regional greenhouse gas initiative

Regional Greenhouse Gas InitiativePresentation to

American Council of Engineering Companies of New HampshireJanuary 15, 2008

New Hampshire Department of Environmental Services Commissioner

Thomas S. Burack

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Climate ChangeImpacts on New Hampshire

• Trends indicate NH is experiencing impacts now

• Extreme storm events

• More rain in winter• Less snow cover

Average Winter Temperature in the Northeast 1899-2000

Time series represent areally weighted average of 56 meteorological stations.

Flooding in NH

October 2005 May 2006April 2007

• Peak flows in many rivers greater than 100 year flood

• Millions of dollars in state and individual losses

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Future Economic Impacts to New HampshireNortheast Climate Impacts Assessment (2007)

By late in the century (without reducing GHG emissions)

• Winter snow season cut in half• Sea-level rise up to nearly three feet• More than 60 days with temperatures over 90°F in

most cities • 4 to 28 days with temperatures over 100°F

(compared with one or two days per year historically).

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What if we don’t act now to reduce green-house gases?

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Global Cost of No Action(Stern Review UK Treasury 2006)

• Extreme weather alone – 0.5-1% world GDP annually• Total cost of taking no action equivalent to reduction

in consumption per head of 5-20% annually• Less costly to take actions now than to delay• Risk to world economy on the order of multi-national

world conflict• Insurance market already reacting

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NH CO2 (equivalent) Emissions by Sector

2004

Electric Utilities

34%

Commercial

8%Industrial

7%

Residential

15%

Transportation

34%

Agriculture,

Forestry and

Waste

2%

Transportation

Residential

Industrial

Commercial

Electric Utilities

Agriculture, Forestry

and Waste

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RGGI Cap & Trade Program

• Regional cap on emissions from fossil fuel-fired power plants >25 megawatts

• Cap (10 state region) 188 million allowances • 1 allowance = 1 ton• NH Budget 8.6 million allowances• Majority of allowances will be sold in regional

auction

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RGGI Cap Levels

• 2-Phase CO2 Caps (gradual, keeps cost low)– stabilization 2009 – 2014 (no absolute

reductions, but reductions from business-as-usual)

• Phase I Regional Cap = 188,076,976 tons• Phase I NH Budget = 8,620,460 tons

– 10% reduction 2015 - 2018 • (2.5% per year for 4 years)

• Built-in Review of Program in 2012

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Compliance

• Power plants must have enough allowances to equal their emissions by the end of the three year period

• Can buy allowances (regional auction) or offset allowances

• Unlimited banking of allowances

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RGGI Offset Projects

• 1st set – methane capture, SF6 (electric insulator), afforestation, end-use efficiency

• Initially limited to 3.3% of each source’s emissions• Offsets may come from RGGI region or from another

US state at 1:1• Safety valves built in to increase use of offsets for

economic relief if necessary

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RGGI impact on NH

• 9 other states going forward with RGGI

• Regional energy prices will be affected by RGGI whether NH participates or not

• Only way to mitigate costs is to participate and use auction revenues

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Regional Leadership

• Driving federal action• Western Climate Initiative includes Arizona, California, Montana,

New Mexico, Oregon, Utah, Washington, British Columbia, and Manitoba and 10 observers including 3 Canadian provinces and Sonora, Mexico

• Midwestern Greenhouse Gas Reduction Accord includes Illinois, Iowa, Kansas, Michigan, Minnesota, Wisconsin, and Manitoba (Indiana, Ohio, and S. Dakota also signed as observers)

• Investment in more efficient energy market is positive for NH regardless of climate change

W CI960 MTons (US) / 13% US Midwest Group

1027 MTons (US) / 14% USRGGI

766 MTons (US) / 10% US

Total Emissions and Percentage of Total U.S.Emissions of Regional Cap-and-Trade Initiatives

Notes:1. B ritish Colum bia and M anitoba Canada are m em bers of W CI.2. M anitoba Canada is a m em ber of the M idwest G roup.3. C ross-hatching indicates observer status (4. Kansas is a m em ber of the M idwest G roup and an O bserver for W C I.5. O ntario , Q uebec, and Saskatchewan Canada, and Sonora M exico are O bservers of W CI.Source: W orld Resources Institu te, Novem ber 2007

RGGI Cap 188 MTons (US) (Electric Sector Only)

- W CI - M idwest G roup).

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Is RGGI Significant?

