Public Meeting Public Meeting Point of Regulation for the Sources - - PowerPoint PPT Presentation

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Public Meeting Public Meeting Point of Regulation for the Sources - - PowerPoint PPT Presentation

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Public Meeting Public Meeting Point of Regulation for the Sources Point of Regulation for the Sources of Fuel Combustion Included in the of Fuel Combustion Included in the Second Compliance Period in a Second Compliance Period in a

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Public Meeting Public Meeting Point of Regulation for the Sources

  • f Fuel Combustion Included in the

Second Compliance Period in a California Cap-and-Trade Program

June 23, 2009 California Air Resources Board

Point of Regulation for the Sources

  • f Fuel Combustion Included in the

Second Compliance Period in a California Cap-and-Trade Program

June 23, 2009 California Air Resources Board

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California Cap-and-Trade Rulemaking Timeline California Cap-and-Trade Rulemaking Timeline

  • Focus in 2009: work through implications of

different issues and policy decisions

  • Focus in 2010: finalize program design and

regulatory language

  • Late 2010: Board consideration of cap-and-

trade regulation

  • Extensive public process throughout
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Purpose of Meeting Purpose of Meeting

  • Discuss options for the points of regulation (and

regulated parties) as they apply to sources of fuel combustion included in the second compliance period of the California cap-and- trade program

  • Stakeholders are asked to provide written

comments on this topic to ARB by July 14th

(http://www.arb.ca.gov/cc/capandtrade/comments.htm)

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Outline for Today’s Presentation Outline for Today’s Presentation

  • Background on fuels in the cap
  • Compliance obligation considerations
  • Point of regulation options for each fuel
  • Future meeting topics
  • Roundtable discussion and questions
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Background on Fuels in the Cap Background on Fuels in the Cap

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Capped Sources Capped Sources

  • 2012-2014 (Narrow Scope)

– In-State Electricity Generation Facilities (>25,000 MT CO2e/yr) and Imported Electricity – Large Industrial Facilities (>25,000 MT CO2e/yr)

  • 2015-2020 (Broad Scope – 2nd and 3rd

compliance periods). Narrow scope fuels plus:

– Transportation fuel use – Small industrial fuel use (<25,000 MT CO2e/yr) – Residential and commercial fuel use

Source: Scoping Plan page 31

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7 Transportation 38% Industry 20% Commercial and Residential Natural Gas 9% Recycling and Waste 1% High GWP 3% Agriculture 6% Electricity, 23% 7

California GHG Inventory (2002 – 2004 Average) California GHG Inventory (2002 – 2004 Average)

Source: Scoping Plan ~96% Gasoline + Diesel ~97% NG + LPG

Added in 2nd Period Added in 2nd Period

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Concept of the Cap Concept of the Cap

2020 2018 2015 2012 Greenhouse Gas Emissions

Emissions from All Sources (Period 1) Allowances Issued Linear Projection to % of Target (Electricity and Industrial Sources) Linear Projection to Target (All Capped Sources)

Source: Scoping Plan Appendix page C-18

Goal: Establish cap for each year at the beginning

  • f the program
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Compliance Obligation Considerations Compliance Obligation Considerations

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Considerations for Determining Point of Regulation (POR) Considerations for Determining Point of Regulation (POR)

  • Capture as many emissions as possible
  • POR with information to report fuel used in CA
  • Limit the number of regulated parties
  • POR with information to avoid double pricing of

emissions from fuel use at large stationary sources (i.e. ‘net out’)

  • Consider relevant legal constraints
  • Consider need for full information on how

refined fuel was produced (i.e. full production pathway)

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Establishing a Compliance Obligation: Broad Scope Establishing a Compliance Obligation: Broad Scope

  • Who: Point of regulation will be defined for all types
  • f fuel consumed in California
  • What: Direct emissions from fuel combustion (fuel

carbon content as proxy)

– Fuel production pathway emissions upstream from the point

  • f regulation may also have a compliance obligation
  • Considerations:

– ‘Net out’ fuels sold by fuel providers to large point sources with direct compliance obligations – ‘Net out’ fuels exempt from the program (e.g. petroleum used in plastics)

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Reporting Reporting

  • GHG Mandatory Reporting Regulation

will be revised as part of cap-and-trade regulation in 2010

– 2nd compliance period fuels to be added

  • Regulated parties in the cap-and-trade

program will be also be reporting entities

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Point of Regulation Options for Each Fuel Point of Regulation Options for Each Fuel

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POR for Regulations with Fuels POR for Regulations with Fuels

  • POR definition above for LCFS does not capture all possible PORs
  • Electricity for transportation will not be classified as a “fuel”. The

point of regulation for electricity will capture all uses.

  • Hydrogen (H2) fuel doesn’t contain carbon so H2 fuel use will not

be included. H2 production is captured as industrial source.

LCFS Proposed AB 32 Fee Reg CaRFG3, RFS AB 32 Cap / Trade Gasoline, diesel Refinery or importer of blendstock Refinery or importer of blendstock Distribution Rack TBD Natural gas Utilities or fuel dispensing eq.

