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NYISO Carbon Charge Climate Action Council Meeting
3rd of March 2022
Meeting Highlights:
-
- 2022 activities and schedules
Timeline
|
Phase
|
Activities
|
January -April
|
Information Gathering
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- Hold public comment period followed by initial public input sessions
- Reengage with Climate Justice Working Group
- Develop and launch communications and educational materials
- Initiate expert engagement
|
May – August
|
Discussion and Deliberations
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- Complete remaining public input sessions
- Hold potential subgroup and CAC meeting discussions to advance topics on which consensus is needed
- Fully rollout communications and educational materials
- Continue expert engagement, as needed
|
September - December
|
Drafting and Plan Finalization
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- Draft and refine Final Scoping Plan
- Develop and deploy educational materials as needed
|
-
-
Public Input
- Sessions to solicit feedback from the public about the Draft Scoping Plan.
- Nine (9) 3-hour public hearings: 7 in-person and 2 virtual. From 4 to 7PM.
- Written comments will be accepted in the comment period.
- CAC to discuss as part of its agenda the full set of public comments after the comment period closes
- Final Scoping Plan is released 1 / 1/ 2023
UPDATE on NYISO J vs PJM PSEG as of 2/28/2022
TRADE DATE
|
HUB
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PRODUCT
|
STRIP
|
SETTLEMENT PRICE
|
PERCENTAGE DIFFERENCE FROM DEC 22
|
2/28/22
|
NYISO J Off-Peak
|
Off-Peak Futures (50 MW)
|
Dec-22
|
82.40000
|
100%
|
2/28/22
|
NYISO J Off-Peak
|
Off-Peak Futures (50 MW)
|
Dec-23
|
59.30000
|
72%
|
2/28/22
|
NYISO J Off-Peak
|
Off-Peak Futures (50 MW)
|
Dec-24
|
63.35000
|
77%
|
2/28/22
|
NYISO J Off-Peak
|
Off-Peak Futures (50 MW)
|
Dec-25
|
54.00000
|
66%
|
2/28/22
|
NYISO J Off-Peak
|
Off-Peak Futures (50 MW)
|
Dec-26
|
58.85000
|
71%
|
2/28/22
|
NYISO J Off-Peak
|
Off-Peak Futures (50 MW)
|
Dec-27
|
56.85000
|
69%
|
2/28/22
|
NYISO J Off-Peak
|
Off-Peak Futures (50 MW)
|
Dec-28
|
55.80000
|
68%
|
2/28/22
|
NYISO J
|
Peak Futures (1 MW)
|
Dec-22
|
101.35000
|
100%
|
2/28/22
|
NYISO J
|
Peak Futures (1 MW)
|
Dec-23
|
77.55000
|
77%
|
2/28/22
|
NYISO J
|
Peak Futures (1 MW)
|
Dec-24
|
73.65000
|
73%
|
2/28/22
|
NYISO J
|
Peak Futures (1 MW)
|
Dec-25
|
78.35000
|
77%
|
2/28/22
|
NYISO J
|
Peak Futures (1 MW)
|
Dec-26
|
73.35000
|
72%
|
2/28/22
|
NYISO J
|
Peak Futures (1 MW)
|
Dec-27
|
73.15000
|
72%
|
2/28/22
|
NYISO J
|
Peak Futures (1 MW)
|
Dec-28
|
69.90000
|
69%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-22
|
57.85000
|
100%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-23
|
47.40000
|
82%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-24
|
42.80000
|
74%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-25
|
44.35000
|
77%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-26
|
44.05000
|
76%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-27
|
45.10000
|
78%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-28
|
45.25000
|
78%
|
2/28/22
|
PJM PSEG Zone DA
|
Peak Futures (1 MW)
|
Dec-29
|
45.90000
|
79%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-22
|
48.60000
|
100%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-23
|
37.50000
|
77%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-24
|
38.25000
|
79%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-25
|
36.65000
|
75%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-26
|
38.05000
|
78%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-27
|
38.60000
|
79%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-28
|
39.15000
|
81%
|
2/28/22
|
PJM PSEG Zone DA Off-Peak
|
Off-Peak Futures (1 MW)
|
Dec-29
|
39.75000
|
82%
|
Analysis on Power Prices
NYISO J Off-Peak: The curve from Dec ’22 to Dec ’26 is backwardated/flat. The perceived market confidence for a 2024 start date has declined significantly in the last 8 months. Aegis has not seen a formal change of course from New York other than a continued slow pace during the process. The market is currently not pricing in carbon fee as it did back in 2019/2020.
