Brian M' Jones

1
AWMA-NES Fall 2005 ConferenceRegional
Greenhouse Gas Initiative An Industry
Perspective

• Brian M. Jones
• M.J. Bradley Associates, Inc.
• November 4, 2005

2
INTRODUCTION TO M. J. BRADLEY

• The Clean Energy Group, founded in 1997, is a
  coalition of electric generating and electric
  distribution companies that share a commitment to
  responsible environmental stewardship.
• The Regional Greenhouse Gas Coalition is a
  multi-sector industry coalition formed with the
  objective of participating in the regional
  climate change policy dialogue in the Northeast.
• Other climate policy services (e.g., inventory
  development, policy strategy, registry
  development).

3
NATIONAL PERSPECTIVE
4
REGIONAL SUCCESS DRIVING NATIONAL POLICY

• Acid Rain Program
• Low Emission Vehicle Program
• Ozone
• Mercury
• RGGI?

5
RGGI FACES A NUMBER A CHALLENGES

• No commercially available end of pipe CO2 control
  technology currently exists today.
• Competitive nature of the regional electricity
  markets some affected RGGI electric generators
  will have to compete with electric generators
  outside the RGGI region that do not operate under
  a CO2 cap.
• Reliance on more than a doubling of natural gas
  fired combined cycle capacity in the RGGI region.

6
CO2 CONTROL OPTIONS

• Limited Options exist for reducing CO2 emissions
  within the electric generating sector
• Switch to lower carbon fuels
• Increase fossil plant production efficiency
• Switch to non-emitting technologies
• Offsets are needed to expand compliance options

7
RGGI LEAKAGE IS A REAL ECONIMIC AND ENVIRONMENTAL
CONCERN
8
RGGI MODELING MORE NATURAL GAS CAPACITY
Currently, 40 of natural gas demand in New
England is from electric generators
Base Case Cumulative Capacity Additions
9
GENERAL INDUSTRY POSITIONS ON RGGI

• NO - geographic and absolute offset limitations
• NO or SMALLER set aside/auction
• DIRECT POLICY to address electricity imports
• SAFETY VALVE/PRICE CAP for compliance cost
  certainty and
• COMMITMENT to harmonize with a national program.

10
INDUSTRY POSITIONS (cont.)

• Offsets recent EPA modeling indicates U.S.
  offsets are available in the 1-2 range RGGI
  should embrace lowest cost opportunities.
• Set Aside/Auction there is uncertainty
  regarding its impacts on the market RGGI should
  take a measured approach.
• Electricity Imports/Leakage leakage undermines
  credibility of program RGGI should direct a
  panel of experts to develop a strategy
  implemented at the start of RGGI in 2009.
• Safety Valve/Price Cap cost impacts are unclear
  RGGI should provide cost assurance for affected
  sources, consumers, and policymakers.
• Harmonization a national program is necessary
  to address the issue RGGI should commit to
  harmonize with national program.

11
RGGI PROJECTED ALLOWANCE PRICES AND ACTUAL EU
ALLOWANCE PRICES
Source Evolution Markets (www.evomarkets.com)
Shown is moving average price converted to US
dollars and short tons.
12
Conclusion

• Thank You
• Brian M. Jones
• bjones_at_mjbradley.com