Market Program Issues

1
Market Program Issues

• WRAP MTF Meeting
• May 21, 2002
• Salt Lake City, Utah

2
Overview

• Key elements of the trading program
• Allocations Issues
• Trading Issues
• Integration with National Programs
• Next Steps

3
Five Critical Elements

• Measurement Quantify emissions accurately.
• Transparency Make reporting and program
  operation public.
• Accountability Hold program participants
  accountable for meeting goals.
• Fungibility Minimize transaction constraints
• Consistency Apply fixed rules consistently and
  objectively.
• Market Mechanisms and Global Climate Change An
  Analysis of Policy Instruments, Petsonk, Dudek,
  Goffman, October 1998

4
Allocations Issues

• Sector allocation based on sector subtotal of the
  milestones
• Credits should be allocated to emissions sources
  (I.e. no auction)
• Uncertainty and new source set-aside in
  milestones should be allocated to
  utility/non-utility sectors on a pro-rata basis.
• Other States opting-in Need a transparent
  process to develop allocations for their sources.
• Non-banked allocations will aggregate to M/S each
  year.

5
Allocations to New Sources

• Growth allowance
• Available on a 1st come, 1st serve basis.
• Allocated on a BACT emissions rate or .1
  lbs/mmBTU where appropriate BACT analysis not
  available
• Allowances return to growth pool when not used
  after a defined amount of time (in the event
  source not built.)

6
Trading

• Existing Market Infrastructure should be used
  ATS/ETS
• Market needs to be allowed to work
• Participants need assurance of value of allowance
  (e.g. Current RAVI allows FLMs to capture
  allowances with uncertain and ambiguous criteria.

7
Trading (cont.)

• Banking
• No restrictions
• No expiration (inc. 2018)

8
Non-utilities

• Opt-in, in order to participate in regional
  market
• Similar transparency as utilities
• Monitoring ? CEMs.
• Emission Control level
• Realistically set, creates some market value
• Clear understanding on how it is set.

9
Integration with National Programs

• WRAP Trading program incorporated into national
  program design should reflect this.
• Existing ATS/ETS should be used.
• National Trading should be permitted

10
Next Steps

• Determine what needs to be included in 2003 SIPs
  for Regional Market Program.
• Non-utilities?
• Develop timelines