Business

Connecticut seeks to support nuclear energy

For more than a year, Connecticut legislators have been working to craft a policy to ensure that zero-emission electricity from the Millstone Nuclear Power Station continues to flow until at least 2035 and 2045, when its operating licenses expire.

Millstone, New England’s largest power plant, supplied 45 percent of Connecticut’s in-state power generation and nearly all its carbon-free electricity last year. With around 2,100 MW of installed capacity, the facility generates enough power each year to meet the needs of nearly 2 million Connecticut households. Moreover, the two reactors help avoid the emissions of more than 6 million metric tons of carbon dioxide per year.

But Millstone, like other nuclear power plants, faces economic headwinds. Challenges include sustained low natural gas prices, declining renewable energy costs, slow growth in electricity demand, and power markets structures and policies that don’t compensate nuclear for its environmental and reliability attributes. Mandated safety enhancements and other capital and maintenance investments are adding to plant costs. Since late 2012, six U.S. nuclear reactors have been retired prematurely, and seven more are set to close by 2025.

If this trend continues or accelerates, there could be serious climate implications. Nuclear power supplies 20 percent of total U.S. electricity, but makes up 57 percent of zero-carbon electricity. As all recent U.S. nuclear retirements have led to increased fossil fuel-fired generation, any additional loss of nuclear generating capacity would be expected to increase U.S. emissions of carbon dioxide as well as nitrogen oxides. These increased emissions will set back our efforts to fight climate change and regional air pollution. Although nuclear power enjoys bipartisan support in Congress, a federal remedy has failed to emerge, so individual states are taking action. Last August, New York established a clean energy standard to help assist its upstate reactors. In December, Illinois passed a law to support two (i.e., Quad Cities and Clinton) of its six nuclear power plants in a similar fashion. New Jersey, Ohio and Pennsylvania are exploring options to support their nuclear reactors.

In Connecticut, lawmakers have proposed creating additional opportunities for Millstone to sell its power. In the bill’s current form, nuclear power would be able to participate in a state solicitation for carbon-free power. Under this arrangement, the commissioner of the Department of Energy and Environmental Protection could direct electric distribution companies (i.e., utilities) to “enter into agreements for energy, capacity, and environmental attributes,” provided the proposals are in the best interests of the ratepayers and meet other criteria. At the same time, the bill would increase the state’s renewable portfolio standard (RPS) to 40 percent by 2040 from 27 percent by 2020. So as not to overwhelm the RPS and inhibit the growth of renewables, only a portion of Millstone’s output should be eligible under the final bill unless the ambition of the RPS is increased commensurately.

To remain economically viable, power plant owners rely on revenues (i.e., energy and capacity) they receive from participating in wholesale power markets. However, low natural gas prices continue to put downward pressure on wholesale electricity prices across the country. In 2016, prices in New England’s electricity market averaged $28.94/MWh – the lowest since the market was established in 2003 and below the average total generating cost for multi-unit nuclear reactors. Owners can also enter into two-party agreements directly with power consumers or other parties. While this offers an alternative revenue stream, these contract prices tend to reflect current circumstances in electricity markets.

Power markets are challenging and do not reward nuclear power for its large environmental and system reliability benefit. In the absence of a price on carbon, we need alternatives to ensure nuclear power plants do not retire prematurely. We applaud Connecticut’s proactive approach to recognizing the carbon-free attributes of New England’s largest power source. State leadership on climate has never been more critical. With reasonable policies in place to maintain the existing U.S. nuclear fleet, it will be easier for the U.S. to reduce its emissions and achieve its climate and air pollution reduction goals.

Energy efficiency: How Minneapolis is teaming up with utilities to reduce emissions

When the city of Minneapolis set out to cut greenhouse gas emissions 80 percent by 2050, it soon became clear the goal couldn’t be met without substantial help from the area’s two investor-owned energy companies.

