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Green House Gas Mitigation Strategies University of California, Santa Barbara Donald Bren School of Environmental Science and Management Greenhouse Gas Mitigation Planning: A Guide for Small Municipal Utilities Christine Z. Fernandez Kapil Kulkarni Sara Polgar Matthew Schneider Stuart S. Webster Sponsored by Burbank Water and Power Greenhouse Gas Mitigation Planning: A Guide for Small Municipal Utilities June 2005 Christine Fernandez Kapil Kulkarni Sara Polgar Matt Schneider Stu S. Webster Donald Bren School of Environmental Science and Management University of California Santa Barbara Sponsored by: Burbank Water and Power Contact Info: Kapil Kulkarni [email protected] Stu Webster [email protected] Christine Fernandez [email protected] This report can be found at: http://www.bren.ucsb.edu/research/gp_past.asp ABSTRACT California’s electric power generators are increasingly aware of the problem of greenhouse gas (GHG) emissions and their link to global climate change. Utilities anticipate a carbon-constrained future and want to prepare for this operational constraint by acting in an environmentally responsible, economically feasible and politically strategic manner through mitigating their GHG emissions. Information on the steps involved in, and the resources available for, GHG mitigation options have yet to be synthesized into a format that will help utilities make informed choices. Furthermore, utilities need to become familiar with the characteristics of the climate change problem as well as the variables, uncertainties, and potential costs and benefits of specific GHG mitigation options. To address this need, we have developed a GHG mitigation guide for a sub-sector of California’s power generators: small municipal utilities. This guide is designed to help small municipal utilities navigate the decision-making process involved in choosing mitigation projects for implementation. This guide also outlines the types of information that need to be synthesized and the resources available for a utility to implement an economically and environmentally beneficial mitigation plan. The City of Burbank Water and Power (BWP) serves as a case study to illustrate the decision points necessary for forming a GHG mitigation plan. Greenhouse Gas Mitigation Planning: A Guide for Small Municipal Utilities iii ACKNOWLEDGEMENTS We would like to thank the following people who have taken the time to provide invaluable advice, input, and support throughout this project: Patricia Holden Josh Schimel Donald Bren School of Environmental Science and Ecology, Evolution and Marine Biology, Management, University of California, Santa Barbara University of California, Santa Barbara Jennifer Wu Oliver Chadwick City of Burbank Water and Power Geography Department, University of California, Santa Barbara Tom Murphy John Melack Santa Barbara County Air Pollution Control District Donald Bren School of Environmental Science and Management, University of California, Santa Barbara Brad Boyes Entrix, Inc. Bob Wilkinson Donald Bren School of Environmental Science and Management, Joerg Blischke University of California, Santa Barbara Metcalf & Eddy Chris Still Dave Van Mullem Geography Department, University of California, Santa Barbara Metcalf & Eddy Greg San Martin Craig Whan PG&E Hot Rot Composting Systems William Schlesinger George Croll Nicholas School, Duke University Vandenberg Air Force Base Charles Kolstad Rachel Tornek Donald Bren School of Environmental Science and Management, California Climate Action Registry University of California, Santa Barbara Joel Levin Christopher Costello California Climate Action Registry Donald Bren School of Environmental Science and Management, Tom Umenhofer University of California, Santa Barbara Entrix, Inc. Greg Rau Kevin Wright Institute of Marine Sciences, Lawrence Livermore Laboratory Entrix, Inc. Michael Toman Dennis Moran Inter-American Development Bank City of Burbank Water and Power Chris Lewis City of Burbank Water and Power ACRONYMS & ABBREVIATIONS AR Afforestation/Reforestation MWh Megawatt hour AWEA American Wind Energy Association N2O Nitrous Oxide BTU British Thermal Unit NEG/ECP New England Governors and Eastern BWP Burbank Water and Power Canadian Premiers C Carbon n.d. no date available CA California PUC Public Utilities Commission CARROT Climate Action Registry Reporting PV Photovoltaic Online Tool QA/QC Quality Assurance / Quality Control CCAR California Climate Action Registry QMV Quantification, Monitoring and Verification CCX Chicago Climate Exchange SCPPA Southern California Public Power Authority CDM Clean Development Mechanism SOC Soil Organic Carbon CEC California Energy Commission Tm3 cubic terameters (1012 meters) CEMS Continuous Emission Monitoring tC/ha/yr Tons of Carbon Per Hectare Per