Climate change action plan

              Table of Contents



Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i Climate Change Advisory Group Membership . . . . . . . . . . . . . . . . . . . . . . . . . .ii Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .E1







Chapter 1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1



Executive Order 2005-02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 The CCAG Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Emissions Inventory and Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Overview of the Policy Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Summary of the Recommended Individual Policy Options . . . . . . . . . . . . . . . .9 Cross-Cutting (CC) All Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Residential, Commercial, Industrial (RCI) and Waste Management Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Energy Supply (ES) Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Transpor tation and Land Use (TLU) Sector Recommendations . . . . . . . . . . .14 Agriculture (A) and Forestry (F) Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Policy Option Rankings by Reductions and Savings/Costs . . . . . . . . . . . . . . .17 CCAG Recommended Policy Options by Sector . . . . . . . . . . . . . . . . . . . . . . . .20







Chapter 2 Impacts of Climate Change . . . . . . . . . . . . . . . . . . . . .25



Impacts in Arizona and the West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27







Chapter 3 Greenhouse Gas Emissions Inventory and Reference Case Projections, 1990-2020 . . . . . . . . . . . . . . . . . . 29



Arizona Greenhouse Gas (GHG) Emissions: Sources and Trends . . . . . . . . .30 A Closer Look at the Two Major Sources: Electricity and Transportation . . . .32 Reference Case Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Key Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37







Chapter 4 Goals and Cross-Cutting Issues . . . . . . . . . . . . . . . . . .39



Overview of Cross-Cutting Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Key Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Overview of Policy Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Cross-Cutting (CC) All Sectors Policy Descriptions . . . . . . . . . . . . . . . . . . . . . .39







Chapter 5 RCI and Waste Management . . . . . . . . . . . . . . . . . . . . 45



Overview of GHG Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Key Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Overview of Policy Recommendations and Estimated Impacts . . . . . . . . . . .47 RCI and Waste Management (RCI) Sector Policy Descriptions . . . . . . . . . . . .50







Table of Contents



Chapter 6 Energy Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57



Overview of GHG Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Key Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Overview of Policy Recommendations and Estimated Impacts . . . . . . . . . . .59 Energy Supply (ES) Sector Policy Descriptions . . . . . . . . . . . . . . . . . . . . . . . .63







Chapter 7 Transportation and Land Use . . . . . . . . . . . . . . . . . . .67



Overview of GHG Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Key Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Overview of Policy Recommendations and Estimated Impacts . . . . . . . . . . .68 Transpor tation and Land Use (TLU) Sector Policy Descriptions . . . . . . . . . . .70







Chapter 8 Agriculture and Forestry . . . . . . . . . . . . . . . . . . . . . . . . 77



Overview of GHG Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77 Key Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 Overview of Policy Recommendations and Estimated Impacts . . . . . . . . . . .79 Agriculture and Forestry (AF) Sectors Policy Descriptions . . . . . . . . . . . . . . .81







Appendices



A. B. C. D. E. F. G. H. I. J. Executive Order 2005-02 Description of the CCAG Process List of Technical Work Group Members Greenhouse Gas Emissions Inventory and Reference Case Projections 1990-2020 Center for Climate Strategies Memo: Methods for Quantification and Analysis Cross-Cutting Issues - detailed policy description/analysis RCI, and Waste - detailed policy description/analysis Energy Supply - detailed policy description/analysis Transpor tation and Land Use - detailed policy description/analysis Agriculture and Forestry - detailed policy description/analysis







Acknowledgements



The Climate Change Advisory Group gratefully acknowledges the following individuals and organizations who contributed significantly to the successful completion of the CCAG process and publication of this Climate Change Action Plan: Thomas D. Peterson and The Center for Climate Strategies, whose dedicated team of professionals contributed extraordinary amounts of time, energy and expertise in facilitation of the CCAG process and preparation of the CCAG's documents and recommendations: Alison Bailie Maureen Mullen Kenneth Colburn Stephen Roe Karl Hausker Adam Rose Michael Lazarus Will Schroeer Lewison Lem David von Hippel Holly Lindquist Eric Williams Kur t Maurer, of the Arizona Department of Environmental Quality, who coordinated and supervised all activities associated with the CCAG process on behalf of ADEQ, including overseeing the writing and production of this Climate Change Action Plan. Special thanks goes as well to the following ADEQ employees, whose excellent service and commitment helped ensure an open, public process that suppor ted the CCAG's work and its recommendations: Brian Davidson Nancy Wrona Marnie Greenbie Ira Domsky Thomas Marcinko Philip Amorosi Lynn Ott Scott Baggiore Steven Peplau Emily Bonanni Randy Sedlacek Amber Chapa Cor tland Coleman The CCAG also acknowledges David M. Esposito, formerly of ADEQ, whose effor ts contributed to the successful formation of the CCAG, and Joseph Mikitish of the Arizona Attorney General's Office, who served as legal counsel to the CCAG. A very special "thank you" goes to Cinda Briggs, George Copeland, Ray Palmer, Kate Widland and other staff at the Salt River Project who graciously allowed the use of their conference room facilities for CCAG meetings and provided other support for the CCAG's public meetings. Finally, the CCAG recognizes the many individuals who participated in the CCAG's sector-based Technical Work Groups. For a complete listing of these individuals by work group, see Appendix C.







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Climate Change Advisory Group Membership



Sandy Bahr Conservation Outreach Director Sierra Club Grand Canyon Chapter David Berry Vice President Public Affairs Swift Transportation Mike Boyd Director Western Wind Energy Roger Clark Director Air and Energy Program Grand Canyon Trust Margaret Cook Director Department of Environmental Quality Gila River Indian Community James W. Crosswhite Rancher EC Bar Ranch Nutrioso, AZ Dannion Cunning President and Chief Executive Officer Lake Havasu City Convention & Visitors Bureau Cosimo De Masi Manager Corporate Environmental Services Tucson Electric Power Kara Downey Manager Environmental, Safety and Health Services Arizona Electric Power Cooperative Rob Elliott Arizona Raft Adventures Kirsten Engel Professor of Law James E. Rogers College of Law University of Arizona Stephen Etsitty Director Environmental Protection Agency Navajo Nation Edward Fox Vice President Communications, Environment and Safety Pinnacle West/ Arizona Public Service Grady Gammage, Jr. Attorney Gammage & Burnham PLC Steve Gatewood Director Greater Flagstaff Forest Partnership Richard Hayslip Assistant General Manager Environmental, Land, Risk Management and Telecom Salt River Project Jim Henness Farmer Casa Grande, AZ Jeff Homer Environmental, Health and Safety General Dynamics Kevin Kinsall Vice President Government Relations Phelps Dodge Ursula Kramer Director Pima County Department of Environmental Quality Willis Martin Vice President Land Acquisition Pulte Homes and Communities of Del Webb R. Glenn McGinnis Chief Executive Officer Arizona Clean Fuels Yuma, LLC Tim Mohin Director Sustainable Development Intel Corporation Don Netko Director, Arizona Site Services, Issues Management and Corporate EHS Freescale Semiconductor Karen O'Regan Manager Environmental Programs City of Phoenix Steve Owens Director Arizona Department of Environmental Quality Bill Pfeifer President and Chief Executive Officer American Lung Association of Arizona Suzanne Pfister Vice President Marketing, Communications and Public Relations St. Joseph's Hospital Bobby Ramirez Manager Cultural and Environmental Services Salt River Pima-Maricopa Indian Community Jeff Schlegel Arizona Representative Southwest Energy Efficiency Project George Seitts Director Arizona Department of Weights and Measures Sean Seitz President Arizona Solar Energy Industry Association Thomas Swetnam Professor Laboratory of Tree-Ring Research University of Arizona Penny Allee Taylor Administrator Corporate Public Affairs Southwest Gas Corporation Richard W. Tobin II Attorney Lewis and Roca LLP







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Executive Summary



Executive Order 2005-02



On February 2, 2005, Governor Janet Napolitano signed Executive Order 2005-02 establishing the Climate Change Advisory Group (CCAG). Appointed by the Governor, the 35-member CCAG comprised a diverse group of stakeholders who brought broad perspective and expertise to the topic of climate change in Arizona. The Governor's Executive Order directed the CCAG, under the coordination of the Arizona Department of Environmental Quality (ADEQ), to: 1) prepare an inventory and forecast of Arizona greenhouse gas (GHG) emissions; and 2) develop a Climate Change Action Plan with recommendations for reducing GHG emissions in Arizona. The Executive Order emphasized that "Arizona and other Western States have particular concerns about the impacts of climate change and climate variability on the environment, including the potential for prolonged drought, severe forest fires, warmer temperatures, increased snowmelt, reduced snow pack and other effects." The Executive Order also recognized that "actions to reduce GHG emissions, including increasing energy efficiency, conserving natural resources and developing renewable energy sources, may have multiple benefits including economic development, job creation, cost savings, and improved air quality."







The CCAG Process



The CCAG held its first meeting on July 14, 2005, followed by a year of intensive fact-finding and consensus building, facilitated by the Center for Climate Strategies (CCS). The CCAG met six times during this period, and five sector-based technical work groups (TWGs) of the CCAG -- Energy Supply (ES); Residential, Commercial, Industrial and Waste Management (RCI); Transpor tation and Land Use (TLU); Agriculture and Forestry (AF); and CrossCutting Issues (CC) ? met a total of 40 times via teleconference. The recommendations adopted by the CCAG underwent two levels of screening. First, a potential policy option being considered by a TWG was accepted as a "priority for analysis" and developed for full analysis only if it had a supermajority of support from CCAG members (with a "supermajority" defined as five or fewer "no" votes or objections). Second, after the analyses were conducted, only policy options that received at least majority support from CCAG members were adopted as recommendations by the CCAG and included in this report. Of the 49 policy recommendations adopted by the CCAG, 45 received unanimous consent, two (2) received a supermajority of support, and two (2) received a majority of support.







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Emissions Inventory and Forecast



Prior to the first meeting of the CCAG, a preliminary inventory and forecast of GHG emissions for Arizona for years 1990 through 2020 was produced pursuant to Executive Order 2005-02. The inventory provided several critical findings, including: ? Between 1990 and 2005 Arizona's net GHG emissions increased by nearly 56%, from an estimated 59.3 million metric tons carbon dioxide equivalent (MMtCO2e) to an estimated 92.6 MMtCO2e. ? Arizona's GHG emissions are forecasted to increase by 148% from 1990 to 2020, taking into account the effects of recent energy efficiency actions adopted by the State. Without these actions emissions growth in 2020 would be forecasted to increase by 159% over 1990 levels. ? The transportation and electricity sectors account for more than threefour ths ? roughly 77% -- of Arizona's total GHG emissions. Figure E-1 below shows the relative amount of GHG emissions contributed by each sector in 2000. Figure E-1 Arizona Greenhouse Gas (GHG) Emissions in 2000







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Figure E-2 below shows how Arizona's projected growth in GHG emissions compares to the growth rates in other states with climate action plans. Figure E-2 Comparison of 1990-2020 GHG Emissions Growth for States with Climate Plans







While Arizona's high emissions growth rate presents challenges, it also provides major opportunities. Because more than three-fourths of Arizona's GHG emissions are directly related to energy and transportation, the opportunity exists for Arizona to reduce its GHG emissions while continuing its strong economic growth by being more energy efficient, using more renewable energy sources, building new infrastructure "right" in the first place to produce lower GHG emissions and increasing the use of cleaner transportation modes, technologies and fuels.







The CCAG's Recommended Policy Options



The CCAG is recommending a comprehensive set of 49 policy options to reduce GHG emissions in Arizona. The CCAG strongly recommends early and aggressive implementation of the recommendations and a corresponding set of incentives to promote their early adoption. The CCAG believes that early action and implementation of its policy recommendations are critical to put Arizona quickly on the path toward significant emissions reductions. The CCAG also urges that the policy options be implemented as a set, to the greatest extent practicable, to achieve the maximum GHG emissions reductions possible. Overarching Recommendation: Set a State Goal to Reduce Arizona's GHG Emissions to 2000 Levels by 2020 and to 50% below 2000 Levels by 2040. As an overarching policy matter, the CCAG recommends that Arizona establish a statewide goal of reducing future GHG emissions to a level equal to 2000 emissions by the year 2020 and to 50% below the 2000 emissions level by the year 2040.







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The recommended goal for reductions in Arizona's GHG emissions reflects the CCAG's policy options recommendations. In fact, the CCAG's recommended policy options, if fully implemented, could reduce GHG emissions in Arizona by s ev e r a l million metric tons more than the amounts called for in the recommended goal. The CCAG's policy options could cut Arizona's GHG emissions by more than 69 MMtCO2e in 2020, reducing GHG emissions to more than five percent (5%) below the 2000 level. Cumulative GHG emissions reductions from 2007-2020 for all the policy options combined could total more than 485 MMtCO2e (adjusted for overlap to avoid double-counting of reductions). Figure E-3 below shows the annual GHG reductions that could be achieved by sector through the CCAG's recommended policy options from 2010 to 2020. As Figure E-3 illustrates, a significant portion of the achievable reductions are associated with energy efficiency and renewable energy policy options in the residential, commercial, and industrial sectors. Figure E-3 2010 through 2020 GHG Reductions, by Sector







AF ? Agriculture and Forestry TLU ? Transportation and Land Use ES ? Energy Supply RCI ? Residential Commercial Industrial (fuel use)







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The recommended goal for Arizona is consistent with the goals set by other states, including those in the West, that are implementing GHG reduction strategies:



AZ CA 2000 levels by 2020; 50 percent below 2000 levels by 2040 2000 levels by 2010; 1990 levels by 2020; 80 percent below 1990 levels by 2050 1990 levels by 2010; 10 percent below by 2020; 75 percent below by 2100 1990 levels by 2010; 10 percent below by 2020; 75 percent below by 2100 1990 levels by 2010; 10 percent below by 2020; 75 percent below by 2100 3.5 percent below 1990 levels by 2005 2000 levels by 2012; 10 percent below by 2020; 75 percent below 2050 5 percent below 1990 by 2010; 10 percent below 1990 levels by 2020 1990 levels by 2010; 10 percent below by 2020; 75 percent by 2050 1990 levels by 2010; 10 percent below by 2020; 75 percent by 2100 1990 levels by 2020; 70-80 percent below 1990 levels by 2050







CT MA ME NJ NM NY OR RI WA







(Puget Sound)







Reducing Arizona's GHG emissions to the recommended levels through full implementation of all of the CCAG's recommendations also would result in significant economic benefits for the state, including substantial economic cost savings, new job creation and enhanced economic development. The Center for Climate Strategies (CCS) has calculated overall net economic cost savings from the CCAG's recommendations of more than $5.5 billion between 2007-2020, with additional significant cost savings also expected between 2020-2040 (although not calculated by CCS). The CCS also has calculated an average net economic cost savings of nearly $13 per ton of GHG emisssions reduced under the CCAG's recommended policy options (if fully implemented).