Xcel and CenterPoint Energy provide their customers the electricity and natural gas that powers, heats, and cools the city’s commercial and residential buildings, which accounts for two-thirds of city emissions. Energy efficiency had to be part of the equation.

Utilities are largely regulated at the state level in Minnesota but cities do negotiate franchise agreements that allow utilities use of public property for transmission lines and pipelines. Under new 10-year franchise agreements with the city, the utilities agreed to establish a partnership to help the city reach its goal.

Now in its third year, the Clean Energy Partnership has drawn national attention. It won a Climate Leadership Award from the U.S. Environmental Protection Agency (EPA). The Department of Energy recognized its software program that helps building owners understand their energy use. Several cities – including Salt Lake City; Santa Fe, N.M.; and Madison, Wis. – have looked to Minneapolis as a model for their own emissions-cutting efforts.

The partnership has set a series of ambitious goals, including reaching 75 percent of households with energy efficiency retrofit services and cutting energy use 17 percent by 2025, and achieving a carbon-free electricity supply by 2040. Steps the partnership has taken include encouraging commercial property owners, landlords, and individual homeowners to conserve energy – as well as continuing efforts to cut the electric and gas usage of city-owned buildings, streetlights, and vehicles.

“The first two years really were a learning experience,” said Luke Hollenkamp, a sustainability program coordinator for Minneapolis. “One of the biggest accomplishments was just getting it up and running.”

Initial work included building databases of energy usage and energy conservation efforts throughout the city and creating a community Energy Vision Advisory Committee (EVAC) – two steps that both proved crucial.

Measure first

The databases, which are managed by the city, were a key early accomplishment, giving the partnership a way to measure progress as well as track participation in its energy conservation programs down to the neighborhood.

“We had known that parts of the city weren’t participating as much in energy efficiency programs as others, but we didn’t know to what scale,” Hollenkamp said. “This gave us a way to track our progress at a more granular level.”

The city in 2013 adopted a benchmarking ordinance requiring all private commercial buildings larger than 50,000 square feet to report their natural gas, electricity, and water usage. Meter readings are automatically uploaded by the utilities and compiled into a publicly available online tool that uses EPA’s Energy Star measures to rate buildings. Overall, the Minneapolis buildings score 74 out of 100, well above the median national score of 50.

Low-performing buildings identified by the benchmarking can be targeted for assistance and all benchmarked properties are encouraged to conserve energy. The city has established a “Minneapolis Building Energy Challenge” to reduce energy consumption by 15 percent by 2020. Participants receive public recognition for their efforts and the city will help connect owners with the technical resources they need to achieve the goal. So far, 15 of 429 eligible buildings have signed up for the challenge.

Audrey Partridge, local energy policy manager at electric utility CenterPoint, said the partnership’s current two-year plan calls for more intensive outreach to tell property managers and owners about programs they may be eligible for to lower their energy usage -- and their bills.

Engage the community

The 15-member community advisory committee – which includes representatives from the community, environmental advocacy groups, major industrial energy consumers, and technical experts – has proved crucial to the program’s success.

“One of the great things that EVAC has done was provide a template for community engagement,” said Bridget Dockter, manager of policy and outreach for natural gas utility Xcel. “That ended up being the source for a pilot program we are actually engaged in now.”

Under the outreach pilot program, the partnership is enlisting neighborhood organizations to test the best ways to reach the two populations that have historically lagged in participating in energy-efficiency programs – lower-income neighborhoods and multi-family buildings.

More than half of Minneapolis residents are renters, making multi-family buildings a key area to target. But how do you persuade property owners to invest in energy efficiency when tenants typically pay the utility bills?

In October 2015, Xcel and CenterPoint began offering free energy audits through the partnership to owners of buildings with at least five units and set up financial incentives ranging from 15 to 25 percent of upgrade costs for efficiency improvements in market-rate buildings. Rebates are available through the utilities under a state requirement.

Dockter said it’s too soon to measure the results, since it can take months after an energy audit to secure the capital for efficiency improvements. But, she said, “we’ve had a handful of buildings actually make the formal investment.”

