CO2 Emissions Offset Projects

CO2 Offset Allowances

A CO₂ offset allowance represents one ton of demonstrated project-based greenhouse gas reduction, avoidance, or sequestration under the New York State CO₂ Budget Trading Program, 6 NYCRR Part 242 (Program). Projects producing quantifiable reduction, avoidance, or sequestration of greenhouse gases can offset greenhouse gas emissions occurring elsewhere. CO₂ offset allowances provide compliance flexibility to electric power generators by recognizing certain types of reductions of greenhouse gases from projects outside of the capped sector (the electric sector). Offsets also encourage projects outside the regulated sector that can help achieve the CO₂ emission reduction goals of the Program and of the Regional Greenhouse Gas Initiative (RGGI).

A generator may use CO₂ offset allowances to satisfy only a limited portion of its compliance obligation. Initially, the use of CO₂ offset allowances is limited to 3.3 percent of a power plant's total compliance obligation during any three-year control period, though this limit may be expanded to 5 percent or 10 percent if certain CO₂ allowance price thresholds are reached.

Detailed information on approved offset project categories, eligibility, and prescriptive application requirements can be found in 6 NYCRR Subpart 242-10.

Offset Project Categories

New York's CO₂ Budget Trading Program specifies offset project categories and establishes prescriptive standards for each category. These requirements seek to ensure that awarded CO₂ offset allowances represent real, additional, verifiable, enforceable, and permanent CO₂ equivalent emission reductions or carbon sequestration. At this time, five project categories for CO₂ offset allowances are eligible under the Program:

Landfill methane capture and destruction
Reduction in emissions of sulfur hexafluoride (SF6)
Sequestration of carbon due to afforestation
Reduction or avoidance of CO₂ emissions from natural gas, oil, or propane end-use combustion due to end-use energy efficiency in the building sector
Agricultural manure management operations

In addition to project-based greenhouse gas emission reduction or sequestration, the Program also allows for the award of CO₂ offset allowances for CO₂ emissions credit retirements from a mandatory carbon constraining program outside the United States (e.g., Clean Development Mechanism [CDM] Certified Emission Reductions [CERs]) when certain CO₂ allowance price thresholds are reached.

Offset Application and Verification Processes

Applying for an award of CO₂ offset allowances requires a project sponsor to: (1) open a general account in the RGGI CO₂ Allowance Tracking System (COATS) and obtain an offsets project ID; (2) submit a Consistency Application to the Department; and (3) submit a periodic Monitoring and Verification Report to the Department. Linked from this web page are the Department's application and submittal materials for project sponsors, along with detailed instructions on how to fill out the required forms, for each of the five offset project categories. Each form is available in Portable Document Format (PDF) and MS Word.

To ensure the integrity of offset projects, each project must be verified by an independent third party. Third party verifiers must be accredited by the Department. Note that both the Consistency Application and the Monitoring and Verification Report submitted by the project sponsor must include a signed verification statement and report from a Department-accredited independent verifier.

Applying to become accredited by the Department requires an independent verifier to: (1) submit an accreditation application to the Department; and (2) submit a pre-engagement Conflict of Interest disclosure to the Department. Linked from this web page are the necessary materials for an independent verifier to become accredited by the Department. Each form is available in Portable Document Format (PDF) and MS Word.

Note: Currently there are no accredited verifiers. As verifiers become accredited by New York, they will be posted from a link on this page.

More about CO2 Emissions Offset Projects:

Landfill Methane Gas Capture and Destruction - Instructions and application forms for RGGI CO2 offset allowances under the category of landfill methane gas capture and destruction
Reduction in Emissions of Sulfur Hexafluoride (SF6) - Instructions and application forms for RGGI CO2 offset allowances under the category of reductions in emissions of SF6
Sequestration of Carbon Due to Afforestation - Instructions and application forms for RGGI CO2 offset allowances under the category of sequestration of carbon due to afforestation
Building End-use Energy Efficiency - Instructions and application forms for RGGI CO2 offset allowances under the category of building end-use energy efficiency
Agricultural Manure Management Operations - Instructions and application forms for RGGI CO2 offset allowances under the category of agricultural manure management operations
Verification Process - To insure the integrity of the RGGI CO2 offset projects, independent third parties are required to verify the offset projects