Albuquerque Journal: EIB Approves Gas Emissions Cap Proposal

December 2010

The state Environmental Improvement Board on Monday approved a petition by the Santa Fe-based nonprofit New Energy Economy, calling for a state-only cap on greenhouse gas emissions.

By a 4-1 vote, the board adopted what amounts to a backup plan if the New Mexico Environment Department’s cap-and-trade plan doesn’t get off the ground. Last month, the board approved the NMED’s regulation proposing that the state participate in a regional cap-and-trade program with other states and Canadian provinces.

The state Environmental Improvement Board on Monday approved a petition by the Santa Fe-based nonprofit New Energy Economy

The NEE plan, originally to take effect in 2012, calls for businesses and industries in the electric and gas and oil sectors that emit 25,000 metric tons or more of carbon dioxide to start reducing emissions by 3 percent a year. It would only take effect if the state’s plan fails or if a federal emissions regulation is not forthcoming.

Under a board amendment, the NEE rule would take effect Jan. 1, 2013, or six months after the NMED rule is no longer in force, whichever date is later. The rule would sunset if a regional or federal emissions reduction is put in place. If that’s not the case, it would expire in 10 years after the effective date.

“This (the NEE rule) is that measure that’s out there that if all things go wrong, this is still in place,” board member Gregory Green said. “Our state needs to move forward.”

The NMED plan would allow regulated sources to reduce emissions by 2 percent a year, starting in 2012. It also would allow them to buy “allowances” from companies able to reduce emissions more than the requirement called for, or to buy offsets, to comply with the law. Business and industry groups opposed to the rule have threatened to challenge the board’s decision.

The board spent much of Monday afternoon trying to mesh the time frames with the NMED rule to avoid having competing rules on the books.

“We put the effective date so far out, I’m not concerned (about) going back and forth,” board chair Gay Dillingham said.

Under the NEE rule, regulated companies that couldn’t reach the reduction requirements could buy offsets from unregulated state companies that are able to reduce greenhouse gas emissions. There is a $50-per-metric-ton cap on what a company would be required to spend to reduce emissions, with $1 added each subsequent year. The rule provides an “off-ramp” for any company that could demonstrate the cost of compliance affects its “financial integrity.”

Board member Leland Gould voted against the measure, saying he believes most of the state’s citizenry opposes it and that any regulation that causes a competitive disadvantage for companies in New Mexico is unfair. In addition to Green and Dillingham, James Gollin and Abbas Ghassemi voted in favor.

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