snlfinancial-california and new york exploring trading opportunities for clean power plan-jan25-2015
TRANSCRIPT
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California New York exploring additional tradingopportunities for Clean Power PlanArticleRelated ContentTo receive real-time alerts for stories on similar topics click here
SNL Financial
Monday January 25 2016 428 PM ET
By Annalee Grant [mailtoagrantsnlcom]
California appears to be sitting pretty when it comes to Clean Power Plan compliance the stateand the entire West Coast will likely exceed the emissions reduction goals set by the newcarbon rule without having to take any additional steps
Yet California Air Resources Board spokesman David Clegern told SNL Energy recently thatstate officials are in talks with other states including New York about possibly expandingCalifornias emissions cap-and-trade program and other ways to comply with the Clean Power
Plan
Tools
2
Regulators in New York alsoconfirmed having preliminaryClean Power Plan compliancediscussions with California andother state officials at the directionof Gov Andrew Cuomo NewYork is already a member of theRegional Greenhouse GasInitiative and is also expected toslightly exceed its emissions targetwithout additional effort NewYork Department of EnvironmentalConservation spokesman BenningDeLaMater said the state is lookingat possibly collaborating with theWestern Climate Initiative ofwhich California is a member
Regional market-based programshellip have demonstrated the power ofmarkets to achieve substantialemission reductions at a low costwhile creating jobs maintaininggrid reliability and supportingeconomic growth powered byincreasingly low-carbon energyDeLaMater said The goal hecontinued is to enhance theseexisting trading programs by
building broader more efficient markets that could enable even greater emissions reductions
Clegern said the cap-and-trade program in his state is the key to California achieving CleanPower Plan compliance Other states have reached out to California regulators to discuss how theprogram was developed and how linkage might work Many states are examining more than onepossibility for achieving compliance and cap-and-trade is a topic which has attracted interestClegern said
California has plenty of lessons learned to offer states and Andy Van Horn principal andmanaging director with Van Horn Consulting believes expanding carbon trading markets couldoffer plenty of benefits to California and New York Both California and New York understandmass-based cap-and-trade programs and are champions of the positive role competition plays inthe affected electricity and fuel markets Van Horn said Both are aware of the nuances anddifficulties posed by wholesale electricity markets transmission and reliability constraints
3
Shaping existing markets for the Clean Power Plan
Californias Global Warming Solutions Act of 2006requires greenhouse gas emissions to return to 1990 levelsby 2020 or a 15 reduction in emissions that would occurby that date in a business-as-usual case Looking out evenfurther California hopes to reduce emissions 80 from1990 levels by 2050 A cap-and-trade program wasestablished in 2012 enforceable for 2013 emissions
It has always been a paramount goal of [the act] to createa regional or national market for carbon allowancesEliminating carbon emissions in California is only a dropin the global bucket Van Horn said
New York on the other hand is one of nine members ofRGGI which was the first mandatory market-basedemissions trading program in the US to reduce carbon emissions and the first anywhere to usea cap-and-invest model for reducing pollution according to the NYDEC The first control periodbegan in 2009
Many experts have opined that carbon trading markets are the most economical way tocomply with the EPAs Clean Power Plan Van Horn is no different adding that marketmechanisms are the best means to cross state and national boundaries and achieve regulatoryobjectives at least cost But Van Horn stressed that monitoring and measurements in protocolsand market rules must have integrity and be the same in all participating jurisdictions
Van Horn said that both New York and California have experience with distributed generationdemand-side management and rate-setting and operational issues associated with greenhouse gasemissions trading programs New York can benefit in an expanded market by tapping intorenewable resources that will be difficult to build in the state
New York knows that California will continue to be a growing market for renewable powerVan Horn said It will be cheaper to build and operate renewable power resources in Californiaand in the western US than to build and operate renewables in New York
Van Horn said a fungible carbon allowance that can be traded across state lines and politicalborders broadens the scope of reductions lowers costs reduces transaction costs and increasesincentives to develop new technologies and more efficient processes The revenue fromCalifornias trading program supports measures that could achieve future reductions as well aslow income communities
ldquoNew York knows that
California will continue to be a
growing market for renewable
power It will be cheaper to
build and operate renewable
power resources in California
and in the western US than to
build and operate renewables in
New Yorkrdquo
ndashndash Andy Van Horn Van Horn
Consulting
4
Both New York and California have strong financial and investment communities thatrecognize the advantages of using market mechanisms rather than command-and-controlapproaches Van Horn said Investors and companies in both states recognize the potential fornew products services and technologies needed to achieve EPAs 2030 targets and to makesubstantial reductions beyond 2030
