New Hampshire Regional Greenhouse Gas Initiative RGGI Economic Study Stakeholder Meeting

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New Hampshire Regional Greenhouse Gas
Initiative (RGGI)Economic Study Stakeholder
Meeting

• 5/21/2007

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Goal of todays stakeholder meeting

• Introduce research team
• Give an overview of the study and methodology
• Open, informal dialogue to help ensure the
  quality of the study
• Encourage stakeholder feedback and engagement in
  the process

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Goals of Study

• Help to answer key questions for stakeholders
• What will be the economic impact costs and
  benefits of RGGI in New Hampshire?
• What is the most economically effective and
  efficient way for NH to implement RGGI?
• To answer these questions, we will
• Assess economic impact of RGGI on NH
• Review existing research and documentation
• Consider assumptions used in RGGI modeling
• Draw on our knowledge of NH economy New England
  energy markets
• Provide analysis and recommendations on allowance
  allocation and other RGGI considerations in NH
• Economic modeling of different allocation
  scenarios, public benefit percentages and uses,
  energy efficiency initiatives, offsets, etc.

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Related Research

• New Hampshire Renewable Portfolio Standards (RPS)
  stakeholder engagement and economic impact
  analysis helped to inform and guide policy making
• Provides a process model/framework for RGGI
  discussion and analysis

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Research Approach

• Provide a thorough and independent assessment
• Objective
• Looking for input from and dialogue with
  stakeholders
• Transparent

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Deliverables

• Research paper
• Presentations highlighting findings and
  recommendations
• Transparent process, modeling and data
• Excel spreadsheet model and access to data
• Presentations to legislative committees and
  stakeholders

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Final Report Outline

• RGGI background information and current state
  legislative status
• Review of New Hampshire specific RGGI research
• Assessment of the Economic Impact of in RGGI in
  New Hampshire
• Overall impact on state economy
• Employment impact
• Program costs
• Electricity costs
• Potential energy portfolio impacts
• Allowance Allocation Analysis
• Review and analysis of possible allocation
  methods
• Cost impacts
• Review of Other Policy Considerations with
  Recommendations

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Timeline

• May and June- Assessment of existing work
• May - Stakeholder input/comments on research plan
• June/July/August Analysis and modeling
• Week of September 17th Draft Report
• Late September/Early October -Second stakeholder
  forum
• October Final report and presentations

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Decision Flowchart



Outcomes/Results
Initial Decisions
"Mediating" Points

• Allowance Prices
• RGGI Utility Costs to Different Consumers
  (Residential, Industrial, Commercial)
• Investment in and benefits of EE
• Changes in Energy Mix and Use
• Reduction in GHG
• Net Economic Impact (as percent of GSP)

• Allocation Method (auction, grandfathering)
• Use of Auction Funds
• Public Benefit/Rebate
• percentages
• Energy Efficiency incentives and investment

• Offsets
• Trigger (safety value and impact mitigation)
• Others

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Carbon Trade Programs

• European Union Emission Trading Scheme (EU ETS)
• Largest multi-national only mandatory carbon
  trading program in the world
• 27 member countries, each proposes a National
  Allocation Plan (NAP)
• Phase I (2005-2007)
• Covers 12,000 installations (45 of EU CO2)
  emissions
• Power facilities exceeding 20 MW, industrial
• Phase II (2008-2012)
• Expands scope to all greenhouse gases
• 7 below 2005 emission levels
• Aviation emissions
• 4 non-EU members expected to join

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EU ETS Experience

• Market peaked 2/3/2006 -36.75 per ton/credit
• May 18, 2007-Allowances trading at lowest value-
  0.36
• Decline associated with Caps being too high -
  no need for industries to cut emissions

Source European Energy Exchange
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U.S. --RGGI and RGGI-like Activity

• No Federal level mandatory carbon cap trade
• Activity at the state level
• Western Regional Climate Action Initiative-WA,
  OR, AZ, CA, NM
• Regional Greenhouse Gas Initiative (RGGI)
• 31 states joined The Climate Registry
• Momentum building at the Federal level
• April 2007-Supreme Court rules EPA has authority
  under the Clean Air Act to regulate CO2
• Many companies including utilities are expressing
  support for national cap including DuPont, Shell,
  GM Duke energy

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GHG Pricing Research

• Chicago Climate Exchange-voluntary trading system
  Cost per ton is between 3-4
• Robert Stavins, environmental economist at
  Harvard University, suggests a 100 per ton tax
  on carbon is required to significantly influence
  behavior and reduce emissions

Chicago Climate Exchange
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RGGI Background

• Cap Trade program for CO2 emissions from fossil
  fuel power plants gt 25 MW
• 10 states now participating (MA,RI MD recently
  joined)
• Takes effect in 2009
• RGGI Cap - 188 million tons
• NH CO2 budget - 8.6 million tons (4.5 of total)
• NH CO2 emissions (2004) -8.8 million tons
• All states require 25 of their allowances for
  strategic energy and consumer benefit purposes.

Image from rggi.org
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UNH Economic Impact Research Examples of sources
being investigated

• RGGI planning documents
• State RGGI stakeholder meeting documents
  including comments
• Maryland RGGI study
• ISO New England
• NYSERDA ACEEE
• Other recommended sources from stakeholders?

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Allowance Allocation

• Economic costs benefits of auction versus
  generator (grandfather) allocation
• Proposed scenarios including
• 25, 50, 75 and 100 allowance auctioning
• 25, 50, 75 100 energy efficiency
• 25, 50, 75 100 consumer rebate
• Proportionate to residential, commercial
  industrial consumption
• Phased-in percentage
• Time period ?
• Phased in schedule?
• Any additional Stakeholder suggested allocation
  scenarios?

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RGGI State Activity
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Key Factors Affecting RGGI.

• Future energy prices
• NYMEX futures
• Annual Energy Outlook (AEO) 2007 estimates
• Demand growth for electricity
• ISO New England CELT
• US greenhouse gas policy
• No national policy for carbon cap
• NH specific assumptions?

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Eligible Offset Projects

• Landfill gas (methane) capture and combustion
• Sulfur hexafluoride (SF6) capture and recycling
• Afforestation (transition of land from
  non-forested to forested state)
• 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.

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Other issues

• Integration with NH energy policy
• NH Utility Structure
• Existing CO2 cap NH Clean Power Act
• Other pollution requirements (e.g. Mercury)
• Renewable Portfolio Standard
• Economic impacts of offset and energy efficiency
  projects
• Approaches to evaluating economic costs
  benefits of energy efficiency initiatives

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Stakeholder Input

• Research plan methodology
• Suggestions and guidance.
• Other general input

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Stakeholder involvement

• Encourage continuous engagement
• Ways to contact research team
• E-mail
• ross.gittell_at_unh.edu
• magnusson3_at_yahoo.com