Environmental Leader

New York’s Environmental Board has approved regulations to enact a regional “cap and trade” program aimed at reducing GHG emissions from power plants, AP reports via Newsday.com

Under the regulations drafted by the state Department of Environmental Conservation, each state that’s part of the Regional Greenhouse Gas Initiative – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island, and Vermont- has agreed to issue its own regulations to put the “cap and trade” initiative into action by Jan. 1, 2009.

Power plant companies will have to cover its CO2 emissions volume by purchasing allowances at quarterly auctions or on secondary markets. The first auction is scheduled for Sept. 25, and power plants have until March 1, 2012 to buy enough allowances to cover their emissions from 2009 to 2011.

According to Peter Iwanowicz, director of the Office of Climate Change at the DEC, the total annual emissions allowance for the 10-state region is capped at 188 million tons with the minimum sale price of $1.86 per ton. New York’s annual emissions allowance will be 64.3 million tons of CO2.

The first two RGGI trades, which occurred earlier this year, were in the range of $5 – $10 per ton -much higher than the official price estimate of $2.32 per ton. The initial price signals point to RGGI creating a billion-plus regional carbon market.

But some businesses say the initiatives will impose extra costs on energy consumers and add to the state’s economic problems, making the state less competitive than its neighboring states Pennsylvania and Ohio– which are not part of the regional initiative– while providing little environmental benefit.

Power producers group president Gavin Donohue told AP that a national program to reduce CO2 emissions is the way to go and that the regulations may force power companies to pay exorbitant fees to obtain all the emission allowances they need.

Iwanowicz says safeguards have been built into the auction process to ensure that utilities are able to obtain the allowance they need. In addition, the DEC estimates that the new regulations will add about 78 cents per month to the average consumer’s electric bill.

Last month, the Western Climate Initiative, made up of seven U.S. states and  four Canadian provinces, released its “Draft Design of the Regional Cap-and-Trade Program” and its “Draft Essential Requirements of Mandatory Reporting for the Western Climate Initiative.” The plan is for the regional proposal to take effect in 2012