regional greenhouse gas initiative (hb 1434) presentation to house science, technology, & energy...
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![Page 1: Regional Greenhouse Gas Initiative (HB 1434) Presentation to House Science, Technology, & Energy Committee January 10, 2007 New Hampshire Department of](https://reader038.vdocuments.us/reader038/viewer/2022110207/56649d375503460f94a1003d/html5/thumbnails/1.jpg)
Regional Greenhouse Gas Initiative (HB 1434)
Presentation toHouse Science, Technology, & Energy Committee
January 10, 2007New Hampshire Department of Environmental
Services Thomas S. Burack, Commissioner
Robert R. Scott, Director Air Resources Division
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Climate ChangeImpacts on New Hampshire
• Trends indicate NH is experiencing impacts now
• Extreme storm events
• More rain in winter• Less snow cover
Average Winter Temperature in the Northeast 1899-2000
Time series represent areally weighted average of 56 meteorological stations.
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Flooding in NH
October 2005 May 2006April 2007
• Peak flows in many rivers greater than 100 year flood
• Millions of dollars in state and individual losses
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Future Economic Impacts to New HampshireNortheast Climate Impacts Assessment (2007)
By late in the century (without reducing GHG emissions)
• Winter snow season cut in half• Sea-level rise up to nearly three feet• More than 60 days with temperatures over 90°F in
most cities • 4 to 28 days with temperatures over 100°F
(compared with one or two days per year historically).
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What if we don’t act now to reduce green-house gases?
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Global Cost of No Action(Stern Review UK Treasury 2006)
• Extreme weather alone – 0.5-1% world GDP annually• Total cost of taking no action equivalent to reduction
in consumption per head of 5-20% annually• Less costly to take actions now than to delay• Risk to world economy on the order of multi-national
world conflict• Insurance market already reacting
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UK Experience
• All three political parties working together to address climate change
• 1990-1999 14% reduction in GHG emissions; 14.9% increase in economic growth; 5% increase in jobs
• Confederation of British Industry – recent economic report on growth in emerging technologies and energy services (very supportive of climate change policies)
• Specific examples of companies transforming from skeptics to champions of aggressive energy efficiency policies
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NH CO2 (equivalent) Emissions by Sector
2004
Electric Utilities
34%
Commercial
8%Industrial
7%
Residential
15%
Transportation
34%
Agriculture,
Forestry and
Waste
2%
Transportation
Residential
Industrial
Commercial
Electric Utilities
Agriculture, Forestry
and Waste
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RGGI Cap & Trade Program
• Regional cap on emissions from fossil-fueled power plants >25 megawatts
• Cap (10 state region) 188 million allowances • 1 allowance = 1 ton• NH Budget 8.6 million allowances• Majority of allowances will be sold in regional
auction
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Compliance
• Power plants must have enough allowances to equal their emissions by the end of the three year period
• Can buy allowances (regional auction) or offset allowances
• Unlimited banking of allowances
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RGGI impact on NH
• 9 other states going forward with RGGI
• Regional energy prices will be affected by RGGI whether NH participates or not
• Only way to mitigate costs is to participate and use auction revenues
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Regional Leadership
• Driving federal action• Western Climate Initiative• Mid-western initiative (Illinois, Iowa, Kansas,
Minnesota, Michigan, Wisconsin, and Manitoba)
• Investment in more efficient energy market is positive for NH regardless of climate change
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RGGI is Significant
• RGGI would represent the seventh highest emitting developed country
• The RGGI cap (188,076,976 tons) is similar to the emissions of Australia, France, or Italy
• There is no “silver bullet” but RGGI is part of the “silver buckshot”
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Benefits of HB 1434• Helps to mitigate long-term energy costs via greater
investment in energy efficiency
• Creates a market signal that encourages development of cleaner and, in many cases, more local energy sources
• Increases our energy independence with more local energy sources: keeping more dollars local
• Starts to mitigate our GHG emissions to avoid the most deleterious projections of climate change impacts
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Downside of not joining RGGI• Roughly half of NH’s supply is purchased from
the regional market
• As a consequence, NH electric prices will be affected by RGGI
• No benefit of sale of NH allowances
