Status Report: Summit Platform

1
Status Report Summit Platform GHG Accord
Implementation MGA Governors Energy Steering
Committee July 21, 2008
2
Overview

• Process Overview
• MGA Platform Advisory Groups Scope of Work
• Status Report Update by Advisory Group
• EE
• Bioeconomy and Transportation
• RE, Advanced Coal, and CO2 Capture
• Resolutions ImplementationC02 Management
  Infrastructure, Transmission Adequacy and
  Low-Carbon Corridors
• Greenhouse Gas Accord and Subgroups
• Overview of Modeling in MGA Process
• Low Carbon Fuel Standard Policy Development

3
Policy Recommendations, Cooperative
Regional Initiatives Other Outcomes
Governors Energy Summits 2007 2009
MGA Steering Committee of Governors and
Premiers Staff
State Regional Implementation 2008-2009

• Four Stakeholder Advisory Groups
• Energy Efficiency
• Bioeconomy Transportation
• Renewable Elec., Adv. Coal CO2 Capture
• Greenhouse Gas Accord

4
Scope of Work for Platform Advisory Groups EE,
Bio, RE/Advanced Coal

• Quantifiable Policy Measures
• Identify, characterize, model, prioritize and
  recommend quantifiable policy measures to
  governors/premiers staff to achieve MGA goals.
• Recommend quantifiable policy measures to MGA
  Greenhouse Gas Accord advisory group to
  complement cap-and-trade in achieving broader
  regional emissions reductions targets and to
  reduce the cost of the cap and trade program
  itself.
• Other Initiatives
• Identify, develop and, where appropriate, begin
  implementing critical initiatives to enable
  and/or reinforce quantifiable policy measures in
  achieving governors/premiers goals (e.g.,
  technical assessments, public-private
  partnerships, collaborative projects, etc.).

5
Scope of Work (cont.)

• Regional Scenario Model Development
• Provide input into design of a systems dynamics
  model to run regional scenarios of multiple
  combinations of energy efficiency, bioenergy,
  renewable electricity and advanced coal/CCS
  themes.
• MGA Energy Security Climate Stewardship Roadmap
  
• Develop regional roadmap outlining modeling
  results, recommended policies and initiatives,
  implementation results to date and next steps
  (will be primary documentary centerpiece for next
  Summit in Sept. 2009)

6
MGA Platform and GHG Cap-and-Trade Modeling
7
Cooperative Resolutions Assigned to RE, Advanced
Coal CCS Advisory Group

• CO2 Management Infrastructure Partnership
• Transmission Adequacy Initiative
• Low-Carbon Energy Transmission Infrastructure
• Establishment of resolution subcommittees
• At least one in-person meeting of each, with
  breakout sessions at full Advisory Group meetings
• Work integrated with larger Advisory Group, but
  decision-making distinct

8
Energy Efficiency Advisory Group

• Organized into 4 subgroups
• Energy efficiency potential studies
• Utility-related policies
• Building codes, appliances standards
  governments leading by example
• Best practices
• Fleshing out policy options to be analyzed and
  quantified by Center for Climate Strategies
  (complete set to be vetted at July 23-25 meeting
  in Kansas City)
• CCS work with EE Advisory Group has advanced
  furthest quantitative analysis to be complete in
  Sep-Oct.
• In October, Forios systems dynamics model will
  enable Advisory Group to determine policy
  combinations capable of achieving MGAs goal of 2
  percent by 2015.

9
Energy Efficiency contd.

• In October Advisory Group will draw on modeling
  results to make recommendations to Cap Trade
  Advisory Group and MGA Steering Committee
• Also identifying complementary non-policy
  initiatives (e.g., EE potential whitepaper
  development to be funded by Energy Foundation)

10
Bioeconomy Transportation Advisory Group

• Second in-person meeting on July 21 in Chicago
• CCS policy measure characterization process at
  earlier stage than EE Advisory Group
• Liquid fuels/transportation GHG reduction
  policies (to complement cap-and-trade) becoming
  important focus for Advisory Group
• E.g. Low Carbon Fuel Standard North Central
  Bioeconomy Consortium, Pew Center on Global
  Climate Change working with BTAG and GHG Advisory
  Group participants (4 webinars on different
  aspects of LCFS and in-person meeting in Des
  Moines)
• Policies to reduce vehicle miles traveled (to be
  identified and characterized)

