On September 15, 2016, Washington Department of Ecology (Ecology) finalized the Washington Clean Air Rule to cap and reduce carbon pollution. The Clean Air Rule was first proposed on January 5, 2016, with a second proposal released on May 31, 2016. The finalized rule is codified in Washington Administrative Code (WAC) Chapter 173-442.
The rule establishes greenhouse gas (GHG) emissions standards starting in 2017 for certain stationary sources, petroleum product producers, and natural gas distributors in Washington with carbon dioxide equivalent (CO2e) greater than the 100,000 metric ton (MT) compliance threshold.1 Energy-intensive and trade-exposed (EITE) parties and petroleum product importers will not join the program until 2020. The compliance threshold will decrease by 5,000 MT CO2e every three years until 2035. Parties with emissions between 70,000 and 100,000 MT CO2e will join the program when they exceed the declining threshold.
|Washington Compliance Threshold|
|First Compliance Period|
|70,000||2035 and beyond|
For covered parties, the GHG reduction pathway for non-EITE parties is a 1.7% decrease annually from the covered party's baseline GHG emissions value through 2035. Starting in 2036, the emissions reduction pathway remains constant at the value calculated for calendar year 2035.
For EITE covered parties, the mass-based GHG emission reduction pathway does not apply. Ecology will calculate and determine the efficiency improvement rate for each EITE party. These rates are based on the efficiency intensity distribution determined for each sector by using paired GHG emissions and production data. If a covered party is in the bottom 25th percentile of the sector, their efficiency improvement rate will be set at a rate faster than required by the mass-based GHG emission reduction pathway, but not more than a 2.7% annual decrease. If the EITE covered source is in the top 25th percentile of the sector, their efficiency improvement rate will be set at rate slower than required by the mass-based GHG emission reduction pathway, but not less than a 0.7% annual decrease. For sources between the 25th and 75th percentile for their sector, the rate of reduction will equal the mass-based GHG emissions with a 1.7% annual reduction.
There are additional provisions in the rule to determine reduction pathways for sectors without sufficient data to create a distribution and for sources without sufficient data to determine their efficiency.
Each covered party's compliance obligation is determined by the sum of covered GHG emissions for the compliance period minus the emission reduction requirement for the compliance period in metric tons. If the difference is greater than one, then the facility must acquire Emission Reduction Units (ERUs).
If the difference is greater than one, then compliance is met by creating ERUs. ERUs can be created by:
- Directly cutting emissions;
- Purchasing reductions from other businesses;
- Obtaining emissions reduction units from projects in Washington; and
- Purchasing allowances from outside of Washington.
Each of these options has its own specific requirements and limitations, and the rule should be evaluated closely to determine the best compliance option for a particular covered party. Each organization subject to the rule will be required to submit three-year compliance reports that demonstrate how the organization met the rule's requirements. These compliance reports must be verified by an eligible third-party. Annual reports with greenhouse gas emissions will continue to be required for covered organizations.
Additionally, Ecology released proposed amendments to WAC 173-441 to modify GHG reporting rules for consistency with the Clean Air Rule.
1 Based on a three calendar year rolling average, beginning with calendar year 2012, per WAC 173-442-030.