SOURCE: California Energy Commission
March 12, 2008 16:53 ET
Energy Commission Adopts Recommendations to Reduce Greenhouse Gases
SACRAMENTO, CA--(Marketwire - March 12, 2008) - The California Energy Commission today
adopted a report to develop comprehensive regulatory strategies to meet AB
32 greenhouse gas reduction goals. The "Interim Opinion on Greenhouse
Strategies" was prepared jointly by the Energy Commission and the
California Public Utilities Commission (CPUC). The Opinion makes
recommendations to the California Air Resources Board (ARB) for a
regulatory structure that includes a combination of market and program
approaches to reduce greenhouse gas emissions in the electricity and
natural gas sectors.
"Clearly, AB 32's aggressive goals and timetable require swift action by
state regulators and utilities. I am pleased by the initial efforts of our
two agencies," said Jackalyne Pfannenstiel, Chairman of the Energy
Commission. "This interim opinion lays the groundwork for a balanced and
fair approach to reducing greenhouse gas emissions in a way that will
protect consumers, ensure grid reliability and provide a model for other
states and the federal government."
The Interim Opinion is the first of two phases tasked to the Commissions
under AB 32. This initial decision that defines the point of regulation
and a second opinion to be issued in the summer of 2008 will describe the
specific mechanisms for requiring the electricity and natural gas
industries to meet their goals. Both decisions will be considered and
possibly incorporated into the ARB's Scoping Plan for the agency's further
work in implementing AB 32.
The foundation of this proposed regulatory framework is based on the
state's "loading order" which puts energy efficiency as the top priority,
followed by renewable energy investment. The Interim Opinion recommends
that all retail providers of electricity and natural gas be required to
provide, at minimum, yet-to-be determined levels of all cost-effective
energy efficiency and renewable energy. The proposal designates the
deliverers of electricity to the California grid to be the entities
responsible for complying with AB 32 greenhouse gas reductions. The Interim
Opinion also recommends that some portion of these available greenhouse gas
emission allowances be auctioned and that a majority of the proceeds be
used in ways that benefit California's electricity consumers.
The Interim Opinion further recommends that if a multi-sector cap-and-trade
program is developed for California, the electricity industry should take
part. The Energy Commission believes that if a robust cap-and-trade program
is implemented by the ARB, the electricity sector can provide reductions in
greenhouse gases beyond the mandatory programs and at a lower cost with
increased flexibility and innovation.
Additional recommendations will be provided later this year to ARB after
detailed economic modeling is finished on emission reduction opportunities
and costs in the electric and natural gas sectors.
"We can now move into the next phase of our joint proceeding, working with
our stakeholders, to develop recommendations for the design of an emissions
allocation system," commented Chairman Pfannenstiel.
Development of this Interim Opinion has been an open public process
beginning with a joint Commission symposium in April 2007 that addressed
greenhouse gas emissions and various types of cap-and-trade markets. In
August, the Commissions held a public workshop and a joint meeting to
discuss the point of regulation. The CPUC will consider adopting this
opinion at their March 13, 2008 Business Meeting.
The "Interim Opinion on Greenhouse Strategies" is available from the Energy
Commission at http://www.energy.ca.gov/ghg_emissions/meetings/