Northeast States Release Model Set Of Regulations To Implement Carbon Dioxide Cap-and-trade Program

The seven Northeast states participating in a multi-state program to reduce climate-changing emissions from power plants released on Aug. 15 a model set of regulations to be proposed in each participating state to implement the program.

Under the Regional Greenhouse Gas Initiative (RGGI), seven Northeast states agreed to propose a cap-and-trade program to reduce carbon dioxide (CO2) emissions. The states participating in RGGI are: Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont. The state of Maryland recently adopted legislation requiring Maryland to join RGGI by June 2007.

In December 2005, the governors from the seven states entered into a memorandum of understanding specifying the general framework of the program. On March 23, 2005, the states released draft model regulations that outlined proposed specific requirements for the program. The draft rule was the subject of a 60-day comment period and two public meetings were held. The model set of regulations released on Aug. 15 reflects and incorporates many of the comments received and provides detailed rules for the program, officials said. Each state will use the model rule as a starting point for obtaining legislative or regulatory approval of the program.

In response to comments received, the states also agreed to make certain minor modifications to their December 2005 memorandum of understanding. The states agreed to simplify the way the program will incorporate so-called "offset credits" -- reductions of greenhouse gas emissions that are achieved outside the electricity sector such as at landfills, farming operations or certain other project sites.

Under RGGI, the seven states will launch a regional cap-and-trade system that uses emissions credits or allowances to limit the total amount of CO2 emissions. Beginning in 2009, emissions of CO2 from power plants in the region would be capped at approximately current levels -- 121 million tons annually -- with this cap remaining in place until 2015. The states would then begin reducing emissions incrementally over a four-year period to achieve a 10 percent reduction by 2019. Compared to the emissions increases the region would see from the sector without the program, RGGI will result in an approximately 35 percent reduction by 2020, officials said.

Under the cap-and-trade program, the states will issue one allowance, or permit, for each ton of CO2 emissions allowed by the cap. Each plant will be required to have enough allowances to cover its reported emissions. The plants may buy or sell allowances, but an individual plant's emissions cannot exceed the amount of allowances it possesses. The total amount of the allowances will be equal to the emissions cap for the region. Coal-fired, oil-fired and gas-fired electric generating units with a capacity of 25 megawatts or more will be included under RGGI.

The RGGI states have agreed that at least 25 percent of a state's allowances are to be dedicated to strategic energy or consumer benefit purposes, such as energy efficiency, new clean energy technologies and ratepayer rebates. A power plant also could purchase these allowances for its own use. The funds generated from these sales will be used for beneficial energy programs.

For more information, visit RGGI's Web site at http://www.rggi.org.

This article originally appeared in the 08/01/2006 issue of Environmental Protection.

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