1. Market-Based Emission Limits
The Regional Greenhouse Gas Initiative (RGGI) is the first market-based carbon dioxide (CO2) emissions reduction program. RGGI was created in 2009 and is used by nine states (CT, DE, ME, MD, MA, NH, NY, RI, and VT) to implement coordinated CO2 emission budget trading programs that together establish a limit on allowed CO2 from affected sources in participating states. About 90 percent of CO2 allowances are distributed via auction and from 2009 through 2012, the states invested more than $700 million of auction proceeds in programs that lower CO2 emissions and consumer energy costs. Since 2005, emissions in participating states dropped more than 40 percent, in part leading to the multi-state adjustment of CO2 emissions limits by 45 percent in 2014 to 91 million short tons of CO2, and to 78 million short tons in 2020.
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2. Greenhouse Gas (GHG) Performance Standards
GHG emissions standards imposing enforceable emission limits on new and/or expanded electric generating units have been enacted in four states (CA, NY, OR, and WA). Three of the states (CA, OR, and WA) also have enacted GHG emission performance standards setting emission rates for electricity that is purchased by electric utilities.
3. Utility Planning Approaches
Two states (MN and CO) have worked with investor-owned utilities in the development of a multi-pollutant plan to reduce emissions utility wide that enables the utilities to assess the most cost-effective means of meeting long-term and comprehensive energy and environmental goals. For example, in Colorado the Clean Jobs Act of 2010 required investor-owned coal plants to develop multi-pollutant plans in collaboration with the Department of Public Health and Environment and the Public Utility Commission. The plans address both current and “reasonably foreseeable” federal Clean Air Act (CAA) requirements. On utility’s plan was approved in 2010 and is projected to reduce CO2 emissions in the state by 28 percent in 2020.
4. Renewable Portfolio Standards
According to the EPA, more than 27 states have adopted renewable portfolio standards (RPS) that require retail suppliers of electricity to derive a minimum or percentage amount of that electricity from eligible renewable sources with lower GHG emissions. States, via legislatures, utility regulatory commissions and other methods, specify the types of eligible renewable energy or other sources that qualify for use and may include sources from outside of the state.
A good example of RPS is in Oregon where the standard was enacted in 2007 with the largest utilities required to meet five percent renewable energy beginning in 2011, 15 percent by 2015, 20 percent by 2020 and 25 percent by 2025. Smaller utilities are required to meet renewable energy levels of five or 10 percent by 2025, depending on their size. The most recent reports show all of the largest utilities achieved the five percent requirement by year-end 2012.
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5. Demand-Side Energy Efficiency Programs
These programs are aimed at reducing electricity consumption, including during periods of peak demand such as very hot weather spells. Quite simply, less energy used means less CO2 emissions and these programs are often driven by existing state programs, standards and policies such as:
- Integrated resource planning (IRP) that requires utilities to obtain “all cost-effective energy efficiency” through long-term planning,
- Energy efficiency resource standards (EERS), and
- Public benefit funds.
These programs have diverse goals and are typically funded by small fees or surcharges on customer electric bills, or through RGGI CO2 auction proceeds. From 2010 to 2011 electricity savings from the programs increased 22 percent.
6. Energy efficiency resource standards (EERS)
More than 20 states now have EERS requiring utilities to save a specific amount of energy each year or over several years. Typically multi-year requirements, they are expressed as a percentage of annual retail electricity sales or as specific electricity savings amounts over a long-term period relative to a baseline of retail sales. Over the compliance period, an EERS reduces fossil fuel-fired electricity generation by reducing electricity demand, thus reducing CO 2 emissions.