PA 08-98—sHB 5600

Environment Committee

Public Safety and Security Committee

Appropriations Committee

AN ACT CONCERNING CONNECTICUT GLOBAL WARMING SOLUTIONS

SUMMARY: This act mandates reductions in state greenhouse gas (GHG) emissions and makes changes designed to help the state achieve the reductions.

Prior law set state GHG emission reduction goals for 2010, 2020, and 2050. The act requires the state to meet its 2020 goal and a modified 2050 goal.

It requires certain state agencies to identify (1) activities and facility improvements to meet state energy saving goals and (2) policies and regulations they may adopt to help meet the emission limits. It also requires the Department of Environmental Protection (DEP) commissioner, with the help of a regional nonprofit air quality and climate organization, to publish a baseline inventory of GHG emissions and recommend strategies, regulatory actions, and policies to achieve the necessary reductions. It eliminates a requirement that the commissioner establish a regional GHG registry to which certain emission sources must report, and related provisions.

The act requires the Governor's Steering Committee on Climate Change (steering committee) to create a subcommittee to assess the impact of climate change on the state and recommend to the governor and legislature ways the state can adapt to, and mitigate, harmful impacts. It authorizes the DEP commissioner to contract with, and serve on the board of, a nonprofit organization created to help the state implement a multistate air pollution control program.

It allows the commissioner to use funds from the greenhouse gas reduction fee on new motor vehicles to implement air pollution control requirements as well as the act's greenhouse gas reduction requirements.

It also (1) requires the Department of Transportation (DOT) to continue to investigate, within available appropriations, the potential for improving the state transportation system in ways to reduce GHG emissions; (2) requires DEP to keep abreast of low carbon fuel standards in other states and elsewhere; (3) allows proceeds from the auction of GHG emission allowances to be used to cover certain state agency administrative costs; (4) authorizes DEP to work with other states and Canadian provinces to develop market-based compliance mechanisms to achieve the GHG limits, including a cap-and-trade program; (5) changes reporting requirements, and (6) makes other changes.

EFFECTIVE DATE: October 1, 2008, except for the provision concerning the DEP commissioner's contracting authority, which is effective on passage.

SETTING GHG EMISSION LIMITS

Emission Requirements

Prior law set 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 set a default reduction goal of between 75% and 85% below 2001 levels by 2050. The act 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. It requires the DEP commissioner to determine these levels. By law, GHGs are any chemical or physical substance emitted into the air that the DEP commissioner reasonably anticipates will cause or contribute to climate change, including carbon dioxide (CO2), methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

Reporting Requirements

The act requires, by January 1, 2010 and twice a year thereafter, state agencies that are members of the steering committee to report to the Office of Policy and Management (OPM) secretary and DEP commissioner. The report must identify (1) existing and proposed activities they design to meet state agency energy-savings goals, as set by the governor; (2) improvements to the agencies' facilities designed to meet these goals; and (3) policies and regulations member agencies may adopt in the near future to meet the act's GHG emissions limits. Steering committee members include the commissioners of DEP, DOT and the departments of Administrative Services and Public Utility Control; the chairperson of the Connecticut Clean Energy Fund; and the OPM undersecretary. The departments of Revenue Services and Social Services join these agencies on the climate change coordinating committee, which staffs the steering committee.

By January 1, 2012 and every three years thereafter, the DEP commissioner, in consultation with the OPM secretary and the steering committee, must report to the Environment, Energy, and Transportation committees on the quantifiable emissions reductions achieved. The report must include a schedule of proposed regulations, policies, and strategies designed to achieve the GHG limits; an assessment of the latest scientific information and relevant data on global climate change; and the status of GHG emissions in other states and countries.

The act requires that, at least one year before the effective date of any federally mandated GHG cap-and-trade program that covers GHG emissions subject to state cap-and-trade requirements, the DEP commissioner and OPM secretary explain the differences between the federal and state requirements in a report to the Environment, Energy, and Transportation committees. The report must identify any regulatory or legislative actions needed to become consistent with the federal program.

The act 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 in meeting the GHG reduction goals set by prior law.

GHG Emissions Reporting

Prior law required (1) the DEP commissioner to work with other states or a regional consortium to establish a regional GHG registry and reporting system, and (2) owners and operators of certain stationary emission sources to annually report their emissions to the registry.

It also required the commissioner to (1) annually consider expanding the reporting requirements to other facilities and sectors, (2) provide for voluntary reporting by these entities and facilities, (3) evaluate the feasibility of establishing a statewide GHG registry if a regional one was not developed, and (4) publish a GHG emission inventory every three years.

