On Friday, MassDEP released for public review and comment draft amendments to the CO2 Budget Trading Program regulations. These amendments are designed to implement the changes to the Regional Greenhouse Gas Initiative (RGGI) agreed to by the RGGI states earlier this year as part of the 2012 Program Review.
As Seth previously discussed, the major change is a new cap that reduces the baseline budget of allowances for 2014 by 45%, with additional 2.5% reductions in the years 2015 through 2020. The reduction is designed to address the significant excess supply of allowances relative to actual emissions levels in the region. For Massachusetts, the initial cap will be 14.4 million tons in 2014, dropping to 12.6 million tons by 2020.
Massachusetts (and the other RGGI states) have also tackled the problem of excess banked allowances – that is, allowances that were purchased but not used during the 2009-20013 period. In two phases, MassDEP will reduce the baseline budget of allowances by the amount of private banked allowances attributable to Massachusetts. The first phase adjustment will be determined at the beginning of 2014. This change will ensure that the over-allocation of the early RGGI period does not interfere with the new budget reductions.
For more information, see MassDEP’s Background Information and Technical Support Document. A public hearing will be held on the regulatory amendments on July 29, and the comment period will close on August 8.