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The Policy Options



The CCAG is recommending a comprehensive set of forty-nine (49) policy options: Cross-Cutting (CC) Issues The CCAG is recommending five (5) policy options to facilitate reductions in Arizona's GHG emissions across economic sectors and address issues associated with climate change. These policy options include: ? Set a State GHG Reduction Goal (as stated above) (CC-1) ? Establish a GHG Emissions Reporting Mechanism (CC-2) ? Establish a GHG Emissions Registry (CC-3) ? Under take Climate Action Education and Outreach (CC-4) ? Develop a State Climate Change Adaptation Strategy (CC-5) Residential, Commercial, Industrial and Waste Management (RCI) Sectors The CCAG is recommending a set of twelve (12) policy options to reduce emissions from the RCI sector, including improving energy efficiency, substituting lower-emissions energy resources, and strategies to reduce emissions from the production of electricity consumed by the RCI sector. The state's rapid growth and limited pursuit of energy efficiency to date offers particularly strong opportunities to reduce emissions through improving the efficiency of buildings, appliances and industrial practices. The RCI policy options include: ? Set Demand-Side Efficiency Goals and Establish Funds, Incentives, and Programs to Achieve Them (RCI-1) ? Establish State Leadership Programs to Achieve Energy Savings and Promote Clean Energy (RCI-2) ? Implement Enhanced Appliance Efficiency Standards (RCI-3) ? Adopt Building Standards/Codes/Design Incentives for Energy Efficiency and Smart Growth (RCI-4 & RCI 5) ? Encourage Distributed Generation of Renewable Energy and Combined Heat and Power (RCI-6 & RCI 7) ? Implement Electricity Pricing Strategies that Support Energy Conservation (RCI-8) ? Promote Low-Global-Warming-Potential Refrigerants in Commercial Operations (RCI-9) ? Provide Incentives for Consumers to Switch to Low GHG Energy Sources (RCI-10) ? Increase Recycling and Solid Waste Management and Reduction (RCI-12) ? Increase Water Use Efficiency and Promote Energy Efficiency and Renewable Energy Production from Water and Wastewater Management (RCI-13)







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Energy Supply (ES) Sector The CCAG is recommending a set of eight (8) policy options to significantly reduce GHG emissions from the ES sector. The principal challenge in addressing GHG emissions from Arizona's electricity sector is the state's extraordinary growth rate and the accompanying projected increase in energy demand. New policies are needed to increase utilization of Arizona's renewable energy resources, like solar, wind, biomass and geothermal, and reduce reliance on pulverized coal technology. The ES policy options include: ? Increase the Environmental Portfolio Standard by 1% each year through 2025 (ES-1) ? Provide Incentives for and Encourage Investment in Renewable Energy (ES-3) ? Explore Development of a National or Regional GHG Cap and Trade Program (ES-4) ? Implement Carbon Intensity Targets (ES-6) ? Reduce Barriers to Renewables and Distributed Generation of Clean Energy (ES-9) ? Implement Net Metering and Advanced Metering for Energy Consumption (ES-10) ? Implement Pricing Strategies to Promote Energy Conservation and Use of Renewable Energy (ES-11) ? Implement Integrated Resource Planning (ES-12) Transportation and Land Use (TLU) Sector The CCAG is recommending a set of thirteen (13) policy options to reduce GHG emissions reductions from the TLU sector, including improved vehicle fuel efficiency, increased usage of lower-emissions fuels, greater use of loweremissions means of travel and land use and other strategies to decrease the growth in fuel use and vehicle miles traveled (VMT). GHG emissions from the TLU sector, which are expected to more than double by 2020 (over 1990 levels), are influenced by transportation technologies and fuels, along with population, economic growth and land use policies that affect the demand for transpor tation services. The TLU policy options include: ? Adopt the Clean Car Program (TLU-1) ? Implement Policies to Promote Smart Growth Planning, Infill, Increased Density and Transit-Oriented/Pedestrian Friendly Development (TLU-2) ? Promote Multi-Modal Transit (TLU-3) ? Reduce Vehicle Idling (TLU-4) ? Set Standards for Alternative Fuels (TLU-5) ? Provide Incentives for Hybrid Vehicles (TLU-7) ? Explore Feebates (TLU-8) ? Implement a Pilot Program for Pay-As-You-Drive Insurance (TLU-9)







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? Encourage Low Rolling Resistance Tires and Promote Proper Tire Inflation (TLU-10) ? Provide Incentives for Accelerated Replacement/Retirement of High-Emitting Diesel Vehicles (TLU-11) ? Increase the Use of Biodiesel (TLU-12) ? Implement Practices and Procurement Policies to Achieve a Lower-GHGEmitting State Vehicle Fleet (TLU-13) ? Reduce the Speed Limit to 60 mph for Commercial Trucks on Highways/Freeways (TLU-14) Agriculture and Forestry (AF) Sectors The CCAG is recommending eleven (11) policy options for the AF sectors. While the AF sectors are directly responsible for only a small amount of Arizona's current GHG emissions, there are opportunities for GHG reductions in the sectors, as well as reductions in overall GHG emissions in the state by increased carbon sequestration through new policies and practices in the AF sectors. The AF policy options include: ?Use Manure Digesters to Reduce Methane Emissions from Livestock Operations and Promote Energy Use of the Captured Methane (A-1) ? Use Biomass Feedstocks for Electricity or Steam Production (A-2) ? Increase Ethanol Production and Use (A-3) ? Convert Agricultural Land to Grassland or Forest to Increase Carbon Sequestration (A-7) ? Reduce Conversion of Farm and Rangelands to Developed Uses (A-8) ? Promote Consumption of Locally Produced Agricultural Commodities to Reduce Transportation Emissions (A-9) ? Decrease the Conversion of Forestland to Developed Uses (F-1) ? Increase Reforestation and Restoration of Forestland (F-2) ? Improve Forest Ecosystem Management (F-3a & 3b) ? Improve Commercialization of Biomass Gasification and Combined Cycle Technologies (F-4)







GHG Reductions from the Recommended Policy Options



Figure E-4 below shows the amount of GHG emissions reductions achievable under each individual, quantified policy option cumulatively from 2007-2020, ranked by its GHG reduction potential. The CCS was able to quantify the GHG emissions reduction potential for 35 of the 49 total recommended policy options.







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Figure E-4







CCAG Recommended Policy Options, by Quantified Indvidual GHG Reduction 2007-2020



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Policy Option



Environmental Portfolio Standard/Renewable Energy Standard and Tariff (ES-1) Demand-Side Efficiency Goals, Funds, Incentives, and Programs (RCI-1) Carbon Intensity Targets (ES-6) Solid Waste Management (RCI-12) State Clean Car Program (TLU-1) Integrated Resource Planning (ES-12) Ethanol Production and Use (A-3) Smar t Growth Bundle of Options (TLU-2)







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MMtCO2e



116.00 103.00 70.40 36.00 32.50 28.00 28.00 26.70 18.00 16.00 16.00 16.00 16.00 14.00 12.30 11.80 10.00 10.00 7.00 7.00 6.40







"Beyond Code" Building Design Incentives and Programs for Smart Growth (RCI-5) Distributed Generation/Combined Heat and Power (RCI-6) Electricity Pricing Strategies (RCI-8) Reduce Barriers to Renewables and Clean Distributed Generation (ES-9) Pricing Strategies (ES-11) Building Standards/Codes for Smart Growth (RCI-4) Pay-As-You-Drive Insurance (TLU-9) Reduction of Vehicle Idling (TLU-4) Distributed Generation/Renewable Energy Applications (RCI-7) Direct Renewable Energy Support (ES-3) (including Tax Credits and Incentives, R&D, and siting/zoning) Appliance Standards (RCI-3) Demand-Side Fuel Switching (RCI-10) Forest Ecosystem Management ? Residential Lands (F-3a)







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A







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2







Policy Option



Biodiesel Implementation (TLU-12) Water Use and Wastewater Management (RCI-13) 60 mph Speed Limit for Commercial Trucks (TLU-14) Low Rolling Resistance Tires and Tire Inflation (TLU-10) Biomass Feedstocks for Electricity or Steam Production (A-2) Manure Management ? Manure Digesters (A-1) Forestland Protection from Developed Uses (F-1) State Leadership Programs (RCI-2) Forest Ecosystem Management ? Other Lands (F-3b) Reduce Conversion of Farm and Rangelands to Developed Uses (A-8) Accelerated Replacement/ Retirement of High-Emitting Diesel Fleet (TLU-11) Reforestation/Restoration of Forestland (F-2) State Lead-By-Example (via Procurement and SmartWay) (TLU-13) Programs to Support Local Farming/Buy Local (A-9)







MMtCO2e



6.20 6.00 5.20 4.80 4.54 3.82 3.73 3.00 2.90 1.59 1.20 0.65 0.40 0.15







The data presented illustrate the potential "stand alone" GHG emissions reductions achievable separately under each individual policy option if the option was implemented solely by itself and not in conjunction with other policy options. The potential GHG emissions reduction figures do not account for overlaps that could occur between reductions achievable under individual policy options if the options were implemented together. For example, while Figure E-4 shows cumulative GHG emissions reductions of 116 MMtCO2e for policy option ES-1 as a "stand alone" option, the total would become 70.3 MMtCO2e if the option were implemented in conjunction with all of the other recommended policy options, due to overlaps (especially with the RCI sector). See pages H-3 to H-4 in Appendix H. The same principle applies for ES-6, which changes from 70.4 MMtCO2e to 50.3 MMtCO2e. See page H-18 in Appendix H. When adjusted for overlaps to avoid double counting, the cumulative GHG emissions reductions potentially achievable from 20072020 through full implementation of all of the CCAG's recommended policy options is 485.4 MMtCO2e. See Table 1-3 on page 24 and footnote 15.







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CHAPTER 1: OVERVIEW



Executive Order 2005-02



On February 2, 2005, Governor Janet Napolitano signed Executive Order 2005-02 establishing the Climate Change Advisory Group (CCAG). Appointed by the Governor, the 35-member CCAG comprised a diverse group of stakeholders who brought broad perspective and expertise to the topic of climate change in Arizona. The Governor's Executive Order directed the CCAG, under the coordination of the Arizona Department of Environmental Quality (ADEQ), to: 1) prepare an inventory and forecast of Arizona greenhouse gas (GHG) emissions; and 2) develop a Climate Change Action Plan with recommendations for reducing GHG emissions in Arizona. The Executive Order declared that "scientific consensus has developed that increasing emissions of carbon dioxide (CO2), methane and other greenhouse gases released to the atmosphere are affecting the Earth's climate" and emphasized that "Arizona and other Western States have particular concerns about the impacts of climate change and climate variability on the environment, including the potential for prolonged drought, severe forest fires, warmer temperatures, increased snowmelt, reduced snow pack and other effects." The Executive Order also recognized that "a number of states are addressing climate change and greenhouse gas emissions on an individual and/or regional basis" and declared that "actions to reduce GHG emissions, including increasing energy efficiency, conserving natural resources and developing renewable energy sources, may have multiple benefits including economic development, job creation, cost savings, and improved air quality."







The CCAG Process



The CCAG held its first meeting on July 14, 2005, followed by a year of intensive fact-finding and consensus building. The CCAG met six times, with its last formal meeting on June 22, 2006. During this period, five sector-based te c h n i c a l work groups (TWGs) of the CCAG met a total of 40 times via teleconference, beginning in August 2005 and concluding in May 2006. The TWGs consisted of CCAG members as well as other individuals with interest and expertise in the issues being addressed by each TWG. The five TWGs were: Energy Supply (ES); Residential, Commercial, Industrial and Waste Management (RCI); Transportation and Land Use (TLU); Agriculture and Forestry (AF); and Cross-Cutting Issues (CC). The CCAG process involved a model of informed self-determination through a facilitated stepwise consensus building approach. Under the oversight of ADEQ, the process was conducted by The Center for Climate Strategies (CCS), an independent, expert facilitation and technical analysis







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team, based on procedures that CCS consultants have used in a number of other state climate change planning initiatives since 2000, adapted specifically for Arizona. During the course of the process, the CCAG reached technical consensus on specific mitigation options and evaluative findings related to benefits, costs, and ancillary and feasibility issues associated with options, followed by development of policy consensus on individual recommendations. The CCAG process sought but did not mandate consensus, and it explicitly documented the level of CCAG support for individual policy recommendations and key findings established through a voting process, including barriers to consensus where they existed. The recommendations adopted by the CCAG and presented in this report underwent two levels of screening by the CCAG. First, a potential policy option being considered by a TWG was accepted as a "priority for analysis" and developed for full analysis only if it had a supermajority of support from CCAG members (with a "supermajority" defined as five or fewer "no" votes or objections). Second, after the analyses were conducted, only policy options that received at least majority support from CCAG members were adopted as recommendations by the CCAG and included in this report. In total, of the 49 policy recommendations adopted by the CCAG, 45 received unanimous consent, two (2) received a supermajority of support, and two (2) received a majority of support (see later chapters in this report and the Appendices for details).







