The state of New York has passed a budget that includes a new EV purchase incentive that will provide up to $2,000 for eligible buyers of an all-electric vehicle, a plug-in hybrid EV, or a hydrogen fuel cell vehicle. Meanwhile in Minnesota, legislators have been considering an EV purchase incentive.
The CEO of the Freedom Foundation of Minnesota criticized EV purchase incentives as “a reverse Robin Hood scheme,” without the green tights, that takes money from the many (taxpayers) and subsidizes the purchases of the few (elites who buy EVs). How accurate is the assertion that the wealthy benefit the most from purchase incentives?
A free EV data tool from the New York State Energy Research and Development Authority can provide some insight. Developed with support from C2ES, EValuateNY gives users access to wide-ranging data sources from New York State’s EV market and allows easy comparisons of the factors that affect EV sales. You can find more about the tool in a previous blog post.
Our initial assessment, examining the period before the purchase incentive program has been implemented, shows that the EV market extends well beyond New York’s wealthiest counties.
Using the U.S. Census Bureau’s data on median household income by county, we established three income brackets to compare wealth between counties. Next, we broke down EV registrations by county and income bracket from the beginning of the EV market (2010) to the most recent data in EValuateNY (2014). The results show that counties with high median incomes account for slightly less than half the state’s total EV registrations.
Figure 1: Distribution of EVs by Income Bracket and County (2010-2014)
Therefore, EVs are not solely purchased in high-income counties, though households with high incomes are found in each county. However, EV registrations in three high-income counties (Suffolk, Nassau, and Westchester) account for more than 43 percent of the state’s total registrations, but only about 22 percent of the population. Clearly, these high-income counties have a higher rate of EV registrations. To dive deeper, we used EValuateNY to plot the rate of EV purchases per 1,000 vehicle registrations by county and income level, shown in Figure 2. Using a rate of EV purchases helps eliminate other factors that may affect the data, such as population or the rate of vehicle ownership. We also added the total number of EV registrations as the size of the bubble representing each county.
Figure 2: Household Income with Rate of EV Purchases and EV Registrations by Income Bracket and County (2010-2014)
This chart indicates that income may have a positive effect on the rate of EV registrations. High-income counties’ rate of EV purchases per 1,000 vehicles is higher than the range of low-income counties. With some notable exceptions, it’s also higher than the range of medium-income counties.
EValuateNY helped establish two findings[i] about the effect of income in New York State’s EV market:
1. Counties with low and medium median incomes make up more than half of the market; and
2. Residents of high-income counties may be more likely to purchase an EV than residents of low- and medium-income counties.
So, would New York’s forthcoming purchase incentive rob from the poor and give to the rich? This could not be entirely true, since more than half of all registered EVs are in low- and middle-income counties, and residents in these counties would arguably benefit more from $2,000 than residents from high-income communities. However, there may be some validity to the argument that on an individual basis, residents of high-income counties would benefit more from the purchase incentive because they may be more likely to buy an EV.
From a policy perspective, the purchase incentive is designed to promote EV deployment, reduce greenhouse gas emissions, and invest in the state’s economy. The program is not designed with any specific social equity goals, but New York legislators could address any potential wealth disparity by instituting an income cap, as California recently did.
The value of purchase incentives in spurring the EV market should not be lost in the discussion of income, though. A recent report by the Stockholm Environment Institute highlights the need to reduce EV price premiums as a means of encouraging consumer adoption. The effect of purchase incentives on state EV markets has been demonstrated over the past year after Georgia eliminated its $5,000 all-electric vehicle tax credit, and EV sales fell sharply.
New York State’s purchase incentive is a helpful tool for putting more electric vehicles on the roads. All New Yorkers, not only the wealthy, benefit from the reduced greenhouse gas emissions from having EVs using some of the least carbon-intensive electricity in the nation.
[i] The strength of any correlation is difficult to establish, as EValuateNY’s user interfaces are designed to provide high-level insights. A regression analysis that provides confidence intervals may be required to better understand the significance of income on counties’ rate of EV uptake. Users may conduct advanced analyses by directly accessing EValuateNY’s databases.
