Comment Log Display

December 14, 2010

California Air Resources Board
1001 “I” Street
Sacramento, CA 95812

*Submitted electronically at
http://www.arb.ca.gov/lispub/comm/bclist.php*


Dear Chairman Nichols and Board members, 

Thanks to you and the CARB staff for all of your work on the draft
cap-and-trade regulation. We applaud your efforts to balance the
multiple, sometimes competing, objectives of AB 32 in this draft
regulation. Though we do not agree with every policy choice, Center
for Resource Solutions supports CARB’s approval of this draft
regulation. It will serve as a crucial element of California’s plan
for smooth transition to a clean energy future and sustainable
prosperity. Once again California is leading the nation, and we can
demonstrate the great potential for economic progress powered by
clean energy. 

Center for Resource Solutions (CRS) has deep expertise in the
electricity sector, and we write to comment on two particular
issues:

1.	 CRS is very supportive of the decision to include a voluntary
renewable energy (VRE) set-aside mechanism, indicated by the
inclusion in the draft rule of placeholder language indicating
this. 
2.	CRS continues to have concerns about the WCI recommendation that
RECs have no role in mandatory GHG reporting and compliance
protocols.

Support for the Voluntary Renewable Energy Set-Aside

The inclusion of a VRE set aside in the draft rule is a natural
outgrowth of CARB’s efforts to spur clean energy progress in
California. The VRE set aside will support the continued growth of
voluntary purchases of renewable energy from both distributed
generation and utility-scale facilities based within the state.
These purchases are private funds going to expand clean energy
generation in California. Given that this has been one of the
bright spots in the California economy, policy choices to support
continued growth only makes sense.  

As CARB has recognized, without such a VRE Set Aside, California
clean energy producers wishing to sell into the voluntary market
would be hampered by the fact they would no longer be able to
correctly say that such purchases would lead to net emission
reductions.  There is demonstrated appetite amongst Californians
for investment in voluntary action to reduce greenhouse gas
emissions.  The inclusion of a VRE Set Aside ensures that an
in-state clean energy option continues to exist for these funds.


This policy has garnered support from coalitions of dozens of
diverse stakeholders: nonprofits groups, including environmental
groups; and also public health groups like the American Lung
Association of California; faith groups like Interfaith Power and
Light; clean-energy industry stakeholders like Sun Power and
SunTech; associations like the California Wind Energy Association
and the Large-scale Solar Association; plus venture capitalists and
the forward-looking Sacramento Municipal Utility District. Broad,
diverse groups have come together to voice support for a Voluntary
Renewable Energy Set-Aside in coalition letters submitted in 2008,
2009, and 2010.  Incidentally, this diverse coalition looks a lot
like the one that helped defeat Proposition 23.

CRS submitted letters in 2009 and 2010 offering our view on the
reason that a VRE Set Aside should be a priority.  We will not
replicate these same arguments here, though we are happy to provide
further information.  Indeed, we understand that this is one of the
areas of the cap-and-trade program that will be further defined in
2011, and we stand ready to assist in further defining the
program.

Concerns about the WCI recommendation that RECs have no role in
cap-and-trade accounting 

In the spring of 2010, the Western Climate Initiative (WCI)
announced a recommendation to Partner states and provinces that, in
a nutshell, unbundled REC purchases by regulated entities in the
electricity sector should not reduce their compliance obligation.
May 27, 2010, CRS submitted a comment letter explaining the reasons
that we believe this approach is misguided.  Not least, this
counters accepted best practice that null power should be assigned
a system power profile. And the approach would undermine the
commonly accepted definition of RECs as containing the
environmental benefits of the renewable energy generation that
produced the REC . This hard-won—and now commonly
accepted—definition has been enshrined in existing contracts and
has facilitated impressive growth in the voluntary market over the
past five years. 

In response to concerns such as these, we understand that WCI’s
final recommendations for a VRE set aside were changed to
explicitly suggest that specified null power be made be eligible
for the set aside.  From page 3: “WCI Partner jurisdictions should
also consider requiring that renewable energy produced by
VRE-eligible facilities in a non-WCI Partner jurisdictions and sold
on a specified basis to the WCI Partner jurisdiction be counted as
if those facilities were located in the WCI Partner jurisdiction.”


We appreciate that perspectives such as those we have been offering
appear to have been heard and responded to with this adjustment to
the operation of the VRE Set Aside. Though we would prefer a more
direct approach, whereby RECs do affect carbon accounting and null
power carries associated emissions, in the absence of this first
best outcome, we would support the inclusion of specified null
power under the VRE Set Aside. 

We do not believe that the draft cap-and-trade rule directly
addresses this issue of REC accounting, however we understand CARB
is planning to follow the WCI recommended approach. That approach
did not include a participatory process, not even the more limited
participation usually offered as part of WCI policy development. A
whitepaper discussing options was released, but there was no
proposed recommendation with an opportunity to comment.  

Though we see no indication that CARB is on the cusp of committing
to a policy that constructs an artificial wall between RECs and
carbon accounting, we reiterate that we think this would be a bad
idea even with the inclusion of null power in the VRE set aside.
Such a policy would create new accounting challenges and
complications for existing contracts. We would be happy to further
elaborate. 

In conclusion, we must emphasize our gratitude for all that CARB
has accomplished with this draft regulation and all of the related
AB 32 policies. That you achieved so much under difficult
circumstances (not least mandatory furloughs) is a testament to the
commitment to pursuit of the public interest of CARB staff at all
levels.

CRS is always willing to offer our expertise as these policymaking
processes continue to unfold. 



Sincerely,


Jennifer Martin
Executive Director
Center for Resource Solutions