Arizona GHG Emissions Inventory and Forecast



Prior to the first meeting of the CCAG, a preliminary inventory and forecast of GHG emissions for Arizona for years 1990 through 2020 was produced pursuant to Executive Order 2005-02. This document, entitled "Arizona GHG Emissions Inventory and Reference Case Projections, 1990?2020," was completed in June 2005, and then approved by unanimous consent at the CCAG's December 2005 meeting following technical review and revision by the CCAG. This assessment included detailed coverage of all economic sectors and GHGs in Arizona, including future emissions trends and assessment issues related to energy, economic and population growth. Figure 1-1 depicts the level of emissions from each sector in Arizona in year 2000. For comparison, Figure 1-2 shows GHG emissions in the United States as a whole by economic sector.







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Figure 1-1







Arizona Greenhouse Gas (GHG) Emissions in 2000







Figure 1-2







US Greenhouse Gas (GHG) Emissions in 2000







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The inventory of Arizona's GHG emissions provided several critical findings, including: ? Between 1990 and 2005 Arizona's net GHG emissions increased by nearly 56%, from an estimated 59.3 million metric tons carbon dioxide equivalent (MMtCO2e) to an estimated 92.6 MMtCO2e.1 ? Arizona's GHG emissions have increased more than the nation as a whole, driven by Arizona's high population and economic growth combined with relatively high levels of energy use and carbon intensive energy sources, par ticularly coal and petroleum. The State's GHG emissions are forecasted to increase by 148% from 1990 to 20202, while national emissions are forecasted to rise by about 42% over this same period.3 ? Arizona's per capita GHG emissions (the total level of statewide emissions divided by state population) of 14 metric tons carbon dioxide equivalent (tCO2e) are less than the national average of 22 tCO2e because of the relative absence of heavy industry in the State and other factors, such as lower than average heating needs for buildings and facilities. ? The transportation and electricity sectors account for more than three-fourths ? roughly 77% -- of Arizona's total GHG emissions, and are higher than the national average. Both sectors are growing at relatively high rates as well. ? Other fossil fuels usage ? such as natural gas, oil products, and coal ? in the residential, commercial, and industrial sectors contributes another 11% of the state total, while other industrial processes, agriculture and waste account for about 12% combined. ? The storage of forest carbon was found to have a significant offsetting effect to emissions from other sources. The emissions forecast revealed substantial emissions growth rates and related policy challenges. Arizona's projected GHG increase of 148% over 1990 levels by the year 2020 (without further mitigation actions) is the highest known projected emissions growth rate in the country.4 Arizona's rate is almost five times the average growth rate for the West Coast and Northeastern states that have completed climate action plans. (The average projected GHG emissions growth rate for these states during the 1990-2020 period is 33%.) Figure 1-3 compares Arizona's projected GHG emissions growth with the growth in other states that are addressing their GHG emissions (expressing the increase from 1990-2020 as a percentage of 1990 levels for each state). Figure 1-4 provides a detailed breakdown of forecasted GHG emissions in Arizona by sector.5



1 2







Arizona's GHG emissions in 2000 were an estimated 82.3 MMtCO2e, a 40% increase over 1990 levels. These growth figures take into account the projected effects of recent energy efficiency related actions for the RCI sectors adopted by the State. Taking these actions into account, Arizona's GHG emissions are projected to be roughly 147 MMtCO2e in 2020. Without these actions emissions growth in 2020 would be forecasted to increase by 159% over 1990 levels for a total of nearly 154 MMtCO2e in 2020. 3 U.S. Energy Information Administration CO2 inventory and forecast data from 1990 to 2030, available at www.eia.doe.gov/environment.html. 4 These emissions estimates do not include black carbon and organic carbon contributions, such as soot, smoke and fine particulate matter from diesel emissions. These contributions are difficult to conver t into CO2 equivalents, but application of available methods indicates that black carbon and organic carbon emissions may have accounted for 3 to 6 MMtCO2e in Arizona in 2002. 5 The figures used for projected GHG emission increases do not take into account impacts on energy demand resulting from higher temperatures due to climate change; rather, the figures assumed current, business-as-usual scenarios.







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Figure 1-3







Comparison of 1990-2020 GHG Emissions Growth for States with Climate Plans







Figure 1-4







Chart of Projected Arizona GHG Emissions from 1990-2020







MMtCO2e - Million Metric Tons Carbon Dioxide Equivalent RCI - Residential Commercial Industrial ODS ? Ozone Depleting Substances While Arizona's high emissions growth rate presents challenges, it also provides major opportunities. Because more than three-fourths of Arizona's GHG emissions are directly related to energy and transportation, the opportunity exists for Arizona to reduce its GHG emissions while continuing its strong economic growth by being more energy efficient, using more renewable energy sources, building new infrastructure "right" in the first place to produce lower GHG emissions and increasing the use of cleaner transportation modes, technologies and fuels.







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The CCAG's Policy Options



A. The Overarching Recommendation:



Set a State Goal to Reduce Arizona's GHG Emissions to 2000 Levels by 2020 and to 50% below 2000 Levels by 2040 As an overarching policy matter, the CCAG recommends that Arizona establish a statewide goal of reducing future GHG emissions to a level equal to 2000 emissions by the year 2020, and to 50% below the 2000 emissions level by the year 2040. The recommended goals for significant reductions in Arizona's GHG emissions reflect the CCAG's recommendations for 49 specific policy recommendations and extensive consideration of benefits, costs, and feasibility issues. In fact, the CCAG's recommended policy options, if fully implemented, could reduce GHG emissions in Arizona by several million metric tons more than the amounts called for in the recommended goal. The CCAG's policy optons could cut Arizona's GHG emissions by more than 69 MMtCO2e in 2020, reducing GHG emissions to more than five percent (5%) below the 2000 level. Cumulative GHG emissions reductions from 2007-2020 for all the policy options combined could total more than 485 MMtCO2e (adjusted for overlaps to avoid double-counting of reductions). The GHG reductions between 2010 and 2020 achievable by sector under the CCAG's recommendations are shown in Figure 1-6, which illustrates that a significant portion of the achievable reductions are associated with energy efficiency and renewable energy policy options in the residential, commercial, and industrial sectors. Figure 1-5 2010 through 2020 GHG Reductions, by Sector







AF ? Agriculture and Forestry TLU ? Transportation and Land Use







ES ? Energy Supply RCI ? Residential Commercial Industrial (fuel use)







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The recommended goal for Arizona is consistent with the goals set by other states, including those in the West, that are implementing GHG reduction strategies. Table 1-1 below shows how the CCAG's recommendation compares to the goals set by other states: Table 1-1 Greenhouse Gas (GHG) Reduction Goals & Timelines by State







STATE



AZ CA CT MA ME NJ NM NY OR RI WA



(Puget Sound)







GHG REDUCTION GOALS & TIMELINES BY STATE



2000 levels by 2020; 50 percent below 2000 levels by 2040 2000 levels by 2010; 1990 levels by 2020; 80 percent below 1990 levels by 2050 1990 levels by 2010; 10 percent below by 2020; 75 percent below by 2100 1990 levels by 2010; 10 percent below by 2020; 75 percent below by 2100 1990 levels by 2010; 10 percent below by 2020; 75 percent below by 2100 3.5 percent below 1990 levels by 2005 2000 levels by 2012; 10 percent below by 2020; 75 percent below 2050 5 percent below 1990 levels by 2010; 10 percent below by 2020 1990 levels by 2010; 10 percent below by 2020; 75 percent by 2050 1990 levels by 2010; 10 percent below by 2020; 75 percent by 2100 1990 levels by 2020; 70-80 percent below 1990 levels by 2050







While the CCAG's recommended goal calls for a somewhat lower percentage reduction in GHG emissions against a base year of 1990 than in other states, the goal is aggressive in light of Arizona's record projected baseline growth rate. Moreover, the CCAG's recommended goal also is consistent with the scale of reductions estimated by the IPCC and the National Academies of Science (NAS) needed to stabilize future GHG emissions.6 The CCAG strongly recommends the early and aggressive implementation of the recommendations in this Action Plan, and a corresponding set of incentives to promote such early adoption. The CCAG believes that early action and implementation of its policy recommendations are critical to put Arizona quickly on the path toward significant emissions reductions. The CCAG also urges that the policy options be implemented as a set, to the greatest extent practicable, to achieve the maximum GHG emissions reductions possible.



6







IPCC, Third Assessment Report, Summary for Policymakers, 2001, p. 20. http://www.ipcc.ch/pub/un/syreng/spm.pdf







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B. Overview of the Policy Options



The CCAG is recommending a comprehensive set of 49 policy options to reduce GHG emissions in Arizona. These recommendations are summarized in Table 1-2 at the end of this chapter and include: 12 actions in the Residential, Commercial, Industrial and Waste Management (RCI) sectors; 8 actions in the Energy Supply (ES) sector; 13 actions in the Transportation and Land Use (TLU) sector; 11 actions in the (AF) Agriculture and Forestry sectors7; and 5 Cross Cutting (CC) issues across all sectors. The detailed descriptions of these recommendations presented in this report and its appendices also include a wide variety of potential implementation approaches considered by the CCAG. Although not prepared in coordination with other state and regional actions, the recommendations adopted by the CCAG are consistent with and suppor tive of resolutions adopted by the Western Governors Association (WGA), including those adopted at its June 2006 annual meeting in Sedona, Arizona, pertaining to "Regional and National Policies Regarding Global Climate Change,"8 "Clean and Diversified Energy for the West,"9 and "Transpor tation Fuels for the Future,"10 as well as the recommendations of the WGA's Clean and Diversified Energy Advisory Committee (CDEAC).11 In addition to substantially reducing Arizona's GHG emissions, implementation of the CCAG's recommendations would produce significant economic benefits for the state. The Center for Climate Strategies (CCS) has calculated overall net economic cost savings from the CCAG's recommendations of more than $5.5 billion between 2007-2020, with additional significant cost savings also expected between 2020-2040 (although not calculated by the CCS). The CCS also has calculated an average net economic cost savings of nearly $13 per ton of GHGs removed under the CCAG's recommended policy options (if fully implemented). The CCAG's recommendations also complement other efforts underway, including those by the Growing Smarter Oversight Council, which is addressing issues associated with current and projected growth in Arizona. This underscores the potential co-benefits of the CCAG's recommended policy options. Finally, the CCAG has recommended that, while taking action to reduce GHG emissions in Arizona, the Governor also should develop a State climate change adaptation strategy that identifies ? and outlines steps for responding to ? the potential impacts of climate change on the State. Because of the current build-up in the atmosphere of GHGs and the length of time (100 years or longer) that GHGs like CO2 will remain in the atmosphere, Arizona will experience the effects of climate change for years to come, even if immediate action is taken to reduce future GHG emissions. As such, it is essential that Arizona develop a strategy to manage the projected impacts of ongoing climate



7







Policy options F-3a and F-3b address Forest Ecosystem Management, on residential lands and other lands, respectively. While they are summarized collectively in the narrative of this Action Plan, they are counted separately for the total number of policy options. 8 Resolution 06-3 http://www.westgov.org/wga/policy/06/climate-change.pdf 9 Resolution 06-10 http://www.westgov.org/wga/policy/06/clean-energy.pdf 10 Resolution 06-20 http://www.westgov.org/wga/policy/06/futurefuels.pdf 11 http://www.westgov.org/wga/meetings/am2006/CDEAC06.pdf







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change, and to that end, the CCAG recommends, among other actions, that the Governor consider appointing a task force or advisory group to develop recommendations for the State adaptation strategy.







C. Summary of the Recommended Individual Policy Options



Shor t summaries of the 49 policy options recommended by the CCAG are listed below.12 More detailed descriptions of individual policy options can be found in the sector chapters which follow. Fully detailed descriptions of the individual policy options that were presented to and approved by the CCAG can be found in the Technical Appendices.







CROSS-CUTTING (CC) ALL SECTORS



State Greenhouse Gas Reduction Goal (CC-1) Arizona should establish a statewide GHG reduction target to lower GHG emissions to 2000 levels by 2020 and to 50% below 2000 GHG levels by 2040. The emissions reductions achievable through the specific recommendations adopted by the CCAG can exceed these goals in 2020. State Greenhouse Gas Reporting (CC-2) Arizona should implement a GHG reporting mechanism to support tracking and management of GHG emissions. A reporting mechanism will assist in future emissions inventories, promote awareness and action to reduce GHG emissions, and is an essential precursor enabling a GHG registry and possible future trading opportunities. To the greatest extent possible, GHG reporting should be structured collaboratively with other interested states. State Greenhouse Gas Registry (CC-3) Arizona should implement a GHG registry mechanism ? preferably on a regional basis in concert with other interested states ? to enable tracking, management, crediting, and "baseline protection" for entities that reduce GHG emissions. State Climate Action Education and Outreach (CC-4) Arizona should undertake extensive climate change education and outreach activities to create a foundation of public awareness to ensure the long-term success of the State's mitigation and adaptation actions. State Climate Change Adaptation Strategy (CC-5) Arizona should develop and implement a comprehensive state climate change adaptation strategy to manage the projected impacts of climate change while simultaneously taking action to reduce its GHG emissions. The Governor may wish to appoint a CCAG-like task force or advisory group to develop this strategy.



