WCI Sticks with Plans to Limit Use of Offsets

by | Mar 19, 2010

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emissions-2The Western Climate Initiative, targeting a 15 percent reduction in greenhouse gas emissions below 2005 levels by 2020, is sticking with its original plan to limit the use of offset credits and allowances under its proposed cap-and-trade system to no more than 49 percent of the total emission reductions from 2012 to 2020, reports Reuters.

A WCI official told Reuters that the offset limit will be calculated as a percentage of compliance to allow the WCI to link with other trading systems including the U.S. cap-and-trade system in the Northeast, the Regional Greenhouse Gas Initiative. Use of the offsets is still being hammered out.

The WCI said placing limits on the use of offsets would be easier to administer, and it will not adjust offsets annually to allow for a carry-over of unused offsets.

Although the WCI Website states that the initiative still consists of seven western U.S. states and four Canadian provinces, EL reported earlier in March that Arizona dropped out and Washington and Montana failed to get necessary legislative approval, while the Utah Legislature passed a resolution to pull out of the Western Climate Initiative.

In California, the state’s Renewable Portfolio Standard (RPS), which calls for utilities to have 20 percent of its electricity mix from renewable energy sources, just got help from the California Public Utilities Commission (CPUC).

CPUC announced that utilities can now purchase tradable Renewable Energy Credits (T-RECs) to meet their RPS mandates, which changes the agency’s previous position that utilities purchase the electricity and the RECs together, says Lee Barken, IT practice leader at Haskell & White, in an article for San Diego News Network.

Barken explains: “The utility was required to buy green power from large solar and wind farms, and purchase both the electricity and the green attributes of that energy generation simultaneously. The new ruling effectively allows for the ‘unbundling’ of this transaction.”

Barken says by allowing generation outside of California (but within the boundaries of the Western Electric Coordinating Council), it will likely lower the cost and burden of RPS compliance.

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