Game Changer: Lessons From a Major Player in Evaluating Technologies for the California GHG Emissions Cap and Trade Program (AB32)

Businesses in California have been preparing for implementation of the cap and trade program under California Global Warming Solutions Act of 2006 (AB32) for several years.  As a company with the largest oil production and refining capacity in California, Chevron has worked diligently to understand emissions sources, mitigation options and technologies and decision strategies to participate in cap-and-trade programs in the most cost-effective manner.  This paper will describe:

• ·         Key considerations in designing oil production (Upstream) and refining (Downstream) benchmarks  to ensure a smooth transition to cap and trade, acknowledge early actions and avoid economic disruption to trade-exposed industries
  • o   The importance of inventory boundaries, methodologies and treatment of indirect emissions sources
• ·         A description of the Marginal Abatement Cost Curve (MACC) approach to evaluation of mitigation projects
  • o   Why it is valuable in preparing for a cap and trade program
  • o   How to identify mitigation opportunities
  • o   How to consistently evaluate opportunities across multiple business units to enable valid business decisions
  • o   Why 3^rd-party cost curves may not tell the whole story—legal, permitting and other considerations
• ·         Findings and trends from five years of identification and analysis of GHG mitigation options from Upstream and Downstream facilities
  • o   Key energy efficiency projects that can reduce GHG emissions
  • o   The contribution of reliability to GHG emission reductions
  • o   Assessment of solar, wind and geothermal projects—where they can and cannot contribute to GHG emissions reductions
  • o   Evaluation and potential contribution of Carbon dioxide Capture and Storage (CCS) projects for refining and production facilities in California
• ·         Incorporating GHG considerations into new capital projects

Regulators, non-governmental organizations, academics and of course businesses can benefit from this discussion of real-world experience from our comprehensive evaluation of GHG mitigation technologies.