3. ENERGY AND CLIMATE CHANGE

The DOE, through the national laboratories and academic research and development (R&D) activities conducted in collaboration with the EPA, the National Aeronautics and Space Administration (NASA) and the NOAA, supports technology development of pipeline corrosion protection, leak detection systems, pipeline monitoring and sensor systems to detect methane leakage. While technologies and quantification have improved, flaring remains an issue in the Permian and Bakken basins because of insufficient gas takeaway infrastructure.

As part of a deregulatory push, the EPA announced in September 2018 changes to the 2016 NSPS for oil and gas wells under the Clean Air Act, which established regulatory requirements to reduce GHG emissions and volatile organic compound emissions from the sector. The EPA plans to lower requirements to monitor and repair leaks at well sites and compressor stations in an effort to reduce industry compliance costs (EPA, 2018e).

In the same month, the Interior Department’s Bureau of Land Management (BLM) announced a final rule to revise and make less onerous the 2016 Waste Prevention Rule, a regulation to lower methane emissions on federal and tribal lands. According to the Interior Department, the previous regulation was too costly and would have led to an overlap of federal and state regulations overseeing drilling on public lands, which accounts for around 5% of oil and 9% of natural gas production in the United States. The new rule mostly reverts to the regulatory framework for venting and flaring that preceded the 2016 regulation, and defers authority to states or tribal groups to determine if flaring of associated gas at oil wells should require royalties (BLM, 2018).

In most of the efforts to roll back methane regulations, as with other regulatory changes, finalised rules are likely to face lawsuits that could delay implementation and extend policy uncertainty for the oil and natural gas industry. Ultimately, less stringent federal rules on methane emissions could delay emissions reductions in the oil and gas sector, though voluntary industry programmes – including those spearheaded by the EPA, such as Natural Gas STAR – can still lead to notable emissions reduction (EPA, 2019d).

Regional, state and local policies

Beyond federal policy, action on CO2 emissions is also driven by state policies. A large number of states have implemented legally binding carbon pricing mechanisms, either individually or through regional programmes. Additionally, many states pursue ambitious decarbonisation goals for 2030 and beyond by supporting zero-carbon technologies through a wide range of regulatory and market-based mechanisms. Many US cities also have CO2 reduction targets and have put in place local policies and regulations to help achieve them. Subnational actions are supported by the US Climate Alliance including 16 states, Puerto Rico, 240 US cities, around 1 900 businesses and 345 academic institutions.

Twenty-two US states plus the District of Columbia have adopted GHG reduction targets (though not all have been legislated), with policy tools ranging from carbon pricing to efficiency mandates and support for clean energy. The disparities among state targets can lead to diverging outcomes for emissions reductions regionally.

Regional Greenhouse Gas Initiative

The Regional Greenhouse Gas Initiative (RGGI) is a cap-and-trade programme among nine Northeastern states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont (RGGI, 2019). New Jersey was an

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3. ENERGY AND CLIMATE CHANGE

original member of RGGI, but withdrew in 2012, though the state has recently taken steps to rejoin. Virginia has also expressed interest in joining (ICAP, 2018a). The programme, which applies to fossil fuel electric generating units with capacity of 25 megawatts or greater, was first launched in 2009, and updated in 2014, following a comprehensive review in 2012. As of November 2017, 165 entities are part of the programme. The revised programme established a regional cap of 91 million short tonnes of CO2 in 2014, which declines by 2.5% each year from 2015 to 2020. RGGI states expect that the programme will achieve 50% emissions reductions from 2005 levels by 2020. Nearly 90% of emissions allowances are sold by states via auction, with proceeds directed towards clean energy programmes such as energy efficiency and renewables. RGGI states completed another review of the programme in 2017 to plan for the post-2020 period. The review proposed to further cut the emissions cap by 2.275 million short tonnes per year between 2021 and 2030, with a target to achieve 30% emissions reductions from 2021 levels by 2030 (ICAP, 2018b).

California’s climate action plan

At the state level, California has been at the forefront on GHG reduction policies. California’s overarching climate change targets are codified under laws AB32, which passed in 2006 and set out a target to bring GHG emissions levels down to 1990 levels by 2020, and SB32, which passed in 2016 and established a target to cut GHG emissions by 40% from 1990 levels by 2030 (CARB, 2014; California Legislative Information, 2016). More recently, in 2018 the state legislature passed a law to achieve 100% of power from renewable sources by 2045. The state governor also signed an executive order for the state to achieve 80% GHG reductions from 1990 levels by 2050 and to achieve carbon neutrality by 2045.

California’s original cap-and-trade programme was established by AB32, adopted in 2011, and launched in 2013. It applies a cap to power plants, industrial facilities and fuel distributors (petroleum and natural gas). The California Air Resources Board is tasked with implementing and enforcing the programme. The scheme first applied to the power and industrial sectors and was extended to the transportation sector in 2015. Approximately 450 entities are part of the programme. Since 1 January 2014, California’s cap-and-trade programme has been linked with Quebec’s emissions trading system. The two programmes also linked with Ontario’s market on 1 January 2018, but the link was terminated in July 2018 after Ontario revoked its cap-and-trade regulation.

The California legislature in July 2018 voted to extend the state’s cap-and-trade programme for GHG emissions (AB398), which had previously been due to expire in 2020, through 2030 (California Legislative Information, 2017). Though the state’s 2030 emissions target was voted into law the previous year (under SB32), it did not specify the mechanism to achieve the emissions reductions. The cap-and-trade extension will provide longer-term clarity on how the state will achieve its climate targets.

Besides cap-and-trade, the state’s policies also include a Low Carbon Fuel Standard (LCFS) and the ambitious 100% RPS. Importantly, the legislation passed with a supermajority (two-thirds voting margin), which will insulate the programme from legal challenges under California law, as the previous iteration of the programme faced.

In addition to pushing to maintain existing federal standards on light-duty vehicles and the LCFS, which mandates a falling carbon intensity of transport fuels annually (primarily through biofuels blending – see Chapter 5, “Renewable Energy”), California also has in

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