Air Pollution Control Equipment Services, Emissions

Northeast Seven debate model for cutting plant emissions

28 March 2006 – Operators of power plants larger than 25 MW in seven Northeast US states will have to work under the country’s first mandatory market-based cap-and-trade programme to control carbon dioxide emissions if a draft model put together by the Regional Greenhouse Gas Initiative is adopted.

Representatives from Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont will meet in New York today to discuss the implications of the draft model, details of which were released to the public last week.

The key subjects to be discussed are whether carbon emissions allowances will be distributed on a cost free basis or auctioned, what projects will qualify as offsets and whether they should be encouraged or severely restricted, and how offset projects will be evaluated and regulated.

According to Brown Rudnick’s Climate & Energy Group, members of which will be at the consultation meeting in New York today, there is tension within the group of states over whether encouraging offset projects dilutes the programme too much, or whether adding a lot of regulatory hurdles that projects must pass to qualify will only serve to make it extremely difficult to develop any such projects.

Feedback on the proposed model is due in around 45 days and it is expected to be finalized and adopted by the seven states shortly afterwards. A second consultation meeting is scheduled for 2 May 2006 and the comment period will close three weeks later.

Having taken two years to develop the model proposed includes mandatory emission caps on the electric generating sector and allows for emissions trading. Under the draft model participating states will issue one allowance for each tonne of carbon dioxide. Each plant operator would have to purchase enough allowances to cover the carbon dioxide their plant emits. Buying and selling of allowances is possible, as long as the amount of carbon dioxide emitted does not exceed the amount of allowances owned.

The seven states aim to start the programme in 2009, capping emissions from power plants at 121 million tonnes annually until 2015. Between then and 2019, the states will work to reduce emissions by ten per cent.