11
Renewable Electricity, Advanced Coal and Carbon
Capture

• First meeting held in May in Indianapolis second
  meeting on July 30 in Dearborn
• Initial identification and characterization by
  CCS staff of quantifiable policy measures for RE
  and CO2 capture and storage
• Subgroup conference calls underway to further
  policy characterization and preliminary analysis
  Renewable electricity and CO2 capture and storage
• Aiming for full set of measures by July meeting
  for analysis and prioritization by fall
• GPI staff interviewing commercial advanced
  coal/CCS project developers underway to refine
  and prioritize of specific policy measures

12
Transmission Adequacy Resolution Preliminary
Strategy

• First meeting of subgroup in June in DC
• Proposed eventual package recommendation to
  governors and premier addressing three resolution
  deliverables
• Evaluation of new generation and transmission
  needed to accommodate that new generation
• Regional transmission plan focused on required
  high-voltage interstate network additions to
  accomplish that transmission and
• Proposed cost recovery mechanism/ownership
  structure to facilitate financing it.

13
Transmission Adequacy Emerging Approach

• Deliverable 1 Evaluation of transmission needs
• Expand current MISO survey of load-serving
  entities to all MGA states, regardless of
  regional transmission organization (RTO)
  membership
• Status Survey instrument ready and draft letter
  from governors/MGA proposed to encourage LSE
  participation
• Use survey data to expand the scope of Midwest
  Transmission Expansion Plan (MTEP 09 to include
  the MGA footprint. MTEP 09 is national, and the
  MGA portion will be a regional look.)
• Deliverable 2 Resolve transmission queue
  congestion for renewables projects
• Status Subgroup finalized draft comment letter
  to U.S. FERC for governors and premiers
  consideration

14
Transmission Adequacy cont.

• Deliverable 3 Transmission cost allocation and
  recovery
• Develop model legislation to expand regulatory
  commission authorities, where needed, to consider
  public benefit in regional context
• Status survey of state/provincial regulatory
  commissions re statutory authorities about to
  begin
• Pursue cost allocation/recovery agreement at
  subregional level first (up to 345 kV), with
  later expansion to agreement between subregions
  over cost allocation for needed high-voltage
  transmission between them (765 kV)
• Status staff assessment with MISO and
  participants of transmission studies underway
  that will be most useful in defining costs and
  issues to be resolved

15
CO2 Management Resolution Emerging Approach

• Deliverable 1 report on costs and benefits of
  CO2 enhanced oil recovery
• Prepare MGA report to governors and premier that
  builds on existing Midwest reservoir screening
  and on accounting for net GHG emissions
• Status Staff to begin drafting report drawing on
  NETL-funded ARI report that has been peer
  reviewed by subcommittee as foundation for
  analysis of MGA footprint and recommendations
  from subcommittee
• Deliverable 2 expand geologic assessment of
  reservoirs, especially in MN, WI and IA, and
  large-scale non-EOR CO2 storage tests
• Federal appropriations letter to be drafted for
  governors and premiers consideration (staff and
  participants to craft letter)
• Deliverable 3 inventory jurisdictions on
  existing statutes and regulations re CO2
  management
• Status Inventory template completed and
  jurisdictional survey recipients identified and
  inventory to be sent to jurisdictional leads

16
CO2 Management Resolution cont.

• Deliverable 4 Development of uniform model
  jurisdictional statutory and regulatory framework
• Prepare draft comments on pending U.S. EPA draft
  underground injection rule for governors and
  premiers consideration
• Commitment to develop model statutory and
  regulatory template or toolkit key policy
  elements that every jurisdiction needs to
  regulate and manage CO2 at scale (building on
  IOGCC and emerging federal component)
• Status staff to begin working with participants
  to draft model rule comments and template/toolkit
  elements
• Deliverable 5 Identify and site
  inter-jurisdictional CO2 pipeline
• Near term collaboration with participating state
  agency and NGO partners on development of
  regional CO2 pipeline network optimization model
• Develop scenarios for location and scale of
  needed pipeline infrastructure in 2015, 2020 and
  2050 to meet MGA technology commercialization,
  CCS deployment and regional GHG reduction targets
• Status Exploration of model development and
  funding underway among participants and staff

17
Low-Carbon Corridors Resolution

• Staff worked with Hunter Roberts to convene small
  meeting of utility CEOs and NGO executive
  directors in June to explore how MGA resolution
  might be implemented in Upper Midwest part of the
  region
• Participants agreed on the value in building a
  broader stakeholder consensus on next-generation,
  low-carbon renewable and fossil power supply,
  together with transmission expansion, in the
  2015-2025 timeframe
• They also want to add development and deployment
  of plug-in hybrids and smart-grid capabilities in
  conjunction with work on the low-carbon
  electricity supply side of the equation.
• Status They have proposed continuing with a
  small working group to flesh out options and
  recommendations for governors and premiers staff