It’s strawberry season!
The first fruits of our family’s membership in a community-supported agriculture (CSA) program are starting to come in. This weekend, our kids will get back to the Earth (and get some of it on them) by picking a quart of berries at a farm just up the road from our house. And that will be just the start of a weekly harvest of fresh produce that’s locally and organically grown.
CSA is one model for locally-based agriculture and food distribution. It’s essentially a cooperative arrangement between a farmer and the local community. Members of a CSA program buy shares of the eventual harvest from the farmer at the beginning of the growing season and receive a portion of what the farmer produces in return.
The farmer gets help with the upfront costs of running a business that has a lot of uncertainty, like the weather, insects, or blight. The consumer gets a regular supply of produce fresh from the farm, sometimes at a discount over what they might pay at the grocery store.
Of course, with the shared benefits comes shared risk. If the growing season is bad for a certain crop, or an unexpected storm hits, that will affect the harvest. It can be disappointing. But the fact that the community is helping the farmer with costs could mean that the farmer can stay in business despite a bad harvest or devastating storm.
It made sense for my family, which includes two vegan teenagers, to give it a try this year. Each week, we’ll get up to eight items from the farm, such as a head of lettuce, a bag of spinach, a bundle of carrots, or a pound of green beans. We hope the experience will diversify the whole family’s food choices.
Being a CSA shareholder feels good because not only are we supporting our own community, but we are teaching our children where their food comes from and the work it takes to produce it.
You can find a CSA farm or other sources of locally grown food here.
CSA could be right for you if:
- Eating locally grown food is important to you.
- You cook the majority of your own meals.
- You like a variety of different and fresh vegetables.
- You can commit to picking up your produce share on the same day and at the same location each week. (Although some CSAs now offer door-to-door delivery).
- You can tolerate some risk of not getting crops or crops not coming in as planned.
- You want to support the local economy and small farm/agriculture industry.
Not all CSA farms are certified organic, although many do have a USDA certified organic seal. If this is a priority for you, ask about the farm’s growing practices before committing. Another important consideration is to find out what a CSA will provide. Some grow fruit, and others even include meat, eggs and honey.
If you want to eat fresh from the farm but can’t commit to CSA, you have other easy options:
- Farmers’ markets: Many communities set aside places for farmers to sell their produce directly to the public.
- Recovered food: Businesses like Hungry Harvest in the Washington, D.C., area take food that is perfectly edible but might be discarded by a restaurant or a grocery store because of a cosmetic imperfection. Some is sold to customers and some is donated to food banks or farmer’s markets.
- Grow your own: It doesn’t take much space in your backyard or balcony to plant a few tomatoes, bell peppers or squashes—especially if you grow them vertically. If you pull the weeds and water the plants, you’ll have tasty produce you can call your own.
Key Insights on Collaboration for a Resilient Anchorage
C2ES held a two-day Solutions Forum workshop in March 2016 in Anchorage, Alaska, focusing on opportunities for collaboration in building a climate-resilient Anchorage. About 50 business leaders, city, state, federal and tribal officials, nonprofit organizations, and other experts shared their experiences addressing climate change impacts and enhancing resilience. Discussion focused on the role each stakeholder group can play in planning for resilience. This paper summarizes the key insights of the meeting and areas of focus moving forward.
|Josh Wiener of MetLife, Kevin Rabinovich of Mars Inc., Rusty Hodapp of Dallas-Fort-Worth International Airport and Rob Bernard of Microsoft share the strategies that helped them win Climate Leadership Awards with David Rosenheim of The Climate Registry at the fifth annual Climate Laedership Conference, March 10 in Seattle.|
Climate action can start with an idea, but it takes a goal and a plan to get there to make that idea a reality.
When the folks at Microsoft began their current sustainability journey in 2007, “There was well-intentioned chaos,” according to Rob Bernard, the company’s chief environmental strategist. When the Clinton Foundation asked the software maker for a tool to monitor carbon in cities, “That made us think that, internally, we needed to have a strategy on sustainability,” Bernard said in his remarks at the fifth annual Climate Leadership Conference (CLC) in Seattle earlier this month.
