Accurately quantifying and allocating greenhouse gas (GHG) emissions to the causal load is a fundamental practice in climate planning. Emissions from unspecified sources remains a blind spot in accurately quantifying and accurately allocating GHG emissions in GHG emission calculations. We previously posted about causation as the basis for attributing GHG emissions from electricity, CAISO’s Energy Imbalance Market (EIM) GHG emission reporting, as well as AB 1110 and the issue of GHG Intensity Reporting. This post will focus on proposed Assembly Bill 79, as amended on March 21, 2017, to review a proposed legislative solution to resolving the GHG accounting issue from unspecified sources of electricity.
AB 79, as amended on March 21, 2017, seeks to resolve the problem of accurately quantifying greenhouse gases from unspecified sources of electricity purchased by retail suppliers to serve California electric customers. Accurately quantifying GHGs from unspecified sources will better allow allocation of GHG emissions to the load that caused the emissions.
AB 79 would add Section 38532 to the Health and Safety Code. Subsection (a) includes several definitions, the most important of which are the definition of “electricity from specified sources” and “electricity from unspecified sources.” Section 38532 would define electricity from specified sources as “electricity transactions that are traceable to specific generation sources.” Section 38532 would define electricity from unspecified sources as “electricity generated within or outside the state and purchased under commercial agreements that do not identify specific generation sources, including electricity procured from a wholesale market exchange operated by a California balancing authority.”
These definitions differ in wording, but not necessarily meaning, from the existing statutory and regulatory definitions. The proposed Section 38532 definitions of specified and unspecified sources differ from the definitions found under Public Utilities Code Section 398.2 (d) and (e) in that they do not use the language of an auditable contract trail that allows commercial verification that the electricity has been sold once and only once. It also differs from the California Air Resources Board’s (CARB) Cap-and Trade (C&T) 17 CCR Sections 95802(a)(354) and 95802(a)(371) definition of specified and unspecified, respectively, in that it is dependent on transactions and not ownership or written contracts. Despite these differences, we believe this means that specified and unspecified power will remain within the existing definitions and practices of the Public Utilities Code and C&T. Proposed Section 38532’s definition of unspecified should capture sources that lack a transaction specifying a source from a California balancing authority or out-of-state market and are not existing regulated facilities or units. In this respect, AB 79 appears to correctly define unspecified sources.
In terms of requirements, Proposed Section 38532 mandates that CARB, in consultation with the CAISO, adopt a methodology for the calculation of hourly emissions of GHG associated with electricity from unspecified sources purchased to serve California load by January 1, 2020. Section 38532 would further require that the methodology be “capable of calculating, on an ex-post basis, recorded hourly emissions associated with electricity from unspecified sources” either purchased within California or imported from other subregions of WECC. This marks a clear change from Public Utilities Code Section 398.2 (d) that allows retail suppliers to rely on annual data, as opposed to hour-by-hour matching of load and resources, for power content label disclosures to consumers. Further, the bill would require that CARB’s method rely on recorded generation operations data provided by California balancing authorities or balancing authorities serving California load and require that California balancing authorities assist CARB by providing relevant data to develop the method and calculate hourly GHG emissions. How CARB will obtain this information from non-California balancing authorities may serve as one of the limitations of this methodology. Finally, AB 79 would amend Public Utilities Section 400 to allow the California Public Utilities Commission (CPUC) and California Energy Commission (CEC) to incorporate this methodology into disclosure and procurement programs, such as the power content disclosure program currently undergoing changes through the CEC’s open AB 1110 rulemaking.
AB 79 attempts to resolve the challenge of accurately quantifying the emissions from the portion of all electric purchases that are not traceable to the original fuel source and category because of physics and electric market operations. This is not a simple or easy undertaking. Unspecified sources are undifferentiated purchases of electric power from markets (including the California Independent System Operator (CAISO) or trading desks across the western interconnect. California is alone in having a system that quantifies GHG emissions attributed to its load. There is no WECC wide mechanism to track and attribute the GHG emissions from these unspecified sources of power.
The best practice for estimating the GHG emissions from unspecified electricity has been to use CARB’s default emissions factor of 0.428 MT of CO2e/MWh (943 lbs/MWh) as a proxy. This value was adopted from the Western Climate Initiative Partners (WCI) Default Emission Factor Calculator 2010, which used a three-year average of generators in the Western Electric Coordinating Council (WECC) based on U.S. Energy Information Administration (EIA) data with generators running at assumed rates from 2006-2008. It represents the average marginal power from the WECC and may over report or under report actual emissions from power delivered to load. If CARB can overcome the technical aspects of quantifying unspecified GHG emissions, then California will move from using a nearly decade old average that estimated marginal power emissions in the WECC to hourly emission calculations that reflect the fuel-type and consequent emissions of unspecified power used to serve California load. This has the implication of allowing more accurate emission allocations based on causation to create locally-relevant emissions factors for climate planning.
This is the beginning of a two-year legislative term and we expect amendments to AB 79 should it continue to move through the legislative process.