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Revised Regulatory Impact Statement Summary Part 242

The Regional Greenhouse Gas Initiative (RGGI) is a cooperative, historic effort among New York and nine Participating States1 and is the first mandatory, market-based carbon dioxide (CO2) emissions reduction program in the United States. Recently, New York along with the Participating States, completed a comprehensive program review and announced a proposal to lower the regional emissions cap established under RGGI to approximately 75 million tons in 2021, declining 3.0 percent a year through 2030.2 To implement the updated RGGI program in New York State, the Department of Environmental Conservation (Department) revised 6 NYCRR Part 242, CO2 Budget Trading Program (the Program) and 6 NYCRR Part 200, General Provisions.

The statutory authority to revise the Program to reduce the CO2 emissions cap, provide for the budget adjustments, and add an emissions containment reserve derives primarily from the Department's authority to use all available practical and reasonable methods to prevent and control air pollution, as set out in the Environmental Conservation Law (ECL) at Sections 1-0101, 1-0303, 3-0301, 19-0103, 19-0105, 19-0107, 19-0301, 19-0303, 19-0305, 71-2103, 71-2105. The Allowance Auction Program (21 NYCRR Part 507) will also be revised by the New York State Energy Research and Development Authority (NYSERDA) as part of this rulemaking. The statutory sections that grant NYSERDA authority to implement the Allowance Auction Program, which were outlined in the Regulatory Impact Statement accompanying such rulemaking, are briefly outlined in the full Regulatory Impact Statement as background and context for the Program revisions.

The warming climate represents an enormous environmental challenge for the State, because unabated, climate change will continue to have serious adverse impacts on the State's natural resources, public health and infrastructure. New York power plants represent approximately 13 percent of all GHG emissions in the State.3 In 2018, New York power plants in the State subject to the Program burned fossil fuels to produce approximately 27.3 million tons of CO2 into the atmosphere.4

The Department complied with Sections 202-a, 202-b and 202-bb of the State Administrative Procedures Act through an extensive Regional program review process that included public participation by all Participating States. New York coordinated an additional stakeholder process to gather input from the public within its borders. New York and the Participating States had committed to a comprehensive program review during the initial development of RGGI and agreed to evaluate: program success; program impacts; additional emissions reductions; imports and emissions leakage; and offsets. On November 2012, after completion of the first extensive and comprehensive RGGI Program Review, the RGGI Participating States proposed program revisions to reduce the regional emissions cap to 91 million tons in 2014 and committed to reduce that level by 2.5 percent each year through 2020. Further, to account for the full bank of excess allowances at the end of 2014, additional cap adjustments were made over the course of the program from 2014 to 2018, and additional adjustments will be made over the 2019 to 2020 time period. The Participating States initiated program review in the fall of 2015 with the announcement of the first stakeholder meeting, and concluded the process in August 2017. New York conducted an in-state separate stakeholder process designed to provide updates on the status of the regional process and to afford additional opportunity for New York's stakeholders to provide comment.

Mitigating the impacts of a changing climate represents one of the most pressing environmental challenges for the State, the nation and the world. Extensive scientific data demonstrates the need for immediate worldwide action to reduce emissions from burning fossil fuels and supports the conclusion that great benefits will accrue if fossil fuel-fired emissions are reduced through programs like RGGI.

A naturally occurring greenhouse effect has regulated the earth's climate system for millions of years. CO2 and other naturally occurring GHGs trap heat in our atmosphere, maintaining the average temperature of the planet approximately 60°F above what it would be otherwise. An enhanced greenhouse effect and associated climate change results as large quantities of anthropogenic GHGs, especially CO2 from the burning of fossil fuels, are added to the atmosphere. Since the mid-1700's, atmospheric concentrations of GHGs have increased substantially due to human activities such as fossil fuel use and land-use change. Average atmospheric CO2 concentrations exceeded 407 parts per million in 2018, which according to ice core data is higher than at any point in the past 800,000 years and the rate of increase is 100 times faster than previous natural increases at the end of the last ice age.5

The need for the reduction of CO2 emissions through the revisions to the Program is clearly supported by numerous direct impacts that have been observed in New York State and presented in the 2011 New York State ClimAID6 assessment and the 2014 update to ClimAID.7 Temperatures in New York State have risen during the twentieth century, with the greatest warming coming in recent decades - temperatures have risen on average 0.25°F per decade over the past century. This warming includes an increase in the number of extreme hot days (days at or above 90ºF) and a decrease in the number of cold days (days at or below 32ºF). Sea levels in the coastal waters of New York have been steadily rising over the twentieth century, chiefly as a result of thermal expansion of ocean waters, melting land ice and local changes in the height of land relative to the height of the continental land mass. Tide-gauge observations in New York indicate that rates of relative sea level rise were significantly greater than the global mean, ranging from 0.9 to 1.5 inches per decade.

