The New York State Department of Environmental Conservation ("DEC") has issued proposed regulations to implement the Regional Greenhouse Gas Initiative ("RGGI"). RGGI is a regional agreement entered into by New York and nine other states to reduce greenhouse gas emissions from power plants.
The proposed regulations will apply to electric generating units with a nameplate capacity of 25 megawatts or greater. A limited exemption is available for industrial facilities that commit to sell less than ten percent of their electrical output to the grid.
The State base budget of greenhouse gas allowances is 64,310, 8055 tons per year for the first two control periods (2009-2011 and 2012-2014). The base budget will then decrease for subsequent three year control periods.
The New York State Energy Research and Development Authority ("NYSERDA") will conduct an auction of allowances for the first control period commencing in January 2009. Each affected source will be required to purchase sufficient allowances at auction to cover CO2 emissions for the applicable control period. The procedures for auctioning allowances have not yet been announced. The proceeds of the auction will be used to fund energy efficiency, clean energy, and renewable energy projects.
The RGGI regulations, when implemented, also will require continuous emission monitoring for CO2 emissions.
The proposed regulations also provide for the award of CO2 offset allowances to sponsors of emission reduction or avoidance projects. Offsets can be obtained from eligible landfill methane capture, reduced emissions of sulfur hexafluoride, carbon captured from forestry projects, energy efficiency projects, and avoided methane emission from agricultural manure management.
Affected sources subject to the regulations will be limited in the amount of offset credits that may used to meet compliance obligations. The limits will range from an initial amount of 3.3 percent of the obligation to a maximum of 10 percent depending on the price of CO2 allowances ($/ton). The proposed regulations appear to be aimed at assuring that most CO2 reductions will come from verified reductions from existing power plants.
Public hearings on the proposed regulations will be held on December 10th in Albany, December 11th in Ray Brook in the Adirondacks, December 12th in New York City and December 13th in Avon. The New York City hearing on December 12, 2007 will be held at: 10:00 A.M. at the New York State Department of Public Service, Board Room, 4th floor, 90 Church St., New York, NY 10007 Written comments may be submitted to the DEC on or before December 24, 2007.
If you have any questions about the Proposed regulations and their impact on your business, please feel free to contact either Jeff Gracer jgracer@sprlaw.com or Paul Casowitz pcasowitz@sprlaw.com