12







More detailed descriptions and discussion of the policy options are presented in chapters 4-8 of this Action Plan and in the Appendices to the Action Plan (see http://www.azclimatechange.us/template.cfm?FrontID=4670). Gaps in the numbers sequence of policy options reflect options that the CCAG did not approve for recommendation in this Action Plan.







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RESIDENTIAL, COMMERCIAL, INDUSTRIAL (RCI) AND WASTE MANAGEMENT SECTORS



Demand-Side Efficiency Goals, Funds, Incentives, and Programs (RCI-1) Arizona should set energy savings goals for electricity and natural gas, as well as programs and funding mechanisms to achieve these goals: 1) Electricity (energy savings target): 5% savings by 2010, 15% savings by 2020; 2) Natural Gas (utility spending target): ramp up to spending 1.5% of gas utility revenues by 2015. State Leadership Programs (RCI-2) Arizona should establish "Lead by Example" initiatives to achieve energy cost savings and promote clean energy technologies by the public and private sectors. Initiatives include a further 15% reduction in energy use per square foot in State buildings from 2011 to 2020; standards for new State buildings; green procurement strategies; and promotion of new combined heat and power (CHP) facilities in State buildings. Appliance Standards (RCI-3) Arizona should implement State appliance efficiency standards for appliances not covered by federal standards or where higher-than-federal standard efficiency requirements are appropriate. ) Building Standards/Codes for Smart Growth (RCI-4) Arizona should adopt and implement improved energy efficiency building codes, including potentially establishing a statewide code or strongly encouraging local jurisdictions to adopt and maintain state-of-the-art codes. "Beyond Code" Building Design Incentives and Programs for Smart Growth (RCI-5) Arizona should ensure that new and existing buildings achieve high levels of energy efficiency by implementing energy performance standards for Statefunded and other government buildings, and by providing incentives for private and other buildings. Distributed Generation/Combined Heat and Power (RCI-6) Arizona should encourage distributed generation/combined heat and power (DG/CHP) systems through a combination of regulatory changes and incentive programs. Distributed Generation/Renewable Energy Applications (RCI-7) Arizona should promote increasing use of renewable distributed generation through direct incentives for system purchase, market-based incentives for system operation (including "net metering"), State goals or directives, and favorable rules for interconnecting renewable generation systems with the electricity grid.







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) Electricity Pricing Strategies (RCI-8) Arizona should implement changes in Arizona electricity pricing and tariffs to provide improved incentives for end-users to conserve energy (through inver ted block rates) and to adjust the timing of energy use to the extent this reduces GHG emissions. Mitigating High Global Warming Potential Gas Emissions (RCI-9) Arizona should consider promoting the use of low "global warming potential" refrigerants in retail food stores, restaurants, and refrigerated transport vehicles (trucks and railcars) through voluntary agreements, specifications, and incentives. Demand-Side Fuel Switching (RCI-10) Arizona should encourage consumers to switch from high-carbon fuels (coal and oil) to lower-carbon fuels (natural gas) or "low or zero carbon" energy sources (solar water heating or biofuels) through a combination of incentives and targeted research. Solid Waste Management (RCI-12) Arizona should ensure that curbside recycling programs are provided in all communities over 50,000 in population; increase the penetration of recycling in multi-family dwellings; create new recycling programs for the commercial sector (including construction materials); develop markets for recycled materials; increase participation/recovery rates for existing recycling programs; develop a statewide recycling goal; and reduce waste generation. Water Use and Wastewater Management (RCI-13) Arizona should accelerate investment in water use efficiency, increase the energy efficiency of all water and wastewater treatment operations, increase renewable energy production by water and wastewater agencies; encourage and create incentives for technologies with the capability to reduce water use associated with power generation; and ensure that power plants use the best management practices and economically feasible technology available to conserve water.







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ENERGY SUPPLY (ES) SECTOR



) Environmental Portfolio Standard /Renewable Energy Standard and Tariff (ES-1) Arizona should adopt a more aggressive renewable energy mandate than the current Environmental Portfolio Standard. It would start with the 2005 requirement for 1% renewables and increase it 1% each year to 26% in 2025, allowing out-of-state renewables and renewable energy credits (RECs) trading. Further, the CCAG recommends applying this requirement to generation statewide, not only to Arizona Corporation Commission (ACC) jurisdictional utilities. Direct Renewable Energy Support (ES-3) Arizona should encourage investment in renewables by providing direct financial incentives and by removing siting and zoning barriers to renewable energy facilities. (Note: This recommendation is brought forward by the CCAG jointly with recommendation RCI-7 concerning Distributed Generation/Renewable Energy Applications.) ) GHG Cap and Trade Program (ES-4) Arizona should explore the development of a regional or national, economywide cap and trade program for GHG emissions. (Note: While this recommendation originated in the Energy Supply workgroup and focused initially on utilities, the CCAG "economy-wide" reference explicitly recommends that a multi-sector cap and trade program be investigated.) Carbon Intensity Targets (ES-6) Arizona should implement a mandatory carbon intensity target that begins in 2010 (i.e., equal to carbon intensity in 2010) and declines by 3 percent annually through 2025. The carbon intensity target would be translated annually into a cap, and trading would be allowed under that cap. Reduce Barriers to Renewables and Clean Distributed Generation (ES-9) Arizona should remove barriers to renewable energy and clean distributed generation (DG) to enable more clean generation to enter Arizona's energy supply mix. This would have the effect of displacing fossil fuel generation, thereby reducing CO2 emissions. (Note: This recommendation is brought forward by the CCAG jointly with recommendation RCI-6 concerning Distributed Generation/Combined Heat and Power.) Metering Strategies (ES-10) Arizona should implement two effective metering strategies: Net metering allows owners of grid-connected distributed generation (generating units on the customer side of the meter) to generate excess electricity and sell it back to the grid, effectively "turning the meter backward." Advanced metering allows electricity customers much greater opportunity to manage their electricity consumption, such as setting a meter to turn off or turn down air conditioning while away.







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Pricing Strategies (ES-11) Arizona should implement pricing strategies such as "real-time pricing" in which utility customer rates are not fixed, but reflect the varying costs that utilities actually pay for power; "time-of-use" rates, which differ for different times of the day and/or different seasons; "increasing block" rates whereby p r i c e s increase with higher consumption; and green pricing w h e r e by customers are given the opportunity to purchase electricity with a renewable or cleaner mix than the standard supply mix offered by the utility. ) Integrated Resource Planning (ES-12) Arizona should implement an Integrated Resource Planning (IRP) process, which integrates technology and policy options on the demand side with supply side options to satisfy anticipated future demand for energy. (Traditional approaches simply focus on supply-side options to meet forecasted load growth.) Demand-side measures include energy efficiency, distributed generation, waste energy recycling, and peak-shaving measures.







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TRANSPORTATION AND LAND USE (TLU) SECTOR



State Clean Car Program (TLU-1) Arizona should adopt the State Clean Car Program emissions standards adopted by 11 states in order to reduce the net emissions of GHGs from passenger vehicle operation. The standards, which must still be approved by the U.S. Environmental Protection Agency (EPA), would take effect in Model Year 2011 (calendar year 2010). ) Smart Growth Bundle of Options (TLU-2) Arizona should implement a bundle of options to reduce GHG emissions through land use practices and policies. The options include: 1) infill and brownfield redevelopment; 2) transit-oriented development; 3) pedestrian and bicycle friendly development; 4) smart growth planning, modeling and tools; 5) promoting use of multi-modal transit options; 6) increased density. Multi-Modal Transit Options (TLU-3) Arizona should implement a bundle of options to reduce GHG emissions through land use practices and policies that specifically promote the use of multi-modal transit options. Reduction of Vehicle Idling (TLU-4) Arizona should implement policies to reduce idling from diesel and gasoline heavy-duty vehicles, buses, and other vehicles through the combination of a statewide anti-idling rule and by promoting and expanding the use of technologies that reduce heavy-duty vehicle idling. These technologies include: 1) automatic engine shut down/start up system controls; 2) direct fired heaters (for providing heat only); 3) auxiliary power units; 4) truck stop electrification. Standards for Alternative Fuels (TLU-5) Arizona should develop and enforce a State standard for neat biodiesel (B100), biodiesel blends, and ethanol blends to ensure fuel quality and reduce emissions and performance problems with these fuels, and to enable more widespread acceptance of these fuels. Hybrid Promotion and Incentives (TLU-7) Arizona should encourage government programs to promote and incentivize the purchase of hybrid vehicles, including reduction in fees and taxes (such as the State's Vehicle License Tax) and giving preferential infrastructure access to hybrids on carpool lanes or metered parking spaces.







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Feebates (TLU-8) Arizona should study the desirability/feasibility of a "feebate" program to incentivize greater consumer choices and purchase of vehicles that produce lower emissions of GHGs while conserving fuel, including: 1) a fee on relatively high emissions/lower fuel economy vehicles and 2) a rebate or tax credit on low emissions/higher fuel economy vehicles. Pay-As-You-Drive Insurance (TLU-9) Arizona should implement a pilot program to test the feasibility of allowing "pay as you drive" (PAYD) insurance under which insurance rates would be based on the miles driven. Low Rolling Resistance Tires and Tire Inflation (TLU-10) Arizona should establish a tire replacement program for low-rolling resistance tires, which manufacturers currently use on new vehicles but are not easily available to consumers as replacement tires. Arizona also should promote proper tire inflation to improve mileage and reduce emissions. Accelerated Replacement/Retirement of High-Emitting Diesel Fleet (TLU-11) Arizona should reduce GHG black carbon emissions from heavy-duty diesel vehicles by developing and implementing an incentives program in Arizona to accelerate the replacement and/or retirement of the highest-emitting diesel vehicles. Biodiesel (TLU-12) Arizona should implement a series of proposals to increase the use of biodiesel in Arizona. State Lead-By-Example via Vehicle Procurement and SmartWay (TLU-13) Arizona state agencies should "lead by example" by adopting procurement policies and practices and/or joining the EPA SmartWay program to achieve a lower-emitting vehicle fleet for the State. 60 MPH Speed Limit for Commercial Trucks (TLU-14) Arizona should reduce the speed limit for commercial trucks to 60 mph on Arizona highways and freeways.







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AGRICULTURE (A) AND FORESTRY (F) SECTORS



Manure Management - Manure Digesters (A-1) Arizona should reduce methane emissions from livestock manure through the use of manure digesters installed at dairies and promote energy utilization of the methane captured (e.g., electricity production). Biomass Feedstocks for Electricity or Steam Production (A-2) Arizona should implement programs to displace fossil fuel use through the use of agricultural waste (e.g., orchard trimmings, and other crop residue) as a feedstock for electricity or steam production. Ethanol Production and Use (A-3) Arizona should provide incentives for the production of ethanol from crops, agricultural waste, or other materials to offset fossil fuel (gasoline) use. Convert Agricultural Land to Grassland or Forest (A-7) Arizona should increase carbon sequestration in agricultural land by conver ting marginal land used for annual crops to permanent cover (grassland or forests). Reduce Conversion of Farm and Rangelands to Developed Uses (A-8) Arizona should reduce the rate at which existing crop and rangelands are conver ted to developed uses. Programs to Support Local Farming/Buy Local (A-9) Arizona should promote consumption of locally-produced agricultural commodities, which would offset consumption of commodities transported from other states or countries. Forestland Protection from Developed Uses (F-1) Arizona should implement policy initiatives to decrease the conversion of forest and woodlands to urban and other developed uses. Reforestation/Restoration of Forestland (F-2) Arizona should expand forest cover (and associated carbon stocks) by regenerating or establishing forests in areas with little or no present forest cover. Forest Ecosystem Management (F--3a & 3b) Arizona should use 50% or more of biomass extracted from residential and non-residential lands for wood products and/or energy production; accelerate current and planned fuels treatments in Arizona; and have the Governor's Forest Health Oversight Council and Forest Health Advisory Council review forest management practices and policies aimed at GHG reduction and carbon sequestration. Improved Commercialization of Biomass Gasification and Combined Cycle (F-4) Arizona should accelerate the rate of technology development and market deployment of biomass gasification and combined cycle (BGCC) technologies.







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Policy Option Rankings by Reductions and Savings/Costs



Figures 1-7 and 1-8 and Table 1-2 below show the amount of GHG emissions reductions achievable from 2007-2020 under each individual, quantified policy option.13 The CCS was able to quantify the GHG emissions reduction potential for 35 of the 49 total recommended policy options. Figure 1-8 ranks the CCAG's recommended policy options by total savings/cost per ton GHG removed over this same period. Figure 1-7 CCAG Recommended Policy Options, by Quantified Indvidual GHG Reduction 2007-2020



140







120







100 2007-2020 MMtCO2e







80







60







40







20







0



-1 3 I-8 -1 1 -9 0 I-5 I-7 I-3 I-1 I-2 -1 -6 U -1 -8 -3 ES ES 3a U TL C C U F3 -1 C C A ES C A TL FR C A TL R R R R R A -9 a 2







-1 1 U TL -2 3b 1 FFTL







2







0







4







-1







-2







I-1







I-6







I-1







I-4







I-1







-4







-1







2







-1







-9







-3







U







U







U







C







C







C







C







TL







ES







ES







TL







ES







TL







TL







C







R







U







R







R







R







R







AZ CCAG Policy Option







Policy Option



Environmental Portfolio Standard/Renewable Energy Standard and Tariff (ES-1) Demand-Side Efficiency Goals, Funds, Incentives, and Programs (RCI-1) Carbon Intensity Targets (ES-6) Solid Waste Management (RCI-12) State Clean Car Program (TLU-1) Integrated Resource Planning (ES-12) Ethanol Production and Use (A-3) Smar t Growth Bundle of Options (TLU-2)







A







U







-1







2







MMtCO2e



116.00 103.00 70.40 36.00 32.50 28.00 28.00 26.70 18.00 16.00 16.00 16.00 16.00







"Beyond Code" Building Design Incentives and Programs for Smart Growth (RCI-5) Distributed Generation/Combined Heat and Power (RCI-6) Electricity Pricing Strategies (RCI-8) Reduce Barriers to Renewables and Clean Distributed Generation (ES-9) Pricing Strategies (ES-11)



13







Quantification reflects potential GHG reduction if each option is implemented alone, rather than as par t of a comprehensive package of CCAG-recommended options. Results would appear lower when overlaps and duplication are taken into account.