Predictions of future impacts associated with emissions in New York further support the need for a substantial reduction in the CO2 emissions cap. The 2011 New York State ClimAID assessment and 2014 update also examined how sea level rise, changes in precipitation patterns, and more frequent severe weather conditions will affect New York's economy, environment, community life and human health. ClimAID used regionalized climate projections to develop adaptation recommendations and is a climate change preparedness resource for planners, policymakers, and the public.8 The ClimAID assessment and update predicted the following: Air temperatures are expected to rise across New York, by 2.0°F to 3.4°F by the 2020s, 4.1°F to 6.8°F by the 2050s, and 5.3°F to 10.1°F by the 2080s. Annual average precipitation in New York is projected to increase by up to five percent by the 2020s, up to 12 percent by the 2050s and up to 15 percent by the 2080s, with the greatest increases in the northern part of the State. The Department promulgated science-based projections of sea level rise based on the multiple scenarios identified in the 2014 ClimAID assessment and update. These projections identify the potential rise in sea level through 2100 in three coastal regions of the state.9

Extreme climate events, such as heat waves and heavy rainstorms, significantly impact New York's communities and natural resources. Heat waves are expected to become more frequent, and storm-related coastal flooding is expected to increase with rising sea levels.

The need for the significantly reduced CO2 emissions cap and budget adjustments are further supported by the ClimAID assessment10 which provides predictions regarding the effects climate change will have on specific resources and communities in New York State. Rising air temperatures intensify the water cycle by driving increased evaporation and precipitation, resulting in altered patterns of precipitation including more rain falling in heavy events, often with longer dry periods in between. High water levels, strong winds, and heavy precipitation resulting from strong coastal storms already cause billions of dollars in damage and disrupt transportation and power distribution systems. Barrier islands are being dramatically altered by strong coastal storms, such as Hurricane Sandy, as ocean waters over wash dunes, create new inlets, and erode beaches Sea level rise will lead to more frequent and extensive coastal flooding, more frequent flooding, permanent inundation of low-lying areas, encroachment of saltwater into freshwater areas, and increased beach erosion. Loss of coastal wetlands reduces species diversity. Within the next several decades, New York State is likely to see widespread shifts in species composition in the State's forests and other natural landscapes. Lakes, streams, inland wetlands and associated aquatic species will be highly vulnerable to changes in the timing, supply, and intensity of rainfall and snowmelt, groundwater recharge and duration of ice cover. Increased summer heat stress will negatively affect cool-season crops and livestock unless farmers take adaptive measures such as shifting to more heat-tolerant crop varieties and improving cooling capacity of livestock facilities. A warmer climate would result in a different crop mix and decreased milk production11 for New York's farmers. Demand for health services and the need for public health surveillance and monitoring will increase due to increasing rates of heat related illness and death, respiratory diseases, vector-borne diseases, and water- and food-borne illnesses. Over the next few decades, heat waves and heavy precipitation events are likely to increase transportation problems such as flooded streets and delays in mass transit. Communication service delivery is vulnerable to hurricanes, lightning, ice, snow, wind storms, and other extreme weather events, some of which are projected to change in frequency and/or intensity. Impacts of climate change on energy demand are likely to be more significant than impacts on supply. Climate change will adversely affect system operations, increase the difficulty of ensuring adequate supply during peak demand periods, and exacerbate problematic conditions, such as the urban heat island effect.

The Program revisions will cap regional emissions at approximately 75 million tons annually beginning in 2021 and will reduce that level by 3.0 percent each year through 2030. Further, to account for the existing private bank of CO2 emissions allowances already acquired at auction, and to help create a binding cap, the Program revisions provide for a third budget (cap) adjustment. To provide flexibility and cost containment the Program revisions retain the Cost Containment Reserve (CCR), and create an Emissions Containment Reserve (ECR). The Program revisions retain the interim compliance obligation. The RGGI Model Rule revisions eliminated two offset categories, the "SF6 Offset Category" and the "End-Use Energy Efficiency Offsets Category" and updated and retained three offset categories. New York is only retaining the offset provision for avoided methane emissions from agricultural management operations. Finally, to address stakeholder concerns, New York is expanding 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 Department, NYSERDA and the New York State Department of Public Service (DPS) analyzed costs and impacts associated with compliance with the revisions to the Program. Under the Reference Case, without the revisions to the program, CO2 allowance prices (the cost of complying with RGGI) are projected to increase through 2023 to $2.60/ton (2015 dollars) and then decline to the auction reserve price by 2026, as a result of added renewable generation, where they will remain through 2031. Under the Model Rule Policy Case, New York's wholesale electricity prices (including both energy and capacity costs) are projected to be $1.29/MWh (2015 dollars) higher in 2031 than the Reference Case, a three percent increase. A macro-economic impact study of the Program was also conducted. The study concluded that the economic impacts of RGGI on the economies of the participating states, including New York, were generally positive, albeit relatively small.