PJM PSEG: Power Prices for Dec-23 to Dec-27 is lower than Dec 22. The market is not appear to be pricing in any additional carbon (besides RGGI).
Public Input:
RGGI Program Review
The RGGi states on 02 February announced the plan for a Third Program Review and the Summer 2021 preliminary timeline in conducting it; noting that the schedules are subject to revisions over time.
- Preliminary timeline for the 3rd Program Review
Summer / Fall 2021
|
Gather assumptions for IPM base case(s).
|
Fall 2021
|
Public Listening Sessions: Hold initial public listening sessions to solicit public input on Program Review objectives and timeline.
Public Meeting: Hold public meeting(s) to review draft IPM modeling assumptions.
|
Winter 2021/2022
|
Finalize assumptions for IPM base case(s).
|
Winter 2021/2022
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Conduct IPM base case(s) modeling.
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Spring 2022
|
Public Meeting: Hold public meeting to review IPM base case(s) results and solicit input on IPM policy case(s) and program elements.
|
Spring Summer 2022
|
Conduct IPM policy case(s) modeling.
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Summer 2022
|
Gather assumptions for economic modeling and customer bills analysis.
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Summer 2022
|
Public Meeting: Hold public meeting to review IPM policy case(s) results and discuss potential revisions to program elements.
|
Fall 2022
|
Conduct economic modeling/analysis and customer bills analysis.
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Fall 2022
|
Release draft updated Model Rule.
|
December 2022
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Public Meeting: Hold public meeting to review updated Model Rule, final IPM policy case results, economic modeling results, and customer bills analysis
|
January 2023 and onward
|
Conclude Program Review. States initiate individual legislative/regulatory processes.
|
- To support the Third Program Review, the states will:
- Run technical analyses, including electricity sector modeling, to inform decision-making related to core Program Review topics
- Gather input from communities, affected groups, and the general public on the Program Review process and timeline, core topics and objectives, modeling assumptions and results, and other policy and design considerations.
- Hold independent learning sessions with experts and other interested parties on key design elements.
RGGI Updates
- RGGI March 9th, 2022 auction cleared $13.50. The market traded a low of $13.05 on March 7th as the Ukranie crisis, 40% drop in European Carbon Allowances since Feb and 28% drop in California Carbon Allowances since January 1st put some pressure on RGGI. RGGI is currently trading below auction clearing price at $13.30 as of afternoon of March 11th.
- RGGI trading activity gets 4Q increase. The Regional Greenhouse Gas Initiative (RGGI) futures trading activity doubled in the fourth quarter of 2021 compared to the prior quarter. The growth in the participation of money managers and swap dealers has led to more futures trading activity in the RGGI carbon market. About 169mn CO2 allowances were traded in the final quarter of 2021, 33pc more than the fourth quarter of 2020. Approximately 60pc of futures traded in the 4Q 2021 were for contracts settling in December 2021, while 35pc were for December 2022 contracts.
- Virginia House passed to lower cost of RGGI allowances. The Virginia House of Delegates voted 51-48 in favor of HB 892. A bill that would offer discounted Regional Greenhouse Gas Initiative (RGGI) CO2 allowances to companies with long-term power contracts. HB 892 will pave way for the creation of a state reserve of RGGI allowances, which could be sold to qualifying entities for $2/short ton. The reserve would start off by offering 2mn allowances per year, though it would drop over time before falling to zero after 2025. As a requirement, a company must have a pre-existing power purchase agreement dated on or before May 2017 and that lasts through December 2025 and have no means to pass through its RGGI costs. The bill now proceeds to the Democratic-led Senate, where it faces an uncertain future.
- RGGI on the line in Virginia budget deliberation. The Virginia House of Delegates on 24 February passed years 2022 to 24 budget proposals that would remove the state from the Regional Greenhouse Gas Initiative (RGGI). On the other hand, the Democratic-led Senate passed its own budget amendments, which envision Virginia remaining in RGGI. Governor Glenn Youngkin backs an exit from the program, and is planning to meet with leaders from the House and Senate to start ironing out differences between the chambers' proposals and to float changes that align with his own priorities. The deadline to pass a two-year budget is 12 March.
- Bill to exit RGGI thwarted in Virginia Senate. Virginia Senate Democrats have effectively stopped legislation that would have cancelled the state from the Regional Greenhouse Gas Initiative (RGGI). The Virginia Senate Committee on Agriculture, Conservation, and Natural Resources on 22 February voted along party lines to table HB 1301, with all Democrats supporting the move to block the bill. Despite the vote, governor Glenn Youngkin and Republican lawmakers continue to look for ways to pull the state out of RGGI or change how it participates in the program.