• No seat at table – no influence on program
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Energy Efficiency – Regional Priority
• Record peak demand in summer >28,000 MW• Peak demand increase twice as fast as average load
growth• Costly new capacity may be needed to meet demand
reached for only a few hours or days our of the year• Reducing electricity use by 5% during peak times
will save consumers $580 million a year (ISO – NE June 2006)
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Major Potential for Energy Efficiency Improvements
• RGGI bill proposing a “fuel-neutral” fund
• Technology continuing to improve
• Recognize opportunities vary
• Increased energy efficiency overall – can avoid costly new capacity – reducing everyone’s energy costs
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Light Bulb Evolution
Incandescent CFL CFL Cold Cathode LEDElectric Demand 100 Watts 25 Watts 18 Watts 8 Watts 2.2 WattsHours Use 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365Annual kWh Usage 146 37 26 12 3Annual kWh Savings 110 120 134 143Annual Cost (@ $0.149) $21.75 $5.44 $3.92 $1.74 $0.48Annual $ Savings $16.32 $17.84 $20.01 $21.28
Annual CO2 Reduction (lbs) 121 133 149 158
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Fluorescent Light Evolution
34–40 Watts 32 Watts 28 Watts
1950’s – 1980’s late 1980’s – 1990’s Last 5 yrs
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ISO-NE Comments (D. LaPlante presentation 11-9-07)
Should RGGI work?Yes – markets have helped meet environmental policy objectives• Transparent prices enable potential investors to determine
value of projects and allowances• Open access encourages a large number of developers to
participate in markets• Stakeholder process enable market changes to meet policy
objectives• Regional Transmission Planning provides a for(u)m to support
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ISO-NE Comments (D. LaPlante presentation 11-9-07)
RGGI rules compatible with continued reliable operation of the system
• Allowances are not required before the fact to generate• Generators have many opportunities to acquire allowances
– Before the fact in auctions or the secondary market– After the fact in two month window after close of
compliance period– As a last resort, future allowances at a rate of 3 future
allowances for 1 current period allowances can be used
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UNH Economic Analysis 2007
• NH participation is lower cost overall to NH than not joining
• Lowest long-term net utility cost is to auction allowances and put revenues into energy efficiency
• Positive impact on employment and the overall NH economy
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Net Rate Impact – All NH Utilities
2009 2012 2015 2018
Allowance Price $ 2 $ 4 $ 6 $ 8
100% Efficiency $ 14,376,318 $ 13,659,299 $ (1,800,436) $(31,968,822)
Don't Join $ 6,769,305 $ 14,922,360 $ 24,575,400 $ 35,806,006
Net Change from Joining RGGI $7,607,013 ($1,263,061) ($26,375,836) ($67,774,828)
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Average Monthly Change Residential Household Bill - All NH Utilities
2009 2012 2015 2018
Allowance Price $ 2 $ 4 $ 6 $8
100% Efficiency $ 0.76 $ 0.69 $(0.09) $ (1.46)
Don't Join $0.36 $ 0.75 $1.18 $ 1.63
Net Change from Joining RGGI $0.40 ($0.06) ($1.27) ($3.09)
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Potential Mitigation of Monthly Business Electricity Costs
2009 2012 2013 2015 2018
Small Business
$1.29 $(0.20) $(1.90) $(4.00) $(9.78)
Large Business
$159 $(25) $(234) $(493) $(1,205)
% Change
0.4% -0.07% -0.6% -1.3% -3.2%
Net change from 100% investment in energy efficiency compared to not joining RGGI
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Opportunity for Economic Development
• NH tradition of innovation and leadership
• NH needs to foster R&D development of new technologies and related ancillary services
• Current examples – Power Span
– GT Solar
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Regional Greenhouse Gas Initiative (www.rggi.org)
• Clean Power Act – Cap on PSNH fossil fuel units (Bow, Portsmouth,
Newington) – 5,425,866 tons
• RGGI – 10 state MOU– PSNH (Bow, Portsmouth, Newington)
– Granite Ridge (Londonderry)
– Newington Energy (Newington)– 8,620,460 tons
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RGGI Cap Levels
• 2-Phase CO2 Caps (gradual, keeps cost low)– stabilization 2009 – 2014 (no absolute
reductions, but reductions from business-as-usual)
• Phase I Regional Cap = 188,076,976 tons• Phase I NH Budget = 8,620,460 tons
– 10% reduction 2015 - 2018 • (2.5% per year for 4 years)
• Built-in Review of Program in 2012
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RGGI Compliance Options
• Stabilize/Reduce EmissionsEnergy efficiencyFuel switchingChanges in dispatchEmerging control technologies
– GreenFuel Emissions-to-Biofuels system
– CO2 capture & underground injection
• Buy allowances or offsets
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Types of RGGI Allowances
• Budgeted allowances purchased at auction
• Early Reduction: Emission reductions made prior to the start of a program.
