EEI announced an updated framework Wednesday designed to reinforce its commitment to supporting appropriate federal climate change legislation and set forth numerous recommendations for achieving significant emission reductions while minimizing compliance costs for customers. The framework proposes an 80% reduction from current emission levels by 2050, but notes that, in the near term, reductions should be achieved through energy efficiency and renewable energy, while longer-term targets will require deployment of new nuclear and new clean coal technologies.
The framework focuses primarily on a “cap-and-trade” approach to reducing greenhouse gas emissions and proposes initially allocating 40% of the allowances in a cap-and-trade program to the electricity industry, equal to its current share of U.S.-based carbon emissions. The framework recognizes that a gradual transition to an auction-based system may be appropriate in the future, but also recommends a “price collar,” consisting of a firm price ceiling and floor. Although the framework indicates a preference for a cap-and-trade approach, EEI states that it remains open to tax-based or hybrid approaches as well.