One of the biggest sticking points in the Western Climate Initiative (WCI) has been the question of “Scope”—which emissions get included in the cap and trade program. Most public interest organizations argue for a broad cap that includes all the major sources of emissions that can be reliably measured and regulated. (Sightline’s argued this here, here, here, and here.) And the biggest source of emssions, of course—the biggest by far—is transportation fuel.
Somewhat surprisingly, the debate about including petroleum is not a greens versus businesses standoff. In truth, most of the participating businesses and utilities are on the same page about Scope: they want it to be comprehensive. But this important agreement gets too often overlooked.
So, I’m setting the record straight here with a list of Western utilities and businesses already on record for a genuinely economy-wide cap (i.e. one that includes transportation fuels):
Alcoa, Boise Cascade, Chelan County Public Utility District, Clark Public Utilities, Florida Power & Light, Grant County Public Utility District, Independent Energy Producers Association, Industrial Customers of Northwest Utilities, Oregon Business Association , Oregon Forest Industries Council, Oregon Municipal Electric Utilities Association, Oregon’s Public Utility Commission, Pacific Gas and Electric Company, Pacific Northwest Generating Cooperative, Portland General Electric, Oregon’s Public Power Council, Puget Sound Energy, Sempra Energy, Southern California Edison, Tucson Electric Power Company, Washington Public Utility Districts Association, WEST Associates Members (including Arizona Electric Power Cooperative, Arizona Public Service, Colorado Springs Utilities, Idaho Power Company, Basin Electric Power Coop, Los Angeles Department of Water and Power, Pacificorp, Platte River Power Authority, Xcel Energy/PSCo, Public Service Company of New Mexico, Salt River Project, Sierra Pacific Power, Southern California Edison, Tri-State Generation and Transmission, and Tucson Electric Power), and Weyerhaeuser. [You can find their written comments here, here, and here.]
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Now, not all business support capping transportation fuels. Chevron, BP, Western States Petroleum, and a few allies oppose it, while other businesses have either not participated in the WCI process or have simply remained silent on the subject. But the support for a broad scope constitutes a pretty strong majority.
So what’s going on? Why do the vast majority of utilities (and those who rely on utilities) support including transportation fuels? Simply put: it’s in their self-interest.
Most of these utilities believe that including transportation fuels reduces the risk of price spikes for carbon permits. In low-hydro years—when clean electricity gets scarce, and when utilities need dirtier power that requires carbon permits — it will be an advantage to have permits available from sectors that are largely price-independent of electricity. These sectors inlude consumer natural gas and, most importantly, the transportation sector.
Plus, many of the utilities feel that there’s just something unfair about including only a small share of the region’s emissions under an enforceable cap, while allowing the much larger transportation sector to wriggle out. I can’t say I blame them.
Absent the cap, WCI would likely try to address transportation sector emissions with “complementary policies,” such as VMT strategies and vehicle efficiency programs. Many of these policies are fine ideas, but ultimately, a cap is a cheaper way to go. Because we can’t predict the future, a truly economy-wide cap makes the most sense. It ensures that the cheapest and easiest reductions get made first, regardless of where opportunities arise.