That strategy led Microsoft to set and achieve its first public greenhouse gas goal, a 30 percent reduction within five years. Once that was met, the company then set -- and met -- an even more ambitious goal: carbon neutrality.
Microsoft was one of 13 organizations, three partnerships, and one individual honored with 2016 Climate Leadership Awards for accomplishments in reducing greenhouse gas emissions and driving climate action. The were given by the U.S. Environmental Protection Agency’s (EPA), in collaboration with C2ES and The Climate Registry.
Spring is the season of renewal, making it the perfect time to re-evaluate and refresh how we go about living and working sustainably on the planet. Turn over a new leaf this spring by trying any or all of the following five suggestions for treading more lightly on the earth.
- Avoid waste: What we buy and discard creates tons of waste and greenhouse gas emissions. The average American creates 4 pounds of trash daily. Keep would-be-waste to a minimum by making smart choices before you consume. Here are three tips: BYORM (bring your own reusable mug) to your favorite drink shop; carry reusable bags when shopping; or use Pyrex, Tupperware or reusable snack bags for leftovers after dining out.
- Mix up your commute: Are you one of the millions of Americans who drive nearly 30 miles a day – more often than not alone? Try a new way to get where you’re going. Use bike shares, take public transportation, join a carpool or try an uberPOOL.
- Grow your curb appeal: With spring around the corner, it is a fine time to add native trees and other plants to your yard or community garden. This greenery will capture carbon dioxide, the primary greenhouse gas contributing to climate change. Once established, native plants are low-maintenance and survive well on available water. They also enhance the look of your home or community. For more tips, check this guide to native plant gardening.
February is dragging on for an extra day this year, delaying my favorite spring ritual: the opening day of baseball season. The extra day of eager contemplation has me combining a seasonal love of baseball with my year-round affection for electric vehicles (EVs). Bear with me here.
Baseball is an intensely data-driven sport. Whereas most sports are still using relatively simple stats like basketball’s “double double,” where a player reaches double digits in two statistical categories, baseball analysts predict teams’ expected wins by calculating Pythagorean scoring averages. Oakland Athletics General Manager Billy Beane fielded a winning team by using data to find players’ overlooked value, inspiring a famous book and cunningly selling Brad Pitt as a reasonable look-alike in the process.
Baseball shows the importance of data availability and statistical inferences in decision-making. Similarly, access to the best statistics may help transportation managers determine the best strategies to promote adoption of EVs, a market-ready transportation alternative that can reduce harmful emissions that contribute to climate change. The difficulty has been that data resources have been scattered, often difficult to locate and even more difficult to compile into a usable form. This is where a new data tool may be able to offer meaningful insights into EV markets.
What are you doing for Leap Day?
According to folklore, it’s a good day for a woman to propose marriage. But if you’re not looking for that kind of commitment, you can instead commit to make a positive impact in the world during your extra 24 hours this year.
Here are seven things you can do to commit to a better planet Earth this Leap Day:
1. Plan an environmental outing with friends or co-workers. This might mean cleaning up a local stream or helping a local school build a live-and-learn greenhouse or garden. C2ES staffers planted wildflowers at a local park last year and are working on a new outing. The U.S. Environmental Protection Agency offers some other great environmental project ideas.
2. Host an environmental film screening. Educate yourself and friends by watching and discussing an environmental film or TV series like “Chasing Ice,” “Planet Earth,” or “The Symphony of Soil.” For more suggestions, visit this eco film list.
3. Take steps to save energy. Lowering your personal footprint begins by taking stock of how you use energy at home, at work and on the go. With better understanding, you can take action and live more sustainably while saving energy, money and the environment. Use our carbon calculator to find your footprint and complete pledges to improve it.
A number of states, cities, and power companies plan to press forward with clean energy efforts despite this week’s Supreme Court stay of the Clean Power Plan.
That’s because the future of carbon regulation is not “if” but “how and when,” and it is too big a question not to continue a thoughtful conversation among thoughtful people.
States to explore options
Officials in states including California, Colorado, Minnesota, Virginia, and Washington have said the court’s temporary stay won’t stop them from continuing to explore implementation options, which include leveraging the power of market forces to reduce emissions. Even states suing the Environmental Protection Agency (EPA) have been having these conversations, and most will continue to.
