Western Regional Cap & Trade Targets Generators

By Published On: March 7, 2008

Like California, Western states partnering to develop a regional carbon cap-and-trade market for the electricity sector propose holding generators responsible for controlling greenhouse gas emissions. Under the Western Climate Initiative electricity subcommittee’s March 3 draft recommendations, global warming gases would be regulated at the point where the power accesses the Western grid. It is the preferred option because it “will be the most cost effective with universal participation in the Western Electricity Coordinating Council,” according to the Climate Initiative panel. The panel’s rationale for what is known as the “first deliverer” (or “first seller”) point of regulation is the same as the California Public Utilities Commission’s. The idea is to cover emissions from both imported power and in-state supplies and to treat them equally. California and the multi-state partnership are striving to guard against any legal challenges under the Interstate Commerce Clause of the U.S. Constitution which prohibits discrimination against out-of-state entities. In a tentative ruling, expected to be adopted next week, the CPUC also seeks to target generators that send power into the state’s transmission system rather than regulating utilities under a so-called load-based approach. In addition to California, participating Climate Initiative states include Arizona, Oregon, New Mexico, Utah, and Washington. Montana hopes to join the Initiative soon. California and most of the other Western states agreed in February 2007 to jointly achieve a 15 percent cut in their global warming gases by 2020. In addition, California’s climate protection law, AB 32, sets a 25 percent emissions reduction level by 2020 to reach 1990 levels. Utah, British Columbia, and Manitoba agreed to a 15 percent cut from 2005 carbon emissions over the next 13 years last August. Under the Climate Initiative proposal, all the participating states would enact regulations for their fossil-fueled generators. Generators would be responsible for monitoring, measuring, and reporting the emissions. However, due to their multi-jurisdictional reach and more complex roles, the Climate Initiative panel plans to devise a special strategy for how to handle both the Western Power Administration and Bonneville Power Administration under its cap-and-trade system. It also left open for now the question of how emissions covered by a regional trading system would be allocated. Stakeholder input on the proposal is set for March 11. For a copy of the draft, see westernclimateinitiative.org.

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