18
Greenhouse Gas Advisory Group

• Three full advisory group meetings to date, plus
  one round of in person subgroup meetings and two
  rounds of conference calls
• Fourth meeting in Milwaukee next week includes
  public input session
• Subcommittees formed, each with a governors
  representative chairing and staff leads from the
  Pew Center or World Resources Institute
• Scope
• Allowances
• Target-Setting, Data and Compliance
• Modeling
• Offsets

19
Subgroup Status

• Scope
• Preliminary recommendation, subject to modeling,
  that cap and trade program will cover electricity
  and large industrials (just under half of
  regional emissions)
• Major questions
• Which complementary policies will be recommended
  to supplement for greater economy-wide coverage?
• How will implementation be assured?

20
Allowances

• Subcommittee in process of agreeing on
  technologies and practices that should receive
  special incentives through allowance distribution
  (e.g. energy efficiency, CHP, CCS, etc.)
• Participants must still make basic recommendation
  about allowance value distribution mechanism(s)
  allocation based upon past emissions, auction or
  hybrid

21
Modeling

• ICF selected as vendor
• IPM power sector model with build-out for
  additional sectors, together with REMI for
  modeling of macroeconomic impacts
• Subcommittee and ICF team now meeting on
  assumptions book and development of reference case

22
Target-Setting

• Subgroup has recommended, subject to modeling
  results, ranges for interim and mid-century
  regional targets of 15-25 percent reductions from
  2005 levels by 2020 and 60-80 percent reductions
  by 2050.
• Generally consistent with MN statutory and IL
  executive order targets
• Participants have also recommended that the
  cap-and-trade targets and program be reviewed
  periodically based on evolving science and
  technology and on results of program to date.

23
Offsets

• Subgroup is developing a proposed mechanism for
  offsets governance and administration
• Participants have begun identifying a list of
  offset categories to undergo technical review and
  evaluation for potential inclusion in a program
• Recommendation that offset participation at 10
  percent and 50 percent of emissions under capped
  sectors be modeled
• Recommendation on whether offsets, which ones,
  and how much is forthcoming

24
Modeling in the MGA Process
25
Update on NCBC Low Carbon Fuels Policy Initiative

• Organized by North Central Bioeconomy Consortium,
  with participation and input from MGA advisory
  group participants and staff
• Chaired by Iowa Secretary of Agriculture Bill
  Northey, with a regional steering committee
• 4 webinars, 1 in-person meeting planned to date
  for stakeholder information and discussion

26
LCFP Process Goals

• Articulate a Midwestern position on the
  development of state and federal policies
• Make recommendations to the Midwestern Governors
  Association
• Make recommendations on how to integrate state
  efforts
• Assure that Midwestern interests have a voice in
  the development of low carbon policies at the
  national level
• Improve life cycle estimates for corn ethanol
• Understand how implementation of Low Carbon Fuel
  Standards will impact the corn-ethanol industry

27
Four LCFS Webinars

• Webinar 1 Overview of process and issues
• Webinar 2 Status of major Low Carbon Fuels
  Policy efforts CARB, Lieberman-Warner, US EPA,
  EU
• Webinar 3 Life Cycle GHG Assessment for Biofuels
• Webinar 4 Midwestern state Low Carbon Fuels
  Policy initiatives.

28
MGA Advisory Group Representatives

• BTAG group
• Mary Blanchard
• Charles Griffith
• Robert Craig
• Dennis Banasiak
• Mike Doherty
• GHG group
• Doug Scott
• Nancy Jackson

29
Potential LCFS Study

• Goal Develop a credible analytical basis for the
  LCFS. Audience Policymakers and key
  stakeholders (biofuels, electric utilities,
  automakers, oil companies, environmentalists)Key
  Questions1. What role could LCFS play in
  reducing GHG emissions from transportation (vs.
  vehicle standards, fuels in cap, VMT, incentives,
  etc.)?2. How does an LCFS work broad
  programmatic design choices and linkages to other
  climate and transportation policies?3. How
  could the Midwest meet an LCFS, including with
  biofuels, electricity, and hydrogen?
• Broad research team planned expertise from key
  solutions areas (biofuels, electricity, hydrogen)
  with geographic diversity.
• Status Foundation willing to fund study, pending
  MGA support.

30
www.midwesterngovernors.org www.midwesternaccord.
org