For instance, Montana Department of Environmental Quality energy bureau chief Laura Andersen told ClimateWire, "The market forces at play in the region are quite significant and will not go away just because the Clean Power Plan has a stay on it.”
Al Minier, chairman of the Wyoming Public Service Commission, said the stay could give regulators more time to develop strategies that are best for the state.
Weathering the Next Storm: A Closer Look at Business Resilience
Extreme weather and other climate-related impacts are becoming more frequent, and are imposing real costs on communities and companies. Companies have always navigated a changing business environment. But now they face a changing physical environment, as climate change affects their facilities and operations, supply and distribution chains, electricity and water, and employees and customers.
A new 2015 C2ES Report, Weathering the Next Storm: A Closer Look at Business Resilience, examines how companies are preparing for climate risks and what is keeping them from doing more. It also suggests strategies for companies and cities to collaborate to strengthen climate resilience.
The new report synthesizes public disclosures by S&P Global 100 companies, in-depth interviews and case studies, and workshops. It updates the groundbreaking 2013 report, Weathering the Storm, Building Business Resilience to Climate Change, which provided a baseline for how companies were assessing their climate vulnerabilities.
|Click above to see our Weathering the Next Storm infographic, with key takeaways|
- Most major companies recognize and report climate risks. Ninety-one percent of companies in the S&P Global 100 Index see extreme weather and climate change impacts as current or future risks to their business.
- Companies worry about climate impacts beyond their facilities. Almost all companies interviewed expressed concern about impacts to their supply chains and public infrastructure.
- There isn’t one right way to assess and manage climate risks. Many companies view climate change as a “threat multiplier” that exacerbates existing risks. This puts climate change into a familiar context, but could cause companies to overlook or underestimate the threats they face.
- Companies struggle to translate long-term, global climate data into short-term, local risks. Despite growing access to climate-related data and tools, companies say they need “actionable science” that helps them understand locally-specific risks or risk scenarios.
- Companies can start with a limited-scope vulnerability assessment – focusing, for example, on the most critical parts of the business – to raise internal awareness of climate risks.
- Companies should facilitate regular communication across departments involved in climate risk and resilience -- including sustainability, risk management, operations, and finance – and consider whether to change planning horizons to better incorporate climate risks.
- Companies, state and city governments, non-profits and local experts should explore partnerships to analyze data, evaluate climate risks, undertake cost-benefit studies, and implement resilience planning.
- Governments should look for ways to streamline climate risk reporting and provide more guidance on how to incorporate climate risks into financial disclosures.
- Governments should improve public infrastructure and provide opportunities for the private sector to contribute to resilience planning efforts and investments.
- Fact Sheet: Key Insights on Business State and City Collaboration for Climate Resilience
- Executive Summary of our 2015 report.
- Press release on the 2015 report.
- Blog: Are Businesses Prepared for Climate Impacts?
- Our 2013 report and infographic: Weathering the Storm, Building Business Resilience to Climate Change
- Slides from December 2, 2015 webinar for California’s Alliance of Regional Collaboratives for Climate Adaptation
- Video on our YouTube page from our 2013 presentations on Weathering the Storm: Building Business Resilience to Climate Change
- Business Resilience Workshop, March 24, 2015, Washington D.C.
- Climate Impacts and Resilience Workshop, July 26, 2014, Washington, D.C.
- The Executive Forum on Business and Climate, November 3-4, 2013.
- Business Resilience Webinar Series, September-December 2013.
- USA TODAY op-ed by National Grid US President Tom King and American Water CEO Jeff Sterba.
- Our Sept. 23, 2013, event at Climate Week NYC: agenda, photos, video interviews with speakers Preston Chiaro of Rio Tinto; Ken Daly of National Grid, New York; Alan Kreczko of The Hartford; and Lisa Shpritz of Bank of America.
- Our 2008 study, “Adapting to Climate Change: A Business Approach," which outlined an initial screening framework for assessing risks.