Setting goals

Early results include an increase in Home Energy Squad visits from 731 in 2014 to 1,198 in 2015. These home energy audits include installation of energy-saving devices such as LED lights, weather-stripping, programmable thermostats, low-flow shower heads and faucet aerators. For a limited time, the city offered no-interest financing to participants making insulation and air sealing upgrades.

In 2015, residential electric use decreased by 4 percent and natural gas use dropped 22 percent from the previous year. Reductions were in part due to energy efficiency improvements as well as a mild heating season, according to the partnership’s 2015 annual report.

Keys to Success

For municipalities looking to Minneapolis as a model for collaboration, Dockter says a key is having strong commitments from every partner to put in the time and resources needed for success.

“It’s important early on to recognize you aren’t going to find some bright shiny object that is the answer,” she said. “It’s a long, systemic answer that you need to build on to really change the direction and the results.”

Al Swintek, government relations officer at CenterPoint, agrees that the partners need to be committed and that the partnership be formal, with regular meetings, documented goals, and work plans so that it produces results. He recommends directly involving “those at the highest levels to help push this forward.”

To Learn More:

Solutions Story: Dominion, Microsoft team up with Virginia to build solar project

On 125 acres about an hour’s drive southwest of Washington, D.C., construction is in full swing on 260,000 photovoltaic panels.

In the short-term, the project will create more than 200 construction jobs. In the longer term, it will bring more than $70,000 a year in tax revenue to Fauquier County and provide 20-megawatts of solar power, which, at peak capacity, is enough to power several thousand homes.

The project was made possible by a public-private partnership involving the Commonwealth of Virginia, Dominion Energy, and Microsoft—one that could serve asd a model for similar projects.

Dominion’s goal is to install 500+ megawatts of renewable power by 2020.

Microsoft, which has data and technology centers in Virginia, has a goal to remain carbon neutral.

The Remington, Virginia, project is a win for all three. Dominion and MIcrosoft meet their goals with no extra cost to other customers, while the state and its taxpayers have locked-in energy costs.

“We saw this as an opportunity to develop solar for our customers and work toward our own goals for generating renewable energy,” said Dianne Corsello, director of business development for Dominion Generation.

Key to the agreement were renewable energy certificates (RECs). Because electricity from a wind or solar plant is fed into the grid and mixed with power from other sources, there’s no way for an end user to buy power coming from a particular source. A REC is an accounting mechanism to make sure that one (and only one) customer is credited with purchasing a given quantity of power from a particular renewable source.

Microsoft, which has been carbon neutral since 2012, agreed to enter into a long-term agreement to purchase all RECs the project will generate.

For Microsoft, the RECs are helping offset the carbon footprint of its data center in Boydton, Virginia, and contributing to the company’s goal of buying enough renewable energy to equal 100 percent of its energy consumption.

For Dominion, the RECs purchase agreement means  it  can sell the power from the Remington plant at a more competitive rate.

For the state, a 25-year power purchase agreement will allow it to purchase all the power generated from the solar project for no more than it would pay for fossil fuel-generated electricity. Over the lifetime of the deal, that could save taxpayers up to $1 million.

Dominion and Microsoft hope that this could be the start of a trend of creative collaboration on clean energy financing.

“I see opportunities for a growing number of companies that are looking to meet their environmental goals,” Corsello said. Dominion has invested more than $800 million in solar power in Virginia, with 398 megawatts of solar generation either completed or under development.

“We have a long way to go to develop renewable energy,” said Brian Janous, Microsoft’s director of energy strategy. “But we need more of the kinds of opportunities for partnership with utilities we’re seeing here to open up.”