- Pennsylvania coal plant may reduce operations. Homer City Generation, a coal-fired power plant in Pennsylvania will reduce operations and may close some units in 2021. The plant asked PJM Interconnection to excuse it from requirements that it participates in PJM's upcoming 2023-24 base residual capacity auction. Any units that do not participate will likely be deactivated in May 2023, just before the start of the grid operator's 2023-24 year. Homer City said it will make a final decision on participating in the auction and any subsequent unit retirements by 4 April. The three-unit, 2GW-capacity plant is the largest coal plant in Pennsylvania. Homer City said it is contemplating over "regulatory uncertainties," including whether Pennsylvania will formally join RGGI, as it considers whether to close the plant or plant units. Other factors being studied are the 53-year-old plant's operating performance, whether it can support partial operations, availability of coal supply and forward prices.
- PA governor’s budget eyes higher RGGI revenue. Pennsylvania governor Tom Wolf released his final budget proposal for the 2022-23 fiscal year, which estimates revenue of more than $410.6mn from the RGGI CO2 allowance auctions. That is more than the $300mn initial prediction by the Department of Environmental Protection (DEP). The Wolf administration expects large revenues from a full year of participating in the power plant cap-and-trade program. While other proposals in the budget would need approval from the Republican-led state legislature to take effect, Pennsylvania has already moved to join RGGI through regulatory action. Wolf's budget proposal also recommends more funding for the DEP and encourages the state to spend $100,000 developing a strategic plan to decarbonize industry through hydrogen technologies and carbon capture, utilization, and storage. The new fiscal year begins on 1 July 2022 until 30 June 2023.
- Pennsylvania DEP sues LRB over RGGI. The Pennsylvania Department of Environmental Protection (DEP) is suing Pennsylvania Legislative Reference Bureau (LRB), a branch of the state legislature that publishes a weekly report on state regulatory actions. The legal action is brought by the legislative agency’s resistance to publish a regulation for Pennsylvania to join the Regional Greenhouse Gas Initiative (RGGI). Pennsylvania attorney general Josh Shapiro in November signed off on regulations the DEP wrote to enable the state to join RGGI. After the DEP asked the LRB to formally publish the rule, the LRB said that the state legislature still had time to adopt a resolution disapproving of the regulation. The lawsuit claims that the state has already lost $162mn "in proceeds and associated air pollution reductions" from not being able to join in the year's first RGGI auction and that LRB's interpretation of the law could set a dangerous precedent for future regulations that are unpopular with legislators.
- Pennsylvania Republicans want to participate in RGGI lawsuit. Pennsylvania Republican lawmakers want to be involved in a lawsuit that will decide on the state’s participation in the Regional Greenhouse Gas Initiative (RGGI). Senate president pro tempore Jake Corman, Senate majority leader Kim Ward, Senate Appropriations Committee chair Pat Browne, and Senate Environmental Resources and Energy Committee chair Gene Yaw on 25 February asked a state court to allow them to intervene in a lawsuit brought by the administration of governor Tom Wolf. The court filing is the latest development in a long-running disagreement between Wolf and state lawmakers over Pennsylvania joining the RGGI cap-and-trade program. Pennsylvania attorney general Josh Shapiro on November signed off on regulations that the Department of Environmental Protection (DEP) wrote to enable the state to join RGGI. But the Legislative Reference Bureau (LRB) resisted DEP's requests to publish the rule, noting that the legislature can still work on adopting a resolution of disapproval. In December, lawmakers did pass such a resolution, which Wolf vetoed in January. While the LRB says it is giving lawmakers a chance to override Wolf's veto, the DEP has asked the court to force LRB to publish the rule. In this new filing, the Republican senators are asking the Commonwealth Court of Pennsylvania to allow them to interfere in the lawsuit because they have a "legally enforceable interest in establishing and controlling their own calendar, practices, and procedures for voting on matters before the general assembly." They also argue that the legislature's resolution disapproving of the RGGI rule was passed within legal deadlines and that they have time to override Wolf's veto and stop the regulation from coming into effect.
- US, EU hit Russia’s finances, could affect energy flows. In a joint statement released on 26 February, the US and EU will encumber Russian foreign reserves and disengage major Russian banks from the global financial system as the country continues its invasion of Ukraine. Select Russian banks will be disconnected from global financial messenger service provider Swift. The US and EU sanctions announced to date that it does not target Russian energy exports, and there is general intent to preserve that exemption. It is working with Swift around figuring out the capability of identifying the product type in transactions, and if technically possible to identify energy transactions that the targeted banks process. The alternative is not to target banks known to process the most energy transactions. The list of banks is yet to be finalized.
