Development of Climate Challenge

Climate Challenge Options Workbook

Utility Commitments

Climate Challenge is a joint initiative of the U.S. Department of Energy (DOE) and the electric utility industry to voluntarily reduce greenhouse gas emissions. The initiative, announced as a foundation action under the Climate Change Action Plan, is part of the United States' initial response to the 1992 Framework Convention on Climate Change, which aims for the stabilization of greenhouse gas emissions to 1990 levels by the year 2000. The basis of the program is described in an April 20, 1994, Memorandum of Understanding (MOU) between DOE and representatives of the nation's electric utility industry:

• Edison Electric Institute;
• American Public Power Association;
• National Rural Electric Cooperative Association;
• Large Public Power Council; and
• Tennessee Valley Authority.

The Program consists of voluntary commitments by electric utilities to undertake actions to reduce, avoid, offset, or sequester greenhouse gas emissions. These commitments are formalized in individual utility Participation Accords for large utilities and in Letters of Participation for small utilities. DOE provides technical information and support, reports on the progress of the program, and provides public recognition to utility participants. The types of commitments are broad enough that any utility can participate, regardless of size, type or amount of generation, resource mix, or load growth.

In his October 1993 Climate Change Action Plan (CCAP), President Clinton launched the Climate Challenge program. Following this action, the electric utility industry and DOE entered into intensive consultations, forming several working groups to develop a Memorandum of Understanding (MOU) and a comprehensive set of options to implement the program. This work culminated in the signing of the Climate Challenge MOU on Earth Day 1994 with Vice President Gore in attendance and the publication of the Climate Challenge Options Workbook in October 1994. These items, along with a set of industry sponsored initiatives, form the basis of the program. While the MOU is between DOE and the national electric trade organizations, the program itself is implemented through agreements with individual utilities. Participation by the trade associations and by individual electric utilities assures the continued involvement of the entire electric utility industry. The Climate Challenge MOU consists of:

• a set of guiding principles;
• actions to be taken by the electric utility industry;
• actions to be taken by DOE; and
• a set of general provisions.

Three exhibits are attached as part of the MOU: (1) A list of industry initiatives to reduce greenhouse gas emissions; (2) model accounting protocols; and (3) a list of actions that DOE committed to undertake to facilitate the reduction, avoidance, and sequestration of greenhouse gas emissions. The MOU sets out eight guiding principles:

• the program is voluntary and flexible enough to embrace a wide range of actions;
• the program includes not only actions by individual utilities but also industry-wide initiatives;
• utility actions will often be taken for business and other reasons but will have the effect of reducing net greenhouse gas emissions;
• utility actions may involve other sectors (e.g., electrotechnologies, forestry) and may occur outside of utility facilities;
• utility actions will be cost-effective and will take into consideration effects on ratepayers, shareholders, and the competitive situation facing a utility;
• reporting and accounting procedures used in Climate Challenge will be consistent with the guidelines established to implement Sec. 1605(b) of the Energy Policy Act of 1992 (EPAct) concerning the voluntary reporting of greenhouse gas emissions;
• DOE will work with other Federal agencies to reduce barriers to utility activities which reduce net emissions; and
• utility participants will periodically report on individual progress and the obstacles that they have encountered.
• The MOU has two sets of actions that the electric utility industry agrees to undertake: (1) each industry signer of the MOU agrees to designate a representative to the Climate Challenge program; and (2) each utility participant in Climate Challenge agrees to sign an individual agreement with DOE that contains a set of core elements. There are three core elements that a participation agreement must contain:
• commitments to reduce, avoid or sequester greenhouse gases;
• a commitment to report annually on activities and achievements in a format consistent with the guidelines for voluntary reporting of greenhouse gas emission reductions established in Sec. 1605(b) of EPAct; and
• a commitment to confer periodically with DOE to jointly evaluate the utility's progress under the accord, and discuss possible adjustments.

As part of the Climate Challenge process, the electric utility industry and DOE jointly developed the Climate Challenge Options Workbook. This effort was an important part of engendering cultural change throughout the utility industry and the government. The Workbook, which was first published in October 1994, identifies over fifty categories of activities that utilities can undertake to cost-effectively reduce, avoid, or sequester greenhouse gas emissions. The categories of options cover all areas of end-use programs, generation technologies, transmission, distribution, and other actions. Numerous utility-specific case studies illustrate utilities' successful implementation of these options.

The Workbook also identifies potential barriers associated with the implementation of some of the options. These barriers may include technological feasibility, cost, legal and regulatory issues, public concerns, and other factors. Ideas for ways to overcome the barriers are also included in the Workbook. The Workbook includes an appendix containing bibliographic material from DOE, the U.S. Environmental Protection Agency (USEPA), and the Electric Power Research Institute (EPRI). The value of the Workbook goes beyond the information it contains, as it serves as an early demonstration that DOE and the electric utilities can successfully work together in collaborative efforts.

Web access:

Climate Challenge MOU

Climate Challenge Workbook

The Climate Challenge Participation Accords and Letters of Commitment

The essence of the Climate Challenge program is the commitments that have been made by utility participants. These commitments are formalized in individual utility Participation Accords for larger utilities, and through Letters of Participation for utilities having less than 50,000 customers.

Most utilities have made commitments to undertake specific projects or actions to reduce greenhouse gas emissions, including: efficiency improvements in generation and end-use, distribution, transmission; increased use of energy efficient electrotechnologies; fuel switching to lower carbon fuels such as natural gas; increased generation using non-carbon sources such as renewable energy and nuclear power; transportation actions including greater use of natural gas powered and electric vehicles; forestry actions such as tree planting; recovery of methane from landfills and coal seams; and the use of coal fly-ash as a portland cement replacement.

Eleven Climate Challenge utilities have made commitments to achieve specific emission levels. Seven utilities have committed to emissions below their 1990 baselines in the year 2000. Two utilities in Florida, experiencing strong demand growth, have committed to reduce emission rates (per kWh) to or below their baseline rate. Two additional utilities have committed to make reductions of specified tonnage below a modified reference case which projects what emissions would have been in the year 2000 without involvement in the Climate Challenge program.

Several utilities have forged cooperative ties with environmental groups, such as the Nature Conservancy, as part of their Climate Challenge activities. For example, environmental groups may monitor a utility's progress or serve as partners in a specific project. Such efforts are helping to effect a culture change for including global climate concerns in corporate planning and operations.

TABLE OF CONTENTS

SECTION II: CLIMATE CHALLENGE ACHIEVEMENTS

Please send comments to:
Lawrence.Mansueti@hq.doe.gov