Overview of Western Climate InitiativeWESTAR Fall Meeting October 2008

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Initiative Collaboration IncludesInitiative Collaboration Includes

Joint work to:– Promote clean and renewable energy in the region– Increase energy efficiency– Advocate for regional and national climate policies that are in the

interest of western states– Identify measures to adapt to climate change impact

Three specific directives:– Set a regional emissions reduction goal– Join a multi-state registry to track, manage and credit reductions– Design a regional multi-sector market-based mechanism

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WCI DesignWCI Design• Most expansive cap and trade program to date

– All 6 primary greenhouse gases from all major sources

– Nearly 90% of the region’s emissions by 2015

• Regional Greenhouse Gas Initiative (RGGI)– CO2 from electricity only

– ~28% of emissions

• EU ETS – C02 from electricity, industrial combustion and

process emissions– ~40% of emissions

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Economic Modeling ResultsEconomic Modeling Results

• Possible to meet regional goal with modest overall savings

• Complementary policies get us about ½ way to target– CA tailpipe standards– 1% reduction in demand for electricity and gas– 2% reduction in VMT

• Offsets, banking and broad scope all reduce allowance prices

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What the Design Is and Isn’tWhat the Design Is and Isn’t

• It is – the policy framework– what must be the same between jurisdictions

for this regional program

• It isn’t– the specific details; they will come through

legislative and rule processes

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Design Starting PointDesign Starting Point

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• Firm 2020 emissions limit– Based on individual State and Provincial

emissions goals

• Common approach to quantifying emissions

• Individual State/Provincial programs– Harmonized around essential elements– Linked to create a regional trading market

Design RecommendationsDesign Recommendations

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• Starting dates– 2011 for reporting– 2012 for cap and trade program

• Sectors, gases and thresholds

• Points of regulation

• Methodology for regional caps and partner budgets

• Three year compliance periods

Design RecommendationsDesign Recommendations

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• Unlimited banking; no borrowing

• Essential reporting requirements

• Early reductions allowances (ERA)

• Offset criteria and protocols

• Maximum level of offset credits

• Regional auction process

• Minimum auction levels

Design RecommendationsDesign Recommendations

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• Allowance over-allocation minimized

• Use of allowance values

• Enforcement

• Linkage to other systems

• Acceptance of new partners

• Regional administrative organization

State and Provincial DecisionsState and Provincial Decisions

• Allocation of allowances – May standardize between sectors/jurisdictions

• Maximum percent of allowances auctioned

• Use of most of the value of the allowances

• Minimum offset credits allowed

• Allowance set-asides

• Recognition of early reductions (other than ERA)

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Path ForwardPath Forward• Develop legislation 2009 session

• Meeting with stakeholders and legislators

• Develop 2009 work plan, including• Early Reduction Allowance criteria• Offset protocols and project types• Regional caps and partner budgets• Reporting essential elements and model rule• Auction design• Essential elements for cap and trade rules • Regional organization design

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What it means for Air programsWhat it means for Air programs• Quantification of emissions critical

– Establishing regional caps– Setting partner budgets– Measuring reductions – Reporting across jurisdictions– Market confidence

• Market requires consistency, transparency, enforcement– Accurate and timely allowance tracking– True up after compliance period– Quick and sure enforcement

• And, likely yours to implement13

www.ecy.wa.gov/climatechange/index.html