Video: Webinar for California’s Alliance of Regional Collaboratives for Climate Adaptation, December 2, 2015
Video of our report launch
Building Resilience to Climate Change -- Why it's Crucial
Panel: Taking Business Resilience to the Next Level
Comments of the Center for Climate and Energy Solutions on the Clean Power Plan's Clean Energy Incentive Program
C2ES December 2015 comments of the Center for Climate and Energy Solutions on the Clean Power Plan’s Clean Energy Incentive Program (CEIP)
This document constitutes the comments of the Center for Climate and Energy Solutions (C2ES) on the proposed Clean Energy Incentive Program proposed by the U.S. Environmental Protection Agency (EPA). C2ES is an independent, nonprofit, nonpartisan organization dedicated to advancing practical and effective policies and actions to address our global climate change and energy challenges. As such, the views expressed here are those of C2ES alone and do not necessarily reflect the views of members of the C2ES Business Environmental Leadership Council (BELC).
C2ES believes that market-based policies are the most efficient and effective way of reducing greenhouse gas emissions, and we applaud EPA for including multiple provisions in the final Clean Power Plan that promote market adoptions that can be used by states. Market-based policies harness market forces to spur innovation, development and deployment of clean energy technologies. To that end, trading of allowances or emission rate credits (ERCs) under the Clean Power Plan (CPP) can help ensure that emission targets are achieved at the lowest possible cost. Complementary to this, C2ES believes the Clean Energy Incentive Program (CEIP), properly designed, can help meet CPP objectives, promote market mechanisms and provide additional clean energy benefits as outlined below.
The CEIP provides economic value
CEIP credits (allowances or ERCs) issued by states and matched through EPA’s reserved pool could provide economic value to clean energy projects in two ways. First, if a project developer is an electricity generator subject to the CPP, these credits can be used for compliance. Second, if the project developer does not have a compliance obligation, these credits can be sold, which creates a revenue stream that can improve the financial viability of a project. As states develop their implementation plans, they may be able to provide early enhancements for project financing if some of the CEIP credits are allocated in advance by project type. This can help mobilize capital markets who would now know that the additional incentive would be available.
The CEIP will accelerate early market formation and price discovery
CEIP credits will complement other trading mechanisms that states may establish to comply with the CPP and add additional liquidity to CPP markets. Liquidity is important to an emissions trading market because it lowers the risk of price volatility or sudden price spikes caused by an inability to find available allowances. In addition, it can help with price discovery because these will likely be available before CPP compliance markets are functioning.
The trading of CEIP credits could be a key strategy for electricity generators to comply with emissions limits, either by incentivizing them to reduce their emissions and sell (or avoid purchasing) credits, or by purchasing credits from other generators at a lower cost. Early implementation of the CEIP may play a role in fostering the development of these trading regimes.
The CEIP could speed the development of state implementation plans and help reduce regulatory uncertainty
Projects become eligible for CEIP credits only if they commence construction after a final state implementation plan is submitted in the project’s host state. EPA allows plans to be finalized as late as September 2018. Because of the value of CEIP credits, project proponents may encourage states to finalize plans as soon as possible in order to open CEIP eligibility to a greater number of projects. Early plan finalization may give utilities additional time to plan for compliance and lower the regulatory uncertainty around CPP implementation.
The CEIP can incentivize city-level clean energy programs
Finally, the CEIP could provide a way for cities to have a role in meeting CPP compliance goals. U.S. cities have tremendous citizen and policymaker interest in reducing carbon emissions, improving energy efficiency and deploying more renewable energy, but they often face resource constraints. CEIP credits could provide cities a crucial funding resource to expand existing programs or launch new initiatives.
While noting that the CEIP as proposed has many benefits, C2ES also sees several potential enhancements, and we recommend the following:
Ensure the maximum number of projects can receive credits under the CEIP
Opportunities for wind, solar, and energy efficiency projects abound, and there is a chance that the demand for credits will exceed 300 million tons. We advise EPA to prepare for this situation by anticipating how to allocate credits when there are not enough to match each megawatt hour generated or avoided.
