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ResearchPG&E's tariff filing with the California Public Utilities Commission (CPUC) targets a goal of collecting approximately $20 million over the three-year demonstration period to offset about two million tons of CO2 (the equivalent of removing 350,000 cars from California's roads). This works out to approximately $10 for each ton of CO2 offset. PG&E has flagged forest restoration and conservation projects in California as one means of achieving these reductions, but other emissions reduction options will also be explored. In addition, PG&E is asking the CPUC for $16.4 million of general ratepayer funding to pay for the administration and marketing costs of implementing the pilot program (about 4 cents per month per ratepayer).
Because PG&E is asking for ratepayer funds for this program, stakeholders have taken the opportunity to weigh in as part of the public comment process. The comments have generally applauded PG&E for fighting global warming, but have raised a number of questions. On the administrative side, why should ratepayers pick up the whole marketing and administrative bill, given that the program will likely also benefit shareholders? On the cost side, why will PG&E’s program cost twice what the Climate Trust in Oregon has been spending on offsets? On the merits, why not include the purchase of renewable energy credits (RECs) in the program, providing "immediate benefits" to Californians through expanded renewable generation?
When it comes to a program like the one PG&E has proposed, the devil is in the details. We’ve just published a comprehensive review of the key issues in the Environmental Law Institute’s Environmental Forum, entitled “Selling Carbon Neutrality” (send me an email for a copy). Based on our work in this area, I offer the following thoughts regarding some of the issues being raised about PG&E’s Climate Protection Program:
- I’m impressed by the amount of effort that PG&E is putting into the development and marketing of the program. This has been a key failing of many carbon neutrality efforts. It’s too complicated an idea to just throw a carbon neutral product or service out and hope that it works. Real work is needed to figure out how to effectively communicate the message of carbon neutrality to consumers and how to influence their buying decisions.
- I’m hoping that PG&E will make educating its customers about climate change a key element of the Climate Protection Problem. What we really need to fight climate change is national and international policy; public education can help move us in that direction. If PG&E does not see public education as being within its purview, the significance of the program will be diminished.
- One should not simply compare the cost of the Climate Protection Program with the asserted cost of carbon offsets from other programs. One has to look carefully at what exactly the program considers a carbon offset, and at other program attributes. Different programs have widely disparate approaches to key aspects of carbon offsets, with a resulting wide variation in the quality of what they’re offering to the market.
- RECs are a different concept and should not be included within the Climate Protection Program. Renewable energy projects can deliver carbon emissions reductions, and as such can be part of any climate protection program. But RECs are a fundamentally different commodity from GHG credits (a point we develop in the article mentioned earlier). At this point, they’re best kept separate.
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Dr. Mark C. Trexler has more than 25 years of energy and environmental experience, and has focused on global climate change since joining the World Resources Institute in 1988. He is now president of Trexler Climate + Energy Services, which provides strategic, market, and project services to clients around the world.
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