OLR Bill Analysis

sHB 5600

AN ACT CONCERNING CONNECTICUT GLOBAL WARMING SOLUTIONS.

SUMMARY:

This bill mandates a wide range of measures to reduce greenhouse gas (GHG) emissions. The bill affects the power generating, transportation, and building sectors.

Current law sets state GHG emission reduction goals for the years 2010, 2020, and 2050. The bill requires the state to meet its 2020 and 2050 goals and makes a number of other changes designed to reduce GHG emissions. It:

1. requires the Department of Environmental Protection (DEP) commissioner to establish emission limits for the electric industry;

2. expands reporting requirements by requiring owners and operators of certain stationary emission sources to report GHG emissions to the regional greenhouse gas registry;

3. requires the state building inspector and the Codes and Standards Committee to revise the State Building Code to include the most stringent energy standards available, but eliminates a requirement that the code require certain major construction and renovation projects to meet green building standards;

4. creates more stringent building construction energy standards, and requires the Office of Policy and Management (OPM), after consulting with DEP and the departments of Public Works and Public Safety, to adopt regulations for new construction or major renovation of a state-owned or -leased building;

5. creates a new class of certified energy inspector;

6. requires state-owned or -leased facilities to offset their GHG emissions through investments in land-use-based carbon offsets in Connecticut;

7. requires the Transportation Department to investigate possible expanded high speed and light rail passenger service and expanded freight rail service in the northeast;

8. requires the OPM secretary to develop a model municipal smart growth code;

9. requires state agencies, when conducting a Connecticut Environmental Policy Act (CEPA) environmental impact evaluation, to include an analysis of the effect of the proposed action on GHG and other air pollutant emissions and the state's economic and safety needs;

10. allows proceeds from the auction of GHG emission allowances be to used to cover certain DEP administrative costs;

11. authorizes the creation, by regulation, of a low-carbon fuel standard for motor vehicle and home heating fuels;

12. requires DEP to work with other states and Canadian provinces to develop market-based compliance mechanisms to achieve the GHG limits; and

13. makes other changes.

The bill also prohibits load-serving entities from signing a power purchase agreement for, and bars DEP from permitting, any new base-load fossil fuel power plant that begins operating after June 1, 2008 if it exceeds the carbon dioxide (CO2) emissions rate of 1,100 pounds per megawatt-hour for the total emissions associated with producing electricity. However, this provision does not take effect until October 1, 2008.

EFFECTIVE DATE: October 1, 2008, except for the provision creating the class of, and developing a training and certification program for, certified energy inspectors, which takes effect upon passage.

SETTING GHG EMISSION LIMITS

Current law sets goals of reducing state GHG emissions to (1) 1990 levels by January 1, 2010 and (2) 10% below 1990 levels by January 1, 2020. It sets a default goal of reducing emissions between 75% and 85% below 2001 levels by 2050. The bill eliminates the 2010 goal and instead requires the state to reduce its GHG emissions to (1) at least 10% below 1990 levels by January 1, 2020 and (2) at least 80% below 2001 levels by January 1, 2050.

Agency Regulations

It requires, by January 1, 2012, the OPM secretary, commissioners of DEP, and the departments of Administrative Services (DAS) and Transportation (DOT) to each adopt regulations concerning the GHG caps as they pertain to each agency, and to meet the bill's emission limits. The regulations must provide for DEP evaluation of policies and programs based upon a GHG emissions cost of $ 10 per ton of CO2, adjusted for inflation, or the current Regional Greenhouse Gas Initiative (RGGI) or federal allowance price, whichever is more. The DEP commissioner may adjust the cost to reflect the projected cost of carbon over a proposed project's lifetime.