One way to accomplish this is to provide a reservation system for credits. Clean energy project developers would request credits prior to 2020, based upon two requirements—the launch of the program/beginning of construction and the expected performance of the project. In 2020 and 2021, after the project’s performance is verified, the project could then be allocated credits. C2ES believes this would add certainty to the project financing during the development stage by reducing the chance that a project would receive no credits (because the CEIP pool had been depleted), as could happen under a first-come, first-served system. EPA or states could also modify a reservation system to achieve other policy aims by prioritizing projects that meet desired characteristics. For example, criteria could include project size, project cost, or project operation start date. This approach can help mobilize capital markets earlier.
An alternative approach would be to set a maximum number of credits that a project could request from the CEIP. In this way, an allocation to a large project would not leave too few credits for other projects. A system could be developed where allocation requests happened in stages, so that if, after all eligible projects had received credits for some fraction of the electricity generated or avoided, they could request additional allocation if credits remained in the CEIP matching pool. This is different than the redistribution formula on which EPA is requesting comment, in that this staged distribution would occur in the same year in the same state and applies only to the situation in which the CEIP is oversubscribed.
We recognize that setting a priority to maximize the number of projects that receive CEIP credits creates a risk of missing opportunities for least-cost project development. Giving a large number of CEIP credits to a small number of projects may be more cost effective because it may result in lower costs for project administration per unit of renewable energy or energy efficiency delivered. However, given the limited duration of the CEIP, C2ES believes that the environmental benefits of broad participation outweigh the economic concerns of possibly incentivizing more costly programs over less costly ones.
SPECIFIC COMMENTS REQUESTED BY EPA
EPA requested comment on a number of provisions in the proposed CEIP. C2ES thanks EPA for the opportunity to comment on a few of these areas.
Definition of commence construction
C2ES believes EPA should use a definition of “commence construction” that already exists. This lowers the administrative costs of the CEIP and facilitates faster deployment of CEIP-eligible projects, since developers would not need to educate themselves about a unique definition.
As an example, certain federal-level clean energy tax credits define “commence construction” as when either work of a significant physical nature has been undertaken or more than 5 percent of a project’s total capital cost has been spent. Such requirements are well-understood by project developers and are not considered overly burdensome to meet or demonstrate to authorities.
Definition of low-income community
Similarly, C2ES believes EPA should use a definition of “low-income community” that already exists. State and city policymakers and project developers are familiar with existing terms, for example a geographic region’s area median income, or a comparison to the federal poverty line. While we are agnostic on exactly which definition is used, we believe it should be one currently used in other federal programs, reflecting regional differences in cost of living, and consistent across all states.
C2ES identifies a second aspect of the low-income community definition under the CEIP that we believe should be changed – the prescribed extent in which low-income communities are served. Some projects serve only low-income communities, for example residential energy efficiency improvements. Others, however, serve the broader community, including low-income households. For example, energy efficiency projects at water treatment plants serve the broader community, including low income households.
C2ES believes that applying a broad definition of how communities are served will maximize the environmental and economic benefits of the CEIP. It will do this by increasing the number of projects that are eligible – some of which may be larger and therefore lower cost to implement. Energy efficiency tends to lower electricity bills as consumers who have deployed more energy efficient technologies reduce their consumption of electricity. This provides an additional benefit that can significantly help low-income communities given the regressive nature of any energy cost increase. In addition, it has the added benefit of making these consumers less vulnerable to extreme heat or cold.
Evaluation, measurement, and verification requirements should be explicit and consistent
C2ES recognizes the critical role that evaluation, measurement, and verification (EM&V) requirements play in maintaining the environmental integrity of carbon trading programs. Having EPA-defined EM&V requirements reduces potential costs for state agencies by avoiding the need to develop requirements in every state and provides consistency for project developers as part of the model rule.
C2ES recommends that as EPA finalizes the EM&V requirements, it should prioritize processes that are low-cost and can be applied uniformly across states to allow a greater deployment of energy efficiency under the CPP.
Timing of credit allocation
C2ES notes that having credits available to the market as early as possible is the best way to reduce uncertainty and stimulate early market formation. In terms of credit allocation to projects in 2020 and 2021, C2ES recommends that EPA provide matching credits to clean energy projects shortly after performance, potentially on a quarterly or six-month basis.
