08/11/2017

MassDEP Issues New Regulations to Reduce GHG Emissions

Today, the Massachusetts Department of Environmental Protection (MassDEP) promulgated final regulations to ensure that the Commonwealth will meet the 2020 statewide greenhouse gas (GHG) emissions limits mandated by the 2008 Global Warming Solutions Act (GWSA).  The new regulations reflect recent rulings and executive orders by the Massachusetts Supreme Judicial Court and Governor Charles D. Baker, respectively, requiring Massachusetts to achieve goals related to climate change in a timely manner.  Two of the new regulations, 310 CMR 7.74 (Reducing CO2 Emissions from Electricity Generating Facilities) (Section 7.74) and 310 CMR 7.75 (Clean Energy Standard) (Section 7.75) will increase the amount of clean electricity purchased from the regional grid for consumption in the Commonwealth and reduce carbon dioxide (CO2) emissions from power plants in Massachusetts by imposing an annually declining aggregate emissions cap on 21 large fossil fuel-fired generators in Massachusetts.  The new regulations will have important effects on the electricity sector in Massachusetts and the region. 

Background 

Pursuant to the GWSA, Massachusetts must achieve a 25% reduction in GHG emissions statewide below 1990 levels by 2020, and additional reductions of at least 80% below 1990 levels by 2050.  Last year, in Kain v. DEP, the Supreme Judicial Court of Massachusetts held that MassDEP must promulgate enforceable regulations that will facilitate the Commonwealth’s achievement of these emissions reductions.  In September 2016, Governor Baker issued Executive Order No. 569, requiring MassDEP to promulgate final regulations by August 11, 2017.  MassDEP has issued the regulations consistent with that directive, and after a period of public comment.  

A New Clean Energy Standard and Emissions Cap

As promulgated, Section 7.75, the Clean Energy Standard, establishes a minimum percentage of electricity sales that Massachusetts utilities and competitive suppliers must procure from clean energy sources.  The minimum percentage begins at 16% in 2018, and increases by 2% annually, to 80% in 2050 (combined percentage for RPS and CES-only resources).  The CES will complement - not replace - the existing Massachusetts Renewable Portfolio Standard (RPS) regime. For example, any renewable energy certificates (RECs) allowing for compliance with RPS Class I requirements will also satisfy CES requirements. At the same time, electricity obtained from additional non-emitting, non-RPS energy sources may satisfy CES requirements, e.g., certain hydroelectric generators.  Similar to the RPS regime, suppliers will demonstrate compliance with CES requirements by obtaining the requisite amount of Clean Energy Credits (CECs) or by making Alternative Compliance Payments (ACPs).  The CES’s focus on the increased use of clean energy is consistent with the Commonwealth’s ongoing commitment to soliciting proposals for significant additional hydropower and wind energy resources, as set forth in the 2016 Energy Diversity Act.

Section 7.74 establishes an allowance trading program for CO2 emissions from electricity generating resources and a sector-wide, annually declining limit on aggregate CO2 emissions from 21 large, fossil fuel-fired power plants in Massachusetts.  The new regulation sets the initial cap for 2018 at 8.96 million metric tons of CO2, declining to 1.8 million metric tons of CO2 in 2050.  Sections 7.74 and 7.75 will work in tandem, such that as the requirements of Section 7.74 displace fossil fuel-fired resources and equipment within the Commonwealth, Section 7.75 will require additional procurements of clean energy to meet the needs of Massachusetts ratepayers.

Importantly, these new regulations will both pose challenges for the continued viability of fossil fuel-fired plants in Massachusetts and render the availability of renewable energy even more essential to meeting the Commonwealth’s retail electricity load. 

In addition to Sections 7.74 and 7.75, MassDEP issued the following regulations to limit GHG emissions within the Commonwealth:  

  • 310 CMR 7.72 Reducing Sulfur Hexafluoride Emissions from Gas –Insulated Switchgear (requiring that sulfur hexafluoride (SF6) emissions from gas-insulated switchgear owned by large utilities meet a mass-based, annually declining aggregate limit);
  • 310 CMR 7.73 Reducing Methane Emissions From Natural Gas Distribution Mains and Services (requiring that methane emissions from natural gas mains and services for individual distribution system operators meet a mass-based annually declining aggregate limit); 
  • 310 CMR 60.05 Global Warming Solutions Act Requirements for Transportation (requiring the Massachusetts Department of Transportation (MassDOT) to meet enforceable limits on CO2 emissions from the combustion of fuels and heating fuels in equipment owned by MassDOT and the Massachusetts Bay Transit Authority); and
  • 310 CMR 60.06 CO2 Emission Limits for State Fleet Passenger Vehicles (requiring a mass-based annually declining GHG emissions limit on passenger vehicles owned and leased by the Commonwealth’s Executive Offices).

For questions regarding the new Mass DEP regulations or any other energy issue, please contact Jared S. des Rosiers at jdesrosiers@pierceatwood.com or 207.791.1390, or James M. Avery at javery@pierceatwood.com or 617.488.8125.