There will be costs associated with the administration of the Program. The Department will continue to incur staff costs associated with the implementation of the revised Program. NYSERDA will also continue to incur costs to administer and evaluate the use of auction proceeds from the Program. It should be noted, that the Department's costs and NYSERDA's administrative and evaluation rates are expected to remain unchanged as a result of the Program revisions. A significant portion of Program costs are allocated to the operation and administration of the CO2 Allowance Tracking System (COATS) and conducting allowance auctions. It is anticipated that these costs will not change in the future.

Under the existing Program and the revisions to the Program, the owners and operators of each source and each unit at the source shall retain the following documents for a period of ten years from the date the document is created: account certificate of representation form; emissions monitoring information; copies of all reports and compliance certifications; copies of all documents used to complete a permit application; copies of all documents used to complete a consistency application; and copies of all documents required as part of an auction application.

For each control period in which one or more units at a source are subject to the CO2 budget emission limitation, the CO2 authorized account representative of the source shall submit to the Department, a compliance certification report for each source covering all such units. This must be submitted by the March 1st following the relevant control period for all units subject to the Program.

The Department examined the "No Action" alternative which would leave the current Program in place and the Program cap and flexibility provisions within it would remain unchanged. Since the "No Action" alternative would leave the Program unchanged and would not address the results of the regional Program Review at the end of 2017 it was not selected. The Department also considered different regional emissions cap levels as additional alternatives, rather than the approximately 75 million ton regional emission cap that is to be implemented under the revised Program. Lastly, flexibility provided for under the Program provided through the revision to the CCR and offset provisions, and the inclusion of the ECR were evaluated.

The revisions to the Program are protective of public health and the environment in the absence of similar federal emission standards. The potential adverse impact to global air quality and New York State's environment from CO2 emissions necessitates that New York State take action now to minimize CO2 emissions that contribute to climate change. Due in part to the lack of a federal program, the Department has determined that fossil fuel-fired electricity generators must continue to reduce emissions of CO2 now.

The revisions to the Program include an expansion of the applicability provisions of the current Program. The revised Program will require affected sources already subject to the Program to continue to comply. Units newly subject to the Program under the expansion to certain units 15 MW and larger will be subject to the Program for compliance purposes beginning in 2021. The Program revisions retain the interim compliance obligation. Units 15 MW and larger that are subject to the Program will be subject to both the interim control period and control period requirements on the later of January 1, 2021 or the date the unit commences operation.

The Program revisions also include minor revisions and updates to all references. Finally, the majority of the proceeds from the sale of New York's allowances will continue to be dedicated to strategic energy or consumer benefits, such as energy efficiency and clean energy technologies.


1 In addition to New York, the RGGI Participating States include: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island, and Vermont. Pennsylvania has expressed interest in potentially becoming a RGGI Participating State, while Virginia recently finalized its own regulation so that it will become a RGGI Participating State as of January 1, 2021.
2 The Participating States released the Updated Model Rule on August 23, 2017.
3 NYSERDA 2019. New York State Greenhouse Gas Inventory 1990-2016. Available at:
5 World Meteorological Organization. Greenhouse Gas Bulletin. 2017. Report Number 13. Available at
6 Rosenzweig, C., W. Solecki, A. DeGaetano, M. O'Grady, S. Hassol, P. Grabhorn (Eds.). 'Responding to Climate Change in New York State: The ClimAID Integrated Assessment for Effective Climate Change Adaptation'. New York State Energy Research and Development Authority (NYSERDA).
7 Horton, R., D. Bader, C. Rosenzweig, A. DeGaetano, and W. Solecki. 2014. Climate Change in New York State; Updating the 2011 ClimAID Climate Risk Information, New York State Energy Research and Development Authority (NYSERDA), Albany, New York.
8 Rosenzweig, 'op.cit'
9 6 NYCRR Part 490, Projected Sea-level Rise.
10 Rosenzweig, 'op.cit.'
11 Garcia, Alvaro. Dealing with Heat Stress in Dairy Cows. South Dakota Cooperative Extension Service. September 2002. Page 1.

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