To learn more:

Dominion Energy: Remington-Gordonsville

Microsoft: Adressing our carbon footprint

Virginia: Renewable Energy Programs

C2ES guide helps cities and businesses collaborate on climate resilience

Press Release
May 24, 2017
Contact Laura Rehrmann, rehrmannl@c2es.org, 703-516-0621

 

C2ES guide helps cities and businesses collaborate on climate resilience

WASHINGTON – Cities and businesses both face the threat of damaged infrastructure and disrupted operations due to climate impacts. A new C2ES guide outlines ways cities can collaborate with the local business community to strengthen climate resilience.

To create the Guide to Public-Private Collaboration on City Climate Resilience Planning, C2ES brought together local government and business officials in Kansas City, Mo.; Miami Beach, Fla.; Phoenix; and Providence, R.I., to assess each city’s climate preparedness and prioritize resilience needs. Each city has a unique economic make-up and faces different climate threats, but common threads led to recommendations for any city leader to invite and promote business collaboration, including:

  • Build resilience planning on the foundation of existing public-private programs and partnerships across city departments.
  • Show businesses that climate resilience planning is a key priority, and set up a process for continual collaboration to demonstrate that business involvement is valued.
  • Work with partners, including in academia and state and federal government, to develop localized data on climate threats to emphasize the business case for resilience planning.
  • Tailor the approach depending on the industry and size of the business.
  • Explore innovative financing for resilience projects, including public-private partnerships and insurance incentives.

“Every city hit by a severe storm understands the need for resilience and fast disaster recovery,” said C2ES President Bob Perciasepe. “Businesses need climate-resilient public infrastructure to maintain business continuity. Cities need climate-resilient businesses to maintain the economic health of the community. It only makes sense for them to work together.”

Just as cities and businesses jointly suffer the negative impacts of climate change, they may jointly benefit from the economic development opportunities that come from improving resilience, according to the guide. Upgrading or relocating infrastructure, implementing energy efficiency projects, building microgrids, and restoring natural ecosystems can improve resilience and create jobs.

Cities and businesses bring complementary strengths to climate resilience planning. Businesses may have data analysis and emergency response resources that would be helpful to cities. Cities, meanwhile, often find it easier to plan for the longer term.

Expanding the stakeholders involved in resilience planning can also increase political support and the willingness to devote public resources to the topic.

The Guide to Public-Private Collaboration on City Climate Resilience Planning was created with support from Bank of America.

Cities and businesses can make more resilient communities by working together

The impacts of climate change are being felt today – including more frequent and intense storms, heat waves, droughts, and rising sea level. These impacts take a human and economic toll on cities and the businesses operating in them. Despite the common threat, little guidance exists for how the public and private sectors can work together to prepare.

To address that gap, C2ES, in partnership with Bank of America created a Guide to Public-Private Collaboration on City Climate Resilience Planning. The guide outlines 13 recommended actions for city planners to invite and promote collaboration with businesses on climate resilience.

Working together makes sense because both public and private stakeholders want to see economic growth in their communities. Extreme weather events have caused more than $1 trillion in damage to the U.S. economy since 1980, and the intensity of these events is expected to worsen because of manmade climate change.

Storms can be particularly devastating for small businesses. The Hartford found 52 percent of small businesses affected by Hurricane Sandy in 2012 lost sales or revenue, and 25 percent of these businesses had to slow down or stop hiring.

C2ES brought together local government and business officials in Kansas City, Mo.; Miami Beach, Fla.; Phoenix; and Providence, R.I., to assess each city’s climate preparedness and prioritize resilience needs. Despite differences in each city’s geography, size, climate threats, and economic make-up, we found common insights into how to best foster city-business collaboration.

  • Resilience planning should be an extension of existing programs and partnerships. It requires involvement of officials in multiple city departments.
  • If cities demonstrate to businesses that climate resilience planning is a key priority, it’s more likely businesses will devote the resources to collaboration.
  • Businesses respond to data. By working with partners to find localized data on climate threats and vulnerabilities, cities can help articulate the business case for climate resilience planning.
     
  • ‘Business’ is not a monolith, and city climate resilience planners will need to tailor their approach. Small businesses, in particular, have unique needs.
     
