The Regional Greenhouse Gas Initiative (RGGI), a cooperative effort designed to reduce carbon dioxide (CO2) emissions from electric power generators in 10 Northeastern states, appears poised to auction off its first batch of allowances today, but many participants - states, investors and regulated power generators - struggle with how to proceed.  RGGI applies to generators with a capacity of 25 megawatts or greater that rely on fossil fuels for at least 50% of their input power in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.

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Despite the 93-2 Senate vote for a $17 billion energy tax package, extending renewable energy tax credits, on Tuesday, September 23, skepticism exists as to the measure’s success when presented to the House, with its differing energy tax package, next week.

The energy incentives are part of H.R. 6049 and extend the Investment Tax Credit (ITC) and the energy Production Tax Credit (PTC), which would give businesses and individuals tax credits for the use of solar, wind, geothermal and ocean energy.  Both the ITC and PTC expire December 31, 2008 and while many are optimistic about the measure after yesterday’s vote, a lot of work remains to garner the support of the House.  Some House members have balked that the tax extenders bill violates that “pay as you go” or paygo principle.

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On Tuesday, September 23, the Western Climate Initiative (WCI) partners, including seven western states and four Canadian provinces, announced their proposed design of a regional market-based cap-and-trade program.  The WCI partners are recommending a multi-sector program to reduce greenhouse gas (GHG) emissions to 15% below 2005 levels by 2020.

Under the current proposal, the WCI would initially regulate emissions from electricity generation and large industrial and commercial facilities that emit more than 25,000 metric tons of GHGs.  The scope would expand in 2015 to include smaller facilities and transportation fuels.

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The Senate Environment and Public Works (EPW) Committee is scheduled to discuss the US Environmental Protection Agency’s (EPA) Advance Notice of Public Rulemaking and its approach to regulating greenhouse gases (GHG’s) at a hearing on Tuesday, September 23 at 10 a.m. in Room 406 of the Dirksen building. 

Hearing witnesses include: 

• Robert Meyers, principle deputy assistant administrator, U.S. EPA;
• Mary Nichols, chairman, California Air Resources Board;
• Jason Burnett, former associate deputy administrator, U.S. EPA;
• David Bookbinder, chief climate counsel, Sierra Club;
• Bill Kovacks, vice president for environment, Technology and Regulatory Affairs, U.S. Chamber of Commerce; and
• Marlo Lewis, senior fellow, Competitive Enterprise Institute.

Also on Tuesday, the Senate is scheduled to consider the Baucus-Grassley amendment to H.R. 6049.  The amendment set to expire on December 31, 2008, extends the Investment Tax Credit (ITC) and energy Production Tax Credit (PTC), which will continue expansion of the renewable energy industry, create new jobs and spur economic growth.

Additionally, the Senate Foreign Relations Committee on Tuesday is scheduled to mark up The U.S.-Brazil Energy Cooperation Pact, which has a focus on biofuels production, research and infrastructure, and is designed to strengthen U.S. energy relations with Brazil and the Western Hemisphere.  The markup is scheduled in S-116 of the Capitol building.

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The Western Climate Initiative (WCI) is expected to release a report on Tuesday detailing the design of a regional cap-and-trade program for carbon emissions.  The WCI is a consortium of 7 Western states and 4 Canadian provinces that have committed to reducing greenhouse gas (GHG) emissions by 15 percent (from 2005 levels) by 2020.

The WCI is the second major regional GHG reduction program to attempt to implement a cap-and-trade program.  The first program, the Regional Greenhouse Gas Initiative (RGGI), composed of 10 states on the East Coast, will hold its first auction on Thursday and begin operations in January 2009.

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The International Organization for Standardization (ISO) is currently debating whether to develop standards for measuring the carbon footprint of business activities.  The ISO is the largest standardization organization in the world, having published more than 17,000 standards for a broad array of industries, including several related to environmental topics. 

The Greenhouse Gas Protocol (GGP) is the most widely-used standard today for quantifying and managing greenhouse gas (GHG) emissions.  The GGP was created by the World Resources Institute and the World Business Council for Sustainable Development, and is actually used by the ISO as a basis for its current three part “Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals.”  These current ISO specifications with guidance serve more as informal guidance for business, and are not as rigorous as ISO’s actual standards.  The GGP on the other hand does not provide detailed standards for individual industries, but rather focuses on the theoretical framework for designing GHG accounting systems. 

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For clean coal advocates, the energy bill passed in the House Wednesday reflects the tough reality of getting a comprehensive bill passed by the end of the current session.  Speaker Pelosi indicated last week that the House Bill would incorporate the $10 billion funding mechanism for accelerating investment in carbon capture and sequestration (CCS).  On Tuesday when Democrats introduced the bill, the CCS funding provision was gone.  Instead it included modest changes to existing tax credits targeting integrated gasification combined cycle (IGCC) systems, carbon sequestration and other clean coal technologies.  Such changes include:

• Providing an additional $950 million in additional tax credits (based on a credit of 30 percent of the investment) for certain qualified advanced coal projects, and requiring that companies seeking such tax credits provide for capture and storage of at least 65 percent of its carbon emissions (Sec. 811);
• Providing an additional $150 million in additional tax credits (based on a credit of 30 percent of the investment) for qualifying coal gasification projects that include equipment to separate and sequester at least 75 percent of the project’s total carbon emissions (Sec. 812);

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The New York State Energy Research and Development Authority (NYSERDA) approved regulations on Monday for the state’s participation in the Regional Greenhouse Gas Initiative (RGGI) auction system. RGGI is an commitment between ten northeast and mid-Atlantic states to reduce carbon dioxide emission from the electricity generating sector.

Under RGGI, participating states establish their own auction rules. New York’s regulations specify that all of the state’s allowances shall be auctioned, and that revenue will be used “to promote and implement programs for energy efficiency, renewable or non-carbon emitting technologies, and innovative carbon emissions abatement technologies with significant carbon reduction potential . . . .” In order to determine how best to use the funds, NYSERDA will “convene an advisory group of stakeholders representing a broad array of energy and environmental interests” at least once per year.

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