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Policy Option



Building Standards/Codes for Smart Growth (RCI-4) Pay-As-You-Drive Insurance (TLU-9) Reduction of Vehicle Idling (TLU-4) Distributed Generation/Renewable Energy Applications (RCI-7) Direct Renewable Energy Support (ES-3) (including Tax Credits and Incentives, R&D, and siting/zoning) Appliance Standards (RCI-3) Demand-Side Fuel Switching (RCI-10) Forest Ecosystem Management ? Residential Lands (F-3a) Biodiesel Implementation (TLU-12) Water Use and Wastewater Management (RCI-13) 60 mph Speed Limit for Commercial Trucks (TLU-14) Low Rolling Resistance Tires and Tire Inflation (TLU-10) Biomass Feedstocks for Electricity or Steam Production (A-2) Manure Management ? Manure Digesters (A-1) Forestland Protection from Developed Uses (F-1) State Leadership Programs (RCI-2) Forest Ecosystem Management ? Other Lands (F-3b) Reduce Conversion of Farm and Rangelands to Developed Uses (A-8) Accelerated Replacement/ Retirement of High-Emitting Diesel Fleet (TLU-11) Reforestation/Restoration of Forestland (F-2) State Lead-By-Example (via Procurement and SmartWay) (TLU-13) Programs to Support Local Farming/Buy Local (A-9)







MMtCO2e



14.00 12.30 11.80 10.00 10.00 7.00 7.00 6.40 6.20 6.00 5.20 4.80 4.54 3.82 3.73 3.00 2.90 1.59 1.20 0.65 0.40 0.15







Figure 1-8







CCAG Recommended Policy Options, by Quantified Cost Per Ton GHG Removed



Cost savings are shown below the axis. Net costs are shown above the axis.



$80 $60 $40 $20 $/MMtCO2e 0 -$20



TL U TL -12 U -1 3 A -3 A -1 a ES -1 A -9 F1 R C ES I-7 TL -3 U -1 F- 4 2 ES -6 A -8







-$40 -$60 -$80







-$100 AZ CCAG Policy Option







U R -1 C I R -3 C ES I-8 R 11 C I R -1 C IES 6 TL -9 U F- 4 3a F3 Rb C I R -4 C I-5 A R2 C I-2 ES TL -12 U TL -2 U -9







TL







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Policy Option



State Clean Car Program (TLU-1) Appliance Standards (RCI-3) Electricity Pricing Strategies (RCI-8) Pricing Strategies (ES-11)







Cost/Cost Savings per Ton GHG Removed



-$90 -$66 -$63 -$63 -$36 -$25 -$25 -$22 -$21 -$21 -$18 -$17 -$8 -$4 -$2 $0 $0 $0 $0 $0 $6 $6 $7 $17 $31 $31 $35 $44 $44 $65







Demand-Side Efficiency Goals, Funds, Incentives, and Programs (RCI-1) Distributed Generation/Combined Heat and Power (RCI-6) Reduce Barriers to Renewables and Clean Distributed Generation (ES-9) Reduction of Vehicle Idling (TLU-4) Forest Ecosystem Management ? Residential Lands (F-3a) Forest Ecosystem Management ? Other Lands (F-3b) Building Standards/Codes for Smart Growth (RCI-4) "Beyond Code" Building Design Incentives and Programs for Smart Growth (RCI-5) Biomass Feedstocks for Electricity or Steam/Production (A-2) State Leadership Programs (RCI-2) Integrated Resource Planning (ES-12) Smar t Growth Bundle of Options (TLU-2) Pay-As-You-Drive Insurance (TLU-9) Biodiesel Implementation (TLU-12) State Lead-By-Example (via Procurement and SmartWay) (TLU-13) Ethanol Production and Use (A-3) Environmental Portfolio Standard/Renewable Energy Standard and Tariff (ES-1) Programs to Support Local Farming/Buy Local (A-9) Manure Management ? Manure Digesters (A-1) Forestland Protection from Developed Uses (F-1) Distributed Generation/Renewable Energy Applications (RCI-7) Direct Renewable Energy Support (ES-3) (including Tax Credits and Incentives, R&D, and siting/zoning) 60 mph Speed Limit for Commercial Trucks (TLU- 14) Reforestation/Restoration of Forestland (F-2) Carbon Intensity Targets (ES-6) Reduce Conversion of Farm and Rangelands to Developed Uses (A-8)







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Table 1-2







CCAG Recommended Policy Options, By Sector







RESIDENTIAL, COMMERCIAL, INDUSTRIAL (RCI) AND WASTE MANAGEMENT



2010 2020 2007-2020 Annual GHG Annual GHG Cumulative Cost/Cost Savings Per Ton GHG Reduction Reduction Reduction Removed ($/tCO2e) (MMtCO2e) (MMtCO2e) (MMtCO2e) 3.1 0.04 0.2 0.3 15.1 0.4 1.0 2.2 103 3 7 14 -$36 -$4 -$66 -$18







CCAG Policy Option







RCI-1 RCI-2 RCI-3 RCI-4







Demand-Side Efficiency Goals, Funds, Incentives, and Programs State Leadership Programs Appliance Standards Building Standards/Codes for Smar t Growth "Beyond Code" Building Design Incentives and Programs for Smart Growth Distributed Generation Combined Heat and Power Distributed Generation Renewable Energy Applications Electricity Pricing Strategies Mitigating High Global Warming Potential (GWP) Gas Emissions (HFCs, SFCs, PFCs) Demand-Side Fuel Switching Solid Waste Management Water Use and Wastewater Management







RCI-5







0.2







3.1







18







-$17







RCI-6







0.4







2.7







16







-$25







RCI-7 RCI-8







0.1 1.1







2.1 1.5







10 16







$31 -$63







RCI-9







Not available







RCI-10 RCI-12 RCI-13







0.1 2.2 0.2







1.2 3.7 0.8







7 36 6







Not available Not available Not available







Notes Numbers are rounded to the nearest one-tenth. Cost savings are shown as negative costs. All costs are estimated using a real discount rate of 5% (see Appendix G for details). RCI-9: Lack of specific policy design and lack of data prevented estimation of tons and costs. RCI-10: Lack of data prevented estimation of costs. RCI-12: Lack of data prevented estimation of costs. RCI-13: Lack of data prevented estimation of costs.







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Table 1-2







CCAG Recommended Policy Options, By Sector







ENERGY SUPPLY (ES)



2010 2020 2007-2020 Annual GHG Annual GHG Cumulative Cost/Cost Savings Per Ton GHG Reduction Reduction Reduction (MMtCO2e) (MMtCO2e) (MMtCO2e) Removed ($/tCO2e) 4.2 16.4 116.0 $6







CCAG Policy Option







ES-1







Environmental Portfolio Standard/Renewable Energy Standard and Tariff Direct Renewable Energy Support (including Tax Credits and Incentives, R&D, and siting/zoning) National or Regional GHG Cap and Trade Carbon Intensity Targets Reduce Barriers to Renewables and Clean Distributed Generation Metering Strategies Pricing Strategies Integrated Resource Planning







ES-3







0.1







2.1







10.0







$31







ES-4 ES-6 ES-9 ES-10 ES-11 ES-12







- 0.28-- 0.18 0.0 0.4







2.0-- 18.5 14.0 2.7







7 - 88 70.4 16.0 Not available







$7 - $19 $44 -$25







1.1 0.1







1.5 5.4







16.0 28.0







-$63 -$2







Notes Cost savings are shown as negative costs. All costs are estimated using a real discount rate of 5% (see Appendix H for details). ES-3: This option is quantified under RCI-7, Distributed Generation/Renewable Energy Applications. Values are shown above for completeness, but not included in cumulative totals to prevent double-counting. ES-4: These estimates are based on U.S. Energy Information Administration (EIA) modeling of a national cap-and-trade policy and the likely impact on Arizona's power sector based on simple apportionment. The above values reflect the range of results for GHG reductions and costs from four scenarios modeled by EIA. These values are not included in the cumulative totals because Arizona cannot implement a national or regional cap-and-trade policy unilaterally and to avoid duplicative counting of reductions based on overlaps with other policy option recommendations. ES-9: This option is quantified under RCI-6, Distributed Generation/Combined Heat and Power. Values are shown above for completeness, but not included in cumulative totals to prevent double-counting. ES-10: This option is an enabling policy for RCI-6 and RCI-7; its quantification is incorporated as part of those options. ES-11: This option is quantified under RCI-8, Electricity Pricing Strategies. Values are shown above for completeness, but not included in cumulative totals to prevent double-counting. ES-12: This option overlaps substantially with ES-1, Environmental Portfolio Standard, and ES-6, Carbon Intensity Targets Values are shown above for completeness, but not included in cumulative totals to prevent double-counting.







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Table 1-2







CCAG Recommended Policy Options, By Sector







TRANSPORTATION AND LAND USE (TLU)



2010 2020 2007-2020 Annual GHG Annual GHG Cumulative Cost/Cost Savings Per Ton GHG Reduction Reduction Reduction Removed ($/tCO2e) (MMtCO2e) (MMtCO2e) (MMtCO2e) 0.3 1.5 5.6 4.0 32.5 26.7 Not available 0.7 1.3 11.8 Not available Not available Not available 0.0 0.0 2.8 0.8 12.3 4.8 $0 Not available -$22 -$90 $0







CCAG Policy Option







TLU-1 TLU-2 TLU-3 TLU-4 TLU-5 TLU-7 TLU-8 TLU-9 TLU-10







State Clean Car Program Smar t Growth Bundle of Options Promoting Multimodal Transit Reduction of Vehicle Idling Standards for Alternative Fuels Hybrid Promotion and Incentives Feebates Pay-As-You-Drive Insurance Low Rolling Resistance Tires and Tire Inflation Accelerated Replacement/ Retirement of High-Emitting Diesel Fleet Biodiesel Implementation State Lead-By-Example (via Procurement and Smart Way) 60 mph Speed Limit for Commercial Trucks







TLU-11 TLU-12 TLU-13 TLU-14







0.2 0.1 0.03 0.3







0.03 1.1 0.04 0.5







1.2 6.2 0.4 5.2







Not available $0 $0 $35







Notes Cost savings are shown as negative costs. All costs are estimated using a real discount rate of 5% (see Appendix I for details). TLU-3: This option was analyzed in tandem with TLU-2; its quantification is incorporated as part of that option. TLU-5: This option is an enabling policy for TLU-12 and A-3; its quantification is incorporated as part of those options. TLU-7: This option overlaps substantially with TLU-1; its quantification is incorporated as part of that option. TLU-8: This option overlaps substantially with TLU-1. Insufficient data prevented estimation of cumulative GHG reductions and costs. TLU-10: Insufficient data prevented estimation of costs. TLU-11: Insufficient data prevented estimation of costs.







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Table 1-2







CCAG Recommended Policy Options, By Sector







AGRICULTURE (A) AND FORESTRY (F)



2010 2020 2007-2020 Annual GHG Annual GHG Cumulative Cost/Cost Savings Per Ton GHG Reduction Reduction Reduction Removed ($/tCO2e) (MMtCO2e) (MMtCO2e) (MMtCO2e) 0.2 0.05 0.5 0.5 0.1 4.0 3.8 4.5 28.0 Not available 0.1 0.01 0.3 0.02 0.5 0.2 0.2 0.02 0.3 0.1 0.5 0.2 1.6 0.1 3.7 0.6 6.4 2.9 Not available $65 $6 $17 $44 -$21 -$21 $1 -$8 $0







CCAG Policy Option







A-1 A-2 A-3 A-7 A-8 A-9 F-1 F-2 F-3a F-3b







Manure Management ? Manure Digesters Biomass Feedstocks for Electricity or Steam Production Ethanol Production and Use Conver t Agricultural Land to Forest or Grassland Reduce Conversion of Farm & Rangelands to Developed Uses Programs to Support Local Farming/Buy Local Forestland Protection from Developed Uses Reforestation/Restoration of Forestland Forest Ecosystem Management ? Residential Lands Forest Ecosystem Management ? Other Lands Improved Commercialization of Biomass Gasification and Combined Cycle







F-4







Notes Cost savings are shown as negative costs. All costs are estimated using a real discount rate of 5% (see Appendix J for details). A-7: Lack of specific policy design and lack of data prevented estimation of tons and cost. F-4: This option overlaps substantially with F-3a and 3b, thus it was not estimated to prevent doublecounting.