These regulations must:

1. minimize cost and maximize the total benefit to the state, encourage innovation, stimulate investment in low GHG technology and encourage early action to reduce GHG emissions;

2. ensure that compliance with the regulations furthers federal and state air pollution standards and goals to reduce emissions of toxic air pollutants;

3. weigh potential benefits to society, including reducing other air pollutants, diversifying energy sources, and other benefits to the economy, environment, and public health;

4. ensure that activities taken to comply with the regulations do not disproportionately impact low-income and minority communities;

5. minimize the administrative burden of implementing and complying with the regulations;

6. consider the significance of the contribution of each source or category of sources to statewide GHG emissions; and

7. result in GHG emission reductions that are real, permanent, quantifiable, verifiable, and enforceable.

OPM and the Governor's Steering Committee on Climate Change (steering committee) must monitor and enforce compliance with the law and regulations.

DEP must work with interested states and Canadian provinces to develop and implement mechanisms, including cap and trade programs, to achieve compliance with the bill's GHG limits.

The bill authorizes DEP to adopt regulations creating monitoring and verification requirements to ensure the capture and sequestration of CO2. The regulations must be consistent with federal guidelines concerning permanent sequestration. Permanently sequestered GHG emissions must be excluded when determining if the state has met its GHG emission limits.

Reporting Requirements

The bill eliminates a requirement that DEP, in collaboration with other state agencies and the steering committee, submit an annual report to the Environment Committee on progress made in achieving the state's Climate Change Action Plan goals. It instead requires that, by January 1, 2012 and every five years thereafter, the OPM secretary, after consulting with the DEP commissioner and the steering committee, report to the legislature on (1) the progress made in achieving the emission reductions and (2) an assessment of the latest scientific information and relevant data on climate change and the status of emission reductions in other states and countries.

GHG Emissions Reporting

Under current law, owners and operators of stationary emission sources that report air emissions data to DEP under Title V of the Clean Air Act must annually report their GHG emissions to the regional GHG registry. The bill requires, by April 15, 2009, that owners and operators of stationary emission sources that emit more than 10,000 tons of CO2 equivalents report to the regional GHG registry on a DEP form. They must report all GHG emissions in a format the registry can accommodate. The DEP commissioner must annually consider whether to expand the reporting requirements to other entities or facilities. The bill eliminates a requirement that she annually explain her decision to the legislature.

It requires the state (apparently DEP), where appropriate and feasible, to incorporate the standards and protocols developed by the national climate registry established by the Northeast States for Coordinated Air Use Management (NESCAUM) and the Northeast States Center for a Clean Air Future.

ELECTRIC SECTOR

Electric Sector Emission Levels

The bill requires DEP, in consultation with the Department of Public Utility Control (DPUC), to establish emission levels for the electric sector, based on consumption and electricity purchases from the regional electric power grid. The DEP commissioner must consider the RGGI and the state's renewable portfolio standards when establishing these limits (see BACKGROUND).

Use of Emissions Allowances

Connecticut is a member of RGGI, a multistate initiative to reduce power plant carbon dioxide emissions in the northeast. The law requires the state to adopt regulations to implement the RGGI cap-and-trade program (see BACKGROUND). By law, after implementing this program, DEP, in consultation with DPUC, must auction all emission allowances and invest the proceeds on behalf of electric ratepayers in energy conservation, load management, and Class I renewable energy programs. The state may use up to 7. 5% of the total projected allowance value for reasonable administrative costs associated with implementing RGGI. The bill specifically allows these allowances to be used to cover the reasonable administrative costs state agencies incur in adopting the GHG emission regulations the bill requires.

Fossil Fuel Power Plant Restrictions

The bill prohibits (1) a load-serving entity from signing a power purchase agreement or capacity contract for, and (2) DEP from permitting, a new base load fossil fuel power plant that begins operating after June 1, 2008, if it emits CO2 at a rate greater than 1,100 pounds per megawatt-hour for the emissions associated with producing electricity, including useful thermal output. The DEP commissioner may reduce the rate to account for technological advances. Load-serving entities are not defined in state law or regulation, but include utilities and other certain entities under federal law.

