Design of a Cap on Emissions from California Power Demand

work as well as many substantive comments. Matthew Ogonowski, a Policy Analyst at the Center for Clean Air Policy, conducted supporting research and contributed to sections of the paper. We would also like to thank the California stakeholders and other experts who provided detailed comments on earlier drafts of this paper, including paper is intended to examine the potential design of policy options to reduce greenhouse gas (GHG) emissions from both in-state and out-of-state power sources, including the possible design of a cap-and-trade system for California. This paper also supports one of the primary recommendations resulting from the West Coast Governors' Global Warming Initiative that the States of California, Washington and Oregon work together to examine the need to develop a regional market-based carbon allowance program. 1 This paper addresses the strong interest in the specifics of alternative policy designs among California state agencies and interested stakeholders, including the members of the Energy Commission's Climate Change Advisory Committee. The paper evaluates alternative cap-and-trade policy designs for both imported power and in-state power resources and examines three alternatives in the California context: 1) multi-state approaches; 2) emission portfolio standards; and 3) caps on emissions associated with power demand. Lastly, the paper describes how the third option, the cap on emissions associated with power demand, might be designed.