Western States’ Climate Policies: 2019 Legislative Session Update JENNIFER GARDNER, SENIOR STAFF ATTORNEY WESTERN RESOURCE ADVOCATES PRESENTATION TO WECC MARKET INTERFACE COMMITTEE JUNE 27, 2019 1
Presentation Outline ▪ Cap-and-Trade • Oregon ▪ Carbon-Free • Colorado • New Mexico • Washington ▪ Securitization • Colorado • New Mexico • Montana ▪ Transition Assistance • Colorado • New Mexico 2
Cap-and-Trade: Overview • A cap is set on the amount of carbon a group of facilities can emit on an annual basis • Companies typically obtain a permit or “allowance” for every ton of carbon they emit • The total number of allowances is limited • Each year, companies must decide how they will get enough allowances to cover their emissions • They can either: operate more efficiently, install pollution controls, burn less fuel, or buy allowances Photo Credit: Government of Nova Scotia 3
Oregon’s Climate Action Program ▪ If HB 2020 passes, Oregon’s new cap -and-trade program would begin in 2021… • On June 17, the House passed HB 2020 • On June 20, 12 Republicans fled the state Senate to avoid a quorum necessary to vote on HB 2020 ▪ GHG Targets: • 2035: 45% below 1990 baseline • 2050: 80% below 1990 baseline ▪ Requires “economy - wide” emission reductions: • Transportation fuels • Electricity • Natural gas • Other fossil fuels • Industrial processes ▪ Oregon would also join the Western Climate Initiative – the West’s regional carbon trading system 4
EIM implications? Maybe… • HB 2020 : “the office may adopt rules as necessary to address electricity scheduled for delivery and consumption in this state through an energy imbalance market or other centralized market administered by a market operator.” • In other words, HB 2020 provides the flexibility, if needed, for Oregon to adopt rules to handle the point of regulation for entities that sell power through the EIM into Oregon. 5
Carbon-Free: Overview What’s the difference between an RPS and carbon -free mandate? ▪ An RPS, or renewable energy mandate, requires that all electricity sold within a state come from renewable energy sources, including: wind, solar, geothermal and hydropower. ▪ A carbon-free, or 100% clean energy mandate, requires all electricity to come from carbon-free resources, which include renewable energy, but also other resources, such as nuclear energy. ▪ So, a carbon-free mandate is actually broader in scope than an RPS. ▪ Carbon-free legislation can be in the form of a goal or mandate and can be economy-wide or utility-specific. 6
Colorado’s Roadmap to 100% Renewables ▪ SB 236 : Codifies Xcel Energy’s 100% carbon-free by 2050 goal • Interim goal → reduce carbon emissions 80% by 2030 (from 2005 levels) • Requires utilities to consider the social cost of carbon in resource planning ▪ HB 1261 : Establishes a goal of reducing economy-wide GHG emissions 90% below 2005 levels by 2050 • Sets benchmark targets of 26% reduction by 2025 and 50% reduction by 2030 • Directs the AQCC to develop policy and incentives to reach those targets, but leaves retail electricity rulemaking to the PUC Xcel Energy’s CEO, Ben Fowkes, speaks with reporters in Denver after announcing the utility’s 100% clean energy goal. Photo credit: Denver Business Journal 7
New Mexico’s Energy Transition Act ▪ SB 489 establishes the following: • A statewide renewable energy standard for the state’s IOUs and rural electric coops: 1. 40% renewables by 2025 2. 50% renewables by 2030 3. 80% renewables by 2040 • A 100% zero carbon resources standard for IOUs by 2045 and for rural electric coops by 2050 8
Washington’s Clean Energy Transformation Act ▪ SB 5116 establishes the following: • Phases out coal-fired electricity by the end of 2025 • By 2030, the state’s electric utilities must be 100% carbon -neutral: 1. 80% of their carbon- neutral power must come from “non -emitting electric generation and electricity from renewable resources” 2. The remaining 20% can be met in one of three ways: RECs, an administrative penalty, or Energy Transformation Projects (“ETPs”) 3. The administrative penalty is based on “tons remaining uncovered” (effectively amounting to a $100 per ton carbon tax) 4. ETPs may include EV infrastructure, weatherization, or renewable natural gas • Adopts a policy to transition to 100% clean electricity by 2045 • Requires utilities to consider the social cost of carbon in resource planning 9
Securitization Overview Think of securitization as loan refinancing. Essentially, securitization enables utilities to retire coal plants earlier (at a lower cost to ratepayers) through the issuance of ratepayer-backed bonds. Image Credit: The Sierra Club 10
Securitization & Transition Assistance ▪ Colorado • SB 236 establishes securitization measures on stranded coal assets in order to shift risks away from ratepayers. • Requires that utilities include a workforce transition financing plan when filing any plant closure proposal. ▪ New Mexico • The Energy Transition Act enables utilities to use securitization to refinance investments in coal-fired power plants that retire early. • The bill’s language specifically designates its use in retiring PNM's San Juan Generating Station. • Part of the revenue from securitization will go towards economic development and worker assistance in communities impacted by these plant retirements. ▪ Montana • HB 467 allows utilities to apply for securitization for the retirement or replacement of an existing power plant that it owns or operates. • No requirement included for workforce transition. 11
Concluding Thoughts ▪ According to David Roberts with vox.com, “the trend of states targeting 100% clean electricity has gone viral.” ▪ Even utilities are taking part… • Xcel Energy – Colorado : In December 2018, Xcel announced its goal to reduce carbon emissions 80% by 2030 (based on 2005 levels) and to be carbon-free by 2050 – SB 236 essentially codified Xcel’s goal • Avista – Washington : On April 18, Avista announced its goal to serve its customers with 100% clean energy by 2045 and to have a carbon-neural energy supply by 2027 (3 years early) • PNM – New Mexico : On April 22, PNM committed to meeting the state’s 100% zero carbon resources standard by 2040 (5 years early) ▪ What’s next? • Implementation and compliance – goals versus mandates • How to measure success – economic impacts, carbon emission reductions, etc. • Potential impacts to current and developing regional energy markets (including EIM, EDAM and WEIS) 12
Jennifer Gardner, Senior Staff Attorney Western Resource Advocates Phone: 801-413-7355 Email: jennifer.gardner@westernresources.org 13
Recommend
More recommend