Year System UNFCCC United Nations Framework Convention on CO2 Carbon Dioxide Climate Change CH4 Methane U.S. United States CPT Cost Per Ton w/w By Weight DOE United States Department of Energy ECBM Enhanced Coal Bed Methane Recovery EIA Energy Information Administration EOR Enhanced Oil Recovery EPA United States Environmental Protection Agency ERCs Emission Reduction Credits EU ETS European Union Emissions Trading Scheme GHG Greenhouse Gases Gt Gigaton GtC Gigatons of Carbon IGCC Integrated Gasification Combined Cycle IOU Investor Owned Utility IPCC Intergovernmental Panel on Climate Change IPP Intermountain Power Project JI Joint Implementation kcf Thousand Cubic Feet kW Kilowatt kWh Kilowatt Hours lbs Pounds LULUCF Land use, Land-use Change, and Forestry Mha Megahectare MMT Million Metric Tons MT Metric Ton MTCE Metric Ton of Carbon Equivalent MMTCE Million Metric Tons of Carbon Equivalent MMBTU Million British Thermal Units Mt Megaton MW Megawatt Greenhouse Gas Mitigation Planning: A Guide for Small Municipal Utilities v TABLE OF CONTENTS ABSTRACT …………………………………………………………………………. iii ACKNOWLEDGEMENTS ...………………………………………………………….. iv ACRONYMS & ABBREVIATIONS …………..………………………………………. v EXECUTIVE SUMMARY ……………………………………………………………. 1 CHAPTER 1 INTRODUCTION ………………………………………………….. 4 1.1 Problem Statement ………………………………………………. 4 1.2 Purpose of the Guide …………………………………………… 4 1.3 Structure of the Guide ……………………………………………. 4 CHAPTER 2 BACKGROUND ……………………………………………………. 7 2.1 Key Terminology Used in the Guide …..………………………. 7 2.1.1 Mitigation and abatement ………………………… 7 2.1.2 Mitigation option vs. mitigation project …………… 7 2.1.3 Types of GHG mitigation options ….……………. 7 2.1.4 Baseline definitions ……………………………….. 7 2.1.5 Offsets …………….……………………………… 8 2.1.6 Leakage …………………………………………….. 8 2.2 Target Audience for this Guide ………………………………… 8 2.2.1 BWP and applicable California municipal utilities … 9 2.2.2 Target readers within the organization ……………. 9 2.3 Elevated GHGs in the Atmosphere ……………………………. 10 2.3.1 The global carbon cycle …………………………… 10 2.3.2 The greenhouse effect …………………………….. 12 2.3.3 GHGs and GWP …………………………………. 12 2.3.4 The problem of climate change and global warming … 13 2.4 Sources of GHG Emissions …………………………………….. 14 2.4.1 Global emissions of GHGs ……………………….. 14 2.4.2 U.S. National emissions of GHGs ………………… 15 2.4.3 California emissions of GHGs ……………………. 16 Greenhouse Gas Mitigation Planning: A Guide for Small Municipal Utilities vi 2.5 Utilities’ Role(s) in Addressing the Problem ………………….. 17 2.5.1 Mitigation options …………………………………. 17 2.5.2 Options for implementing mitigation actions ……… 18 2.5.3 Outcomes of mitigation actions ……………………. 21 2.5.4 Present mitigation actions of utilities ………………... 21 2.6 Climate Change Policy …………………………………………. 24 2.6.1 International policy ……………………………….. 24 2.6.2 The European Union Greenhouse Gas Emissions Trading Scheme …………………………………… 25 2.6.3 U.S. National policy ………………………………. 26 2.6.4 Regional policy …………………………………….. 27 2.6.5 State policy ………………………………………… 28 2.7 Future Policy Directions ………………………………………... 29 2.7.1 Potential state and/or federal policy approches …... 29 2.7.2 Potential barriers to federal regulation of GHGs……… 31 CHAPTER 3 ASSESSING EXISTING EMISSIONS AND SETTING A MITIGATION GOAL ……………………………………………………………… 34 3.1 Emission Inventories ……………………………………………. 34 3.2 Deciding on a Mitigation Goal …………………………………. 36 CHAPTER 4 PRELIMINARY SCREENING CRITERIA ……………………………. 39 4.1 Feasibility ………………………………………………………... 39 4.2 Uncertainty ……………………………………………………... 39 4.3 Regulatory Restrictions ………………………………………… 40 CHAPTER 5 CRITERIA FOR EVALUATION OF GHG MITIGATION OPTIONS …... 41 5.1 Project baseline and additionality ………………………………. 41 5.1.1 Project baseline …………………………………………….42 5.1.2 Additionality ……………………………………………… 44 5.2 Quantification, monitoring and verification …………………... 45 5.3 Permanence ……………………………………………………... 47 5.4 Leakage ………………………………………………………….. 49 5.5 Project magnitude ………………………………………………. 50 5.6 Mitigation kinetics ……………………………………………… 51 5.6.1 Timeframe for offset generation …………………………... 51 5.6.2 Longevity …………………………………………………. 52 5.7 Ancillary impacts ………………………………………………… 52 5.8 Cost per ton of carbon equivalent ……………………………… 54 Greenhouse Gas Mitigation Planning: A Guide for Small Municipal Utilities vii 5.8.1 Calculating CPT …………………………….……………… 55 5.8.2 Return on Investment (ROI) ……………………………… 56 5.9 Regulatory acceptance …………………………………………... 57 5.10 Preferences of the utility ………………………………………… 59 5.10.1 Mitigation preferences ……………………………………... 59 5.10.2 Costs and benefits to stakeholders ……………………….... 60 5.11 Existing relationships …………………………………………... 61 5.12 Perception of the public …………………………………………. 61 CHAPTER 6 MITIGATION OPTIONS …………………………………………… 64 6.1 Reduction Approaches ………………………………………….
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