In addition to obtaining allowances through the quarterly auction process, allowances may also be bought and sold in a secondary market. This structure provides access to a wide variety of buyers and sellers to obtain allowances at an agreeable price, and thus increases the stability of the market. The RGGI CO2 Allowance Tracking System (COATS)
tracks the allocation, award and transfer of CO2
allowances as well as the registration of offset projects, in order to determine compliance with state CO2
Budget Trading Programs. The program also functions as the trading platform for the secondary CO2
allowances market. Reports on program data, market activity, and compliance are publicly available through COATS.
Maryland Department of the Environment established and maintains several general accounts for CO2 allowances under the Maryland CO2 Budget Trading Program. By January 31st of each calendar year, MDE allocates all CO2 allowances from the program to these accounts, which are thereafter handled based on the account-specific regulations. The accounts are summarized below, and additional details can be found under COMAR 26.09.02.
- The Limited Industrial Exemption Set-Aside Account (LIESA) holds allowances that are available for retirement by regulated sources which, as a condition of their permits, limit annual electrical output to the PJM grid to less than 10% of total generation. The number of allowances retired is equal to the average number of tons CO2 emitted by qualifying budget sources over the past three calendar years. Additional details are outlined in COMAR 26.09.02.06.
- The Long Term Contract Set-Aside Account (LTC) holds allowances that are available for sale to qualifying regulated sources at the minimum reserve price. In order to qualify, sources must demonstrate that purchasing the required allowances through auction or secondary market will threaten their financial viability due to the terms of relevant long-term power purchase contracts. Additional details are outlined in COMAR 26.09.02.07.
- The Voluntary Renewable Set-Aside Account (VRSA) holds allowances that are available for retirement in exchange for the retirement of equivalent Renewable Energy Certificates (RECs). The goal of this set-aside account is to promote renewable energy choices, and all Marylanders are eligible to participate. Additional details on VRSA can be found in COMAR 26.09.02.08 as well as this MDE Guidance Document. You may also find out more about “green” electricity options for on the Maryland Public Service Commission's web site.
- The Clean Generation Set-Aside Account (CGSA) holds allowances that are available to be awarded to new sources which apply Best Available Control Technology or Lowest Achievable Emissions Rates (as would be required under the EPA’s New Source Review). This account was created to incentivize the development of new “clean” in-state power. Additional details are available in COMAR 26.09.02.09.
- The Consumer Energy Efficiency Account holds all CO2 allowances from the program which have not been awarded to any parties and are not allocated to one of the four Set-Aside Accounts. Allowances from this account may be offered for sale in auctions.
RGGI applies to coal-fired, oil-fired, and gas-fired electric generating units located within participating states that have a capacity of at least 25MW (“CO2 budget sources”). All CO2 budget sources are responsible for installing and maintaining continuous emissions monitoring system (CEMS) to monitor CO2 concentration, stack gas flow rate, oxygen concentration, heat input, and fuel flow rate; and for recording, reporting, and verifying the data from these systems. The CEMS should be certified and maintained, and the data recorded and reported, in accordance with federal law (40 CFR §75). More details on the Maryland specific requirements can be found in COMAR 26.09.10 and COMAR 26.26.09.11.
The entities who maintain these CO2 budget sources are required to turn in allowances equivalent to the amount of CO2 emitted over the three-year control period, with each allowance worth one short ton CO2. To ensure progress towards compliance, each CO2 budget source must also surrender allowances equal to 50% of their emissions for each interim control period (the first two years of the three-year period). For example, during the third control period (2015-2017), CO2 allowances were required to account for 50% of 2015 emissions by 03/01/2016, and by 03/01/2017, additional CO2 allowances were required to account for 50% of 2016 emissions. Allowances to account for the remaining 2015 and 2016 emissions, as well as 100% of 2017 emissions, are due at the end of the control period by 03/01/2018. If a regulated source has excess emissions for which they do not turn in the required allowances at the time they are due, they are then required to immediately obtain and surrender allowances for the excess at a ratio of 3:1. Sources may also have more allowances than needed to account for their emissions in a given period. In this case, they may “bank” these allowances for use in the future.