The New Mexico Environmental Improvement Board (EIB) has adopted, by a vote of four to three, greenhouse gas (GHG)-reduction regulations. The rules, proposed by the New Mexico Environment Department, will reduce global warming pollutants through a regional cap on GHG emissions.
The new regulations will enable the state to participate in a regional GHG cap-and-trade program with other U.S. states and Canadian provinces through the Western Climate Initiative (WCI). The WCI is a collaborative of seven western states and four Canadian provinces that are developing strategies to address climate change.
The program, which is scheduled to start in 2012, will affect approximately 63 large industrial sources in New Mexico. Those sources include electric generators and the largest emission sources in the oil and gas sector. Each source would have to reduce its emissions by 2% annually until 2020 or acquire emissions credits from other participants.
The program will not be triggered unless at least 100 million tons of emissions are included regionally, which ensures that New Mexico will not implement a trading program alone, according to the EIB. The program would have to be more than four times larger than New Mexico's annual emissions of approximately 24 million tons.
The program is designed to contain costs to industry and consumers through several mechanisms, including the free allocation of pollution allowances to regulated sources; trading of allowances to allow the market to find the lowest-cost emission reductions; a generous offset program, which allows sectors that are not under the cap to implement low-cost reduction measures; and a delay in turning in allowances until 2015.
Economic analyses show a modest net benefit to the New Mexico economy as a result of reducing GHG emissions and promoting clean energy jobs.