BUILDINGS AND LAND USE

Tightening the State Building Code

By law, the state building inspector and the Codes and Standards Committee must revise the State Building Code to require that buildings, including residential buildings, are designed to provide optimum cost-effective energy efficiency during their useful life. Current law requires the revision to meet the American Society of Heating, Refrigerating, and Air Conditioning Engineers Standard 90. 1 for new construction (Standard 90. 1).

The bill eliminates the requirement that these buildings meet this standard, and instead requires, by January 1, 2009, the inspector and committee to revise the code to include the most stringent model energy standards available. These revisions must meet either the most recent version of the International Energy Conservation Code standards or Standard 90. 1, as appropriate. The inspector and committee must revise the code no later than six months after these standards are revised.

Eliminating Green Building Requirements for Certain Projects

The bill eliminates a requirement that the state building inspector and Codes and Standards Committee revise the State Building Code to require that, except for residential buildings of up to four units, (1) buildings costing at least $ 5 million built after January 1, 2009, and (2) renovations costing at least $ 2 million, starting January 1, 2010, meet the silver building standard of the Leadership in Energy and Environmental Design (LEED) rating system for new commercial construction and major renovation projects, or an equivalent standard, such as the two-globe rating of the Green Globes USA design program.

State Buildings

By January 1, 2009, the OPM secretary, in consultation with the commissioners of DEP and the departments of Public Works and Public Safety, must adopt regulations for new construction or major renovation of state-owned or -leased buildings that create building construction energy standards that exceed by at least 20% the standards set forth in Standard 90. 1. The secretary may revise the regulations as needed.

All state-owned and -leased facilities must offset any GHG emissions resulting from the removal of forests, associated biomass, and soil carbon through investments in land-use-based carbon offsets in Connecticut. The OPM secretary, in consultation with the DEP commissioner, must develop standards and verification protocols to ensure that the offsets occur and are permanent, enforceable, and verifiable.

Certified Energy Inspectors

By July 1, 2008, the commissioner of administrative services must establish the classification of “certified energy inspector” in OPM. OPM must develop a training and certification program for this position by September 1, 2008.

Development of a Smart Growth Code

The OPM secretary, in consultation with the DEP commissioner, must develop a model municipal smart growth code that encourages (1) open space preservation, (2) mixed land use, (3) compact building design, and (4) the availability of public transit and other low-carbon-emission transportation alternatives. It must emphasize strengthening and directing development towards existing infrastructure. The secretary must investigate potential incentives to encourage municipalities to adopt the model code, and must report to the legislature on his findings by January 1, 2009.

TRANSPORTATION SECTOR

Passenger and Freight Rail Service

DOT must investigate the potential for expanding high speed and light-rail passenger service and freight rail services in the Northeast. The investigation must include developing new rail corridors, reducing vehicle miles traveled, and analyzing the expanded service's effect on economic and environmental benefits and GHG emissions. The DOT commissioner must report to the legislature by June 1, 2009.

Low Carbon Fuel Standard

The bill allows the DEP commissioner, in consultation with the DOT commissioner and OPM secretary, to adopt regulations establishing a low-carbon fuel standard for motor vehicle and home heating fuels sold in the state. Before adopting the regulations, DEP must determine if a sufficient analytical framework exists to accurately measure full-lifecycle GHG emissions, including GHG emissions caused by changes in land use and other factors. DEP's assessment must include the modeling tools developed by the California Air Resources Board and U. S. Environmental Protection Agency (EPA).

The fuel full-lifecycle analysis must (1) include all stages of fuel and feedstock production and distribution and (2) adjust the weight for all GHG emissions relative to their global warming potential. Any adopted regulations must mandate the use of a sufficient analytic framework, and establish a declining standard for GHG emissions measured in CO2 equivalent grams per unit of fuel energy sold, sufficient to achieve at least a 10% reduction in the lifecycle carbon intensity of all motor vehicle and home heating fuels sold in Connecticut by 2020.