  • Innovative financing can help promote collaboration. While not all climate resilience strategies will require additional funds, some will. The private sector is more likely to collaborate when they see that the city is committed to exploring all options for financing the steps in the climate resilience plan.

As the diagram below shows, business collaboration can be a part of every step of existing climate resilience planning frameworks.

 

Our recommendations supplement existing climate resilience planning frameworks.

 

City-business collaboration in times of disaster isn’t new. When Hurricane Sandy knocked out electricity to millions, American Water, the largest publicly traded U.S. water company, had more than 400 generators ready to keep providing clean water to its customers. The only problem was, the company didn’t have any place to store the fuel to run them. Local towns had fuel storage tanks, but no fuel. So, they worked together to move and store fuel to run not only the water pumps but also fire and police vehicles.

What’s needed is more collaboration before the fact, in light of new and increased threats. Providence, Rhode Island, faces increased flooding with sea level projected to rise as much as 2 feet by 2050. At our workshop, state officials, city departments, local businesses, universities, hospitals, utilities, and others started examining the risks and ways to respond. As Mayor Jorge Elorza put it, “We simply can’t afford to kick the can down the road.”

We hope this report will be a first step toward a climate resilience planning paradigm where cities and businesses work together to find the best ways to protect their communities from climate change impacts. We believe these important partners can achieve better results by working together.

Guide to Public-Private Collaboration on City Climate Resilience Planning

Guide to Public-Private Collaboration on
City Climate Resilience Planning

May 2017

Download (PDF)

Cities and businesses are separately preparing for climate change and building their resilience to impacts. But they have not had guidance on how to work together, until now. This report lays out the value in public-private collaboration on city climate resilience planning, and recommends to city resilience planners specific actions they can take to bring their business community into the climate resilience planning process.

Key Takeaways

  • Resilience planning is an extension of existing programs and partnerships. 
  • Businesses respond to city leadership.
  • Businesses respond to data.
  • 'Business' is not a monolith.
  • Innovative financing can help promote collaboration.
 
Ashley Lawson
Janet Peace
Katy Maher
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Key Insights for Expanding Microgrid Development

Key Insights for Expanding Microgrid Development

April 2017

Dowload the fact sheet (PDF)

C2ES held a half-day Solutions Forum in March 2017 in Washington, D.C., focusing on the benefits of microgrids and examining what is standing in the way of accelerating their deployment. Two panels, comprising business and city leaders, shared their first-hand experience in the small, but rapidly developing microgrid industry. Discussion focused on what developers are learning from successful microgrid projects and overcoming obstacles to deployment. About 100 people, including policymakers, entrepreneurs, and academics, attended the forum at The George Washington University School of Law and 200 watched online. 

Key Takeaways

The nation’s first microgrid architect, Shalom Flank, Ph. D., of Urban Ingenuity, identified three economically viable categories of microgrid frameworks.

  1. The classic success model, considering primarily the urban situation, is the “combined heat and power (CHP) plus solar” microgrid. These work downtown, on campus, or at a large facility like a hospital. With improvements in modern electronics and controller technologies, these projects can earn even greater revenues (e.g. providing grid services).
  2. “Thermal only” microgrids pay for themselves. These involve creating a condenser water loop across multiple buildings with heat sources and sinks. They are highly efficient for serving heating and cooling loads. There is no resilience benefit in this instance, but emissions savings are excellent.
  3. “Solar saturation” microgrids are viable. The current grid can’t accommodate an entire neighborhood where all homes have solar without a microgrid. This kind of project provides emissions and resilience benefits.
 
 

Video

Watch our March 8, 2017 discussion at Geoge Washington University.

 
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Webinar: Helping Small Businesses Build Climate Resilience

Promoted in Energy Efficiency section: 
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2:00-3:00 PM, EDTWatch video

Photo of 2010 Annapolis, Maryland, flooding courtesy of the Chesapeake Bay Program via Flickr.

