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2007 ARIPPA Annual Tech Convention


... on Greenhouse Gas (GhG) emissions ... sources, including utilities, oil and gas and transportation facilities ... for natural gas, propane and heating ... – PowerPoint PPT presentation

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Title: 2007 ARIPPA Annual Tech Convention

2007 ARIPPA Annual Tech Convention Managing
Greenhouse Gas Emissions
Arun Kanchan Principal ConsultantTrinity
Consultants Somerset, New Jersey akanchan_at_trinit
yconsultants.com August 29, 2007 Harrisburg,
Presentation Objective
  • Brief Background on Greenhouse Gas (GhG)
  • Domestic and international policy developments
    regarding global climate change
  • Best practices in greenhouse gas inventorying

Stabilizing CO2 Base Case and Gap Technologies
  • Assumed Advances In
  • Fossil Fuels
  • Energy intensity
  • Nuclear
  • Renewables
  • Gap technologies
  • E.g. CCS

The Gap
Source Jae Edmonds, PNNL/Univ MD
1.9 ?
Fill the Stabilization Triangle with Seven Wedges
Adapted from Robert Socolw, www.princeton.edu/cm
Sources of Greenhouse Gases
Climate Change BasicsThe Greenhouse Gases
(per the Second Assessment Report)
Calculating CO2e
  • CO2e is carbon dioxide equivalent
  • CO2e reflects the global warming potential of
    each greenhouse gas relative to carbon dioxide,
    which has a GWP of 1
  • Emission rate 400 tpy CH4
  • CH4 GWP 21
  • 400 tpy CH4x 218,400 tpy CO2e

10,000 metric tons of CO2e ?
All info from The New Zealand Herald, 11/1/03,
quoting the New Zealand Climate Change Office
How do the U.S. and China Compare with Other
Countries on GhG Emissions
Climate Change BasicsEmissions per Capita (2003)
Metric Tons CO2 Equivalent
From Energy Information Administration, World
Population, 1980-2003 2005
(No Transcript)
Domestic and International Policy
Bush Administration Report (2004)
  • CO2 is the largest single forcing agent of
    climate change
  • CO2 and CH4 have been increasing for about two
    centuries as a result of human activities
  • approximately three-quarters of present-day
    anthropogenic carbon dioxide emissions are due
    to fossil fuel combustion.

The Kyoto ProtocolEarly Backlash in the United
  • Senate Resolution 98 (1998)
  • Developing countries must be included
  • Must not harm the U.S. economy
  • Passed by a vote of 95-0

Emission Trends in the United StatesMoving
Opposite Kyoto Targets
Kyoto Allocation 5,699 MMT CO2 Equivalent per
Million Metric Tons CO2 Equivalent
2000 Gap 1,295 MMT CO2 Equivalent 18.5 of
Domestic Legislation S280 - Climate Stewardship
and Innovation Act of 2007
  • Limit GHG sources with emissions of greater than
    10,000 tCO2e per year from the following sectors
  • Power generation
  • Transportation
  • Refiners
  • Producers or importers of HFCs, PFCs, SF6
  • Other industry
  • Emission targets
  • Decrease to 2004 levels in 2012
  • Decrease to 1990 levels by 2020
  • Decrease to 1/3 of 2000 levels by 2050

John McCain, R-AZ
Joseph Lieberman I-CT
Domestic LegislationS280 - Climate Stewardship
and Innovation Act of 2007
  • Compliance achieved by cap and trade
  • 6 GHGs
  • 30 of reduction requirements can be satisfied by
    submitting allowances from another nations
    market or by a net increase in sequestration
  • Penalty for noncompliance is 3x the market value
    of a ton of GHG per ton of excess GHG emissions
  • In 2003, defeated 53 to 45
  • Reintroduced in 109th Congress, defeated 60-38
  • Introduced in 110th Congress

Domestic LegislationS.1766 The Low Carbon
Economy Act of 2007
  • Formally introduced to 110th Congress on July 11,
  • Emission Targets
  • Reduce emissions to 2006 levels by 2020
  • Reduce emissions to 1990 levels by 2030
  • 60 reduction of emissions from 2006 levels by
  • Regulated entities include
  • Regulated fuel distributors (natural gas
    pipelines, petroleum refineries, regulated coal
    facilities, natural gas processing plants, and
    fuel importers)
  • Non-fuel regulated entities (producers or
    importers of HFCs, PFCs, SF6, or N2O adipic and
    nitric acid manufacturers aluminum smelters
    HCFC-22 producers, and various other
    non-fuel-related emitters)

Domestic Legislation S.1766 The Low Carbon
Economy Act of 2007
  • Cost reducing features
  • Safety valve mechanisms set at 12/metric tonne
    of CO2e
  • 14 of allowances auctioned for technology,
    adaptation, and assistance programs
  • 53 of allowances allocated to various industrial
  • 23 of allowances will be reserved for a
    set-aside program supporting agricultural
    sequestration, early reduction, carbon
    sequestration, and individual state reduction

