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RGGI Model Rule Summary (Aug 15, 2006)
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The Northeast's Initiative to cap power-plant emissions of CO2
Model Rule released August 1, 2006. Here's how it works:
• Hold constant the level of C02 emissions from 2009--15.
• Reduce the level of CO2 emissions by 10% from the start of 2015 through 2019.
• 25% or more of allowances will be sold at auction, with proceeds to consumers.
• The allowances can be traded between power plants.
• Start date = Jan. 1, 2009
• Each state gets its share of allowances, and determines its consumer benefits.
• States can auction or give away the remaining 75% of their allowances.
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RGGI Covers electricity production in seven states: NY(64), NJ(23), CT(11), NH(9), DE(8), ME(6), VT(1). (Numbers give CO2 emissions by generators in millions of tons/year).
Base Budgets
The initial Base Budget for the Region begins at 121,253,550 short tons, which is allocated to the participating states by the MOU. Base budgets and the states' allocations will hold constant for 2009--14, and then decline by 2.5% per year for the next 4 years, reaching a 10% decrease in 2018. Base budgets determine the allowances that each state will allocate during each allowance year.
Use of allowances for Consumer Benefit
Each Signatory State agrees that 25% of the allowances will be allocated for a consumer benefit or strategic energy purpose.
Compliance Periods
These are 3 years long unless extended by one year due to an SV Trigger Event. Each CO2 Source must have enough allowances (dated during or prior to the Compliance Period) to cover its emissions during the compliance period.
Use of Offsets to cover emission
If no Trigger Event occurs, 3.3% of emissions may be covered with National Offsets. If a Compliance Period includes an Offset Trigger Event, CO2 Sources may cover up to 5% of their emissions with National Offsets. If the Period includes an SV Trigger Event, up to 10% may be covered with National and International Offsets.
Trigger Events
A Trigger Event occurs when the average regional spot price for allowances exceeds a threshold, TT, for twelve consecutive months during the last 22 months of a 3-year compliance period. (The 1st 14 months are excluded as a Market Settling Period.)
An Offset Trigger Event is based on threshold TT = $7.00 (2005$).
A Safety-Valve (SV) Trigger Event is based on TT = $10.00 in 2005 increased by the CPI+2% in each subsequent year.
National and International Offsets
National offset are given for 1 ton of CO2 equivalent GHG removal or sequestration in any US jurisdiction with a cap and trade program that has a monitoring agreement with the RGGI region. International Offsets are allowances or credits from international trading programs.
Monitoring
The Model RGGI Rules include extensive details for monitoring, CO2 emissions on an hourly basis, for monitoring afforestation projects, and carbon sequestration projects.
Sources covered
RGGI applies to generation units with a capacity greater than 25 WM, unless they have been exempted because they sell less than 10% of their output to the grid [1.4(a)].
Penalties
Sources with excess emissions must forfeit 3 tons of post-compliance-period allowances for each ton of emissions in excess of applicable allowances. (Allowances for year N cannot be use for a compliance period that ends before year N.) [1.5(c)(d)]
Early Reduction Allowances (ERAs)
ERAs can be awarded as follows [5.3(c)]:
Baseline years = 2003-5. Early reduction (ER) years = 2006-8.
If Baseline heat input > ER heat input for a Source
ERAs = Eb - Eer, where Eb = baseline CO2, and Eer = early reduction C02
If Baseline heat input < ER heat input for a Source
ERAs = (C02 emission rate improvement) x (total output during ER years)
Banking of Allowances
The banking of allowances, offset allowances and early reduction credits will be allowed without limitation.
Information in this summary is taken from the MOU (12/20/05), the Amendment to the MOU (8/8/2006), and if a [section #] is given, from the Model Rule (8/15/06).
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http://zfacts.com/p/234.html | 01/18/12 07:26 GMT
Modified: Fri, 13 Apr 2007 04:50:24 GMT
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