air Act Amendments)

• Not just history…– Not alone in this – Cross-pollination; better ideas & vetting– Greater punch; strength in numbers– Competitive advantage; learning curve

• 50% additional reduction nationally

• 50% by 2003 • “Virtual elimination”

• 1990 GHG levels by 2010 • 10% below 1990 by 2020 • 75-85% ultimately

• Reaffirmed post-2002

Regional Plan, Individual Action…

• States moved forward with plans to implement– CT GHG plan, RPS, LEV, appliances, CHP– MA 4-P regulations, RPS– NH 4-P legislation, registry – ME GHG legislation, plan– RI plan– NJ consent decree & 20% initiative– NY LEV, plan, NYSERDA energy efforts– Even WV mandatory GHG reporting– Pacific states joining in: OR, CA, WA

• Initiated – April 2003 letter from Governor Pataki (R-NY) to 10 Northeast and Mid-Atlantic states

• Purpose – Invitation to develop a regional “Cap-and-Trade” system for GHGs

• Process – Start with power sector and CO2; then possibly expand to other sectors, GHGs, & offsets

• Timeline – Targeted April 2005

Regional Greenhouse Gas Initiative (RGGI)

• Nine states chose to participate– CT, DE, MA, ME, NH, NJ, NY, RI, VT– World’s 3rd largest economy

• 14% US GHG Emissions• 3.4% of Global GHG ( Germany)

• Others observing: PA, MD, DC, Provinces

• Staff Working Group created, plan developed, endorsed by energy & environmental chiefs

RGGI (continued…)

The Model Rule

Memorandum of

Understanding

The Groundwork

Data Assembly

IPM Modeling

REMI Modeling and

Benefits Analysis

Stakeholder Process

Post-Model Rule

Legislationand/or

Rulemaking

Regional Organization

Key RGGI Components

The RGGI Model Rule

Applicability: 25 MW+

Banking

Compliance Period

Offset Provisions

Early Action Credits

Monitoring & Reporting

Penalties & Enforcement

Regional Emissions Cap

State Allowance Budgets

New Source Allowance “Pool”

Opt-In Provision

The RGGI MOU

State-by-State Allocations of Allowances to Sources

Commit to Initiate Rulemaking

Recommendations on Collateral Energy Policies

Link with other Trading Systems

Method for Accounting for Additional States, or Subtracting States that Withdraw from RGGI

Emissions & Allowance Tracking/Regional Registry

Establish Regional Body

Future Offset Design

Prospective International Linkages

• Amendment to EU Trading Directive– “1a. Prior to third countries listed in Annex B to the Kyoto

Protocol ratifying the Protocol, agreements may be concluded with regional authorities in those countries to provide for the mutual recognition of allowances between the Community scheme and mandatory greenhouse gas emissions trading schemes capping absolute emissions established by those authorities.”

– Amend. 8, Article 25, adopted by Envir. Comm. 3/16/04

• Australian states starting a RGGI-like effort

• Link with Canada in registry/trading?

RGGI Next Steps

• Better to take a bit longer & get it right…• NY Times 8-24-05 Story

– “Generally accurate, but…”– 2009-2015: Stabilize at 2000-2004 levels– 2016-2020: reduce 10% lower

• Many issues remain:– Leakage, allowance allocations, offsets (type &

amount), consumer allocations/EE, etc.

• Stakeholder reaction & revision?• Legislative approval / regulatory processes• Litigation?

Thank you for your time and attention!

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Energy Efficiency & Renewables Path(MORE jobs, reliable, secure, clean, andexportable)

Energy Intensity Path(LESS jobs, reliable,

secure, clean, andexportable)

Competitive AdvantageLost to Delay

Now Later

Sustainability

Old or New Energy Path?