An expanded trading market could smooth out the risks and volatility of year-to-year weathermarket and economic changes This is of particular concern to California which in recent yearshas experienced persistent drought conditions that have impacted the availability of hydroresources
5
The California drought means more emissions in drought years and lower emissions in yearswith abundant hydro Van Horn explained Hence linking would reduce weather-inducedvariations in annual emissions as well as risks due to other factors that affect particularindustries and state economies
The Clean Power Plan offers a compliance option for states that already have their own tradingprograms called a state measures approach under a mass-based compliance plan This reflectsthe fact that the carbon trading programs already operating use a mass-based system The statemeasures plan type accommodates trading programs that may also be trading in otherpollutants too Californias program is an economy-wide cap-and-trade program so Van Hornsays the rules will need to be altered for use in the states Clean Power Plan strategy
New York and any other states that end up linking with California will need to carefully analyzetheir assigned targets and compare them with potential linked regional carbon emissions targetsover the carbon rules compliance period Van Horn said Moreover the states must ensureleakage of emissions from one source to another will not occur
Successful linkage for states like New York and California would not only be a critical step inachieving Clean Power Plan compliance but could resonate across the world Van Horn saidproving that global carbon markets can function efficiently and achieve significant reductions incarbon emissions
Article Feedback Email this Story Display Printable View
Link to this article httpswwwsnlcomInteractiveXArticleaspxcdid=A-35078843-12329
2
Regulators in New York alsoconfirmed having preliminaryClean Power Plan compliancediscussions with California andother state officials at the directionof Gov Andrew Cuomo NewYork is already a member of theRegional Greenhouse GasInitiative and is also expected toslightly exceed its emissions targetwithout additional effort NewYork Department of EnvironmentalConservation spokesman BenningDeLaMater said the state is lookingat possibly collaborating with theWestern Climate Initiative ofwhich California is a member
Regional market-based programshellip have demonstrated the power ofmarkets to achieve substantialemission reductions at a low costwhile creating jobs maintaininggrid reliability and supportingeconomic growth powered byincreasingly low-carbon energyDeLaMater said The goal hecontinued is to enhance theseexisting trading programs by
building broader more efficient markets that could enable even greater emissions reductions
Clegern said the cap-and-trade program in his state is the key to California achieving CleanPower Plan compliance Other states have reached out to California regulators to discuss how theprogram was developed and how linkage might work Many states are examining more than onepossibility for achieving compliance and cap-and-trade is a topic which has attracted interestClegern said
California has plenty of lessons learned to offer states and Andy Van Horn principal andmanaging director with Van Horn Consulting believes expanding carbon trading markets couldoffer plenty of benefits to California and New York Both California and New York understandmass-based cap-and-trade programs and are champions of the positive role competition plays inthe affected electricity and fuel markets Van Horn said Both are aware of the nuances anddifficulties posed by wholesale electricity markets transmission and reliability constraints
3
Shaping existing markets for the Clean Power Plan
Californias Global Warming Solutions Act of 2006requires greenhouse gas emissions to return to 1990 levelsby 2020 or a 15 reduction in emissions that would occurby that date in a business-as-usual case Looking out evenfurther California hopes to reduce emissions 80 from1990 levels by 2050 A cap-and-trade program wasestablished in 2012 enforceable for 2013 emissions
It has always been a paramount goal of [the act] to createa regional or national market for carbon allowancesEliminating carbon emissions in California is only a dropin the global bucket Van Horn said
New York on the other hand is one of nine members ofRGGI which was the first mandatory market-basedemissions trading program in the US to reduce carbon emissions and the first anywhere to usea cap-and-invest model for reducing pollution according to the NYDEC The first control periodbegan in 2009
Many experts have opined that carbon trading markets are the most economical way tocomply with the EPAs Clean Power Plan Van Horn is no different adding that marketmechanisms are the best means to cross state and national boundaries and achieve regulatoryobjectives at least cost But Van Horn stressed that monitoring and measurements in protocolsand market rules must have integrity and be the same in all participating jurisdictions
Van Horn said that both New York and California have experience with distributed generationdemand-side management and rate-setting and operational issues associated with greenhouse gasemissions trading programs New York can benefit in an expanded market by tapping intorenewable resources that will be difficult to build in the state
New York knows that California will continue to be a growing market for renewable powerVan Horn said It will be cheaper to build and operate renewable power resources in Californiaand in the western US than to build and operate renewables in New York
