United States

United States

Mandatory control of power pollution, Oregon decides obligation for emissionoffsets instead of co2 tax

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In a startling first that is electrifying US renewables backers, the state of Oregon is implementing mandatory C02 controls. It is the first state in the US to do so. Oregon, in the Pacific Northwest and known as one of the country's most environmentally conscious areas, is to require all new power plants to offset 17% of their C02 emissions. The legislation was won after several years of fighting by conservation and citizens' groups and almost two years of hearings and negotiations.

The ground-breaking law, known as HB 3283, was approved by state legislators in mid June. "It should be signed into law by the governor within the next few weeks," says Pete West of Renewable Northwest Project, which has lobbied hard for the legislation along with Northwest Renewables Advocates and the Oregon Office of Energy. The governor is a strong supporter of the bill and is expected to sign it into law, rather than veto, it as part of a broader power plant siting measure.

The law regulates C02 pollution by requiring new power plants to avoid, offset, or mitigate at least 17% of their C02 emissions. In this way a power plant developer is encouraged to offer more efficient plants because it is given credit for the C02 emissions it avoids. A developer can choose a "performance path" and devise its own mitigation programme, or a "monetary path" and pay upfront into a fund.

Pay and walk

For a 250 MW gas plant emitting roughly 30 million tons of C02, the 17% standard's monetary path would require a one-off payment of $2.9 million. This is arrived at by demanding $0.57/ton for 5.1 million tons of C02 (17% of 30 million tons). The developer of such a plant could thus "pay and walk," says West. The 57 cents has been calculated after market testing of the cost of environmental protection measures and can be adjusted if necessary. Upfront payments would go into a trust for secondary clean energy initiatives, such as distribution of renewables, and be managed by a non-profit fiduciary agent.

A developer could alternatively choose to implement its own mitigation programme, provided it is approved by the Oregon Energy Facility Siting Council (EFSC). By electing such a performance path a developer must propose mitigation projects and demonstrate the net reduction in emissions each project would achieve. EFSC establishes the criteria for acceptable offsets and a site certificate is conditional on their successful implementation.

"All mitigation and offsets must be set at the beginning and become part of the sunk, fixed costs, for operating the plant," according to Renewable Northwest Project. Thus, whether payment is made up front or a programme of mitigation and offsets is chosen, the cost will be passed through to the consumer through electricity bills.

The 17% standard is measured at a 100% capacity factor for 30 years and is relative to the most efficient combined-cycle combustion turbine plant operating commercially in the US. Such a plant emits 0.84 pounds of C02/kWh, which the new regulations limit to 0.70/kWh. Most thermal plants in the Pacific Northwest generally operate less than ten months of a year (thus not at 100% capacity), so the 17% is in effect more like a 20% requirement for a typical plant, according to Renewable Northwest Project. In other words, the standard for the total C02 pollution that must be offset, mitigated or avoided is regardless of actual operation.

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