Helping Small Businesses Build Climate Resilience

Wednesday, April 26, 2017, 2:00 – 3:00 p.m., EDT

Watch Video

An extreme weather disaster can force some small businesses to close their doors forever. How can small businesses better evaluate, prepare for, and respond to the increasingly frequent and intense extreme weather events that climate change brings? 

This free webinar will explore:

  • Risks small businesses face from climate and extreme weather
  • Challenges to making small businesses more climate resilient
  • Resources for small businesses
  • Recommendations for engaging small businesses on resilience

Speakers:

Charissa Cooper, Private Sector Liaison, National Capital Region Planner, Maryland Emergency Management Agency

Jon Philipsborn, Associate Vice President, Climate Adaptation Practice Director, Americas at AECOM

Katy Maher, Science Fellow and Resilience Project Coordinator, C2ES

 

Addressing California cap and trade concerns

California’s cap-and-trade program received court affirmation this month that the state has authority to auction allowances. But questions remain about the program’s future.

California lawmakers are evaluating ways to achieve the state’s 2030 greenhouse gas reduction goal. One option, championed by Governor Brown, is to extend its cap-and-trade program. But some lawmakers are concerned the program isn’t delivering the expected revenues for state clean energy programs. Others worry it doesn’t do enough to provide equitable environmental co-benefits.

Could the single step of extending the program address these concerns? To some extent, yes.

The debate in Sacramento

Under California’s cap-and-trade program, operating since 2013, emissions are down and economic productivity is up.

But there are some areas of concern. Auction revenues are down. As I’ve noted before, low carbon prices don’t mean a cap-and-trade program isn’t working. They just mean the required emissions reductions are cheap. But California legislators want to use auction revenue to fund other projects like planting trees in urban areas and putting rooftop solar panels in disadvantaged communities. More importantly, a recent analysis shows emitters are more likely to be near disadvantaged communities, raising concern Californians won’t enjoy the co-benefits, like cleaner air, equally.

Legislators have proposed extending the cap-and-trade program through 2030, although they are debating restricting how it operates. Discussion continues about replacing cap-and-trade with a carbon tax approach. This tax proposal would seek to address the first concern, that allowance prices are too low to fund desired programs. Other debate centers around restrictions to force more emissions reductions to occur inside the state. Current rules allow for reductions at sources of electricity outside California, or at limited offset project sites in the U.S. and Canada.

Economic theory tells us that limiting emissions through a cap-and-trade program will achieve the environmental objective at the least cost, through business innovation. Could lowering the cap address other key concerns as well?

Tighter cap = higher revenues

The California Air Resources Board’s (CARB) 2017 Climate Change Scoping Plan Update (Scoping Plan) evaluates policy options to achieve the 2030 goal. The regulator’s preferred approach is to keep existing programs (like the state’s aggressive 50 percent Renewable Portfolio Standard), extend the cap-and-trade program, and require extra emissions reductions at in-state refineries. Its analysis concludes this would meet the 2030 goal, using market-based approaches to minimize costs while prioritizing in-state reductions.

Using the information in the Scoping Plan, let’s examine how CARB’s preferred policy approach would address concerns about revenue and equity.

First, compare actual auction revenue in 2016 with projections of how revenue might change if the cap-and-trade program were extended (see Table 1). Making some conservative assumptions, revenues could double by 2020, from $2 billion without an extended cap to $4 billion with an extended cap. The increase comes mostly from increased allowance demand that would be expected if the business community receives a long-term policy signal in favor of cap-and-trade. Auction revenue could reach $5 billion in 2025, even as the cap (and the number of allowances sold) declines.

Table 1. Relationship between allowance supply and state revenue.
2016 values are calculated from CARB data. Projections for 2020 are based on CARB’s projected auction volumes and our conservative price estimates. Projections for 2025 are estimated assuming a linear cap decline and no significant changes to program allocation rules. Current program rules set a minimum auction price of $15.40 in 2020. The minimum price would be $19.70 in 2025 under the current escalation rate.