Redistributing unused credits
If there are insufficient projects in a state to utilize its full share of EPA’s matching pool, C2ES recommends that the credits be available to projects in any state in which the CEIP is implemented and there is excess demand for credits, on a first-come, first-served basis. The initial matching pool allocation to participating states will ensure that states with a large capacity for clean technologies do not utilize the entire pool at the expense of states with smaller capacities. However, if a state’s share of the matching pool is unused, this would most likely reflect capacity that is too expensive to develop in the 2020-2021 timeframe. C2ES believes the EPA matching credits should then be rewarded to projects in other states that have met eligibility criteria but have not yet been allocated credits (reflecting an oversupply of economic renewable and energy efficiency potential in that state).
Converting the 300 million short ton matching pool into ERCs
C2ES believes that such a conversion should be administratively simple and consistent with the actual emission reductions taking place on the electricity grid. For example, the emission rate of the marginal generation source in a given power market could be used. In addition, C2ES recommends that the conversion factor be periodically updated to account for the expected change in carbon intensity of electricity generation occurring even before the first compliance period. For example, if new renewables lowered the carbon intensity (in tons/MWh) of electricity in a power market between 2020 and 2021, the conversion factor (expressed in tons/MWh) would have to be similarly lowered so that projects receiving ERCs or allowances are treated fairly, with respect to one another.
Participation by states, tribes and territories without CPP goals
Since CEIP-eligible projects serve to reduce overall emissions of the entire electricity grid, it is appropriate to allocate CEIP credits to projects in states that do not have CPP goals but are connected, via interstate transmission lines, to states that do. These jurisdictions, if they wish to participate in the CEIP, should submit an intent to do so in the same way as CPP states. EPA should then allocate a portion of its matching pool to these jurisdictions using the same formula as for other states. Since there is no corresponding state match for these jurisdictions, EPA could consider doubling the allotment from the federal matching pool for projects in these jurisdictions only. In this way, project developers would have an equal incentive to develop CEIP-eligible projects in these jurisdictions. For example, an energy efficiency project located in the District of Columbia could be granted two full CEIP credits from the EPA matching pool for every megawatt hour of electricity avoided. In this way, the project receives the same economic incentive as a project located in a state with a CPP target.
C2ES recognizes that EPA has finalized the eligibility criteria in the final Clean Power Plan. As mentioned earlier, the CEIP has the potential to be an important stimulator of clean energy and also of market-based implementation plans. We view these as important and that the CEIP can play this role.
However, in finalizing the eligible projects to solar, wind, and energy efficiency in low income communities, EPA is making some essential policy advances, but at the same time missing some others.
Encourage other clean energy technologies
C2ES believes that the CEIP as proposed encourages other clean energy technologies too narrowly. For example, hydropower and geothermal facilities could increase capacity at existing plants within a similar two-year construction window, while carbon capture and storage (CCS) could be deployed at existing coal and natural gas units to significantly decrease emissions.
We suggest that EPA explicitly help states to understand and use the flexibility they have in their overall state-wide allocations to complement the objectives of the CPP and CEIP, including rate payer protection, and potentially allocations for other clean energy technologies. Each state is unique, with its own set of industries, resources and population needs. For example, we believe one state may desire to buffer rate impacts, while another might want to use a portion of its allocation to credit a CCS retrofit or capacity upgrade at another existing power plant. We believe that states should have as much flexibility as possible.
Related to this issue, states should also be granted the flexibility to determine how many CEIP credits to allocate to clean energy or energy efficiency technologies from their state budgets. For example, under the proposal, a wind project would receive half credit from a state and half credit from EPA, for every megawatt hour generated. If a state wanted to give a wind project a full credit, for example, we see no issue (even if EPA only provides a half of a credit). Similarly, if a state deems CCS to be eligible for CEIP allocation, but EPA does not, then a state should be able to decide the size of the credit for the the CCS project. In this way, the megawatt hour generated from wind and the CO2 reductions from CCS would receive the same economic incentive, even though the source of this incentive (state versus EPA) would be different.