Allocations Design Issues

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Allocations Design Issues
Allocations Subcommittee Steve Owens,
Chair January 10, 2008 Portland, Oregon
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Mission

• The mission of the WCI Allocation Subcommittee
  is
•  
• To recommend a methodology for determining the
  number of allowances to be apportioned, either
  individually to each WCI partner and thereby
  establishing each Partners overall emissions
  allowance budget for the WCI program, or
  regionally for the WCI region overall and
• To determine whether to recommend that the
  Partners establish a common method for
  distributing the budgeted emissions allowances
  (a) among covered sectors and (b) within each
  sector to covered entities.
• If a common allowance distribution method is
  recommended, the Subcommittee will recommend a
  distribution method or methods for consideration
  by the WCI Partners.
• - WCI Work Plan, 10/29/07

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Subcommittee Members

• Arizona Steve Owens, Patrick Cunningham, Ira
  Domsky, Lee Alter
• California Belinda Chen, Fereidun Feizollahi,
  Kevin Kennedy, Steve Roscow
• Colorado Ginny Bannon
• Nevada Colleen Cripps, Leo Drozdoff
• New Mexico Sandra Ely, Mary Uhl
• Oregon Phil Carver
• Utah Colleen Delaney
• Wyoming Brian Bohlmann
• British Columbia Warren Bell, Rachel Boston, Kel
  Hicke, Laura Lapp
• Ontario Jennifer Backler, David Coates, John
  Hutchinson, Seema Khanna, Tom Markowitz,
  Ray Rivers
• Quebec Michel Lesueur
• Saskatchewan Howard Loseth

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Commenters as of November 30, 2007



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Summary of Comments Received as of November 30,
2007



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Question 1

• Apportionment of Allowances
• Apportionment means the subdivision of the
  regional cap and trade emissions cap among the
  participating jurisdictions.
• Should each Partner should be authorized to
  distribute allowances equal to that Partners
  share of the regional cap, or, should a regional
  entity distribute allowances on behalf of all the
  Partners without apportioning the regional cap
  among them?

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Question 1


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Question 1


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Question 1


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Question 2

• Distribution of Allowances
• Distribution or allocation of allowances means
  the process by which emissions allowances are
  distributed for use by covered sources under an
  emissions cap and trade system.
• To what degree should distribution by the
  Partners be made uniform, or standardized, among
  participating jurisdictions?

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Allocations SubcommitteeQuestion 2


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Question 2


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Question 2

• Or, should some flexibility be allowed within
  prescribed limits beyond which all Partners must
  adopt the same distribution system?
• ISSUE The Allocations Subcommittee recognizes
  that there are many more detailed questions
  concerning the distribution of allowances than
  are asked here. The subcommittee anticipates
  seeking comment on these questions at a later
  time.
• ISSUE The Allocations Subcommittee recognizes
  the special challenges associated with the
  development of a regional system that could
  successfully merge into a future national
  program, and the additional complications of
  developing a single regional program that can
  accomplish this in two nations. The subcommittee
  seeks comments on how to ensure that the proposed
  and potential future programs will function well
  together.

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Question 3

• Allocation Methods
• There are multiple ways allowances can be
  distributed or allocated for use by covered
  sources.
• Whether and to what degree should allowances be
  distributed directly to covered sources free of
  charge?

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Question 3


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Question 3


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Question 3

• Should the allowance distribution system have the
  capacity to change over the life of the program
  through phasing in particular distribution
  methods or using different distribution bases?
• Should the Partners place restrictions on the use
  of revenues from auctioned allowances?

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Question 4

• Early Actions
• WCI cap and trade design principle
• Provide appropriate recognition and incentives
  for early emissions reductions
• How should the cap and trade program either
  encourage or hold-harmless emission reductions
  efforts that occur prior to the start of the
  program?
• Qualifying early actions would have to be
  quantifiable, verifiable, enforceable and
  permanent.

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Question 4

• The WCI Design Principles state that the program
  will provide appropriate recognition and
  incentives for early emissions reductions.
  Should the program accomplish this
• Through the selection of benchmarking and program
  start dates?

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Question 4

• Through special allocations of allowances?
• Drawn from within the cap?
• Drawn from outside the cap?

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Question 4

• Through auctioning of allowances?

• By other means?

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