Illustrative scenario

Annual allowance sales at auction (tons, all vintages*)

Annual average auction clearing price ($/ton)

Annual state revenue ($)

2016 actual values

168,076,078

$12.73

$2,139,608,473

2020 projection, BAU policy**

133,632,293

$15.40

$2,057,937,311

2020 projection, extended cap-and-trade policy***

259,197,485

$16.00

$4,147,159,760

2025 projection, extended cap-and-trade policy***

211,618,003

$25.00

$5,290,450,075

*The vintage is the first year in which the allowance is eligible for compliance. California currently auctions a small number of allowances three years in advance (“future vintages”), to promote price discovery and liquidity in the market.
**Assumes auctions are subscribed at same level as 2016, but no future vintages offered.
***Assumes current and future vintage auctions are fully subscribed
Source: CARB data and C2ES calculations.

These calculations are based on the observation that allowance demand (and prices) increase when businesses receive policy signals that buying allowances will be a good long-term investment. Experience in both Europe and the U.S. Northeast’s Regional Greenhouse Gas Initiative has borne this out. Each of those markets has had periods of low prices. When rulemakers responded by tightening the cap, allowance prices increased.

A key point from those experiences is that the market didn’t wait to respond after the agreed cuts took place – prices increased as soon as the legislation was passed. Legislators can boost state revenue for greenhouse gas reduction programs today by committing to the market through 2030.

Tighter cap = greater co-benefits

But what about concerns that the trading provision doesn’t allow disadvantaged communities to enjoy equal co-benefits, like fewer criteria air pollutants (SO2, NOx, PM 2.5), from the regulation?

It is worth noting that the cap-and-trade program is not the state’s sole policy measure aimed at reducing greenhouse gases. Figure 1 shows the reductions each measure in CARB’s preferred plan is expected to produce. The total reductions needed to meet the 2030 target are estimated at 680 million tons (Mt). CARB expects other policies will reduce at least 339 Mt and potentially 489 Mt (the figure shows the high value). The cap-and-trade program is expected to make up the difference, or 28-50 percent of the required reductions.

While a detailed analysis is required to estimate cap-and-trade compliance pathways, it is reasonable to assume that improved energy efficiency and substituting cleaner fuels would play a major role. These actions also reduce criteria air pollutants as a co-benefit. A potential 50 percent cut in these pollutants would make a big difference in the air quality near covered sources.

Figure 1. Projected emissions reductions from the policies included in the Scoping Plan analysis. 

Solid black dashes show historic statewide emissions. The dotted line shows a trajectory to meet California’s 2020 and 2030 targets. The colored areas show the reductions from each policy measure, including the potential new refinery reduction measure. The blue dashed area shows the reductions that the cap-and-trade program would need to achieve to meet the 2030 goal.
Source: California Air Resources Board

While cap-and-trade is not a perfect policy tool, it provides emissions certainty while minimizing costs to society. Economic theory and experience show that extending (and lowering) the cap can cause near- and long-term market impacts. These include increased auction revenue and reduced criteria air pollutant emissions, and help address concerns about revenue and equity through the existing cap-and-trade program alone. Other policy options are available – such as modifying the trading rules or creating additional location-specific reduction targets. But legislators may have a simpler option that takes advantage of the flexibility of market mechanisms: Cut the cap, and let businesses respond.

(Ashley Lawson is a Senior Solutions Fellow at C2ES. Next on the Climate Compass blog: How carbon capture could play a greater role in the ARB Scoping Plan.)

 

Award winners extend climate leadership to customers, community

Sarda & Schpritz
NRG Vice President for Sustainability Bruno Sarda and Bank of America Senior Vice President for Environmental Operations Lisa Shpritz at the 2017 Climate Leadership Conference.

To winners of the 2017 Climate Leadership Awards, leadership means more than taking action in their own businesses; it’s about leading partners, suppliers, and customers as well.

Social responsibility was one of several themes running through the 2017 Climate Leadership Conference in Chicago, where officials from business, government and the nonprofit sector celebrated their achievements and discussed strategies to advance climate action.