Domestic Legislation S.1766 The Low Carbon
Economy Act of 2007
  • Initial allocation period set to start on January
    1, 2012
  • In January 2007, the Energy Information
    Administration (EIA) released an analysis of a
    similar proposal by Bingaman, finding that it
    would cost 0.1 of GDP through 2030

(No Transcript)
Other Domestic Legislation
Source Point Carbon, Carbon Market Analyst,
Carbon Trading in the US The Hibernating
Giant, September 13, 2006
Domestic Legislation
Source Wall Street Journal, June 20, 2005 and
National Center on Energy Policy
State/EPA Litigation
  • Lawsuit filed against EPA in June 2003 for
    failure to regulate carbon dioxide under the
    Clean Air Act
  • Litigants
  • Commonwealth of Massachusetts
  • State of Connecticut
  • State of Maine

State/EPA Litigation
  • No indication that Congress intended to regulate
    in the area of climate change in the 1990 CAAA
  • CAA is missing a regulatory regime for addressing
    climate change (as exists for stratospheric ozone
  • Cites FDA v. Brown Williamson Tobacco Corp.
    (2000) which states that an administrative agency
    awaits congressional direction on a fundamental
    policy issue such as climate change instead of
    searching for authority in existing statutes,
    which were not designed to deal with the issue

(No Transcript)
Regional Greenhouse Gas Initiative
Regional Greenhouse Gas Initiative (RGGI)
  • 8 Northeastern and Mid-Atlantic States (CT, DE,
    ME, NH, NJ, NY, VT, and recently MD)
  • Mandatory CO2 cap and trade program to reach
    state-specific targets
  • For CO2 only, from utilities (electric generating
    units with a nameplate capacity ?25 MW)
  • Program will begin January 1, 2009 and will cap
    regional GHG emissions at 1990 levels by 2014,
    10 below 1990 levels by 2018
  • Memorandum of Understanding (MOU) issued on
    December 20, 2005
  • Draft model rule issued on March 23, 2006
  • Final model rule issued August 15, 2006, and will
    be basis for state legislation

Regional Greenhouse Gas Initiative (RGGI)
  • Program Adoption
  • Launch date of January 1, 2009
  • State-level implementing legislation must be in
    place by December 31, 2008
  • Regional emissions cap
  • Annual budget of 121,253,550 short tons
  • For 2009 to 2014, annual budget remains static
    in 2015, budget will decline 2.5 per year

Regional Greenhouse Gas Initiative (RGGI)
Types of Offset Projects
  • Landfill gas capture/combustion
  • SF6 capture and recycling
  • Afforestation
  • End-use efficiency for natural gas, propane and
    heating oil
  • Methane capture from farming operations
  • Projects to reduce fugitive methane emissions
    from natural gas transmission and distribution
    (deleted from final model rule)

Regional Greenhouse Gas Initiative (RGGI)
  • Offset Projects
  • Reductions realized on or after the date of the
  • One allowance per ton of CO2e reductions inside
    signatory states
  • One allowance per two tons CO2e reductions
    outside signatory states
  • Source may only cover up to 3.3 of reported
    emission with offset allowances

Regional Greenhouse Gas Initiative (RGGI)
  • Offset Trigger and Reset
  • If after market settling period, average regional
    spot price exceeds 7.00 (2005) per ton for
    twelve months on rolling average
  • Offsets may be awarded to projects located
    anywhere in North America
  • Offset allowances will be awarded on 11 basis
  • Offset allowance coverage will be increased to up
    to 5 of reported emissions for compliance period

Regional Greenhouse Gas Initiative (RGGI)
  • Safety Valve Offsets Trigger
  • If a Safety Valve Trigger Event occurs twice in
    two consecutive 12-month periods
  • Offsets may be awarded to projects located
    anywhere in North America or from international
    trading programs
  • Offset allowances will be awarded on 11 basis
  • Coverage will be increased to up to 5 of
    reported emissions for first three years of
    compliance period and 20 of reported emissions
    for fourth year of compliance period

Regional Greenhouse Gas Initiative (RGGI)
  • Allocation of Allowances
  • Each state may allocate allowances from their
  • 25 of allowances will be allocated for consumer
    benefit or strategic energy purposes
  • Promote energy efficiency, mitigate ratepayer
    impacts, promote renewables, stimulate investment
    in carbon abatement technologies, and/or to fund
    program administration

PA Energy Department Authority Funding
  • Governor Rendell is making 10 million in grants
    available for the fourth round of Pennsylvania
    Energy Development Authority funding.
  • PEDA was brought back to life by the governor
    after years of inactivity and it has directed 21
    million in grants and loans for 57 clean energy
    projects that are leveraging another 240 million
    in private investment. The projects will create
    975 permanent and construction jobs.
  • Applicants for PEDA financing can seek grant
    assistance for capital costs for a variety of
    innovative, advanced energy projects. Eligible
    PEDA projects may include solar energy wind
    low-impact hydropower geothermal biologically
    derived methane gas, including landfill gas
    biomass fuel cells coal-mine methane waste
    coal integrated gasification combined cycle
    demand management measures, including recycled
    energy and energy recovery, energy efficiency and
    load management and clean, alternative fuels for
    transportation. PEDA particularly encourages
    applicants with projects related to distributed
    generation for critical public infrastructure to
  • PEDA financing is available to organizations
    operating in Pennsylvania and to those businesses
    interested in locating their advanced energy
    operations in Pennsylvania.

