Developing New York State’s Economywide
Public input will inform development of the regulations to implement New York’s Cap-and-Invest Program, including the auction of allowance under that program. As a starting point, DEC and NYSERDA invite the public to review the regulation governing California’s economywide program [PDF] as well as those operating in Quebec and Washington State. DEC and NYSERDA are interested in hearing what elements of those regulations would work well and what improvements or changes may best serve New York.
Meeting the Climate Act Limit on Greenhouse Gas Emissions (GHG) with a Cap-and-Invest Solution
- All GHG emissions would be accounted for under the State’s program and the cap must reduce at a rate to achieve the statewide GHG emission limits set in law.
- Obligated sources (e.g., large-scale GHG emitters and distributors of heating and transportation fuels) would be required to obtain allowances equal to the GHG emissions associated with their activities. All obligated sources will have a reporting requirement.
- Non-obligated sources would not be required to obtain allowances, but their GHG emissions would be accounted for in setting the allowance budget. The allowance budget plus the non-obligated emissions would equal the statewide GHG emission cap. Some non-obligated sources may have an emissions reporting obligation.
Directing Climate Act Investments to reduce GHG emissions and support equity and affordability - NYSERDA anticipates developing a regulation covering the auction of allowances to achieve the Climate Act goals of affordability, equity and the just transition to clean energy. The Climate Act directs that a minimum of 35 percent of proceeds and a goal of 40 percent be invested to benefit disadvantaged communities.
Invitation to Provide Comments on the development of the regulations. The major design elements that New York is seeking feedback on are listed below. You can expand each heading for further information on what is being considered for New York State.
DEC and NYSERDA have developed a template document [PDF] to assist commenters in providing feedback on these topics.
DEC and NYSERDA will review comments and further develop pre-proposal materials to define New York’s program. DEC will send notices to the distribution list when the second round of pre-proposal materials are posted.
Auction Rules – Defines structure and mechanics of allowance auctions.
- What auction format should be used (e.g., single-round or multi-round auctions; a uniform price applicable to all awarded allowances; or allowance pricing based on as-bid prices, frequency of auctions)?
- Should participation in the allowance auctions be limited to obligated entities or be open to market participants without program obligations?
- What requirements should entities fulfill to be able to register for participation in auctions?
- Should the auction mechanics contemplate the inclusion of allowances from linked jurisdictions?
- What measures should be considered (e.g., disclosure requirements) to uphold market integrity and protect against collusion or other market manipulation?
Market Rules – Defines rules for participation in market and trading of allowances.
- Should any constraints be adopted regarding trading of allowances?
- Should any allowance purchase or holding limits or minimum allowance holding periods be applied, and if so, should these apply only to market participants other than obligated entities?