Senior Task Force Embarks on Carbon Pricing Education

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The Carbon Pricing Senior Task Force kicked off Friday, July 26, with over 100 interested stakeholders attending the first meeting in person or by webinar.

The task force has been charged with studying market frameworks that could accommodate states’ carbon pricing policies without negatively impacting other states or the market as a whole.

PJM Facilitates Discussion

The group is carrying out a problem statement and issue charge brought forward by Eastern Generation, Public Service Electric & Gas, CPV Power Holdings, NextEra Energy Marketing and Dayton Power & Light Co. and endorsed by members at the April 25 meeting of the Markets & Reliability Committee.

Within 18 months, the task force will endeavor to present the Markets & Reliability Committee with proposed market rules related to any potential regional or sub-regional carbon pricing strategy endorsed by any or all of the 13 states served by PJM and its utility partners, as well as Washington, D.C.

Maryland and Delaware already operate within the Regional Greenhouse Gas Initiative (RGGI), a regional, state-based compact that caps the carbon dioxide emissions from electric generators, and New Jersey is poised to rejoin.

PJM Associate General Counsel Jen Tribulski, who is facilitating the task force, emphasized that PJM is not a policy maker and would not set a carbon price. The work of the task force is aimed at enabling the energy-market design to incorporate any potential carbon pricing effort by the states.

Establishing a Foundation of Carbon Pricing Concepts

During Friday’s meeting, one expert told task force members that pursuing a low-carbon economy likely will involve a substantial expansion of the electricity sector.

Dallas Burtraw, of the nonprofit, independent research organization Resources for the Future, included that prediction in his review of concepts of carbon pricing. Burtraw’s educational presentation explored:

  • Basic principles, history and current implementation around the globe
  • Interaction with “companion policies”
  • The inner workings and impacts of carbon markets

Replacing the direct combustion of fossil fuels will more than double the share of electricity in final energy consumption in 2050, he said, referencing a report by the Deep Decarbonization Pathways Project. That would be a historic shift, he said.

Most States Have Renewable Goals

Emma Nix, economist and policy analyst – State and Member Services, provided an overview of state energy policies.

States within the PJM region have enacted a variety of policies and regulations addressing environmental outcomes, she said, noting that the policies are not focused solely on carbon emissions, but include other state and local drivers.

All but three states within the PJM footprint – Kentucky, West Virginia and Tennessee –adhere to voluntary or mandatory renewable portfolio standard goals, she said. All of the coastal states (Delaware, Maryland, New Jersey, North Carolina and Virginia) are studying the potential of offshore wind generation.

New Solar, Wind, Storage Making Inroads

Ken Schuyler, manager, renewable services – Market Services, followed up with education on renewable portfolio standards, which require suppliers to use renewable resources to serve an increasing percentage of total demand.

These resources, he said, reflect the diversity of the sources of energy in the PJM footprint. In addition to the more common solar, wind and hydro, Pennsylvania uses coal mine methane; Maryland and North Carolina repurpose poultry litter; and North Carolina makes use of swine waste.

A review of the interconnection queue shows that new projects increasingly are involving solar, wind and energy-storage technology, he said, and carbon emissions throughout the PJM region are steadily decreasing.

Carbon Pricing Study Underway

As the task force is conducting its work, PJM is studying the potential impact of carbon pricing on the competitive wholesale energy market, to inform the decision makers across the region who are considering climate policies.

The study, whose objectives and assumptions were presented to the Market Implementation Committee May 15, will focus on the energy and ancillary markets. It will include the residual revenue created from adjusting net energy imports and exports across the borders, between areas that implement carbon pricing, and those that do not. Each state would decide how these funds are allocated.

The task force will next meet Aug. 26, when topics of discussion will include economic dispatch and how the RGGI carbon price flows through the market.