On August 7, 2008, Massachusetts Governor Deval Patrick signed the "Global Warming Solutions Act," which will impose the most stringent greenhouse gas (GHG) reduction requirements in the nation. The Act creates Chapter 21N, which mandates a reduction of GHG emissions of 10% to 25% below 1990 levels by 2020 and 80% below 1990 levels by 2050, with intermediate caps for 2030 and 2040. Although the details for implementing these caps will not be known until regulations are promulgated, the emission reductions required to meet these caps must be measurable and enforceable.
Whereas most existing GHG reduction programs in the United States focus on the electric generating sector, this Act empowers the Executive Office of Energy and Environmental Affairs (EEA) to regulate a wide variety of sources across the commonwealth, and sets in motion the regulatory process to enforce an economy-wide cap on GHGs. Failure to meet the required reductions can result in administrative civil penalties for violators as high as $25,000 per day.
Greenhouse Gas Registry
The Act mandates that the EEA Secretary establish a GHG registry to catalogue sources of GHG emissions in the Commonwealth. Exactly which sectors will be required to report their emissions is left up to Department of Environmental Protection (“MassDEP”), but it seems likely that the regulations will cut a broad swath. For example, the Act refers to “direct emissions” (such as emissions from sources such as company-owned or company-leased motor vehicles), and “indirect emissions” (such as emissions associated with the consumption of purchased electricity or steam heating). These concepts lay the groundwork for a broad accounting of GHG emissions across multiple sectors of the Massachusetts economy which may have to cut their emissions to meet the goals of the Act.
The EEA must promulgate regulations regarding the reporting and verification of emissions no later than January 1, 2009. Actual reporting begins in April 2009 with the sectors named in the statute, specifically facilities that are required to report air emissions data to MassDEP pursuant to Title V of the Clean Air Act and facilities that have stationary emissions sources which emit over 5,000 tons of GHGs.
Although the Act does not substantially address “leakage”, the concept that reductions in the Commonwealth may cause increased emissions elsewhere, it does require that the Secretary include in the total annual calculation of emissions all GHGs from the generation of electricity delivered to and consumed in the Commonwealth, including transmission and distribution line losses, regardless of whether the electricity was generated in the Commonwealth or imported.
Mandated Reductions
The Act sets ambitious targets for the largest reductions in GHG emissions in the nation, but leaves nearly all of the implementation and details to regulations. The Secretary is instructed to craft a plan, updated at least every 5 years, which achieves the “maximum technologically feasible reductions” of GHG emissions, itself an undefined term. The Act specifies only that the Secretary shall set limits on emissions and shall analyze the feasibility of a variety of measures such as market-based compliance mechanisms and direct emissions reduction measures from other sectors of the economy. The Act specifically allows the Secretary to consider the use of market-based compliance mechanisms, including working with states participating in the Regional Greenhouse Gas Initiative (RGGI) as well as other interested states and Canadian provinces to develop a plan to expand RGGI or other programs to include more diverse sources and sectors. It also requires agencies to promulgate regulations that reduce energy use, increase efficiency and encourage renewable sources of energy in the sectors of energy generation, buildings and transportation.
Regulations to implement the emissions caps must be drafted promptly and the 2020 Plan itself must be finalized no later than January 1, 2011. Organizations seeking to influence the regulations must act quickly. The Act provides for some public input in addition to commenting on proposed regulations. The Secretary must convene an advisory committee with representatives from a wide variety of sectors. In addition, public hearings and workshops regarding the proposed 2020 Plan will take place throughout the Commonwealth, including communities with minority populations and low-income populations which have the most significant exposure to air pollutants.
The full impact of this Act cannot be estimated until regulations have been promulgated, which is certain to be a difficult and contentious process. The Act allows the Secretary to provide credits for early voluntary reductions in emissions where appropriate, and such a program is likely to be included in the regulations. It also provides for "alternative compliance mechanisms" which are actions undertaken by a regulated source that achieve an equivalent reduction of GHGs as a reduction in direct emissions. Although this term is not further elaborated on in the Act, it is likely to involve the use of offsets created by energy efficiency projects.
The Commonwealth’s adoption of CO2 emission standards for existing power plants, its membership in the RGGI program, its GHG policy for projects undergoing review under the Massachusetts Environmental Policy Act, and now the enactment of the Global Warming Solutions Act will likely influence the course of economic development in the state The nature and degree of that influence will hinge on the specifics of the regulations to be promulgated under this new Act.