U.S. States & Regions
States and regions across the country are adopting climate policies, including the development of regional greenhouse gas reduction markets, the creation of state and local climate action and adaptation plans, and increasing renewable energy generation. Read More
In the year since California launched the nation’s largest greenhouse gas cap-and-trade program, the state has proven that climate change action can be led by states and can even spread across national borders.
Under a cap-and-trade system, companies must hold enough emission allowances to cover their emissions, and are free to buy and sell allowances on the open market. Since California held its first auction of carbon allowance credits on Nov. 14, 2012, the California Air Resources Board (CARB) has auctioned roughly 64.4 million allowances valued at $780 million. Through the smooth operation of its auctions and sales of 100 percent of 2013 allowances to date, California has demonstrated its capacity to successfully administer a cap-and-trade program.
California does not have the first emissions trading program in the United States, although it’s certainly the most ambitious. The multi-state Regional Greenhouse Gas Initiative (RGGI) was the pioneer, but California’s cap-and-trade program is more substantial due both to the size of state’s economy and the number of sectors covered. By 2015, California’s program will expand to be about twice as large as RGGI.
The leaders of California, Oregon, Washington, and British Columbia have agreed to promote policies and regulations to reduce greenhouse gas emissions and foster a low-carbon economy.
The Pacific Coast Action Plan on Climate and Energy they signed Oct. 28 represents a nonbinding commitment to align regulations and market-based measures in each jurisdiction. The plan promotes clean energy deployment, carbon pricing, revised greenhouse gas reduction targets, research on ocean acidification, and low-carbon transportation. Several provisions highlight the need for regional cooperation to reduce greenhouse gas emissions, such as those supportive of a high-speed regional rail line and an integrated electrical grid. Finally, the plan calls for a coordinated approach to U.S. and international climate negotiations, and each jurisdiction has agreed to participate in a subnational coalition to secure a broader climate agreement at Conference of Parties to the UNFCCC in Paris in 2015.
The collective size of the parties to this agreement should send a powerful signal that state and provincial governments are willing and able to address climate change. The agreement was developed through the Pacific Coast Collaborative (PCC), which also includes Alaska. The PCC has a population of 53 million and a combined gross domestic product of $2.8 trillion. If it were a country, the PCC would have the fifth largest economy in the world.
Since the agreement is nonbinding, legislative and executive action is needed for real progress to be made. To date, the parties have made varying levels of progress in climate and clean energy policy. British Columbia has had a revenue-neutral carbon tax in place since 2008, as well as a clean fuel standard for transportation. California has been using a variety of policy tools to fight carbon emissions, especially since the passage of its Global Warming Solutions Act in 2006. One element, the cap-and-trade system, has imposed a price on carbon since the beginning of 2013. Oregon and Washington have agreed to put a price on carbon, but each will require new laws to do so. Legislative efforts in both states to put a price on carbon failed in 2009, but both governors are making a renewed push. Governor Inslee in Washington has directed a working group of state legislators to propose carbon-trading legislation by December 2013. In Oregon, Governor Kitzhaber’s administration has been working to implement its 2012 10-Year Energy Action Plan, which includes the state’s greenhouse gas goals.
C2ES: California Cap and Trade
Pacific Coast Collaborative: Home Page
LA Times: Gov. Jerry Brown signs clean energy pact with two states, Canadian province
AP: West Coast States and BC to Link Climate Policies
When I founded a new nonprofit organization 15 years ago, the United States and the world urgently needed practical solutions to our energy and climate challenges. That need has only grown more urgent.
Earlier today, I announced my plans to step aside as the President of the Center for Climate and Energy Solutions (C2ES) once my successor is on board. As I look back, I find we have come a long way. That said, any honest assessment of our progress to date in addressing one of this century’s paramount challenges must conclude that we have much, much further to go.