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The GHG emissions reductions estimate for each policy option in Table 1-2 is presented as a "stand alone" figure, indicating the potential GHG emissions reductions achievable if the particular policy option was implemented solely by itself and not in conjunction with other policy options. To estimate the total quantity of GHG emissions reductions achievable if all of the CCAG's recommended policy options were implemented together, the potential cumulative GHG emissions reduction figure for the combined policy options must be adjusted to account for overlaps between individual policy options to avoid double-counting of potential reductions. For example, there would be overlaps between and among policy options in the RCI and ES sections, as reductions in electricity demand could also result in lower electricity production. As such, again for example, while ES-1 has a "stand alone" reduction estimate of 116 MMtCO2e cumulatively from 2007-2020, the potential reductions from this policy option are an estimated 70.3 MMtCO2e if all of the CCAG's policy options were implemented together as a comprehensive package. See page H3 in Appendix H. The same principle would apply to ES-6, which would change from a "stand alone" GHG emissions reduction estimate of 70.4 MMtCO2e to 50.3 MMtCO2e cumulatively from 2007 to 2020 if it were implemented as part of a comprehensive package. See page H3 in Appendix H. Table 1-3 below shows the total estimated GHG emissions reductions achievable if all of the CCAG's recommended policy options were implemented together, with the appropriate adjustments made to account for overlaps and avoid double-counting of emissions reductions. Table 1-3 Totals



2010 Annual GHG Reduction (MMtCO2e) 15.4 2020 Annual GHG Reduction (MMtCO2e) 69.4 2007-2020 Cumulative Reduction (MMtCO2e) 485.414







Total of all CCAG Options with Adjustments for Overlap



(Detailed data may be found in the Tables presented in Chapters 4-8 and the Appendices.)







The Center for Climate Strategies (CCS) has calculated overall net economic cost savings from the CCAG's policy option recommendations of more than $5.5 billion from 2007-2020. The CCS also has calculated that the average cost for each ton of GHGs removed would be -$12.74, meaning that there would be a net econmic cost savings of $12.74 for each ton of GHGs removed.15







14







As noted, the potential cumulative GHG reduction figures have been adjusted to account for overlaps between reductions achievable under individual policy options to avoid double-counting of potential GHG emissions reductions. The CCAG notes that the cumulative figure represents the total potential GHG emissions reductions achievable if all of the recommended policy options are implemented and acknowledges that there may be challenges to full implementation of all the recommended policy options. The CCAG also notes that the cumulative figures do not include any potential emissions reductions from ES-4 Cap and Trade because only a range of estimates is presented in Table 1-2. The cumulative figures would be higher if reductions from a cap and trade program were included. 15 The overall net economic cost savings figure of more than $5.5 billion and the average $12.74 per ton net savings figure are based on the savings/costs for the cumulative GHG emissions reductions for which CCS was able to estimate savings/cost data, as indicated in Table 1-2, adjusted for overlaps to prevent double-counting of reductions.







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Chapter 2: Impacts of Climate Change



While some CCAG members may hold differing opinions about the science of climate change, the CCAG agreed at the outset of its deliberations not to debate climate change science in order to achieve the directive of Executive Order 2005-02 and move the CCAG process forward.16 As Governor Napolitano's Executive Order stated, a growing scientific consensus has emerged that increasing emissions of carbon dioxide, methane, nitrous oxides, and other GHGs are affecting the Earth's climate. The work of the Intergovernmental Panel on Climate Change (IPCC) represents this consensus.17 According to the IPCC, human activities, particularly the burning of fossil fuels such as coal and petroleum, have added measurably to the natural background levels of GHGs in the atmosphere, which in turn has contributed to rising global temperatures.18 The IPCC estimates that the Earth's surface temperature increased by about 1 degree Fahrenheit during the past century, with much of that warming occurring during the past two decades. The hottest 22 years on record have occurred since 1980; the hottest 10 years on record have all occurred since 1990; and 2005 was the hottest year ever recorded. According to the IPCC, most of the observed warming over the last 50 years is likely due to increased GHG concentrations attributable to human activities (see Figure 2-1 below).19







16







On September 29, 2005, many CCAG members participated in an informal background briefing on the causes and impacts of climate change presented by Dr. Andrew Comrie, Professor of Atmospheric Sciences, University of Arizona. See http://www.azclimatechange.us/ewebeditpro/items/O40F7043.pdf 17 The IPCC is composed of thousands of scientists (including several from Arizona, such as Dr. Jonathan Overpeck, Professor of Geosciences, University of Arizona, and director of the University's Institute for the Study of Planet Earth) representing the parties to the United Nations Framework Convention on Climate Change (UNFCCC), and was formed to provide assessments of climate science, impacts, and mitigation policy to the parties to the UNFCCC every five years. See http://www.ipcc.ch. 18 IPCC, Third Assessment Report (2001) www.ipcc.ch. 19 IPCC, Third Assessment Report (2001) The IPCC's Fourth Assessment Report is due in 2007. The National Academy of Sciences affirmed the IPCC conclusions in its 2001 report titled "Climate Change Science: An Analysis of Some Key Questions," http://newton.nap.edu/catalog/10139.html.







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Figure 2-1







Observed Temperatures and Two Simulations: Natural vs. Anthropogenic Plus Natural20







(Figure courtesy of Dr. Gerald Meehl, National Center for Atmospheric Research.)







Future increases in global temperature are projected to occur with increased atmospheric GHG concentrations unless action is taken to reduce total annual GHG emissions. According to the IPCC, worldwide consequences of increased temperatures due to the build-up of GHGs in the atmosphere are likely to include increased warming of the earth, and enhanced heat stress, natural and human water system needs, melting glaciers and ice caps, sea level rise, increased severe weather events, flooded coastal and lowland communities, more frequent and intense tropical storms and hurricanes, expanded drought, expansion of tropical disease risk, and other serious occurrences.21







20







IPCC scientists use climate models to simulate the observed temperature changes over the last century attributable to atmospheric "forcings," both natural and anthropogenic (a forcing can be a warming or cooling effect). Figure 2-1 compares the results for two simulations: (1) The blue line shows a simulation of natural forcing (solar variation and volcanic activity). (2) The red line shows the simulation of natural forcing plus anthropogenic forcing, i.e., GHG gases and sulfate aerosols (which have a cooling effect).







Actual temperature observations are shown in a black line representing deviations from the average of temperatures from 1890-1999.



21







IPCC, Third Assessment Report (2001)







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Impacts in Arizona and the West



Over the past 50 years, the climate in the western United States has warmed on average by 1.4 degrees Fahrenheit. IPCC climate models predict that fur ther June to August temperature increases of 3.6 to 9.0 degrees Fahrenheit are possible by 2040 to 2069 for western North America,22 while the most extreme warming scenario currently considered possible suggests that annual mean temperatures in the southwestern United States could increase potentially by up to 14 degrees Fahrenheit before the end of the century.23 A warmer climate could mean less winter snowfall, more winter rain and a faster, earlier snowmelt in Arizona's mountains. Higher temperatures and increased evaporation also could lower reservoir levels, lake levels, and stream flows in the summer. Lower stream flows could concentrate pollutant levels and increase salinity, a critical water quality problem in Arizona. Less water would be available to support irrigation, hydropower production, public and industrial supply, fish and wildlife habitat, and recreation. More winter rain, coupled with more rapid snowmelt, could contribute to winter and spring flooding. Meanwhile, less spring and summer aquifer recharge could exacerbate already-declining water levels in parts of the state that depend on groundwater withdrawals for irrigation and municipal supply. With continued population growth, water demand could outpace water supply in areas of the State. Even conservative estimates of climate change predict significant potential impacts on the Colorado River system by the end of this century due to decreased snowfall and snow pack and increased evaporation, including a 15% reduction in annual runoff; a 40% decrease in basin storage; and a decline in hydroelectric power production to 45 to 56% of the historical average. The date of peak spring runoff could continue to advance, coming more than a month earlier in many Western rivers by the century's end.24 Fur ther, climate change could reduce Arizona's forested areas by 15 to 30%, with hotter, drier weather conditions increasing the already-high potential for more frequent, intense wildfires that threaten both forests and property.25 Milder, drier winters could also increase the likelihood of insect outbreaks and wildfires that result from the accumulation of dead wood on the forest floor. Arizona is already experiencing the effects of a hotter, drier climate. Due in part to a decade-long drought and warmer temperatures, Arizona's fire season began earlier (in February) this year (2006) than ever before. Moreover, the two worst wildfires in Arizona history have occurred in just the last few years:







22







Professor Steven Running, Numerical Terradynamic Simulation Group, University of Montana; published July 6, 2006 in ScienceXpress, the online version of the journal Science; 10.1126/science.1130370. 23 Stainfor th et al., Nature, Vol 433, 27 January 2005; www.nature.com/nature. 24 From presentation of Dr. Andrew Comrie, Professor of Atmospheric Sciences, University of Arizona, to the CCAG. See http://www.azclimatechange.us/ewebeditpro/items/O40F7043.pdf 25 U.S. Environmental Protection Agency Fact Sheet 236-F-98-007c, "Climate Change and Arizona" http://yosemite.epa.gov/OAR/globalwarming.nsf/UniqueKeyLookup/SHSU5BNJMV/$File/az_impct.pdf







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the Rodeo-Chediski fire in 2002, which consumed nearly 500,000 acres; and the Cave Creek Complex fire in 2005, which burned nearly 250,000 acres.26 The drought and warmer winter temperatures also have contributed to bark beetle infestations in the State's forests, killing thousands of pine trees and adding to the already-severe fire risk. The State's two driest years in more than a century occurred in 2002 and 2006, respectively, and coincided with the two lowest levels of run-off ever recorded due to decreased snowfall. The 2006 spring runoff season, which measures snowmelt from January through May, provided just 121,000 acre-feet of water this year (2006), as compared to 665,000 acre-feet normally.27 Climate change could likewise significantly alter Arizona's agricultural crop production, which is heavily dependent on irrigation.28 Cotton yields could decline by 5 to 11% and wheat yields by as much as 70% as temperatures rise beyond the tolerance levels for the crop, particularly with reduced water availability. Livestock production, which accounts for about half of the State's annual agriculture industry, could also suffer, as livestock tend to gain less weight in hotter, drier conditions and when pasture yields decline, limiting forage.29 The potential increased susceptibility of crops and livestock caused by these stressors, combined with reduced die-back of pests and diseases resulting from milder winters, could exacerbate these impacts. A changing climate also could exacerbate Arizona's air pollution problems. During the winter of 2005-06, the Phoenix metropolitan area suffered a record-breaking 143 consecutive days without measurable precipitation, which contributed to unprecedented levels of particulate matter pollution (referred to as PM10) in the area. Between November 1, 2005 and March 15, 2006, the Phoenix metropolitan area exceeded the federal standard for PM10 on 30 days, and the Arizona Department of Environmental Quality (ADEQ) issued 25 High Pollution Advisories, more than in the previous decade combined. Increased temperatures also could contribute to increased ozone concentrations in the Phoenix metropolitan area during summer months.







26







A July 6, 2006 study published in ScienceXpress, the online version of the journal Science, linked climate change to larger, longer-lasting wildfires in the Western United States and found that the worst fires (1,000 acres or more) occurred in years with warmer springs and earlier snowmelts. More acreage and larger fires burned in the West between 1987 and 2003 than in the previous 16-year span. See "Warming and Earlier Spring Increases Western U.S. Forest Wildfire Activity" http://www.sciencemag.org/cgi/rapidpdf/1128834.pdf. Dr. Thomas Swetnam of the University of Arizona's Tree Ring Research Laboratory, a CCAG member, was a co-author of the study. 27 Arizona Republic, June 16, 2006. 28 U.S. Environmental Protection Agency Fact Sheet 236-F-98-007c, "Climate Change and Arizona" http://yosemite.epa.gov/OAR/globalwarming.nsf/UniqueKeyLookup/SHSU5BNJMV/$File/az_impct.pdf 29 Ibid.







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Chapter 3 Greenhouse Gas Emissions Inventory and Reference Case Projections 1990-2020



Executive Order 2005-02 directed the Climate Change Advisory Group (CCAG) to prepare an inventory of Arizona's greenhouse gas (GHG) emissions and a projection of future emissions. The Center for Climate Strategies (CCS) prepared a draft document for this purpose for the first CCAG meeting, and CCAG members reviewed the methodology, assumptions, and conclusions in subsequent meetings. The Technical Work Groups did the same for the portions of the document relevant to their sectors. At their December meeting the CCAG members unanimously approved the final document, Arizona Greenhouse Gas Emissions Inventory and Reference Case Projections, 19902020 (hereafter, the Inventory and Projections, Appendix D to the Action Plan). The Inventory and Projections provides historical GHG emissions estimates for the years 1990 through 200330 using a set of generally-accepted principles and guidelines for state GHG emissions and relying to the extent possible on Arizona-specific data and inputs.31 The reference case projections to 2020 are based on a compilation of various existing Arizona and regional projections of electricity generation, fuel use, and other GHG emitting activities, along with a set of simple, transparent assumptions described later in this chapter. The Inventory and Projections covers the six types of gases included in the U.S. Greenhouse Gas Inventory: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Emissions of these greenhouse gases are presented using a common metric, CO2 equivalence (CO2e), which indicates the relative contribution of each gas to global average radiative forcing32 on a Global Warming Potential (GWP) weighted basis. In addition, black carbon (soot/smoke particles) and organic carbon aerosols (used in a variety of commercial and consumer products) could have a significant climate impact, with black carbon having a particularly powerful warming impact. However, because the science is less certain on the relative magnitude of this impact, and because there are as yet no widely-accepted GWP weights to enable comparison with greenhouse gases, these black and organic carbon emissions are not integrated in the CO2 equivalent emissions estimates provided in the main GHG inventory and projection figures presented here.