The low carbon fuel standard must address issues associated with the production of new fuels, including sustainability; water, air, and soil quality impact; land use change; and food production. The relevant agency (apparently DEP) must consider other state standards when adopting regulations.

BACKGROUND

Climate Change Action Plan and Governor's Steering Committee on Climate Change

The Conference of New England Governors and Eastern Canadian Premiers, representing the six New England states and the provinces of New Brunswick, Newfoundland, Labrador, Nova Scotia, and Prince Edward Island, issued a Climate Change Action Plan in 2001 that recommended short- and long-term goals to reduce greenhouse gas emissions. The governor subsequently appointed a steering committee to organize a discussion among businesses, nonprofit organizations, state and local government agencies, and academic institutions of ways to reduce greenhouse gas emissions.

Regional Greenhouse Gas Initiative

Connecticut is a member of RGGI, a multistate initiative to design and implement a flexible, market-based, cap-and-trade program to reduce power plant carbon dioxide emissions in the northeast United States. Connecticut was one of seven states to agree in 2005 to a CO2 cap-and-trade program for all fossil-fuel electric generating units of 25 megawatts or more. The program begins January 1, 2009.

Each state will allocate allowances up to the amount of its emission budget, with each allowance allowing a regulated source to emit one ton of CO2. Under RGGI, instead of giving allowances directly to electric generators for free, states will sell a significant portion through a regional auction, or other means. By law, Connecticut must auction all emission allowances and invest the proceeds on behalf of electric ratepayers in energy conservation, loan management, and class I renewable energy programs. The state may use up to 7. 5% of the total projected allowance value for reasonable administrative costs of implementing RGGI (CGS 22a-200c).

Cap-and-Trade Program

Under a cap-and-trade program, states set the total amount of carbon dioxide emissions to be allowed from all sources (emissions cap). The emissions allowed under the new cap are then divided into individual permits that represent the right to emit that amount. Companies are free to buy and sell permits in order to continue operating in the most profitable manner available to them. Thus, companies that are able to reduce emissions at a low cost can sell their extra permits to companies facing high costs (which will generally prefer to buy permits rather than make costly reductions themselves).

Renewable Portfolio Standards

By law, electric companies and suppliers have to obtain a certain percentage of their power from renewable resources, such as solar and wind power.

Connecticut Environmental Policy Act (CEPA) and Environmental Impact Evaluations (EIEs)

CEPA identifies and evaluates the impact of proposed state actions that could significantly affect the environment. State departments, institutions, or agencies considering (or funding in whole or part) actions that may significantly affect the environment (including actions that could have a short-term disadvantage to long-term environmental goals) must prepare an EIE before deciding whether to undertake or approve such an action. The EIE must be submitted to various agencies and is open to public inspection and comment.

Carbon Sequestration

Carbon sequestration is long-term storage of carbon on the earth's surface, underground, or the oceans, so that the buildup of CO2 concentration in the atmosphere will reduce or slow. In some cases, this is accomplished by maintaining or enhancing natural processes; in other cases, new techniques are developed to dispose of carbon.

CO2 Equivalent

CO2 equivalent is a measurement that describes the global warming potential of a particular GHG over a specific period of time relative to CO2.

Title V Sources

DEP issues Title V operating permits to power plants and other major sources of air pollution subject to the federal Clean Air Act. Permittees must ensure compliance with pollution control requirements. According to DEP, about 126 Title V facilities report to it.

Legislative History

On April 3, the Public Safety Committee reported a substitute bill that eliminated (1) current law requiring certain construction and renovation projects to meet green building standard and (2) a provision prohibiting issuance of certificates of occupancy for new construction and major renovation projects that do not meet the bill's new energy standards.

COMMITTEE ACTION

Environment Committee

Joint Favorable Substitute

Yea

18

Nay

6

(03/07/2008)

Public Safety and Security Committee

Joint Favorable Substitute

Yea

15

Nay

7

(04/03/2008)