RGGI Price Chart
NY / NJ News
- New York pension fund to restrict shale holdings. The New York State Common Retirement Fund will restrict investments in 21 shale stocks, including Diamondback Energy and Continental Resources. It is divesting $238mn in shares and bonds of oil and natural gas producers such as Pioneer Natural Resources and Hess because of worries that they are ill-equipped for energy transition. The shale sector has pledged to reduce its carbon footprint, but individual companies are slow in adopting measures to cut emissions. Those 21 oil and gas companies are more likely to be aiming net zero or emissions reduction targets, and to be assessing and disclosing its climate risks. Previous reviews of oil sands and coal stocks triggered the fund's exit from 34 companies. It plans to review integrated oil and gas companies next.
- First offshore wind lease auction sets record. The first offshore wind lease auction under President Joe Biden's administration, which started on 23 February and concluded on 25 February set in a record of $4.37bn in winning bids. After running for 64 rounds, it ended with five project developers provisionally securing six leases off the northeast US coast. The lease areas cover 488,000 acres in the New York Bight, from the eastern tip of Long Island to the Cape May inlet in New Jersey. Bight Wind Holdings won the largest of the six leases, which spans almost 126,000 acres, through a $1.1bn bid. Mid-Atlantic Offshore Wind got the smallest lease, which covers roughly 43,000 acres at $285mn. The other four winning bids ranged from $645mn-$795mn. The US Justice Department and the Federal Trade Commission will conduct an anti-competitiveness review of the auction before finalizing the leases.
- New ETF to offset emissions of stock portfolio. The Strategic Innovations Net Zero ETF, a New York-based investment manager is launching an exchange-traded fund (ETF) that will achieve net zero emissions from its portfolio by buying North American carbon permits through a non-profit organization, Climate Vault. The group’s ETF filed with the US Securities and Exchange Commission on 28 January by New York-based Strategic Innovations Advisors (SIA), will track the investment performance of an index of large cap US equities and obtain a pro-rata share of carbon allowances for each security’s carbon footprint, as determined by Climate Vault. Climate Vault is aiming to help individuals and businesses decrease their emissions by purchasing physical allowances in regulated North American carbon markets. It collects money from donors to buy California Carbon Allowances (CCAs) and RGGI Allowances (RGAs), thereafter vaulting these allowances to reduce emissions on a ton-by-ton basis. Climate Vault will then sell allowances back into the market in the future at a higher price to fund carbon removal projects. The aim of these projects is to eliminate the same or more amount of GHGs from the atmosphere, as the number of permits being sold. Strategic Innovations under the ETF will try to give capital appreciation by following the investment results of the SAI Index. Climate Vault will then compute the CO2 footprint of the fund’s portfolio every month to know the carbon allowance purchases needed to reach net zero.
- New Jersey solar started the year slow. The New Jersey's solar sector got off to a slow start for the last two consecutive years. The state added 10.3MW of new photovoltaic capacity for January 2022, which is below the 11.3MW initially reported for January 2021 and well under the 30.6MW for January 2020. The figures will likely increase in the next months as the state gathers more data. A big portion of last month’s capacity, which is a little less than 8MW fed into New Jersey’s transition solar incemtive program. Around 2.4MW fed into the new SREC-II program's administrative determined incentive (ADI) track. Around 0.005MW fed into the legacy SREC program. The bulk of the state's total solar source are from small, behind-the-meter systems, which represent over 79pc. Utility-scale projects account for 20pc, and the community solar remains less than 1pc. Lawmakers and regulators are targeting to increase the supply from large projects. The board is working on the second part of the SREC-II initiative, which will use competitive solicitations to support utility-scale solar farms.
- NY announces $25 Million proposal to transition for clean energy jobs. Governor Kathy Hochul on 17 February announced a $25 million statewide federal grant proposal supported by the New York State Energy Research and Development Authority, the New York State Department of Labor and the New York Community Colleges Energy Equity Consortium. On behalf of the statewide collaborative, NYSERDA submitted a $25 million proposal for a funding opportunity through the U.S. Economic Development Association's (EDA) Good Jobs Challenge. The proposal will take a varied approach to reskill and train New Yorkers, including displaced workers in the fossil fuel sector and members of disadvantaged communities, for new clean energy job opportunities. The work under this proposal supports the Climate Leadership and Community Protection Act (Climate Act) to deliver 35 percent with a goal of 40 percent of benefits from clean energy investments to disadvantaged communities and secure a just transition.
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