30 31







For some sectors and sources, historical data are only available through 2000-2002. The Arizona Department of Environmental Quality (ADEQ) prepared a preliminary GHG inventory assessment, which provided a starting point for this analysis. 32 A change in the net radiative energy (incoming solar radiation and outgoing infrared radiation) of the global Earth-atmosphere system is termed a radiative forcing. Positive radiative forcings warm the Ear th's surface and lower atmosphere; negative radiative forcings cool them.







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Arizona Greenhouse Gas (GHG) Emissions: Sources and Trends



In 2000, Arizona accounted for approximately 82.3 million metric tons33 (MMt) of net carbon dioxide equivalent (CO2e) emissions, an amount equal to 1.2% of total U.S. GHG emissions34. Arizona GHG emissions are rising rapidly compared with the nation as a whole, driven by the rapid pace of Arizona's population and economic growth. Arizona GHG emissions were up nearly 40% from 1990 to 2000, while national emissions rose by 23% during this period.35 On a per capita basis, Arizonans emit about 14 tCO2e, 36% less than the national average of 22 tCO2e per capita. Lower per capita emissions are due in part to Arizona's mild climate, and also to the State's less emissions-intensive economic base.36 Figure 3-1 illustrates the State's lower emissions per capita and per unit of economic output. It also shows that like the nation as a whole, per capita emissions have remained fairly flat, while economic growth outpaced emissions growth throughout the 1990-2002 period. During the 1990s, emissions per unit of gross product dropped by 29% nationally, and by 33% in Arizona. Figure 3-1 Arizona and U.S. GHG Emissions, Per Capita and Per Unit Gross Product (2000 Dollars)







MMtCO2e ? million metric tons carbon dioxide equivalent tCO2e ? metric tons carbon dioxide equivalent 100gCO2e ? 100 grams carbon dioxide equivalent







33 34







All GHG emissions are reported here in metric tons. United States emissions estimates are drawn from Climate Analysis Indicators Tool (CAIT) version 1.5. (Washington, DC: World Resources Institute, 2003). Available at: http://cait.wri.org. 35 During the 1990s, population grew by 39% in Arizona compared with 13% nationally. Furthermore, Arizona's economy grew faster on a per capita basis (up 63% vs. 52% nationally). 36 Arizona's economy has a lower share of emissions-intensive industrial and agricultural activities, such as steel production, petroleum refining, or dairy farming. Furthermore, while cooling demands are significant, the emissions associated with air conditioning are lower on average than those for space heating in the rest of the country.







y 30







Electricity use and transportation are the State's principal GHG emissions sources. Together, the combustion of fossil fuels in these two sectors accounts for nearly 80% of Arizona's gross GHG emissions, as shown in Figure 3-2.37 The remaining use of fossil fuels ? natural gas, oil products, and coal ? in the residential, commercial, and industrial (RCI) sectors constitutes another 11% of State emissions. Agricultural activities such as manure management, fertilizer use, and livestock (enteric fermentation) result in methane and nitrous oxide emissions that account for another 5% of State GHG emissions. Industrial process emissions also comprise about 5% of State GHG emissions today, and these emissions are rising rapidly due to the increasing use of hydrofluorocarbons (HFC) as substitutes for ozone-depleting chlorofluorocarbons.38 Other industrial processes emissions result from perfluorocarbon (PFC) use in semiconductor manufacturing, carbon dioxide released during cement and lime production, and methane released by natural gas systems and coal mines. Landfills and wastewater management facilities produce methane and nitrous oxide emissions accounting for the remaining 2% of current State emissions; these emissions have declined slightly in recent years as landfill gas is increasingly captured and flared or used for energy purposes. Figure 3-2 Gross GHG Emissions by Sector, 2000, Arizona and U.S.







Gross emissions estimates do not include the effects of carbon sinks; i.e., the net carbon sequestered in, or released from, soils and vegetation. Recent U.S. Forest Service (USFS) estimates suggest that Arizona forests and the use of forest products sequestered on average about 7 MMtCO2e per year from 1985 to 2002. Much of this increase appears to have occurred during a period when the formal definition of forestland under Forest Inventory and Analysis (FIA) surveys was liberalized from a minimum 10% forest cover to 5% cover requirements. As a result, refined estimates regarding total statewide biomass sequestration may result in significant changes to current estimates as discussed below and should be the focus of further analysis. The Inventor y and Projections repor ts net GHG emissions ? which include the above sequestration estimates ? separately from the gross GHG emissions.



37







38







Gross emissions estimates only include those sources with positive emissions. Carbon sequestration in soils and vegetation is included in net emissions estimates. Chlorofluorocarbons (CFCs) are also potent greenhouse gases. However, they are not included in GHG estimates because of concerns related to implementation of the Montreal Protocol. See Appendix D.







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A Closer Look at the Two Major Sources: Electricity and Transportation



As shown in Figure 3-2, electricity use accounts for nearly 40% of Arizona's gross GHG emissions, or about 35 MMtCO2e, slightly higher than the national share of emissions from electricity production (32%).39 On a per capita basis, in contrast, Arizona emits slightly less in terms of greenhouse gases (7 tCO2e/capita vs. 8 tCO2e/capita nationally) due to electricity. The average Arizonan uses about the same amount of electricity as the average US resident (12,000 kWh per person per year), but Arizona electricity has lower emissions than the national average.40 Arizona gets slightly less electricity from coal (46% vs. 52% nationally in 2000) and more from low-emitting sources, such as nuclear, hydro, and renewables (44% vs. 29% nationally in 2000). During the 1990s, Arizona electricity demand grew at a rate of 4% per year, while electricity emissions grew 3.3% annually, reflecting a decline in emissions per kWh. This decline was due largely to the rapid growth of new natural gas generation, and to a lesser extent, increases in nuclear generation. It is important to note that these electricity emissions estimates reflect the GHG emissions associated with the electricity sources used to meet Arizona demands, corresponding to a consumption-based approach to emissions accounting. Another way to look at electricity emissions is to consider the GHG emissions produced by electricity generation facilities in the State. For many years, Arizona power plants have tended to produce considerably more electricity than is consumed in the State ? in the year 2000, for example, Arizona produced 23% more electricity than it used, exporting on a net basis to consumers in nearby states. As a result, in 2000, emissions associated with electricity production (44.5 MMtCO2e) were considerably higher than those associated with electricity use (34.5 MMtCO2e).41 While the Inventory and Projections presents both the emissions from electricity production and use, unless otherwise indicated, tables, figures, and totals here reflect electricity use emissions. The consumption-based approach can better reflect the emissions (and emissions reductions) associated with activities occurring in the State, particularly with respect to electricity use (and efficiency improvements), and is thus particularly useful in a policy-making context. Under this approach, emissions associated with electricity exported to other states would need to be covered in those states' accounts in order to avoid double counting or exclusions. (Indeed, California, Oregon, and Washington are currently considering such an approach.) Like electricity emissions, GHG emissions in Arizona from transportation fuel use have risen steadily since 1990 at an average rate of slightly over 3%



39







Unlike for Arizona, for the U.S. as a whole, there is relatively little difference between the emissions from electricity use and emissions from electricity production, as the U.S. imports only about 1% of its electricity, and exports far less. 40 In 2000, electricity generation in Arizona emitted 1107 lbCO2e (0.50tCO2e) per MWh; the analysis assumes the same emission rate for electricity delivered to Arizona consumers. In 2000, electricity generation in the US averaged 1321 lbCO2e (0.60tCO2e) per MWh. 41 Estimating the emissions associated with electricity use requires an understanding of the electricity sources (both in-state and out-of-state) used by utilities to meet consumer loads. The current estimate reflects some simple assumptions described in the Inventory and Projections (Appendix D).







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annually. Gasoline-powered vehicles account for about 65% of transportation GHG emissions. Diesel vehicles account for another 20%, air travel for roughly 10%, and the remainder of transportation emissions come from natural gas and liquefied petroleum gas (LPG) vehicles. As the result of Arizona's rapid expansion and an increase in vehicle miles traveled (VMT) during the 1990s (from 35 billion VMT in 1990 to 50 billion VMT in 2000), gasoline use has grown at a rate of 3.2% annually.42 Meanwhile, diesel use has risen 6.5% annually, suggesting an even more rapid growth in freight movement within the State. With respect to black carbon emissions, the transportation sector is the largest contributor. Transportation sources such as on-road diesel vehicles contributed 59% of Arizona's black carbon (BC) emissions in 2002. Other impor tant BC emissions sectors include non-road diesel engines (18%; e.g., generator s, construction equipment) and railroad engines (about 11%). Coal-fired electricity generating units contributed another 6%.







Reference Case Projections



Relying on U.S. Department of Energy (USDOE) and Arizona agency projections of electricity and fuel use, and other assumptions noted below, the Inventory and Projections makes a forecast of GHG emissions through 2020.43 It assumes a continuation of current trends and reflects, to the extent possible, announced plans (e.g., power plant construction and retirement) and the implementation of recently enacted policies. One such policy is the Environmental Portfolio Standard, which currently requires investor-owned utilities to provide 1.1% of the electricity sales from renewable sources by 2012, and could result in emissions savings of slightly over 0.2 MMtCO2e by 2012. Figure 3-3 illustrates the results of the reference case projection in terms of gross GHG emissions. Corresponding numerical results are shown at the bottom of Table 3-1 under the four different emissions accounting approaches considered here: consumption basis, production basis, gross, and net. Under the gross, consumption-basis approach ? i.e., excluding emissions associated with net electricity exports ? Arizona GHG emissions climb to 160 MMtCO2e by 2020, 80% above 2000 levels and 143% above 1990 levels. Assuming current estimates for forest sequestration (6.7 MMtCO2e) continue through 2020, net emissions are lower than gross emissions, but the relative increase is greater. The percentage increases in emissions relative to historical levels are slightly lower under a production-based approach, i.e., one that includes all emissions associated with in-state electricity production. Under the gross emissions case, 2020 production-based emissions are 75% above 2000 levels and 123% above 1990 levels. This difference results from the assumption ? based on estimates from the Arizona Corporation Commission and USDOE ? that Arizona electricity sales will grow slightly faster than electricity generation from 2010 onwards.



42







Based on U.S. Energy Information Agency data for the year 2000, Arizona gasoline use is also slightly below the national average (1.1 vs. 1.3 gallons per person per day). www.eia.doe.gov. 43 Historical data run through 2001 to 2003 depending on the emissions source.







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Electricity and gasoline use are projected to be the largest contributors to future emissions growth, as shown in Figure 3-4. Other major sources of emissions growth include freight transport (diesel), fuel use in buildings and industry (RCI), hydrofluorocarbons (HFCs) used in place of ozone-depleting substances (ODS), and air travel. Figure 3-3 Gross GHG Emissions by Sector, 1990-2020: Historical and Projected







* This chart does not show net carbon sinks (forestry and land use) which average slightly over 10 MMtCO2e/year. RCI ? Residential, Industrial, and Commercial ODS ? Ozone-Depleting Substances







Figure 3-4







Contributions to Emissions Growth, 1990-2020: Reference Case Projections (MMTCO2e)







The particularly steep increase in electricity use emissions is due not only to the assumption that electricity use will continue to grow rapidly, but also that natural gas prices will continue to rise, and the mix of new generation will shift heavily towards coal after 2010, as depicted in Figure 3-5.







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Figure 3-5







CO2 Emissions from Electricity Production in Arizona, by Fuel Source (Includes All In-State Emissions)







Overall, the projected rate of emissions growth is 3% per year from the year 2000 onward, well below anticipated levels of economic growth (4.9% per year), but nonetheless significant. As illustrated in Figure 3-6, emissions track population growth fairly closely until the latter half of this decade, after which they begin to rise more rapidly. The increase in per capita emissions after 2010 appears largely as the result of four factors: 1) electricity growth at a rate faster than population growth 2) increasing reliance on coal-based generation 3) on-road vehicle emissions, particularly freight traffic growing faster than population 4) increasing hydrofluorocarbon emissions in refrigeration, air conditioning, and other applications. For nearly all other sources, with the exception of natural gas use in residential, commercial, and industrial sectors, emissions are projected to grow at a pace slower than State population. Figure 3-6 Historical and Projected GHG Emissions, GSP, and Population (Indexed to 1990 Value)







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Table 3-1







Historical and Reference Case GHG Emissions, 1990-2020, by Source44



1990 2000 2010 2020 Explanatory Notes for Projections







(Million Metric Tons CO2e)







