In a report released in September, the U.S. Federal Energy Regulatory Commission (FERC) proposed a policy statement to clarify that it has jurisdiction over organized wholesale electric market rules that incorporate a state-determined carbon price in those markets, reports Reuters.
FERC said the policy statement seeks to encourage regional electric market operators to explore and consider the benefits of establishing such rules.
“As states actively seek to reduce greenhouse gas emissions within their regions, carbon pricing has emerged as an important, market-based tool that has wide support from across sectors,” FERC Chairman Neil Chatterjee said in a statement.
“The Commission is not an environmental regulator, but we may be called upon to review proposals that incorporate a state-determined state carbon price into these regional markets.”
The rules could “improve the efficiency and transparency of the organized wholesale markets by providing a market-based method to reduce (greenhouse gas) emissions,” Chatterjee said.
States are taking the lead in efforts to address climate change by adopting policies to reduce their greenhouse gas emissions.
Currently, 11 states impose some version of carbon pricing, and FERC-regulated regional markets are examining this approach, FERC said.
Analysts at ClearView Energy Partners LLC noted, however, that FERC Commissioner James Danly contended that issuing a policy statement was “unnecessary and unwise” at this time.
Danly asserted that it would be better for FERC to wait to be in receipt of a actual proposal, and considered it “premature” for the Commission to “opine” on jurisdictional issues before then, ClearView said.
*update The Trump administration demoted Chatterjee and elevated the other Republican commission member, James Danly, to become chairman.