The act instead requires the commissioner, with the advice and assistance of a nonprofit association organized to provide scientific, technical, analytical, and policy support to northeastern state air quality and climate programs (apparently the Northeast States for Coordinated Air Use Management, or NESCAUM) to:

1. by December 1, 2009, publish (a) an inventory of GHG emissions to establish a state GHG emissions baseline and (b) a summary of GHG emission reduction strategies on DEP's website;

2. by July 1, 2010, publish results of various modeling scenarios concerning GHG emissions, including an evaluation of potential economic and environmental benefits and economic growth opportunities based on these scenarios;

3. by July 1, 2011, analyze GHG emission reduction strategies, and after allowing for public comment, recommend strategies to achieve the GHG emission level reductions the act requires; and

4. by July 1, 2012, and every three years thereafter, develop, with an opportunity for public comment, a schedule of recommended regulatory actions by relevant agencies, policies, and other actions needed to show reasonable further progress towards achieving the limits.

As under prior law, the commissioner may adopt regulations to implement the act.

Use of Emissions Allowances

Connecticut is a member of the Regional Greenhouse Gas Initiative (RGGI), a multistate initiative to reduce power plant carbon dioxide emissions in the northeast. The law requires DEP to adopt regulations to implement the RGGI cap-and-trade program and, in consultation with DPUC, to auction all emission allowances, investing the proceeds on behalf of electric ratepayers in energy conservation, load management, and class I renewable energy programs.

By law, the DEP regulations may include provisions to (1) cover reasonable administrative costs associated with implementing RGGI in Connecticut, (2) fund assessment and planning of emissions reduction measures, and (3) mitigate the impact of climate change. The act authorizes these regulations to also include provisions covering the reasonable administrative costs state agencies incur in adopting regulations, plans, and policies to achieve the GHG emissions limits. By law, these costs cannot exceed 7. 5% of the total projected value of the emissions allowances DEP auctions off.

LOW CARBON FUEL STANDARD

The act requires DEP to monitor the development of low carbon fuel standards in other states and jurisdictions; evaluate the potential of these standards to achieve net carbon reductions; and assess whether the analytical framework used to determine the carbon benefit measures the full lifecycle of GHG emissions, including emissions of GHG caused by changes in land use and other factors. (Lifecycle analysis examines the full range of the environmental impact of a product or service. ) The assessment must include the modeling tools developed by the California Air Resources Board and U. S. Environmental Protection Agency. This analytical framework must (1) include all stages of fuel and feedstock production, delivery and use of the finished fuel to the ultimate consumer, and (2) adjust the mass values for all GHG emissions relative to their global warming potential.

DOT must, within available appropriations, continue to investigate the potential for improving the state transportation system to reduce GHG emissions and coordinate with other northeastern states on regional strategies to incorporate GHG emissions reductions into regional transportation planning, including high speed rail, light-rail passenger service, and freight rail services in the northeast.

CLIMATE CHANGE IMPACTS SUBCOMMITTEE

The act requires, by January 1, 2009, the steering committee to create a subcommittee to (1) assess climate change impact on state and local infrastructure, public health, and natural resources and habitats; (2) prepare recommendations and plans to enable state and local governments to adapt to the impact; and (3) provide technical assistance to implement the recommendations and plans. Steering committee members may serve on the subcommittee. By December 31, 2009, the subcommittee must report to the steering committee on its assessment of current state and private programs and its research on the impact of climate change on state:

1. infrastructure, including buildings, roads, railroads, airports, dams, reservoirs, and sewage treatment and water filtration plants;

2. natural resources and ecological habitats, including coastal and inland wetlands, forests, and rivers;

3. public health; and

4. agriculture.

The subcommittee may hold public hearings on its assessment and on recommendations for further assessments of impacts on these resources. It must report to the governor and legislature, by July 1, 2010, on the results of its assessment and its recommendations for changes to state and municipal programs, laws, or regulations to enable municipalities and natural habitats to adapt to and mitigate harmful climate change impact.

DEP COMMISSIONER'S AUTHORITY

Prior law authorized the commissioner to employ technical consultants (1) for special studies, advice, and assistance, and (2) to consult with, advise, and exchange information with other state departments or agencies. The act authorizes her to enter into contracts with these consultants, including nonprofit corporations created to help the state implement a multistate air pollution control program, for these purposes. It authorizes her to serve on the board of directors of such a nonprofit corporation.

USE OF GREENHOUSE GAS REDUCTION FEE

By law, the Department of Motor Vehicles (DMV) commissioner must charge a $5 “greenhouse gas reduction fee” for each new motor vehicle sold on and after January 1, 2007. The fee must be deposited in the Clean Air Act account. The DEP commissioner may use up to 60% of this money to implement the requirements of the GHG labeling program for new motor vehicles and a GHG public education program. The act allows the commissioner to also use the fee revenue to implement air pollution control requirements and the act's greenhouse gas emission reduction, low carbon fuel standard, and DOT study requirements. By law, the DMV may spend the remaining 40% of the fee revenue to implement the labeling and public education program.

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 (RGGI)

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).

Under a cap-and-trade program, companies are free to buy and sell allowances 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 allowances to companies facing high costs, which will generally prefer to buy allowances rather than make costly reductions.

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