  • wner

Utilities + ind. pipeline

  • perators

N/A TBD LNG Fuel provider supplying to dispenser Treated as Natural Gas N/A TBD Electricity Utilities or veh elec providers,

  • indiv. owners

Fuel supplier or importer of electricity N/A See notes below Hydrogen Fuel producer for veh use N/A N/A See notes below E85 Fuel producer for veh use N/A N/A TBD

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Gasoline and Diesel Gasoline and Diesel

POR Options

  • Refiners or blendstock importers
  • Distribution terminal racks

Considerations

  • Compliance at rack would be consistent with CaRFG3
  • Refiners and importers will have fuel production info (LCFS)
  • Compliance must account for low biofuel blends (e.g. E10-

10% ethanol blend)

  • Ability to ‘net out’:

– E.g. Diesel fuel used in narrow scope industrial sources

Example fuel pathway

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High Biofuel Blends (E85, B100, etc) High Biofuel Blends (E85, B100, etc)

POR Options

  • Fuel producers or importers
  • Refiners

Considerations

  • Compliance must account for petroleum feedstock (e.g.

15% gasoline)

  • Various biofuel carbon intensity variations are being

considered

Example fuel pathway

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Natural Gas Natural Gas

POR Options

  • CA end users supplied directly from interstate pipelines
  • Intrastate pipelines
  • Local Distribution Companies (LDCs)

Considerations

  • Multiple points of regulation may be needed to capture

scope of emissions

– E.g., capture end users for direct deliveries from interstate pipelines and/or non-utility deliveries

  • LDCs have some ability to ‘net out’ narrow scope sources
  • Avoid double counting (e.g., NG underground storage)
  • Entities already reporting information to the state
  • Ability to pass through costs
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Transportation End Users Local Producers Imported Gas

American Petroleum Institute. Understanding Natural Gas Markets. http://www.api.org/aboutoilgas/upload/UNDERSTANDING_NATURAL_GAS_MARKETS.pdf

F

  • r

t h e s e e m i s s i

  • n

s

AB 32 Fee Reg

Regulated Party

Low Carbon Fuel Standard Board of Equalization Natural Gas Surcharge California Cap & Trade In-state stationary sources > 25,000 MTCO2E at point of emissions

Natural Gas in California Programs Natural Gas in California Programs

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Transportation End Users Local Producers Imported Gas

First domestic supplier liable for obligation

Australia Carbon Pollution Reduction Scheme

Facilities ≥25,000 MTCO2E (Optional transfer of obligation) R e t a i l e r s r e q u i r e d t

  • a

s s u m e

  • b

l i g a t i

  • n

f

  • r

s m a l l e m i t t e r s ’ e m i s s i

  • n

s Imports (Currently zero) NZ Production

  • Inc. flared gas, venting.

Deducts deliveries to industrial sources

New Zealand ETS Full emissions of NG to be consumed

May opt-in if purchase more that 2 petajoules

Natural Gas in other C&T Programs Natural Gas in other C&T Programs

American Petroleum Institute. Understanding Natural Gas Markets. http://www.api.org/aboutoilgas/upload/UNDERSTANDING_NATURAL_GAS_MARKETS.pdf

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Non-Natural Gas Fuels Non-Natural Gas Fuels

  • Liquid petroleum gas (“propane”)

– ~9% of resid./comm. sector emissions; ~1% of total inventory – Variety of end uses, delivery methods – CPUC regulates safety of propane distribution systems, at point of propane system operator – Prices are unregulated

  • Kerosene

– ~0.3% of resid./comm. sector emissions; ~0.03%

  • f total inventory
  • Others?
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Workshop Discussion Questions Workshop Discussion Questions

1. Are we capturing the appropriate fuel types? 2. Are there suggestions for the cap setting process for these fuels?

  • Sources of data, projections
  • Determining fuel production pathway emissions

3. What are the benefits and challenges with various POR alternatives?

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Future Fuels-Related Topics Future Fuels-Related Topics

  • Consideration of importing LCFS credits for

compliance with cap-and-trade program

  • Reporting process

– Methodologies for 2nd compliance period fuels

  • Cap setting process and data, including fuels
  • Possible inclusion of fuel pathway emissions

(out-of-state) in fuel provider compliance

  • bligation

– Cap-setting public meeting

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References References

  • Low Carbon Fuel Standard (LCFS)

– http://www.arb.ca.gov/regact/2009/lcfs09/lcfsisor1.pdf

  • AB 32 Mandatory Reporting

– http://www.arb.ca.gov/cc/reporting/ghg-rep/ghg-rep.htm

  • BOE Tax Laws (NG Surcharge Law and Fuel Surcharge)

– http://www.boe.ca.gov/sptaxprog/natgas.htm – http://www.boe.ca.gov/sptaxprog/spftdmfuels.htm

  • New Zealand Emissions Trading Scheme

– http://www.climatechange.govt.nz/emissions-trading-scheme/index.html

  • Australia Carbon Pollution Reduction Scheme

– http://www.climatechange.gov.au/emissionstrading/index.html

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Team Leads for Cap & Trade Rulemaking Team Leads for Cap & Trade Rulemaking

Sam Wade, Mary Jane Coombs Cap setting and allowance distribution Ray Olsson Market operations and oversight Brieanne Aguila Offsets and cap-and-trade project manager Claudia Orlando Electricity Joshua Cunningham Transportation fuels Manpreet Mattu Reporting, and Energy efficiency Bruce Tuter, Mihoyo Fuji Industrial sectors Karin Donhowe Residential and commercial fuels Mihoyo Fuji Marginal abatement costs and leakage related issues David Kennedy, Stephen Shelby, Barbara Bamberger, Mihoyo Fuji, Jeannie Blakeslee, Judy Nottoli, Jerry Hart Impact analyses (environmental, economic, localized, small business, public health)

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For More Information… For More Information…

  • ARB’s Cap-and-Trade Web Site

– http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm

  • To stay informed, sign up for the Cap-and-Trade

listserv:

– http://www.arb.ca.gov/listserv/listserv_ind.php?listname=capandtrade

  • Western Climate Initiative

– http://www.westernclimateinitiative.org