Environment DEC
From the September 2008 issue
State Adopts Carbon Cap-and-Trade Program
The New York State Environmental Board has approved regulations to implement the Regional Greenhouse Gas Initiative (RGGI). RGGI is an initiative begun in December 2005 by ten northeastern and mid-Atlantic states to enact regulations to significantly reduce carbon dioxide emissions from power plants.
Ten northeastern states will participate in RGGI. Pennsylvania and several Canadian provinces are observers to the process.
New York and the other RGGI states have designed the first market-based, mandatory cap-and-trade program in the United States to reduce greenhouse gas emissions in a simple and constructive way. Participating states have committed to cap and then reduce the amount of carbon dioxide (CO2) that power plants in their region are allowed to emit, limiting the region's total contribution to atmospheric greenhouse gas levels.
New Approach
RGGI is a major departure from prior cap-and-trade programs, with the state not automatically giving away CO2 allowances to power plant owners. Power plant companies will have to buy CO2 allowances through an auction or in the secondary market to "cover" every ton of carbon dioxide they emit. The quarterly auction process is live, with the availability of bid preparation materials released for the first auction on September 25.
New York is now on track to offer its CO2 allowances in the December 2008 RGGI auction--in advance of the compliance start date of January 1, 2009. While New York is not offering any CO2 allowances for sale in the September auction, power plants and companies in the state, as well as individuals, may bid for the CO2 allowances offered by other states. Any CO2 allowance purchased in the September auction can be used by power generators to comply with the state regulation when it is effective.
Proceeds from the auction will fund energy efficiency programs, renewable energy projects and innovative non-carbon emitting technologies. The program also will provide limited opportunities for power companies to offset a portion of their emissions with other "green" investments.
Related Links:
Regional Greenhouse Gas Initiative (RGGI) (leaving DEC's website)
