Comments RPakhurst has made

PG&E's ClimateSmart Program

Dear Joe,

Several mutual friends and colleagues forwarded me your blog on ClimateSmart^TM and I have the utmost respect for your work. However, your posting has a number of inaccuracies and I am writing to clarify how PG&E designed and plans to implement the ClimateSmart program.

We conceived of ClimateSmart during our January 24, 2006 testimony (https:/www.pge.com/regulation/ClimateProtectionTariff/Testimony/PGE/2006-01-Fwd/ClimateProtectionT ariff_Test_PGE_20060124-01.pdf) before the California Public Utilities Commission (CPUC):
"PG&E's voluntary [program] is designed to be the proverbial "icing on the cake," supplementing other programs and policies that address climate change." (page 1-2)

That means ClimateSmart must be understood in the context of PG&E and California's ambitious energy and climate change policies.

• As a world leader in energy efficiency, we are investing $1 billion in enhanced energy-efficiency programs from 2006 to 2008. (http://www.pge.com/about_us/environment/features/energy_e ...)

• PG&E delivers some of the cleanest electric power of any major electric company in the United States. And we are aggressively adding renewable electric power resources to our energy portfolio. (http://www.pge.com/about_us/environment/features/clean_en ...)

• We are committed to leading by example when it comes to climate change. (http://www.pge.com/about_us/environment/features/climatec ...)

Numerous organizations sent in letters during the extensive CPUC regulatory proceedings on ClimateSmart, including Environmental Defense, Small Business California, and the Natural Resources Defense Council.  Here is a link to those letters (https:/www.pge.com/regulation/ClimateProtectionTariff/Testimony/PGE/2006-01-Fwd/ClimateProtectionT ariff_Test_PGE_20060606-01.pdf).

Since the unanimous approval of the program by the CPUC, here is a sampling of what climate change policy leaders have said:

"ClimateSmart, combined with energy efficiency and solar power, can shrink our climate footprint. We hope that ClimateSmart can play an integral role in helping San Francisco meet our aggressive greenhouse gas emissions reduction goals."
-- Jared Blumenfeld, Director, Department of the Environment, City and County of San Francisco

"ClimateSmart's focus on transparency, accountability, and environmental protection provides a great example for all carbon offset programs."
-- Diane Wittenberg, President, California Climate Action Registry

"The Climate Group congratulates PG&E for its ongoing leadership to address global warming through programs such as ClimateSmart. The company's actions are serving to educate and deepen community awareness of the issue, while providing an opportunity for the general public to take positive steps to reduce their carbon footprint."
-- Mark Kenber, Policy Director, The Climate Group

"We can prevent the most devastating consequences of global warming, but only if we act swiftly and decisively to reduce global warming emissions. By meeting strict standards for offsets, the ClimateSmart program will engage individuals and businesses as part of the solution in the fight on global warming."
-- Karen Douglas, Director, California Climate Initiative, Environmental Defense

"NRDC today reaffirms its view that the ClimateSmart program is an effective way for PG&E customers to invest individually in rigorously verified environmental benefits, even as we continue to emphasize (like PG&E itself) that voluntary measures are complementary to the mandatory measures that are needed to meet the challenge of global warming."
-- Luke Tonachel, Energy Program Analyst, Natural Resources Defense Council

"I am delighted to see the PG&E ClimateSmart program opening to enrollment, and intend for our family to sign up right away. Voluntary programs such as ClimateSmart illustrate the opportunities that exist to address global warming, and the power of individuals to send a message that personal action is both possible and significant."
-- Dan Kammen, Professor in the Energy and Resources Group, in the Goldman School of Public Policy, and Director of the Renewable and Appropriate Energy Laboratory, University of California, Berkeley

Our partners joined with us to debate the challenges of the voluntary carbon market.

On June 28, when the program was launched (http://www.pge.com/news/news_releases/q2_2007/070628.html ...), we held a symposium called "Voluntary Carbon Offset Programs: A License to Pollute or a Climate Change Remedy?"  This program featured the views from:

• Ricardo Bayon, Director, Ecosystem Marketplace and Author of Voluntary Carbon Markets

• Cheri Chastain, Sustainability Coordinator, Sierra Nevada Brewing Company

• Eric Holst, Manager, Center for Conservation Incentives, Environmental Defense

• Dan Kammen, Professor, Energy and Resources Group, in the Goldman School of Public Policy, and Director, Renewable and Appropriate Energy Laboratory, University of California at Berkeley

• Peter Liu, Initial Founder and Vice-Chairman, New Resource Bank

• Wendy Pulling, Director, Environmental Policy, PG&E

• Laurie Wayburn, Co-Founder and President, Pacific Forest Trust

• Diane Wittenberg, President, California Climate Action Registry

Through ClimateSmart, PG&E will be purchasing greenhouse gas emissions reductions through a formal, competitive process.

We are investing 100% of the ClimateSmart payments toward new GHG emission reduction projects in California.  

