News from New York State Department of Environmental Conservation

For more information contact: Maureen Wren, 518-402-8000

New York Officially Adopts Carbon “Cap and Trade” Program

State Environmental Board Approves Regional Greenhouse Gas Initiative

ALBANY, NY (08/11/2008; 1437)(readMedia)-- The New York State Environmental Board today approved regulations to implement the Regional Greenhouse Gas Initiative (RGGI). RGGI is an initiative begun in December 2005 by 10 Northeastern and Mid-Atlantic states to enact regulations to significantly reduce carbon dioxide emissions from power plants.

New York and the other RGGI states have designed the first market-based, mandatory cap-and-trade program in the United States to reduce greenhouse gas emissions in a simple and constructive way. The states have committed to cap and then reduce the amount of carbon dioxide (CO₂) that power plants in their region are allowed to emit, limiting the region's total contribution to atmospheric greenhouse gas levels.

"Today's action is the culmination of extensive work by the Department of Environmental Conservation (DEC) and our state partners to respond to the challenges posed by climate change," said Pete Grannis, DEC Commissioner and Environmental Board Chairman. "With the approval of the RGGI regulations today, we have enacted a key component of Governor David A. Paterson's plan to move New York towards a clean energy economy and ensure a healthier environment for our entire region."

"Governor Paterson has made fighting global climate change one of the hallmarks of his comprehensive energy policy," said Bob Callender, Vice President for Programs, New York State Energy Research and Development Authority. "As RGGI funds become available from the auctions, we look forward to working with our partners to develop new technologies and implement energy efficiency programs that will reduce the emissions of greenhouse gases and provide real and lasting energy savings for consumers throughout New York State."

"The Environmental Board's approval of regulations designed to implement the nation's first carbon ‘cap-and-trade' program is a landmark step for New York State," Chairman of the New York State Public Service Commission Garry Brown said. "By taking this bold and innovative action, the Board is helping turn Governor Paterson's vision of a clean energy economy into reality."

RGGI is a major departure from prior cap-and-trade programs, with the state not automatically giving away CO₂ allowances to power plant owners. Power plant companies will have to buy CO₂ allowances through an auction or in the secondary market to "cover" every ton of carbon dioxide they emit. The quarterly auction process is live, with the availability of bid preparation materials released for the first auction on September 25.

Each RGGI state is issuing its own regulations for implementation. DEC first proposed regulations to enact RGGI last fall, followed by a revised draft and comment period in May 2008.

With today's approval, New York is on track to offer its CO₂ allowances in the December 2008 RGGI auction - in advance of the compliance start date of January 1, 2009. While New York is not offering any CO₂ allowances for sale in the September auction, New York power plants and companies, as well as individuals, may bid for the CO₂ allowances offered by other states in the September auction. Any CO₂ allowance purchased in the September auction can be used by power generators to comply with the New York regulation when it is effective.

Proceeds from the auction will fund energy efficiency programs, renewable energy projects, and innovative non-carbon emitting technologies. The program will also provide limited opportunities for power companies to offset a portion of their emissions with other "green" investments. For more information about RGGI, go to http://www.rggi.org .

The 16-member Environmental Board is composed of State agency heads and representatives of the environmental community, citizen groups, business and industry.

-30-