When our organization, then named the Pew Center for Global Climate Change, first launched in 1998, 63 percent of the world’s electricity generation came from fossil fuels. Incredibly, that number is even higher today – 67 percent. The concentration of carbon dioxide in the atmosphere, the main driver of climate change, is also higher than it was then – in fact, at its highest level in more than 2 million years.
Scientists around the globe have just reaffirmed with greater certainty than ever that human activity is warming the planet and threatening to irreversibly alter our climate. Climate change is no longer a future possibility. It is a here-and-now reality. It’s leading to more frequent and intense heat waves, higher sea levels, and more severe droughts, wildfires, and downpours.
We at C2ES have believed from the start that the most effective, efficient way to reduce greenhouse gas emissions and spur the innovation needed to achieve a low-carbon economy is to put a price on carbon. It’s a path that a growing number of countries, states, and even cities are taking.
State Policy Actions to Overcome Barriers to Carbon Capture and Sequestration and Enhanced Oil Recovery
State Policy Actions to Overcome Barriers to Carbon Capture and Sequestration and Enhanced Oil Recovery
by Patrick Falwell
The development of Carbon Capture and Sequestration (CCS) and Enhanced Oil Recovery with Carbon Dioxide (CO2-EOR) projects faces a wide range of barriers, but state-level policy can help overcome many of these challenges. In addition to establishing a regulatory framework for CCS and CO2-EOR projects, states can provide incentives, financial or nonfinancial, to promote the development of CCS and CO2-EOR. So far, states have adopted a diversity of policies that meet local expectations and needs. Additional state policies have been proposed, but not yet adopted.
This paper, developed through the Sequestration Working Group of North America 2050, lists the key regulatory and economic barriers CCS and CO2-EOR projects must overcome, and lists examples of existing or proposed state-level policies to help in addressing each.
Key Considerations for Industrial Benchmarking in Theory and Practice
by Kyle Aarons
The industrial sector is responsible for 20 percent of the nation's energy consumption and greenhouse gas emissions. Benchmarking is used in a variety of applications to improve the efficiency of industrial facilities and therefore bring emissions down. In this context, benchmarking refers to developing and using metrics to compare the energy or emissions intensity of industrial facilities. Benchmarks are primarily used to compare facilities within the same sector, but can also be used to identify best practices across sectors where common process units, such as boilers, are used. Policymakers can use benchmarking for a variety of purposes, including setting emissions standards, recognizing leading facilities, promoting information sharing, or allocating emission credits in a cap-and-trade program.
This paper, developed through the Industry Working Group of North America 2050, is intended to encourage consistency in benchmarking methodology across programs within a single jurisdiction, as well as across jurisdictions. When facilities are benchmarked using a consistent methodology, it is possible to identify best practices as well as opportunities for improvement across sectors and jurisdictions. For example, two paper mills in neighboring states will only be able to compare their performance if both states use the same data collection methods and metrics. To encourage such consistency, this paper defines and explains key issues that arise when policymakers establish a benchmarking program. It also includes guiding principles recommended by the Working Group based on a review of benchmarking literature and successful programs.
On-bill financing (OBF) refers to a type of loan that can be used to invest in improving the energy efficiency of a building. The loan is paid back over time through an additional charge on the building’s utility bill. This mechanism encourages building occupants and owners to invest in energy efficiency measures, which can decrease energy consumption and utility bills.
Installing energy efficient measures often comes with a high upfront cost that many people, businesses, and institutions cannot afford. OBF programs can mitigate this problem because the administering utility or a third party covers the upfront cost of the energy efficient installations, which the participating utility ratepayer then repays through an additional charge on their utility bill. Since the ratepayer will be using less energy, and therefore paying less for energy, after the installation, there should be little or no net increase in the monthly bill.