Van Horn said a fungible carbon allowance that can be traded across state lines and politicalborders broadens the scope of reductions lowers costs reduces transaction costs and increasesincentives to develop new technologies and more efficient processes The revenue fromCalifornias trading program supports measures that could achieve future reductions as well aslow income communities
ldquoNew York knows that
California will continue to be a
growing market for renewable
power It will be cheaper to
build and operate renewable
power resources in California
and in the western US than to
build and operate renewables in
New Yorkrdquo
ndashndash Andy Van Horn Van Horn
Consulting
4
Both New York and California have strong financial and investment communities thatrecognize the advantages of using market mechanisms rather than command-and-controlapproaches Van Horn said Investors and companies in both states recognize the potential fornew products services and technologies needed to achieve EPAs 2030 targets and to makesubstantial reductions beyond 2030
An expanded trading market could smooth out the risks and volatility of year-to-year weathermarket and economic changes This is of particular concern to California which in recent yearshas experienced persistent drought conditions that have impacted the availability of hydroresources
5
The California drought means more emissions in drought years and lower emissions in yearswith abundant hydro Van Horn explained Hence linking would reduce weather-inducedvariations in annual emissions as well as risks due to other factors that affect particularindustries and state economies
The Clean Power Plan offers a compliance option for states that already have their own tradingprograms called a state measures approach under a mass-based compliance plan This reflectsthe fact that the carbon trading programs already operating use a mass-based system The statemeasures plan type accommodates trading programs that may also be trading in otherpollutants too Californias program is an economy-wide cap-and-trade program so Van Hornsays the rules will need to be altered for use in the states Clean Power Plan strategy
New York and any other states that end up linking with California will need to carefully analyzetheir assigned targets and compare them with potential linked regional carbon emissions targetsover the carbon rules compliance period Van Horn said Moreover the states must ensureleakage of emissions from one source to another will not occur
Successful linkage for states like New York and California would not only be a critical step inachieving Clean Power Plan compliance but could resonate across the world Van Horn saidproving that global carbon markets can function efficiently and achieve significant reductions incarbon emissions
Article Feedback Email this Story Display Printable View
Link to this article httpswwwsnlcomInteractiveXArticleaspxcdid=A-35078843-12329
3
Shaping existing markets for the Clean Power Plan
Californias Global Warming Solutions Act of 2006requires greenhouse gas emissions to return to 1990 levelsby 2020 or a 15 reduction in emissions that would occurby that date in a business-as-usual case Looking out evenfurther California hopes to reduce emissions 80 from1990 levels by 2050 A cap-and-trade program wasestablished in 2012 enforceable for 2013 emissions
It has always been a paramount goal of [the act] to createa regional or national market for carbon allowancesEliminating carbon emissions in California is only a dropin the global bucket Van Horn said
New York on the other hand is one of nine members ofRGGI which was the first mandatory market-basedemissions trading program in the US to reduce carbon emissions and the first anywhere to usea cap-and-invest model for reducing pollution according to the NYDEC The first control periodbegan in 2009
Many experts have opined that carbon trading markets are the most economical way tocomply with the EPAs Clean Power Plan Van Horn is no different adding that marketmechanisms are the best means to cross state and national boundaries and achieve regulatoryobjectives at least cost But Van Horn stressed that monitoring and measurements in protocolsand market rules must have integrity and be the same in all participating jurisdictions
Van Horn said that both New York and California have experience with distributed generationdemand-side management and rate-setting and operational issues associated with greenhouse gasemissions trading programs New York can benefit in an expanded market by tapping intorenewable resources that will be difficult to build in the state
New York knows that California will continue to be a growing market for renewable powerVan Horn said It will be cheaper to build and operate renewable power resources in Californiaand in the western US than to build and operate renewables in New York
Van Horn said a fungible carbon allowance that can be traded across state lines and politicalborders broadens the scope of reductions lowers costs reduces transaction costs and increasesincentives to develop new technologies and more efficient processes The revenue fromCalifornias trading program supports measures that could achieve future reductions as well aslow income communities
ldquoNew York knows that
California will continue to be a
growing market for renewable
power It will be cheaper to
build and operate renewable
power resources in California
and in the western US than to
build and operate renewables in
New Yorkrdquo
ndashndash Andy Van Horn Van Horn
Consulting
4
Both New York and California have strong financial and investment communities thatrecognize the advantages of using market mechanisms rather than command-and-controlapproaches Van Horn said Investors and companies in both states recognize the potential fornew products services and technologies needed to achieve EPAs 2030 targets and to makesubstantial reductions beyond 2030
