Western States Climate Policies: 2019 Legislative Session Update - - PowerPoint PPT Presentation

Western States’ Climate Policies: 2019 Legislative Session Update

JENNIFER GARDNER, SENIOR STAFF ATTORNEY WESTERN RESOURCE ADVOCATES PRESENTATION TO WECC MARKET INTERFACE COMMITTEE JUNE 27, 2019

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Presentation Outline

▪Cap-and-Trade

• Oregon

▪Carbon-Free

• Colorado
• New Mexico
• Washington

▪Securitization

• Colorado
• New Mexico
• Montana

▪Transition Assistance

• Colorado
• New Mexico

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Cap-and-Trade: Overview

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Photo Credit: Government of Nova Scotia

• A cap is set on the amount of carbon

a group of facilities can emit on an annual basis

• Companies typically obtain a permit
• r “allowance” for every ton of

carbon they emit

• The total number of allowances is

limited

• Each year, companies must decide

how they will get enough allowances to cover their emissions

• They can either: operate more

efficiently, install pollution controls, burn less fuel, or buy allowances

Oregon’s Climate Action Program

▪If HB 2020 passes, Oregon’s new cap-and-trade program would begin in 2021…

• On June 17, the House passed HB 2020
• On June 20, 12 Republicans fled the state Senate to avoid a quorum necessary to vote on HB 2020

▪GHG Targets:

• 2035: 45% below 1990 baseline
• 2050: 80% below 1990 baseline

▪Requires “economy-wide” emission reductions:

• Transportation fuels
• Electricity
• Natural gas
• Other fossil fuels
• Industrial processes

▪Oregon would also join the Western Climate Initiative – the West’s regional carbon trading system

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EIM implications?

Maybe…

• HB 2020: “the office may adopt rules as necessary to

address electricity scheduled for delivery and consumption in this state through an energy imbalance market or other centralized market administered by a market operator.”

• In other words, HB 2020 provides the flexibility, if

needed, for Oregon to adopt rules to handle the point of regulation for entities that sell power through the EIM into Oregon.

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Carbon-Free: Overview

What’s the difference between an RPS and carbon-free mandate?

▪ An RPS, or renewable energy mandate, requires that all electricity sold within a state come from renewable energy sources, including: wind, solar, geothermal and hydropower. ▪ A carbon-free, or 100% clean energy mandate, requires all electricity to come from carbon-free resources, which include renewable energy, but also other resources, such as nuclear energy. ▪ So, a carbon-free mandate is actually broader in scope than an RPS. ▪ Carbon-free legislation can be in the form of a goal or mandate and can be economy-wide or utility-specific.

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Colorado’s Roadmap to 100% Renewables

▪SB 236: Codifies Xcel Energy’s 100% carbon-free by 2050 goal

• Interim goal → reduce carbon emissions

80% by 2030 (from 2005 levels)

• Requires utilities to consider the social cost
• f carbon in resource planning

▪HB 1261: Establishes a goal of reducing economy-wide GHG emissions 90% below 2005 levels by 2050

• Sets benchmark targets of 26% reduction by

2025 and 50% reduction by 2030

• Directs the AQCC to develop policy and

incentives to reach those targets, but leaves retail electricity rulemaking to the PUC

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Xcel Energy’s CEO, Ben Fowkes, speaks with reporters in Denver after announcing the utility’s 100% clean energy goal. Photo credit: Denver Business Journal

New Mexico’s Energy Transition Act

▪SB 489 establishes the following:

• A statewide renewable energy standard for the state’s IOUs and rural electric coops:

1. 40% renewables by 2025 2. 50% renewables by 2030 3. 80% renewables by 2040

• A 100% zero carbon resources standard for IOUs by 2045 and for rural electric coops by 2050

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Washington’s Clean Energy Transformation Act

▪SB 5116 establishes the following:

• Phases out coal-fired electricity by the end of 2025
• By 2030, the state’s electric utilities must be 100% carbon-neutral:
• 1. 80% of their carbon-neutral power must come from “non-emitting electric generation and electricity

from renewable resources”

• 2. The remaining 20% can be met in one of three ways: RECs, an administrative penalty, or Energy

Transformation Projects (“ETPs”)

• 3. The administrative penalty is based on “tons remaining uncovered” (effectively amounting to a $100

per ton carbon tax)

• 4. ETPs may include EV infrastructure, weatherization, or renewable natural gas
• Adopts a policy to transition to 100% clean electricity by 2045
• Requires utilities to consider the social cost of carbon in resource planning

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Image Credit: The Sierra Club

Securitization Overview

Think of securitization as loan refinancing. Essentially, securitization enables utilities to retire coal plants earlier (at a lower cost to ratepayers) through the issuance of ratepayer-backed bonds.

Securitization & Transition Assistance

▪Colorado

• SB 236 establishes securitization measures on stranded coal assets in order to shift risks away from ratepayers.
• Requires that utilities include a workforce transition financing plan when filing any plant closure proposal.

▪New Mexico

• The Energy Transition Act enables utilities to use securitization to refinance investments in coal-fired power

plants that retire early.

• The bill’s language specifically designates its use in retiring PNM's San Juan Generating Station.
• Part of the revenue from securitization will go towards economic development and worker assistance in

communities impacted by these plant retirements.

▪Montana

• HB 467 allows utilities to apply for securitization for the retirement or replacement of an existing power plant

that it owns or operates.

• No requirement included for workforce transition.

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Concluding Thoughts

▪According to David Roberts with vox.com, “the trend of states targeting 100% clean electricity has gone viral.” ▪Even utilities are taking part…

• Xcel Energy – Colorado: In December 2018, Xcel announced its goal to reduce carbon emissions 80% by

2030 (based on 2005 levels) and to be carbon-free by 2050 – SB 236 essentially codified Xcel’s goal

• Avista – Washington: On April 18, Avista announced its goal to serve its customers with 100% clean

energy by 2045 and to have a carbon-neural energy supply by 2027 (3 years early)

• PNM– New Mexico: On April 22, PNM committed to meeting the state’s 100% zero carbon resources

standard by 2040 (5 years early)

▪What’s next?

• Implementation and compliance – goals versus mandates
• How to measure success – economic impacts, carbon emission reductions, etc.
• Potential impacts to current and developing regional energy markets (including EIM, EDAM and WEIS)

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Jennifer Gardner, Senior Staff Attorney Western Resource Advocates

Phone: 801-413-7355 Email: jennifer.gardner@westernresources.org