Climate leadership has become a habit at IBM, which won the Organizational Leadership Award for the second consecutive year. The company has taken home a Climate Leadership Award in five of the six years the awards have been given.

IBM has been reducing its greenhouse gas emissions since 1990, and has set three consecutive reduction goals. Its latest is to reduce absolute emissions by 35 percent from 2005 levels by 2020.

It is achieving the goal by becoming more energy efficient and procuring more renewable energy, with a goal of contracting renewable power equal to 20 percent of its own annual electricity use by 2020.

Since 2010, IBM has also required all its contracted suppliers to have an environmental management system, inventory their energy use and greenhouse gas emissions, establish reduction plans, and publically report their results.

IBM also helps other companies reduce their emissions through its own innovation, technology, and business acumen. For example, IBM’s cognitive computing and data analytics help energy suppliers deliver the right amount of renewable energy to the grid while minimizing the amount of conventional fuel they need to burn.

“As IBM stated a decade ago, climate change is one of the most critical global environmental challenges facing the planet, and that is even more true today,” said Wayne Balta, IBM’s vice president for corporate environmental affairs and product safety. “The company will remain committed to environmental sustainability. It’s good business and the right thing to do for humanity.”

Demonstrating leadership to effect change

Bank of America won an Excellence in Greenhouse Gas Management/Goal Achievement Award for reducing greenhouse gas emissions from its global operations 37 percent from 2010 through 2015. The bank accomplished more than twice its goal through energy efficiency programs like LED lighting and occupancy sensors, decommissioning unneeded equipment, and optimizing HVAC controls.

Its new goals are to cut emissions from its global operations in half from 2010 levels, purchase 100 percent renewable electricity, reduce energy use 40 percent, and maintain at least 20 percent LEED-certified space by 2020.

Senior Vice President for Environmental Operations Lisa Shpritz said the bank extends its own efficiency to its partners and uses its position of financial leadership to effect change.

“Leaders have to act responsibly so that others may follow,” she said. “It’s a big responsibility, but we’re up to it.”

The bank has committed to investing $125 billion in developing solutions to climate change and other environmental challenges, including at least $10 billion in high-impact clean energy projects, with partners contributing at least $8 billion to date.

The bank also extends its reach through its supply chain. Nearly 200 of its vendors respond each year to a voluntary survey regarding their climate risks and plans to address them, and the bank publishes the results.

“That’s our responsibility as an organization, to take others with us,” Shpritz said.

Creating an example for others

At NRG Energy, winner of a Goal-Setting Certificate, efficiency and sustainability are also part of a culture that extends to its electricity customers.

NRG is already making significant progress on its goals to reduce greenhouse gas emissions for U.S. operations 50 percent between 2014 and 2030, and 90 percent by 2050, through enhancing power plant performance, capturing and storing carbon emissions from fossil-fired power plants; retrofitting coal-fired power plants to accept natural gas; and deploying new renewable energy generation.

NRG Vice President for Sustainability Bruno Sarda said the company’s commitments make business and economic sense, and benefit customers as well.

“We support our customers’ energy objectives by providing renewable energy, distributed energy, and other efficiency solutions for commercial and industrial customers, retail offerings and large, utility-scale renewable energy projects,” he said.

NRG ranked No. 3 in the nation in renewable generation capacity in 2016, with assets that include 36 wind farms in 12 states.

This year, NRG completed the first retrofit of a U.S. coal-fired power plant to capture carbon dioxide emissions. The Petra Nova project, near Houston, was completed on time and under budget. The captured carbon dioxide is used for enhanced oil recovery, increasing production from already developed domestic oil fields while storing the carbon dioxide underground and creating U.S. jobs.

Such projects also show that the technology works and can be replicated.

“We need to create an example for others,” said Sarda. “A sustainable future is a better future.”

Learn more about all of this year’s Climate Leadership Award winners.

 

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