Act Providing Incentives for Carbon Reduction Investments Exposed

The Act Providing Incentives for Carbon Reduction Investments is a draft model policy considered by ALEC's Energy, Environment and Agriculture Task Force at the Annual Meeting on July 24, 2015. Due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law. The bill language below is from a ALEC 35 day mailer, available here.

ALEC Bill Text

Section 1. Definitions.

For the purposes of this Act:

1. “Auditor” means: (a) the {state} state auditor’s office or its designee for qualifying utilities under its jurisdiction that are not investor-owned utilities; or (b) an independent auditor selected by a qualifying utility that is not under the jurisdiction of the state auditor and is not an investor-owned utility.

2. “Carbon reduction investment” means an investment in support of eligible projects or actions that reduce, prevent, or remove from the atmosphere the emissions of greenhouse gases in the state of {state}. An eligible project or action includes, but is not limited to, investment in or purchase of the emissions reductions attributable to the following:

(a) conservation measures exceeding the avoided cost of power;

(b) installation of electric vehicle chargers and related infrastructure;

(c) installation of infrastructure to provide compressed natural gas, liquefied natural gas, and renewable natural gas for motor vehicles, locomotives, and marine vessels;

(d) the fuel conversion of state ferries to liquefied natural gas;

(e) demand side management of electricity consumption;

(f) energy storage technologies; and

(g) carbon sequestration programs.

3. “Greenhouse gas” means carbon dioxide (CO2), methane (CH4), nitrogen trifluoride (NF3), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and other fluorinated greenhouse gases.

4. “Qualifying utility” means an electric utility serving customers in the state of {state} that is required to comply with the {renewable portfolio standard}.

5. “Renewable energy credit” means a tradable certificate of proof of at least one megawatt- hour of an eligible renewable resource. The certificate includes all of the nonpower attributes associated with that one megawatt-hour of electricity.

6. “{Renewable portfolio standard}” is the regulatory mandate in {state} requiring the increased production of electricity from renewable sources.

7. “{State public utilities commission}” is the governing body charged with regulating the rates and services of a public utility.

Section 2. Incentives for Carbon Reduction Investments.

1. Beginning {date}, a qualifying utility may use carbon reduction investments for compliance with the {renewable portfolio standard}.

a. For the purposes of complying with an annual target, one-half metric ton of carbon dioxide equivalent emissions reduced, prevented, or removed from the atmosphere is equal to the compliance equivalent of one renewable energy credit.

b. Each compliance equivalent under this subsection must be recognized by the {state public utilities commission} or {auditor} for each year that the emission reduction is certified to persist.

c. The determination and certification of emissions reductions must be measured, verified, and documented by a third-party expert retained by the qualifying utility.

d. Emissions reductions under this section that are certified to persist for longer than one year may be carried forward and applied as compliance equivalents in future years.

2. Beginning {date}, a qualifying utility is considered in compliance with an annual target if it invests at least one percent of its total annual retail revenue requirement for that year in carbon reduction investments.

a. Each compliance equivalent under this subsection must be recognized by the {state public utilities commission} or {auditor} for each year that the emission reduction is certified to persist.

b. The determination and certification of emissions reductions must be measured, verified, and documented by a third-party expert retained by the qualifying utility.

c. Emissions reductions under this section that are certified to persist for longer than one year may be carried forward and applied as compliance equivalents in future years.

d. A qualifying utility using the alternative compliance path in this subsection shall resume meeting the annual targets as per the {state’s renewable energy mandate} on a time frame comparable in length to what it would have been before using this compliance path.

Section 3. {Severability clause.}

Section 4. {Repealer clause.}