Creating a Multi-state CO2 Cap and Trade Program for Power Sector

Regional Greenhouse Gas Initiative Presentation to American Council of Engineering Companies of New Hampshire January 15, 2008 New Hampshire Department of Environmental Services Commissioner Thomas S. Burack Climate Change Impacts on New Hampshire Trends indicate NH is experiencing impacts now Extreme storm

events More rain in winter Less snow cover Average Winter Temperature in the Northeast 1899-2000 Time series represent areally weighted average of 56 meteorological stations. 2 Flooding in NH October 2005 May 2006 April 2007 Peak flows in many rivers greater than

100 year flood Millions of dollars in state and individual losses Future Economic Impacts to New Hampshire Northeast Climate Impacts Assessment (2007) By late in the century (without reducing GHG emissions) Winter snow season cut in half Sea-level rise up to nearly three feet More than 60 days with temperatures over 90F in most cities 4 to 28 days with temperatures over 100F (compared with one or two days per year

historically). 4 What if we dont act now to reduce greenhouse gases? 5 Global Cost of No Action (Stern Review UK Treasury 2006) Extreme weather alone 0.5-1% world GDP annually Total cost of taking no action equivalent to reduction

in consumption per head of 5-20% annually Less costly to take actions now than to delay Risk to world economy on the order of multi-national world conflict Insurance market already reacting 6 NH CO2 (equivalent) Emissions by Sector 2004 Transportation Agriculture, Residential

Forestry and Waste Electric Utilities 2% Transportation Industrial 34% 34% Commercial

Electric Utilities Agriculture, Forestry Commercial 8% Industrial 7% Residential and Waste 15%

7 RGGI Cap & Trade Program Regional cap on emissions from fossil fuelfired power plants >25 megawatts Cap (10 state region) 188 million allowances 1 allowance = 1 ton NH Budget 8.6 million allowances Majority of allowances will be sold in regional auction 8 RGGI Cap Levels 2-Phase CO2 Caps (gradual, keeps cost low) stabilization 2009 2014 (no absolute reductions, but reductions from business-asusual) Phase I Regional Cap = 188,076,976 tons

Phase I NH Budget = 8,620,460 tons 10% reduction 2015 - 2018 (2.5% per year for 4 years) Built-in Review of Program in 2012 9 Compliance Power plants must have enough allowances to equal their emissions by the end of the three year period Can buy allowances (regional auction) or offset allowances Unlimited banking of allowances

10 RGGI Offset Projects 1st set methane capture, SF6 (electric insulator), afforestation, end-use efficiency Initially limited to 3.3% of each sources emissions Offsets may come from RGGI region or from another US state at 1:1 Safety valves built in to increase use of offsets for economic relief if necessary 11 RGGI impact on NH 9 other states going forward with RGGI Regional energy prices will be affected by

RGGI whether NH participates or not Only way to mitigate costs is to participate and use auction revenues 12 Regional Leadership Driving federal action Western Climate Initiative includes Arizona, California, Montana, New Mexico, Oregon, Utah, Washington, British Columbia, and Manitoba and 10 observers including 3 Canadian provinces and Sonora, Mexico Midwestern Greenhouse Gas Reduction Accord includes Illinois, Iowa, Kansas, Michigan, Minnesota, Wisconsin, and Manitoba (Indiana, Ohio, and S. Dakota also signed as observers) Investment in more efficient energy market is positive for NH

regardless of climate change 13 T o ta l E m is s io n s a n d P e r c e n ta g e o f T o ta l U .S . E m is s io n s o f R e g io n a l C a p -a n d -T r a d e In itia tiv e s W CI 9 6 0 M T o n s (U S ) / 1 3 % U S M id w e s t G r o u p 1 0 2 7 M T o n s (U S ) / 1 4 % U S RGG I 7 6 6 M T o n s (U S ) / 1 0 % U S R G G I C a p 1 8 8 M T o n s (U S ) (E le c tr ic S e c to r O n ly )

