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ESM 297: Renewable Energy Law and Policy


Carbon tax: assess the carbon emissions for each source and then apply a tax on ... CEC's Application for Rehearing. We raised the issue of lifecycle emissions ... – PowerPoint PPT presentation

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Title: ESM 297: Renewable Energy Law and Policy

ESM 297 Renewable Energy Law and Policy
  • Week 2 Climate Change Law and Policy, AB 32 and
    SB 1368

Californias emissions in 1990
Californias emissions in 2004
Electricity mix
Electricity emissions
Emissions by gas type
What tools do we have to mitigate climate change?
  • Tax policies
  • Carbon tax assess the carbon emissions for each
    source and then apply a tax on the producer of
    those emissions

Other tools
  • Command and control
  • A standard gt SB 1368s emissions performance
  • An emissions cap gt AB 32

  • Market-oriented policies
  • and trade gt authorized by AB 32
  • EUs Emissions Trading Scheme is a cap and trade

  • Voluntary measures
  • Climate Action Registry for reporting carbon
  • Doesnt currently require any additional steps
  • Anything else?

Carbon Tax
  • Not really on the table in California or the U.S.
  • However, AB 32 does state
  • The state board may adopt by regulation, after a
    public workshop, a schedule of fees to be paid by
    the sources of greenhouse gas emissions regulated
    pursuant to this division, consistent with
    Section 57001. The revenues collected pursuant to
    this section, shall be deposited into the Air
    Pollution Control Fund and are available upon
    appropriation, by the Legislature, for purposes
    of carrying out this division. (Section 38597).
  • This provision doesnt in itself authorize a
    broad carbon tax, but this area is somewhat murky
    in light of Prop 218

Carbon Tax
  • In some ways a carbon tax is equivalent to cap
    and trade b/c the trade piece can be equated to
    a tax insofar as it adds to the cost of doing
    business, which is passed on to consumers
  • Advantages
  • costs can be offset through decreasing other
    taxes (income, payroll, etc.)
  • Avoids allowance price volatility (like in the
    EUs pilot program)
  • Others?
  • Disadvantages
  • cant join with other jurisdictions to trade
  • Its a tax
  • Others?

AB 32s Cap
  • By January 1, 2008, the state board shall, after
    one or more public workshops, with public notice,
    and an opportunity for all interested parties to
    comment, determine what the statewide greenhouse
    gas emissions level was in 1990, and approve in a
    public hearing, a statewide greenhouse gas
    emissions limit that is equivalent to that level,
    to be achieved by 2020. (Section 38550).
  • This is by far the most important provision of AB

AB 32s cap
AB 32s cap
  • Not much else of consequence is determined by AB
    32 itself
  • AB 32 sets the goal and the process in motion to
    determine the rules for achieving that goal and
    thats pretty much it

and trade?
  • AB 32 states
  • the state board may adopt a regulation that
    establishes a system of market-based declining
    annual aggregate emission limits for sources or
    categories of sources that emit greenhouse gas
    emissions, applicable from January 1, 2012, to
    December 31, 2020, inclusive. (Section
  • The state board may include in the regulations
    adopted pursuant to Section 38562 the use of
    market-based compliance mechanisms to comply with
    the regulations. (Section 38570(a)).

Governator takes action
  • However, Gov. Schwarzenegger issued Exec. Order
    S-20-06 in October, 2006
  • Directs CARB to collaborate with Cal-EPA with
    the goal of creating a program that permits
    emissions trading with the European Union,
    RGGI and other jurisdictions.
  • Nunez, co-author of AB 32, considered this a huge
    slap in the face b/c it appeared to circumvent
    the AB 32 process
  • Cal-EPA leaders are appointed by the Governor
    whereas CARB is an independent agency

Dems take action
  • The CPUC issued a decision last month
    recommending that CARB adopt a cap and trade
    system for utilities
  • Key Democratic legislators sent a sharply worded
    letter re the need to respect AB 32s
    requirements re market mechanisms
  • CARB has ultimate say
  • But lawsuits may follow

SB 1368s EPS
  • The emissions performance standard requires all
    new baseload long-term electricity contracts to
    be no more polluting than a modern natural gas
  • Not clear how much impact this will have b/c not
    clear how many long-term baseload contracts will
    be entered into
  • Does NOT currently consider lifecycle emissions

P.U. Code Section 8341(d)(1)
  • On or before February 1, 2007, the commission,
    through a rulemaking proceeding, and in
    consultation with the Energy Commission and the
    State Air Resources Board, shall establish a
    greenhouse gases emission performance standard
    for all baseload generation of load-serving
    entities, at a rate of emissions of greenhouse
    gases that is no higher than the rate of
    emissions of greenhouse gases for combined-cycle
    natural gas baseload generation.

P.U.C. Section 8341(d)(2)
  • In determining the rate of emissions of
    greenhouse gases for baseload generation, the
    commission shall include the net emissions
    resulting from the production of electricity by
    the baseload generation.

  • (3) The commission shall establish an
    output-based methodology to ensure that the
    calculation of emissions of greenhouse gases for
    cogeneration recognizes the total usable energy
    output of the process, and includes all
    greenhouse gases emitted by the facility in the
    production of both electrical and thermal energy.
  • (4) In calculating the emissions of greenhouse
    gases by facilities generating electricity from
    biomass, biogas, or landfill gas energy, the
    commission shall consider net emissions from the
    process of growing, processing, and generating
    the electricity from the fuel source.
  • (5) Carbon dioxide that is injected in geological
    formations, so as to prevent releases into the
    atmosphere, in compliance with applicable laws
    and regulations shall not be counted as emissions
    of the powerplant in determining compliance with
    the greenhouse gases emissions performance

CECs Application for Rehearing
  • We raised the issue of lifecycle emissions
  • SB 1368 calls for net emissions to be
    considered for all baseload contracts but doesnt
    define this term
  • Opening language also states
  • In order to have any meaningful impact on
    climate change, the Governor's goals for reducing
    emissions of greenhouse gases must be applied to
    the state's electricity consumption, not just the
    state's electricity production.

CECs Application
  • CPUC denied our request for a re-hearing
  • Essentially they re-stated the earlier rationale
    that no lifecycle emissions requirement existed
    in SB 1368

Real policy problem
  • Should CARB opt for a carbon tax or a cap and
    trade system?

2nd real policy problem
  • If we accept that climate change and peak oil are
    serious crises, how do we effect change on the
    time scale required?

  • Tam Hunt
  • 963-0583, x. 122
  • office hours just email me or call me and we
    can discuss