New York State's Environmental Board last week unanimously
approved regulations to implement the Regional Greenhouse
Gas Initiative (RGGI), a market-based, mandatory cap-and-trade
scheme to reduce carbon dioxide emissions from power plants
within 10 northeastern and mid-Atlantic states.
The Environmental Board-a rainbow of state agencies to
include Environmental Conservation, Health, Agriculture
and Markets, Transportation, Labor, Economic Development,
the Public Service Commission (PSC), and state Energy
Research and Development Authority-voted 15-0 on Aug.
11, clearing the way for the Environmental Conservation
Commissioner to adopt proposed RGGI rules.
RGGI-participating states have signed a memorandum of
understanding agreeing to regulate, via adopted state
legislation, the carbon dioxide emissions from fossil
fuel-fired power plants with a capacity equal to or greater
than 25 MW. The RGGI will allot allowances to these states
based on a regional emissions budget.
Each state will then sell allowances to electric generators
through a regional auction instead of directly allocating
them, as with traditional 'cap and trade' programs. The
first auction is expected to take place on Sept. 25, 2008.
The bid preparation process for this auction is live.
A second quarterly auction will be held on Dec. 17, two
weeks before the compliance period is set to begin.
New York will miss the first auction in September, but
it will be ready for the December auction, the state?s
Department of Environmental Conservation (DEC) said in
Though New York would not offer any allowances in the
September auction, New York power plants and companies,
as well as individuals, could bid for allowances offered
by other states. Allowances purchased from this auction
could later be used to comply with the New York regulation
when it is effective, the DEC said.
Massachusetts, Vermont, Connecticut, Maryland, Rhode
Island, and Maine are set to auction credits in September.
Other RGGI states include Delaware, New Jersey, and New
Hampshire, which was the last state to join the initiative.
New York's PSC chair hailed the approval as a 'landmark
step' and an 'innovative action' that will take the state
governor's vision of clean energy economy into reality.
But the Independent Power Producers of New York (IPPNY)
decried the move, stressing that the initiative would
hit energy consumers with a cost increase of up to 9%
and have a chilling effect on potential investment in
"There is still time before the rule is finalized
for changes to be made that will address several concerns,"
said Gavin Donohue, IPPNY president and CEO.
Since there currently is no carbon-control technology
available to retrofit power plants, power producers should
have priority access (like in other programs) to the emission
allowances needed for facilities to operate in a reliable
manner. In addition, a price cap on the cost of the emission
allowances would soften the blow to ratepayers. Finally,
power producers who are locked into long-term contracts
and will suffer devastating economic blows due to their
inability to recover the costs to comply with program
must receive a proper level of relief.?Sources: New York
State Department of Environmental Conservation, RGGI,