• CO2 Offsets: A reduction from an activity (sector) outside or different than the activity (sector) being regulated.
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RGGI Offsets
• 1st set – methane capture, reduced loss of SF6 (electric equipment insulator), afforestation, end-use efficiency
• 2nd set – forest management• Limited to 3.3% of each source’s emissions• Offsets may come from RGGI region or from another
US state • Safety valves built in to increase use of offsets for
economic relief if necessary
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• 3-Year Compliance Period
• Banking (with typical tracking, monitoring, recordkeeping, and reporting requirements)
• Early Reduction Allowances
Compliance Flexibility Mechanisms
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House Bill 1434
• Includes all major provision of MOU
• Conversion of PSNH allowances under the Clean Power Act
• Proposes to auction remaining allowances
• Revenues to be used for energy efficiency
• Clean Power Act provisions will end 12-31-2008
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125-O:20 Establishing a Trading Program
• State budget of 8,620,460 tons (03-04 average emissions)
• By 2018, 7,758,414 tons• Applicable to all fossil-fueled generation > 25
Megawatts• Auction allowances (except those grandfathered to
PSNH as a result of Clean Power Act)• Can grant Early Reduction Allowances (Northern
Wood Project) • Can accept eligible offset allowances
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125-O:21 Compliance
• Power plants must have enough allowances to equal their emissions over a three year period
• Can buy allowances (regional auction) or offset allowances
• Limit on use of offset allowances
• Unlimited banking
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Limit on use of offset allowances• Allowance price <$7.00 (2005 dollars) – 3.3% • Allowance price >$7.00 but <$10.00 – 5% • Allowance price >$10.00 – can use for 10%
of their compliance obligation– compliance period extended to four years– can use European Union Emission
Trading allowances or Kyoto Clean Development Mechanism offset credits
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125-O:22 Greenhouse Gas Emissions Reduction Fund
• Administered by NH PUC with an advisory board• Used for energy efficiency, conservation, and demand
response • State administrative costs and to pay NH’s
contribution to RGGI regional organization• At least 5% of monies shall be used to assist low-
income residential customers to reduce total energy use (fuel neutral)
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Criteria for use of fund
• reduce GHG emissions from all fuels used to provide electricity, heating and cooling
• cost-effective• reduce peak electric load• promote market transformation, innovation, and
energy cost savings
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125-O:23 Conversion of Clean Power Act Allowances (PSNH)
• Capitol investment converted to the number of allowances that investment would have been able to pay on the “market”
• Unused allowances from 2007 and 2008 (PSNH emissions < Clean Power Act cap of 5,425,866)
• Emission reductions from the Northern Wood Project (will be granted as Early Reduction Allowances) – about 300,000 tons per year
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125-O:24 Set Aside for Voluntary Purchases of RECs
• Up to 1% of allowances set aside to retire emissions for voluntary REC purchases – if not used in any one year, put up for auction
• NH and NE businesses buy RECs to reduce their carbon emissions
• This provision protects the value of the RECs developed in NH, otherwise they will not be “certified” and have little or no value
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Contacts
Tom Burack [email protected]
271- 2958
Bob Scott [email protected]
271-1088
Joanne Morin [email protected]
271-5552