Other Voluntary Initiatives
  • US EPA / DOE Programs
  • Energy Star (DOE)
  • Energy efficient products
  • Energy efficient homes
  • Energy efficient buildings
  • http//www.energystar.gov/
  • Natural Gas Star (EPA)
  • Reduce methane emissions
  • Focus on profitable investments
  • 90 partner companies
  • http//www.epa.gov/gasstar/

Other Voluntary Initiatives
  • EPA Climate Leaders Program
  • Company Commitments
  • Inventory corporate-wide GHG emissions
  • Set aggressive emissions reduction goal
  • Annually report emissions and progress toward
  • Publicize their participation
  • EPA Commitments
  • Technical assistance for GHG inventories
  • GHG Protocol
  • http//climatebiz.com/

Other Voluntary Initiatives
  • Chicago Climate Exchange
  • Voluntary cap-and-trade program for reducing and
    trading greenhouse gas emissions.
  • Phase I - 1 GHG reduction each year for 4
    years 2003 through 2006 (baseline is determined
    from average of 1998-2001 emissions)
  • Phase II - 6 below baseline through 2012
  • Trading approximately 2.5 million metric
    tons/month (3.50/ton)
  • Now approximately 4 to 4.20/ton
  • US, Canada, Mexico, Brazil

American Electric Power (AEP)Baxter
International Inc.City of ChicagoDuPontEquity
Office Properties TrustFord Motor
CompanyInternational PaperManitoba
HydroMeadWestvaco CorporationMotorola,
Inc.STMicroelectronicsStora Enso North
AmericaTemple-Inland Inc. Waste Management,
Other Voluntary Initiatives
  • State registries are being developed for
    baseline protection
  • California Climate Action Registry
  • Eastern Climate Registry
  • LADCO Registry
  • WRAP Registry
  • ..Multi-State Registry

US and Kyoto?
  • US reductions cannot be transacted under Kyoto
    mechanisms, as the US has not ratified the Kyoto
  • Under Kyoto rules, US companies can participate
    in CDM projects in both developing country
    parties (through unilateral CDM) and Annex B
    parties (through JI)

Price and volume ECX CFI Futures Contracts606
million tons (Mt) traded YTD 2007
Los Angeles
August 27, 2007 Conversion, I Euro 1.3645 USD
Source European Climate Exchange
Iron and Steel also shows advantage in options
costing less than 10
GHG Inventory Best Practices
Overview of Sources
Source The Greenhouse Gas Protocol A
corporate reporting and accounting standard
(revised edition), www.ghgprotocol.org
Calculating Emissions
  • Step 1 Identify GHG Source
  • Scope 1 Direct emissions from stationary
    combustion, mobile combustion, processing and
  • Scope 2 Indirect emissions from purchased
    electricity, heat, or steam
  • Scope 3 Indirect emissions from transportation,
    contract manufacturing, and product use

Emissions Sources Power Utility
  • Direct Emissions
  • Stack CO2, CH4, N2O emissions from fuel
  • SF6 from transmission and distribution equipment
  • SO2 Scrubbers - CO2 released from the reaction of
    calcium carbonate with sulfur dioxide
  • SNCR/SCR - Potential N2O emissions from the
    control of NOX through SNCR/SCR.
  • Fugitive CH4 from coal storage piles
  • Blackstart engines
  • Cogeneration

Example Power Utility
  • Indirect Emissions
  • System losses from transmission and distribution
    (TD) the amount that is truly consumed by
    the system (difference between amount produced at
    facility and amount delivered to user)
  • Electricity usage for office buildings

Strategies for Streamlining GHG Inventories
Items for consideration for an internal GHG
  • Set a deminimis threshold for sources and
  • Establish a base year or baseline
  • Set a threshold for adjusting the baseline and
  • Calculate and document distinct GHG emission
    reduction projects
  • Pursue third party verification

US Developments and Crystal Ball
  • Strong possibility that the US may have mandatory
    CO2 limits in the near future (3 to 5 years)
    highly dependent on political climate
  • State (and regional) initiatives/mandates will
    increase (will companies pressure EPA for federal
    regulation if states are too active?)
  • EPA/DOE will continue to pursue voluntary
    initiatives (Climate Leaders, Natural Gas Star,
    1605b, etc.)
  • Domestic litigation will continue
  • Shareholder pressures will escalate
  • Pressure will mount for US to address climate
    change with Kyoto entry into force and EU ETS
  • Northeast and CA will have carbon caps on
    electric generating units and CA will have
    emission caps on additional sources

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