Energy Use (CO2, CH4, N2O) 57.9 78.8 103.6 144.6 Electricity Use 24.9 34.5 46.6 72.2 Electricity Production (in-state) 32.3 44.5 58.4 75.8 Total emissions for in-state power plants Coal 30.9 39.2 42.4 57.5 See electric sector assumptions Natural Gas 1.3 5.1 15.9 18.3 in Appendix H Oil 0.1 0.2 0.0 0.0 Net Electricity Exports -7.4 -10.0 -11.8 -3.6 9.3 11.6 13.8 Res/Comm/Ind (RCI) 7.7 Coal 1.2 1.5 1.8 1.9 Based on USDOE regional projections Natural Gas 4.2 4.7 5.7 7.2 Based on USDOE regional projections Oil 2.2 3.0 4.1 4.6 Based on USDOE regional projections Wood (CH4 and N2O) 0.1 0.1 0.1 0.1 Assumes no change after 2003 Transportation 25.3 35.0 45.4 58.6 On-road Gasoline 16.8 22.8 28.9 36.3 VMT from MoveAZ, constant energy/VMT On-road Diesel 3.5 6.5 9.5 13.6 VMT from MoveAZ, constant energy/VMT Jet Fuel and Aviation Gasoline 3.5 4.3 5.7 7.4 Based on USDOE regional projections Natural Gas (pipeline use) 1.4 1.1 1.2 1.2 constant at 2002 levels Other 0.2 0.2 0.1 0.1 Based on USDOE regional projections Industrial Processes 1.9 4.1 6.3 9.1 ODS Substitutes 0.0 1.4 4.0 6.9 Based on national projections (USEPA) PFCs in Semi-conductor Ind. 0.4 1.0 0.5 0.3 Based on national projections (USEPA) SF6 from Electric Utilities 0.5 0.3 0.2 0.1 Based on national projections (USEPA) Cement & Other Industry 0.6 1.0 0.9 1.0 Increases with state population Methane from Oil & Gas Systems 0.4 0.4 0.6 0.8 Increases with natural gas use Methane from Coal Mining 0.1 0.1 0.1 0.1 Assumes no change after 2003 Agriculture, Land Use, Forestry -2.6 -2.5 -2.1 -2.1 Agriculture (CH4 & N20) 4.1 4.2 4.7 4.7 Assumes (for now) no change after 2002 Soils and Forest Sinks -6.7 -6.7 -6.7 -6.7 Subject to considerable uncertainty Waste Management 2.1 1.9 2.0 1.9 Solid Waste Management 1.7 1.3 1.4 1.1 Based on national projections (USEPA) Wastewater Management 0.4 0.5 0.7 0.8 Increases with state population Total Emissions - Consumption-Basis (Excluding Emissions from Net Electricity Exports) Gross (excluding sinks) 66.0 89.0 116.6 160.3 increase relative to 1990 35% 77% 143% increase relative to 2000 31% 80% Net (including sinks) 59.3 82.3 109.9 153.5 increase relative to 1990 39% 85% 159% increase relative to 2000 34% 87% Total Emissions - Production-Basis (Including All In-State Electricity Generation) Gross (excluding sinks) 73.5 99.0 128.4 163.9 increase relative to 1990 35% 75% 123% increase relative to 2000 30% 66% Net (including sinks) 66.7 92.3 121.6 157.2 increase relative to 1990 38% 82% 135% increase relative to 2000 32% 70%



44







These emissions estimates do not include black carbon and organic carbon contributions. These emissions are difficult to convert into CO2 equivalents, given the lack of commonly accepted GWPs. Available research provides the basis for some initial GWP estimates, as discussed in Appendix D. Application of these GWPs suggests that Arizona black and organic carbon emissions may have accounted for 3 to 6 MMtCO2e emissions in 2002. These figures also do not take into account the projected effects of recent energy efficiency related actions for the RCI sectors adopted by the State. With these actions, Arizona's GHG emissions are projected to be roughly 147 MMtCO2e net, including sinks, in 2020, instead of 153.5 MMtCO2e.







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Key Uncertainties



The strong growth in GHG emissions forecast here is driven largely by economic, demographic, and land use trends (including growth patterns and transpor tation system impacts), all of which are subject to uncertainty. Table 3-2 presents some of the major assumptions used in this report. Population estimates are based on official projections from the Arizona Department of Economic Security (DES). These projections, however, are widely recognized as outdated (based on assumptions circa 1997). Population growth has been more rapid than these projections would indicate, and the DES projections are currently under revision and might lead to even higher GHG growth projections.45 Table 3-2



Parameter



Population* GSP Employment* Electricity sales Personal Vehicle Miles Traveled* Freight Vehicle Miles Traveled*







Key Annual Growth Rates, Historical and Projected



Historical Projected 1980-1990 1990-2000 2000-2020



3.1% 4.1% 3.9% 4.5% n/a n/a 3.4% 6.3% 2.9% 4.0% n/a n/a 72.0% 4.9% 2.5% 3.6% 2.4% 3.7%







Sources/Uses



U.S. Census Bureau for historic, AZ Department of Economic Security for projection (not used for projections) AZ DOT's MoveAZ report for historic, AZ Depar tment of Economic Security for projection EIA SEDS for historic, RCI TWG for projections Bureau of Transport Statistics for historic, AZ DOT's MoveAZ for projections Bureau of Transport Statistics for historic, AZ DOT's MoveAZ for projections







* Population, employment and vehicle miles traveled (VMT) projections for Arizona were used together with USDOE's Annual Energy Outlook 2005 projections of changes in fuel use on a per capita, per employee, and per VMT, as relevant for each sector. For instance, growth in Arizona residential natural gas use is calculated as the Arizona population growth times the change in per capita Arizona natural gas use for the Mountain region. Arizona population growth is also used as the driver of growth in cement production, soda ash consumption, solid waste generation, and wastewater generation.







In addition, the reference case does not include an analysis of future agriculture emissions, which might change significantly if water scarcity, commodity programs, and trade agreements, among other factors, induce major shifts among crops and livestock grown in the State.







45







If the projected growth rates are higher than currently projected (2.0%), then some emissions projections could rise. However, it is important to note that several of the key drivers for this analysis, such as growth in electricity growth and passenger VMT, are already higher than the projected population, and may implicitly reflect population projections higher than the official forecast.







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Two other areas may be subject to significant uncertainty, not simply because the future is hard to predict, but because of limited data availability and scientific understanding: ? Terrestrial carbon emissions and sinks. The net forest and land use sequestration estimates noted above are based on recent improvements to U.S. Forest Service (USFS) carbon stock inventory data that have changed data collection and interpretation during the period of analysis. For instance, during the Forest Inventory and Analysis (FIA) survey periods used for FORCARB246 estimates, the definition of Arizona forestland changed from a minimum forest cover requirement of 10%, to a minimum of 5%. As a result, grasslands may or may not be included in these estimates, depending on their level of tree stocking. Follow up work by CCS and the TWG with the USFS suggested that rangeland carbon fluxes are not likely to significantly affect the final results of the forest carbon inventory and forecast.47 Second, what the USFS defines as forest area in Arizona has increased by 14% since 1985, when it totaled 4.25 million hectares. This addition appears to account for much of the net gain in carbon stock in the USFS estimates (offsetting a decrease in carbon stock per hectare from 1996 to 2002) and may or may not be attributable to the change in the definition of forestland and the addition of lands at between 5% and 10% forest cover. However, further analysis of data and conferrals with the USFS indicated that further quantification of these changes between inventory periods is unlikely to significantly change current inventory or forecast estimates. ? Black carbon and other aerosol emissions. Emissions of aerosols, particularly black carbon from fossil fuel and biomass combustion, could have potentially significant impacts in terms radiative forcing (i.e., climate impacts). Methodologies for conversion of black carbon mass estimates and projections to global warming potential involve significant uncertainty at present. Best available methods for estimating black carbon emissions and their carbon dioxide equivalent are provided in a supplement to Appendix D, along with a preliminary inventory for Arizona for the year 2002. These results are not integrated in either the CO2 equivalent emissions estimates provided in the main GHG emissions inventory and forecast or the projections presented here.







46







47







FORCARB is the original USFS model estimate of carbon in forests. FORCARB2 is the second version of this model. However, the carbon cycle for rangelands is not well understood, and has not been included in current surveys.







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Chapter 4 Goals and Cross-Cutting Issues



Overview of Cross-Cutting Issues



Some issues considered by the CCAG apply broadly across multiple sectors and are therefore better addressed as "cross-cutting" issues across all sectors rather than assigned to any individual sector. This set includes GHG reduction goals, emissions reporting, GHG emission reduction registries, public education and outreach, and adaptation. The Cross Cutting Issues Technical Work Group (TWG) developed policy options for each of these issues.







Key Challenges and Opportunities



C ro s s cutting issues bring forth key challenges in addition to the CCAG's recommended goal. Notable among them, GHG reporting and registry programs will be far more effective if applied on a broad regional or national basis rather than through separate, state-by-state implementation. Beyond t h e usual differences in states' perspectives, a further challenge lies in the fact that states are at much different stages of the learning curve with respect to these and other climate actions.







Overview of Policy Recommendations



After carefully considering Arizona's extraordinary growth rate, overall emissions reduction feasibility, and goals established in other jurisdictions, the CCAG identified a GHG emission reduction goal that is aggressive, yet achievable. The CCAG recommends that a comprehensive effort be undertaken to develop policy options and recommendations for adapting to these conditions. A thorough GHG emissions reporting program is essential for better understanding mitigation obstacles and opportunities, as well as for measuring future progress. A GHG registry will help recognize and share accomplishments and also protect entities by quantitatively recording early GHG reduction accomplishments. Public awareness of climate change is the cornerstone of public acceptance of the need for concerted climate action because climate impacts are already affecting Arizona dramatically. All of the following recommendations received the unanimous support of the CCAG.







CCAG Cross-Cutting (CC) All Sectors Policy Descriptions



The Cross-Cutting sector includes policies and measures that apply across the board to all sectors and activities. Cross-cutting recommendations typically enable or support emissions mitigation activities and/or other opportunities. Fully detailed descriptions of the individual Cross-Cutting sector policy options as presented to and approved by the CCAG can be found in Appendix F.







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State GHG Reduction Goal (CC-1) The CCAG recommends that Arizona establish a statewide GHG reduction target to lower GHG emissions to the 2000 level by 2020, with an additional 50% reduction below the 2000 level by 2040. In lieu of establishing a specific target for 2010, the CCAG also strongly recommends the early and aggressive implementation of the recommendations in this report, along with a corresponding set of incentives to promote early adoption. As the reference case forecast in Figure 4-1 illustrates, Arizona's extraordinary growth in population and economic activity is expected to generate very high percentage growth in carbon emissions compared to other states. Early and aggressive action in Arizona is thus crucial to slowing ? and ultimately reducing ? carbon emissions. The recommended goal for reductions in Arizona's GHG emissions reflects the CCAG's policy options recommendations. In fact, the CCAG's recommended policy options, if fully implemented, could reduce GHG emissions in Arizona by several million metric tons more than the amounts called for in the recommended goal. Figure 4-1 1990-2040 GHG Emissions: Reference Case Forecast, CCAG Goal, and Estimated Cumulative Reductions with CCAG Options







State Greenhouse Gas Reporting (CC-2) Measurement and public reporting of GHG emissions at a statewide, sector, or sub-sector level are important to support tracking and management of emissions. GHG reporting can help sources identify emission reduction oppor tunities and reduce potential risks associated with possible future GHG mandates by "starting up the learning curve." Tracking and reporting of GHG emissions will also help in the construction of periodic state GHG inventories. GHG reporting is a key precursor for sources to participate in voluntary GHG reduction programs, opportunities for recognition, a GHG emission reduction registry, and to secure "baseline protection." Further, GHG reporting







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is an opportunity for the state to influence reporting practices throughout the region and nation, and to build consistency with other reporting programs. Subject to consistently rigorous quantification, GHG reporting should not be constrained to particular sectors, sources, or approaches in order to encourage GHG mitigation activities from all quarters. The CCAG recommends implementing a reporting mechanism that includes the following key elements: ? Phasing in mandatory GHG reporting by sectors as rigorous, standardized quantification protocols, base data, and tools become available and responsible parties become clear; allowing for voluntary reporting before mandatory reporting applies; and allowing the state itself to be a participant, repor ting emissions associated with its own activities and the programs it implements. ? Applying to all source types (e.g., combustion, processes, vehicles, etc.) but using common sense regarding de minimis emissions. ? Having a goal of reporting "organization-wide emissions within Arizona" but doing so with greatest possible "granularity" to facilitate baseline protection (e.g., the "rolling up" of facility and field emissions reports in a reporting database would provide organization totals in Arizona). ? Reporting annually on a calendar year basis for all six traditional GHGs and, to the extent possible, black carbon. ? Requiring reporting of direct emissions, phasing in reporting of indirect emissions associated with purchased power and heat, and allowing voluntary repor ting of other indirect emissions. ? Maximizing consistency with other state and federal reporting programs. ? Verifying emissions reports through self-certification and ADEQ spot-checks, adding third-party verification for registry purposes. ? Allowing for appropriate public transparency of reported emissions, and allowing voluntary project-based emissions reporting when properly quantified. Suggestions for specific design elements of an effective GHG reporting program are included in Appendix F. State Greenhouse Gas Registry (CC-3) Measurement and recording of GHG emissions reductions at a macro- or micro-scale level in a central repository with a "transaction ledger" capacity to suppor t tracking, management, and "ownership" of emission reductions as well as to encourage GHG reductions, to enable potential recognition, baseline protection, and/or the crediting of actions by implementing programs and par ties in relation to possible emissions reduction goals, and to provide a mechanism for regional, multi-state, and cross-border cooperation. Subject to consistently rigorous quantification, registration of GHG reductions should not be constrained to particular sectors, sources, or approaches in order to encourage GHG mitigation activities from all quarters.







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The CCAG recommends that the State implement a registry mechanism with the following key elements: ? Geographic applicability at least at the statewide level and as broadly (i.e., regionally or nationally) as possible. ? Allowing sources to start as far back chronologically as good data exists, as affirmed by third-party verification, and allowing registration of projectbased reductions or "offsets" that are equally rigorously quantified. ? Incorporating adequate safeguards to ensure that reductions are not double-counted by multiple registry participants; providing appropriate transparency; and allowing the state itself to be a participant, registering GHG reductions associated with its programs, direct activities, or efforts. ? Striving for maximum consistency with other state, regional, and/or national efforts, greatest flexibility as GHG mitigation approaches evolve; and providing guidance to assist participants. Suggestions for specific design elements of an appropriate GHG registry are included in Appendix F. State Climate Action Education and Outreach (CC-4) Public education and outreach are vitally important to foster a broad awareness of climate change issues and effects (including co-benefits, such as clean air and public health) among the state's citizens and to engage them in actions to reduce GHG emissions. Such efforts should seek to integrate with and build upon existing outreach efforts involving climate chan