On June 28 we initiated a competitive process (http://www.pge.com/about_us/environment/features/climates ...) to select the projects in which we will invest.  The process is based on PG&E's best practice of renewable and conventional energy purchasing process. We are currently in the process of collecting those offers and will select the projects later this year. Eligibility for the ClimateSmart competitive bid process requires that Projects meet the stringent requirements of either the Forest Project Protocol (http://www.climateregistry.org/docs/PROTOCOLS/Forestry/Fo ...) or Livestock Project Reporting Protocol (http://www.climateregistry.org/docs/PROTOCOLS/CCAR_Livest ...) of the California Climate Action Registry (http://www.climateregistry.org/) (Registry).  It is designed to include other types of GHG emission reduction projects as the Registry completes and adopts a broader range of project measurement protocols.  

PG&E is applying stringent additionality requirements.

Additionality is most commonly defined as doing something that wouldn't have been done under a "business as usual" condition.  While that is a simple principle, most people involved in quantifying GHG emissions reductions agree that it is complicated to implement.  In order to quantify these reductions, PG&E is applying two additionality tests to projects submitting bids to our request - regulatory additionality and financial additionality.  

By following the stringent Registry protocols, we are ensuring regulatory additionality.  The Registry's Forest Project Protocol (http://www.climateregistry.org/docs/PROTOCOLS/Forestry/Fo ...) states that "Project Developers are required to describe their project activity and explain how their project activity exceeds, or is additional to, the baseline qualitative characterization, including any mandatory statutes or regulations used to characterize the project baseline." (page25)

In addition to the Registry additionality requirements, PG&E - as a part of our competitive solicitation process (http://www.pge.com/about_us/environment/features/climates ...) - is requiring every bidder to specify exactly how ClimateSmart funding would be used for new projects. This is our financial additionality test. In our request for offers we state that we "will require all ClimateSmart Projects to provide evidence that but for ClimateSmart funds, the Project that generates the Registry-certified GHG emission reductions would not have occurred."  (page 9)

As you indicated in the Salon.com article that you referenced in your post, people should not invest in carbon offset program if they don't meet basic additionality standards.  PG&E won't invest in them and neither should anyone else.  The pictures of the van Eck and Garcia River forests are just examples of the projects that are going through the Registry certification process.  They may or may not qualify for the PG&E program based on their response to the competitive bid process.  You blog has shown us that the van Eck picture may be confusing, so we will take a fresh look at how we caption that photo to make sure that we are being as clear as possible.

Accountability and transparency are key aspects of this program.

With ClimateSmart, our goal is to create a voluntary GHG emission reduction program with the highest standards of accountability and transparency. In developing the program, we worked with regulators, key environmental groups, and other stakeholders to create this process, incorporating a wide variety of best practice oversight and verification measures.  Some of the measures we have put in place to reach these high standards are:

• Limiting investments to projects with an approved project protocol from the Registry and accepted by the CPUC

• Seeking ongoing feedback and input from an External Advisory Group (http://www.pge.com/about_us/environment/features/external ...) of respected community, environmental, business, and government leaders

• Requiring that all emission reductions for the selected projects are independently certified and registered with the Registry

• Permanently retiring all of ClimateSmart's certified GHG emission reductions, which means they cannot be used by PG&E or anyone else for any other purpose

• Requiring an independent, annual program audit and regularly reporting the results to the CPUC and enrolled customers

Voluntary programs are only part of the solution.

As stated by Peter Darbee, Chairman, CEO and President of PG&E Corporation before the U.S. Senate Committee on Environment and Public Works on June 28 (http://epw.senate.gov/public/index.cfm?FuseAction=Files.V ...), PG&E believes:

"Voluntary programs alone are insufficient and will not send the appropriate price signal to U.S. industry to make a measurable impact on global climate change.  Only a mandatory, national reduction program is capable of stimulating sustained action and investment on the scale required to meaningfully reduce emissions and establish the U.S. as a leader in the response to global climate change."

Consistent with our policy position on mandatory regulation, in 2006, PG&E joined with other leading businesses and environmental nongovernmental organizations as part of the U.S. Climate Action Partnership (http://www.us-cap.org/) to develop a set of policy principles and a legislative framework for a federal, market-based, mandatory climate change program.

And, while we prefer a national approach to addressing climate change, we also recognize the important role that states can play--in terms of acting as a catalyst for federal legislation, bringing forth innovative ideas and approaches to tackle the complexities of the issue, and making progress toward combating climate change. That is why we worked constructively with the California legislature and the Administration to enact AB 32 (Nunez/Pavely), the Global Warming Solutions Act, and were the first major utility to support its passage.

We also supported passage of SB 1368 (Perata), which requires that all power sold to utilities in the state under long-term contracts meet a GHG emissions performance standard that is equivalent to that of an efficient, combined-cycle natural gas plant. Implementation of these two pieces of legislation will ensure that California continues on a path of reducing its overall carbon footprint and challenging its businesses to do the same.

The ClimateSmart program was designed as a demonstration program to provide customers with an option to mitigate the GHG emissions associated with their own energy use.  When mandatory GHG regulations are about to be implemented, PG&E will re-evaluate the program and determine if it should be ended or modified to ensure consistency with any such new mandates.

We look forward to continued discussion on these important topics and would welcome the opportunity to discuss ClimateSmart, as well as PG&E's broader commitment to climate change, with you personally the next time you are in San Francisco.

Kind Regards,

Robert Parkhurst
Pacific Gas and Electric Company
ClimateSmart Manager On Breaking all the offset rules posted 2 years, 4 months ago 16 Responses