Illinois Climate Change Proposal:
New Unit Analysis
A-II METHOD TO DETERMINE IL EGU CAPS
This section outlines the procedure used to determine the CO2 EGU caps under
the IL Climate Change Proposal (ILCCP) for the years 2012 and 2020 for new coal-fired
generating sources. As discussed in Policy Paper #16 – State Level Cap and Trade
Program, the 2020 CO2 cap for covered emissions at 1990 levels is approximately 72.6
million metric tons of CO2e, which was assumed to be the end point or 2020 cap.
The initial task was to determine the 2012 CO2 cap for covered emissions, since
there is no published level. The 2012 CO2 cap is based upon 2011 emissions for covered
sources and the cap is reduced gradually each year until the 2020 cap, based upon 1990
emissions, is achieved. It should be noted under McCain-Lieberman (S. 280), the caps
between 2012 and 2019 remain constant, based upon 2004 emission levels, and do not
drop to 1990 levels until 2020. The first step was to determine the level of IL 2011 CO2e
emissions. The document entitled Illinois Greenhouse Gas Emissions Inventory and
Projections (February 22, 2007), indicated in Table 6, that IL 2011 CO2e emissions
would be 296,396,000 metric tons. The next step was to determine the fraction of these
2011 emissions that would be covered under the ILCCP. This estimation was based upon
data on 2005 covered CO2e emissions contained in Table 1 of Policy Paper #16.
According to Table 1, estimated covered CO2e emissions in 2005 were 108,022,143
metric tons. Dividing this by the state’s 2005 projected CO2e emissions of 279,915,000
metric tons (from Table 6 Greenhouse Gas Inventory) yields a covered fraction of
0.3859. Assuming this fraction of 0.3859 of covered emissions to total state emissions
remains constant through 2011 this would yield a 2012 CO2e emission cap of
114,379,000 metric tons.
The second task was to determine what fraction of this cap that would be
allocated to EGUs as part of the 15 percent “gratis” allocation to covered sources.
Therefore, both the 15 percent gratis allocations to covered sources were determined
from both 2012 (114.4 million metric tons) and 2020 (72.6 million metric tons) state
emission caps. This calculation yielded “gratis” allowances to covered sources of
17,157,000 metric tons in 2012 and 10,890,000 metric tons in 2020. The next step was to
determine what fraction of these total “gratis” allowances would be allocated to the
state’s electric generating sector. Again, Table 1 of the Policy Paper #16 allows us to
compute a 2005 fraction of electric generating sector (93.9 million metric tons) to total
covered (108.0 million metric tons) emissions. This calculation yields a fraction of
0.8697, and assuming this fraction remains constant through 2020, the following
estimated “gratis” allowance allocations for EGU under the ILCCP Cap-and-Trade Policy
are presented in Table A-2 for the years 2012 to 2020.
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