• RGGI would represent the seventh highest emitting developed country

• The RGGI cap (188,076,976 tons) is similar to the emissions of Australia, France, or Italy

• There is no “silver bullet” but RGGI is part of the “silver buckshot”

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Benefits of HB 1434• Helps to mitigate long-term energy costs via greater

investment in energy efficiency

• Creates a market signal that encourages development of cleaner and, in many cases, more local energy sources

• Increases our energy independence with more local energy sources: keeping more dollars local

• Starts to mitigate our GHG emissions to avoid the most deleterious projections of climate change impacts

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Downside of not joining RGGI• Roughly half of NH’s supply is purchased from the regional

market

• As a consequence, NH electric prices will be affected by RGGI

• No benefit of sale of NH allowances

• No seat at table – no influence on program

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Estimated Impact to Business Electricity Costs

2006 average monthly bill(UNH estimate from FERC Form 1)

Small $308 (81,000 accounts)

Large $38,000 (350 accounts)

Not joining RGGI Increase to average monthly bill

2009 2012 2015 2018

Small $1.15 $2.38 $3.72 $5.16

Large $142 $292 $458 $636

% Change

0.4% 0.8% 1.2% 1.7%

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Potential Mitigation of Monthly Business Electricity Costs

2009 2012 2013 2015 2018

Small Business

$1.29 $(0.20) $(1.90) $(4.00) $(9.78)

Large Business

$159 $(25) $(234) $(493) $(1,205)

% Change 0.4% -0.07% -0.6% -1.3% -3.2%

Net change from investment in energy efficiency compared to not joining RGGI

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Energy Efficiency – Regional Priority

• Record peak demand in summer >28,000 MW• Peak demand increase twice as fast as average load

growth• Costly new capacity may be needed to meet demand

reached for only a few hours or days our of the year• Reducing electricity use by 5% during peak times

will save consumers $580 million a year (ISO – NE June 2006)

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Major Potential for Energy Efficiency Improvements

• RGGI bill proposing a “fuel-neutral” fund

• Technology continuing to improve

• Recognize opportunities vary

• Increased energy efficiency overall – can avoid costly new capacity – reducing everyone’s energy costs

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Light Bulb Evolution

Incandescent CFL CFL Cold Cathode LEDElectric Demand 100 Watts 25 Watts 18 Watts 8 Watts 2.2 WattsHours Use 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365 4 hrs/day x 365Annual kWh Usage 146 37 26 12 3Annual kWh Savings 110 120 134 143Annual Cost (@ $0.149) $21.75 $5.44 $3.92 $1.74 $0.48Annual $ Savings $16.32 $17.84 $20.01 $21.28

Annual CO2 Reduction (lbs) 121 133 149 158

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Fluorescent Light Evolution

34–40 Watts 32 Watts 28 Watts

1950’s – 1980’s late 1980’s – 1990’s Last 5 yrs

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UNH Economic Analysis 2007

• NH participation is lower cost overall to NH than not joining

• Lowest long-term net utility cost is to auction allowances and put revenues into energy efficiency

• Positive impact on employment and the overall NH economy

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Opportunity for Economic Development

• NH tradition of innovation and leadership

• NH needs to foster R&D development of new technologies and related ancillary services

• Current examples – Power Span

– GT Solar

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What’s the Ultimate Source of Greenhouse Gases?

ENERGY DEMANDfor

Electricity, Heating/Cooling and Transportation

• Every megawatt-hour of electricity used produces 1,100 lbs. of CO2

• Every gallon of gasoline burned produces 20 lbs. of CO2

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Solutions

• Make your buildings ENERGY STARS (or Leed certified).

• Light up your life (with Energy Star qualified lighting products).

• Establish “turn off” and “unplug” policies for electronic equipment and lights.

• Reduce, Reuse, and Recycle (use double-sided printing and copying)

• Green your fleet and driving habits!BiodieselBiodiesel

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• Buildings• Lighting• Appliances (dishwashers, furnaces, stoves, washer

machines)• Office Equipment• www.energystar.gov

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Reduce fuel consumption in motor vehicles

Establish fuel economy standards for new purchases

Establish anti-idling policies

Promote carpooling and teleconferencing

Less Greenhouse Gases – Less Dependence on Foreign Oil

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Consider the Hybrid Option

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Contacts

Tom Burack thomas.burack@des.nh.gov

271- 2958

Bob Scott robert.scott@des.nh.gov

271-1088

Joanne Morin joanne.morin@des.nh.gov

271-5552