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
Judging from the climate policy debate in Washington, one might conclude that carbon pricing is only a concept, or something being tried in Europe.
But in fact, 10 U.S. states (California and the Northeast states in the Regional Greenhouse Gas Initiative) have carbon trading programs. That means more than a quarter of the U.S. population lives in a state with a price on carbon. And a growing number of nations and provinces around the globe are turning to carbon pricing to cost-effectively reduce greenhouse gas emissions and encourage energy innovation.
E&E TV, April 10, 2014
As President Barack Obama prepares to deliver his State of the Union address, we believe it’s a good time to take a look at the state of our climate: the growing impacts of climate change, recent progress in reducing U.S. emissions, and further steps we can take to protect the climate and ourselves.
The consequences of rising emissions are serious. The U.S. average temperature has increased by about 1.5°F since 1895 with 80 percent of this increase occurring since 1980, according to the draft National Climate Assessment. Greenhouse gases could raise temperatures 2° to 4°F in most areas of the United States over the next few decades, bringing significant changes to local climates and ecosystems.
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.
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 programs allow building owners and occupants to pay for clean energy investments over time through an additional charge on utility bills.
On-bill programs have mostly focused on energy efficiency measures, though renewable energy and water efficiency projects may be eligible as well. Such projects often come with a high upfront cost that many people, businesses, and institutions cannot easily afford. On-bill programs can mitigate this problem because an administering utility or a third party covers the upfront cost of the clean energy installations. A customer’s history of utility bill payment can help to establish credit, and the customer may see little or no net increase in the monthly bill due to expected reductions in energy consumption. Generally, non-repayment will lead to a shutoff in utility service, which deters defaults and can make the loan provider more confident in repayment.
There are two general types of on-bill programs:
- On-bill financing (OBF) – a utility incurs the cost of clean energy upgrades and is repaid by the customer.
- On-bill repayment (OBR) – a third party (not the utility) provides the capital for a clean energy upgrade and is repaid by the customer through a utility bill.
On-bill 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 on-bill programs also varies; programs may be administered by the utility itself, a nonprofit organization, or a government entity. Some programs feature a discounted or zero interest rate. Initial investment funds for on-bill programs can come a variety of sources from utility ratepayers, government grants, or other funding sources. The American Recovery and Reinvestment Act of 2009 (ARRA) provided a significant amount of funding for OBF.
Most participants in on-bill programs 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.
Certain on-bill 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.
The states are organized into the following policy categories:
1. State-Required On-Bill Financing or State-Launched On-Bill Program: 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 or directed a state agency to set up an on-bill program. Program specifications, such as loan terms, program size, and customer eligibility vary from state to state.
2. State-Supported On-Bill Programs: These states have passed laws or public utilities commission orders that authorize and/or support the implementation of OBF or OBR state-wide, but do not require any utilities to offer on-bill programs. These include policies that remove legal barriers or establish funds to offering on-bill programs.
3. Preliminary On-Bill Program Policy: These states’ public utilities commissions have ordered the establishment of pilot on-bill programs or commissioned research or working groups to analyze the feasibility of on-bill 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.