Strictest GHG Reduction Regulations Passed in NM

Last week, the New Mexico Environment Improvement Board adopted a regional cap on greenhouse gas emissions. The measure, which passed narrowly by a four to three vote, is the most comprehensive  regulation in the nation, according to the New Mexico Environment Department. It will allow New Mexico to participate in the regional Western Climate Initiative’s greenhouse gas cap-and-trade program. However, according to Bloomberg, the new regulations won’t take effect in New Mexico until other states or Canadian provinces in the program move forward with similar cap-and-trade programs so that trading can occur.

The new regulations will allow trade credits to be generated for participation in the regional cap-and-trade program.  It applies to sources that emit 25,000 metric tons of carbon dioxide or more per year—estimated to be about 63 in the state. These consist primarily of electricity generators, oil and gas developers, and a few large businesses. The state will reduce by 2% each year the number of allowances to emit greenhouse gas that are allocated to each facility, starting with allowances based on recent historical emissions adjusted for variations in production rates. Allowances will be distributed free of charge. A source that emits more greenhouse gases than the number of allowances it owns will need to purchase additional allowances through the trade portion of the program. Sources that emit less than the number of allowances it owns may bank or sell the excess. The New Mexico program is scheduled to start in 2012 if the market size—which will extend outside the state—is sufficient to be efficient and cost-effective; this figure is estimated to be at least 100 million tons of carbon dioxide. The regulation will expire if an equally effective federal cap-and-trade program is implemented.