S o u r c e : W o r ld R e s o u r c e s I n s t it u t e , N o v e m b e r 2 0 0 7 N o te s : 1 . B r it is h C o lu m b ia a n d M a n it o b a C a n a d a a r e m e m b e r s o f W C I. 2 . M a n ito b a C a n a d a is a m e m b e r o f t h e M id w e s t G r o u p . - M id w e s t G r o u p ). 3 . C r o s s - h a tc h in g in d ic a te s o b s e r v e r s t a t u s ( - W CI 4 . K a n s a s is a m e m b e r o f th e M id w e s t G r o u p a n d a n O b s e r v e r f o r W C I. 5 . O n t a r io , Q u e b e c , a n d S a s k a tc h e w a n C a n a d a , a n d S o n o r a M e x ic o a r e O b s e r v e r s o f W C I. Is RGGI Significant? RGGI would represent the seventh highest emitting developed country The RGGI cap (188,076,976 tons) is similar to the

emissions of Australia, France, or Italy There is no silver bullet but RGGI is part of the silver buckshot 15 Benefits of HB 1434 Helps to mitigate long-term energy costs via greater investment in energy efficiency Creates a market signal that encourages development of cleaner and, in many cases, more local energy sources Increases our energy independence with more local energy sources: keeping more dollars local Starts to mitigate our GHG emissions to avoid the most deleterious projections of climate change impacts

16 Downside of not joining RGGI Roughly half of NHs supply is purchased from the regional market As a consequence, NH electric prices will be affected by RGGI No benefit of sale of NH allowances No seat at table no influence on program 17 Estimated Impact to Business Electricity Costs Not joining RGGI Increase to average monthly bill

2006 average monthly bill (UNH estimate from FERC Form 1) 2009 2012 2015 2018 Small $308 (81,000 accounts) Small $1.15 $2.38 $3.72

$5.16 Large $38,000 (350 accounts) Large $142 $292 $458 $636 0.8% 1.2% 1.7%

% 0.4% Change 18 Potential Mitigation of Monthly Business Electricity Costs Net change from investment in energy efficiency compared to not joining RGGI 2009 2012 2013

2015 2018 Small Business $1.29 $(0.20) $(1.90) $(4.00)

$(9.78) Large Business $159 $(25) $(234) $(493) $(1,205) % Change

0.4% -0.07% -0.6% -1.3% -3.2% 19 Energy Efficiency Regional Priority Record peak demand in summer >28,000 MW Peak demand increase twice as fast as average load

growth Costly new capacity may be needed to meet demand reached for only a few hours or days our of the year Reducing electricity use by 5% during peak times will save consumers $580 million a year (ISO NE June 2006) 20 Major Potential for Energy Efficiency Improvements RGGI bill proposing a fuel-neutral fund

Technology continuing to improve Recognize opportunities vary Increased energy efficiency overall can avoid costly new capacity reducing everyones energy costs 21 Light Bulb Evolution Electric Demand Hours Use Annual kWh Usage Annual kWh Savings Annual Cost (@ $0.149) Annual $ Savings Annual CO2 Reduction (lbs)

Incandescent CFL CFL Cold Cathode LED 100 Watts 25 Watts 18 Watts 8 Watts 2.2 Watts 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365 146 37 26 12

3 110 120 134 143 $21.75 $5.44 $3.92 $1.74 $0.48 $16.32 $17.84 $20.01 $21.28 121

133 149 158 22 Fluorescent Light Evolution 3440 Watts 1950s 1980s 32 Watts late 1980s 1990s

28 Watts Last 5 yrs 23 UNH Economic Analysis 2007 NH participation is lower cost overall to NH than not joining Lowest long-term net utility cost is to auction allowances and put revenues into energy efficiency Positive impact on employment and the overall NH economy 24 Opportunity for Economic Development NH tradition of innovation and leadership

NH needs to foster R&D development of new technologies and related ancillary services Current examples Power Span GT Solar 25 Whats the Ultimate Source of Greenhouse Gases? ENERGY DEMAND for Electricity, Heating/Cooling and Transportation Every megawatt-hour of electricity used produces 1,100 lbs. of CO2

Every gallon of gasoline burned 26 produces 20 lbs. of CO2 Solutions Make your buildings ENERGY STARS (or Leed certified). Light up your life (with Energy Star qualified lighting products). Establish turn off and unplug policies for electronic equipment lights. and Reduce, Reuse, and Recycle (use double-sided printing and copying)

Green your fleet and driving habits! Biodiesel 27 Buildings Lighting Appliances (dishwashers, furnaces, stoves, washer machines) Office Equipment 28 Reduce fuel consumption in motor vehicles Establish fuel economy standards for new purchases Establish anti-idling policies

Promote carpooling and teleconferencing Less Greenhouse Gases Less Dependence on Foreign Oil 29 Consider the Hybrid Option 30 31 Contacts Tom Burack Bob Scott Joanne Morin

[email protected] 271- 2958 [email protected] 271-1088 [email protected] 271-5552 32

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