On-bill financing programs vary by state and by provider, and each program has its own terms and process. Programs may be available to residential, commercial, industrial, and/or institutional customers depending on the state and utility policies. In those states with legislation that requires utilities to offer OBF, generally it is only obligatory for investor-owned utilities (IOUs). Administration of OBF programs also varies; programs may be administered by the utility itself, a nonprofit organization, or a government entity. Some OBF programs feature a discounted or zero interest rate. Generally, non-repayment of the loan will lead to a shutoff in utility service, which deters defaults and makes OBF more attractive for the loan provider. Initial investment funds for energy efficient installations can come from utility ratepayers, government grants, or other funding sources. To date, much of the funding for OBF has come from funds directed by the American Recovery and Reinvestment Act of 2009 (ARRA).
Most participants in OBF begin the program with an audit of the building to determine if energy efficient upgrades would be cost-effective. Some programs require all upgrades to be “bill-neutral.” Bill-neutrality occurs when the savings accrued by the decreased energy use will be equal to or greater than the monthly repayment amount. Unless specifically noted, the programs described in the map are not required to be bill-neutral.
On-bill financing programs may also have the characteristic of being “tied to the meter,” meaning that responsibility of repayment lies with the current resident of the building, rather than forever with the resident who instigated the financing. This allows for flexibility for residents who wish to move or sell their home. Unless specifically noted, the programs described in the map are not tied to the meter.
The states are organized into the following policy categories:
1. State-Required On-Bill Financing: These states have passed laws or public utilities commission orders that require utilities statewide (usually only large or investor-owned utilities) to provide an OBF program. Program specifications, such as loan terms, program size, and customer eligibility vary from state to state.
2. State-Supported On-Bill Financing: These states have passed laws or public utilities commission orders that authorize and/or support the implementation of OBF state-wide, but do not require any utilities to offer OBF programs. These include policies that remove legal barriers to offering OBF or establishing funds for OBF programs.
3. Preliminary On-Bill Financing Policy: These states’ public utilities commissions have ordered the establishment of pilot OBF programs or commissioned research or working groups to analyze the feasibility of OBF programs.
4. On-Bill Financing Offered by Individual Utilities: Utilities in some states have voluntarily created OBF programs without direction from local or state government. In some states, utilities can earn money from reducing overall demand. Energy efficiency can also be a way to reduce peak loads and thus generation costs.
To learn more about On-Bill Financing programs, please see the C2ES On-Bill Financing Brief.
On June 14, 2013, Texas Governor Rick Perry signed into law two bills that should increase the use of combined heat and power (CHP) in the state. Although natural gas production has been on the rise in Texas, the use of CHP has stagnated due to a difficult financing environment and regulatory barriers, and these laws may help remove some of those barriers.
HB 2049 clarifies language in the Texas Utility Code to allow CHP facilities to sell electricity and heat to multiple customers near the CHP facility to maximize efficiency and minimize financial risk. HB 1864 clarifies how to conduct CHP feasibility studies for government facilities that seek to use CHP for disaster preparedness.
Increased use of CHP has a number of positive effects. It is much more efficient than producing heat and power separately. It will replace coal usage in the state with natural gas and therefore decrease greenhouse gas emissions. In addition, because CHP is a decentralized method of energy generation, increased usage of CHP would decrease losses that generally occur while moving power from central power plants to customers. CHP is also less vulnerable to broader grid disruptions. Lastly, unlike typical power plants, CHP uses essentially no water, a welcome benefit in drought-ridden Texas.
In his State of the Union address, President Obama promised stronger action on climate change. Today he followed up with a credible and comprehensive plan. The real issue now is how vigorously he follows through.
From a policy perspective, the president’s plan lacks the sweep, cohesion and ambition that might be possible through new legislation. With Congress unwilling to act, the president instead is offering an amalgam of actions across the federal government, relying on executive powers alone.
Taken together, the actions represent the broadest climate strategy put forward by any U.S. president, addressing the need to both cut carbon emissions and strengthen climate resilience. While many of the specific items are relatively small-bore, and quite a few are actions already underway, the plan also includes new initiatives that can significantly advance the U.S. climate effort.