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Proposed Part 242 CO2 Budget Trading Program

The Department is proposing revisions to 6 NYCRR Part 242, "CO2 Budget Trading Program" (Regional Greenhouse Gas Initiative (RGGI)) and 200, "General Provisions." The proposed revisions to Part 242 will reflect the RGGI program changes set forth in the updated RGGI Model Rule. The proposed revisions to Part 200 will update incorporated references.

The proposed Program revisions will cap regional CO2 emissions at approximately 75 million tons annually beginning in 2021. After 2021, the cap will decline by 2.275 million tons annually. The Third Adjustment for Banked Allowances will adjust the budget for 100 percent of the pre-2021 vintage allowances held by market participants as of the end of 2020, that are in excess of the total quantity of 2018, 2019, and 2020 emissions. The proposed third adjustment would be implemented over the five-year period of 2021-2025, after the size of the 2020 vintage private bank is determined.

While the proposed revisions to the Program retain the Cost Containment Reserve (CCR), the revisions would modify the CCR trigger price and the maximum amount of CCR allowances available at auction each year. The proposed Program revisions create an Emissions Containment Reserve (ECR), which will also help secure additional emissions reductions if prices fall below established ECR trigger prices. The ECR will only be triggered, and allowances withheld from auctions, if CO2 emission reduction costs are lower than projected.

The proposed RGGI model rule revisions eliminated two offset categories, the "SF6 Offset Category" and the "End-Use Energy Efficiency Offsets Category". The model rule revisions also updated and retained three offset categories that some states may continue to implement. In the revisions to Part 242, New York is proposing to retain only the offset provisions for avoided methane emissions from agricultural manure management operations.

New York is also proposing to expand applicability under Part 242 to capture certain units that serve an electricity generator with a nameplate capacity equal to or greater than 15 MW. This applicability expansion will apply to any unit 15 MW or greater that resides at an existing CO2 budget source, and to any 15 MW unit that resides at a facility where there are two or more units with a nameplate capacity of 15 MW or larger.

The proposed Program revisions will retain the interim compliance obligation. Finally, the proposed Program revisions also include minor revisions and updates to all references.

In light of the current emergency associated with the COVID-19 pandemic, Governor Cuomo has put New York State on PAUSE to limit the spread of the novel coronavirus. See Executive Order 202, including subsequent iterations and successors thereof, including Executive Order 202.15. Pursuant to these directives, non-essential meetings and gatherings of any size are currently prohibited, and rulemaking hearings are not required. Consistent with such requirements, the Department will not hold a public hearing for this rulemaking.

Comment period closed.

Written comments on the proposed rule may be submitted until 5:00 p.m. on June 29, 2020 and should be directed to:

Laura Stevens
Division of Air Resources
Proposed Part 242
625 Broadway
Albany, NY 12233-3251
Phone: (518) 402-8396

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    Albany, NY 12233-8401
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