An expanded trading market could smooth out the risks and volatility of year-to-year weathermarket and economic changes This is of particular concern to California which in recent yearshas experienced persistent drought conditions that have impacted the availability of hydroresources
5
The California drought means more emissions in drought years and lower emissions in yearswith abundant hydro Van Horn explained Hence linking would reduce weather-inducedvariations in annual emissions as well as risks due to other factors that affect particularindustries and state economies
The Clean Power Plan offers a compliance option for states that already have their own tradingprograms called a state measures approach under a mass-based compliance plan This reflectsthe fact that the carbon trading programs already operating use a mass-based system The statemeasures plan type accommodates trading programs that may also be trading in otherpollutants too Californias program is an economy-wide cap-and-trade program so Van Hornsays the rules will need to be altered for use in the states Clean Power Plan strategy
New York and any other states that end up linking with California will need to carefully analyzetheir assigned targets and compare them with potential linked regional carbon emissions targetsover the carbon rules compliance period Van Horn said Moreover the states must ensureleakage of emissions from one source to another will not occur
Successful linkage for states like New York and California would not only be a critical step inachieving Clean Power Plan compliance but could resonate across the world Van Horn saidproving that global carbon markets can function efficiently and achieve significant reductions incarbon emissions
Article Feedback Email this Story Display Printable View
Link to this article httpswwwsnlcomInteractiveXArticleaspxcdid=A-35078843-12329
4
Both New York and California have strong financial and investment communities thatrecognize the advantages of using market mechanisms rather than command-and-controlapproaches Van Horn said Investors and companies in both states recognize the potential fornew products services and technologies needed to achieve EPAs 2030 targets and to makesubstantial reductions beyond 2030
An expanded trading market could smooth out the risks and volatility of year-to-year weathermarket and economic changes This is of particular concern to California which in recent yearshas experienced persistent drought conditions that have impacted the availability of hydroresources
5
The California drought means more emissions in drought years and lower emissions in yearswith abundant hydro Van Horn explained Hence linking would reduce weather-inducedvariations in annual emissions as well as risks due to other factors that affect particularindustries and state economies
The Clean Power Plan offers a compliance option for states that already have their own tradingprograms called a state measures approach under a mass-based compliance plan This reflectsthe fact that the carbon trading programs already operating use a mass-based system The statemeasures plan type accommodates trading programs that may also be trading in otherpollutants too Californias program is an economy-wide cap-and-trade program so Van Hornsays the rules will need to be altered for use in the states Clean Power Plan strategy
New York and any other states that end up linking with California will need to carefully analyzetheir assigned targets and compare them with potential linked regional carbon emissions targetsover the carbon rules compliance period Van Horn said Moreover the states must ensureleakage of emissions from one source to another will not occur
Successful linkage for states like New York and California would not only be a critical step inachieving Clean Power Plan compliance but could resonate across the world Van Horn saidproving that global carbon markets can function efficiently and achieve significant reductions incarbon emissions
Article Feedback Email this Story Display Printable View
Link to this article httpswwwsnlcomInteractiveXArticleaspxcdid=A-35078843-12329
5
The California drought means more emissions in drought years and lower emissions in yearswith abundant hydro Van Horn explained Hence linking would reduce weather-inducedvariations in annual emissions as well as risks due to other factors that affect particularindustries and state economies
The Clean Power Plan offers a compliance option for states that already have their own tradingprograms called a state measures approach under a mass-based compliance plan This reflectsthe fact that the carbon trading programs already operating use a mass-based system The statemeasures plan type accommodates trading programs that may also be trading in otherpollutants too Californias program is an economy-wide cap-and-trade program so Van Hornsays the rules will need to be altered for use in the states Clean Power Plan strategy
New York and any other states that end up linking with California will need to carefully analyzetheir assigned targets and compare them with potential linked regional carbon emissions targetsover the carbon rules compliance period Van Horn said Moreover the states must ensureleakage of emissions from one source to another will not occur
Successful linkage for states like New York and California would not only be a critical step inachieving Clean Power Plan compliance but could resonate across the world Van Horn saidproving that global carbon markets can function efficiently and achieve significant reductions incarbon emissions
Article Feedback Email this Story Display Printable View
Link to this article httpswwwsnlcomInteractiveXArticleaspxcdid=A-35078843-12329