2007 -- H 5577

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LC02024

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2007

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A N A C T

RELATING TO HEALTH AND SAFETY - IMPLEMENTATION OF THE REGIONAL

GREENHOUSE GAS INITIATIVE ACT

     Introduced By: Representatives Handy, Ajello, Segal, Ginaitt, and Gallison

     Date Introduced: February 28, 2007

     Referred To: House Environment and Natural Resources

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby

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amended by adding thereto the following chapter:

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     CHAPTER 82

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IMPLEMENTATION OF THE REGIONAL GREENHOUSE GAS INITIATIVE ACT

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     23-82-1. Short title. -- This chapter shall be known and may be cited as the

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"Implementation of the Regional Greenhouse Gas Initiative Act."

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     23-82-2. Legislative findings. -- It is hereby found and declared as follows:

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     (1) Scientific findings indicate that the increase in greenhouse gas emissions, including

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carbon dioxide, is accelerating the natural greenhouse effect resulting in changes in the Earth's

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climate;

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     (2) Climate changes pose serious health risks to humans, as well as danger to ecosystems

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worldwide;

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     (3) This act creates a strong incentive for the creation, development, and deployment of

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more efficient fuel burning technologies and processes, energy efficiency and renewable energy

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supplies which will lead to less dependence on the import of fossil fuels;

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     (4) It is the intent of the legislature in enacting this chapter that the state of Rhode Island

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shall enter into and fully comply with the regional greenhouse gas initiative, as adopted by nine

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(9) other northeastern states.

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     23-82-3. Definitions. -- As used in this chapter:

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     (1) "Allowance" means an authorization to emit a fixed amount of carbon dioxide;

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     (2) "Cap and trade program" means a policy approach for controlling emissions from a

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group of emitting sources, such as electric generating stations, at a total cost that is expected to be

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lower than if sources were regulated individually by setting an overall cap, or maximum amount

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of emissions from all regulated sources per compliance period, that will achieve the desired

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environmental effects. A certain number of authorizations to emit in the form of emissions

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allowances are created, issued and made available to various persons, companies, organizations

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or other entities through a sale by auction or direct allocation. The total number of allowances

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made available in any compliance period cannot exceed the cap. Regulated sources are required

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to completely and accurately measure and report all covered emissions and then turn in the same

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number of allowances as emissions at the end of the compliance period;

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     (3) "Department" means department of environmental management;

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     (4) "Regional greenhouse gas initiative" or "RGGI" means the memorandum of

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understanding (MOU) dated December 20, 2005, as may be amended, and corresponding model

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rule, as may be amended, that establishes an electric power sector carbon emissions cap and trade

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program within the northeast region of the United States;

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     (5) "Office" means the office of energy resources; and

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     (6) "Council" means the energy and resources management council.

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     23-82-4. Cap and trade program creation. -- (a) The department shall, in consultation

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with the public utilities commission, the office and the council, through rules and regulations,

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establish a carbon dioxide cap and trade program that will limit and then reduce the total carbon

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emissions released by generating stations that generate electric power in the state of Rhode

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Island.

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     (b) The department's rules and regulations establishing a carbon cap and trade program

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shall be designed so as to fully comply with the regional greenhouse gas initiative (RGGI) and

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permit the holders of carbon allowances to trade them in a regional market to be established

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through the RGGI.

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     (c) The responsibilities created by establishing a carbon dioxide cap and trade program

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shall be in addition to all other responsibilities imposed by any other general or special law or

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rule or regulation and shall not diminish or reduce any power or authority of the department,

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including the authority to adopt standards and regulations necessary for the state of Rhode Island

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to join and fully participate in any multi-state program, at any stage in the development and

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implementation of such a program, intended to control emissions of carbon dioxide and/or other

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substances that are determined by the department to be damaging and/or altering the climate.

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     23-82-5. Auction design. -- (a) The department shall provide in its regulations that one

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hundred percent (100%) of all allowances issued under the program in the state of Rhode Island

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shall be sold through an auction open to all who wish to participate.

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      (b) The department's regulations shall specify the design of the auction, including the

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process for selection of the independent contractor to run the auction and the timing of the auction

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in any year relative to the dates of the compliance period in RGGI.

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     (c) The department shall engage an independent contractor, consumer trustee or other

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entity experienced in auction design and management or contract with a consumer trustee or other

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entity determined by the department to be qualified to conduct the auction in a manner that

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assures the efficiency of the auction. The selection of an independent contractor, consumer trustee

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or other entity shall include an open and public request for proposals from parties seeking to

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conduct the auction. The proposals shall include a summary of qualifications and experience

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relevant to conducting the auction.

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     (d) The department shall annually convey one hundred percent (100%) of all carbon

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allowances established pursuant to this section to the selected independent contractor, consumer

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trustee or other entity who shall be authorized to receive, hold and sell allowances for the long-

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term benefits of consumers. The selected independent contractor, consumer trustee or other entity

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shall conduct the auction, collect the auction proceeds and shall, without further appropriation,

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distribute the proceeds in accordance with subsection 23-82-6 below, under the oversight of the

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department.

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     (e) Any person or entity selected by the department to conduct the auction shall be

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reimbursed for reasonable costs of administering the program, as determined by the department.

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     (f) The department shall require an annual report from the independent contractor,

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consumer trustee or other entity describing the auction and its results. The report shall be made

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public and shall also be submitted to the general assembly.

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     23-82-6. Use of auction proceeds. -- (a) The proceeds recovered from the allowance

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auction shall be used for consumer benefit, balancing short and long-term benefits. The proceeds

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shall be used for the most cost effective available projects that can reduce consumer energy costs

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and lower the costs of the RGGI program for consumers, and only for the following purposes, in

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a proportion to be determined annually by the office in consultation with the council and the

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department:

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     (1) to promote cost effective energy efficiency and conservation;

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     (2) to promote cost effective renewable non-carbon emitting energy technologies as

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defined in Rhode Island general law section 39-26-5.

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     (3) Reimbursement for reasonable administrative costs to the selected independent

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contractor or other entity engaged to conduct the auction.

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     (b) All allowances and funds generated from the auction of those allowances shall only

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be used for energy efficiency and programs that reduce Rhode Island's emissions of carbon

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dioxide and other greenhouse gasses. Any interest earned on the funds so generated must be

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credited to the fund. Funds not spent in any fiscal year shall remain in the fund to be used for

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future energy efficiency and carbon reduction programs.

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     (c) Annually, not less than six (6) months before the start of the auction, the office, in

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consultation with the department and the council, shall prepare a draft proposal on how the

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proceeds from the allowances shall be allocated. The draft proposal shall be designed to augment

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and coordinate with existing energy efficiency and renewable energy programs, and shall not

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propose use of auction proceeds for projects already funded under other programs. The office

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shall hold a public hearing and accept public comment, in accordance with chapter 42-35, on the

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draft proposal. Once the proposal is final, the department shall authorize the independent

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contractor, consumer trustee or other entity holding the funds to disperse those funds in

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accordance with the final plan.

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     (d) The office shall prepare, in consultation with the department and the council, a report

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by January 1st of each year describing the implementation and operation of RGGI, the revenues

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collected and the expenditures made under this section, the statewide energy efficiency and

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carbon reduction programs, and any recommendations for changes to law relating to the state's

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energy conservation or carbon reduction efforts. The report shall be made public and shall also be

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submitted to the general assembly.

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     23-82-7. Exemption from taxation. -- Notwithstanding any general or special law or

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regulation to the contrary, the division of taxation shall grant a permanent exemption from any

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and all applicable charges or assessments made against the proceeds from the auction of

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allowances pursuant to this chapter.

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     SECTION 2. This act shall take effect upon passage.

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LC02024

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO HEALTH AND SAFETY - IMPLEMENTATION OF THE REGIONAL

GREENHOUSE GAS INITIATIVE ACT

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     This act would mandate Rhode Island's implementation of the Regional Greenhouse Gas

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Initiative, an agreement among nine northeast states to limit the emission of greenhouse gases

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into the environment.

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     This act would take effect upon passage.

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LC02024

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