On February 6, 2020, CDPHE released the draft rule language for Colorado's Greenhouse Gas (GHG) Reporting and Emission Reduction Requirements rule ( Regulation 22). Regulation 22 is divided into two sections - Part A and Part B. Part A describes GHG Reporting Requirements and Part B describes GHG Emission Reduction Requirements.
Before we dive into the proposed requirements, here is a quick recap regarding the events that led to this proposed rule.
- In May 2019, Colorado's General Assembly adopted House Bill 2019-1261 (HB 19-1261) and Senate Bill 2019-096 (SB 19-096), concerning the reduction of GHG pollution and collection of GHG emissions data, respectively.
- In response to HB 19-1261, Colorado's GHG reduction goals were updated in May 2019 as follows:
- 26% reduction statewide by 2025
- 50% reduction by 2030
- 90% reduction by 2050
- Per the Colorado Air Pollution and Control Act (the Act), the Air Quality Control Commission (the Commission) is required to adopt GHG regulations by June 1, 2020.
Regulation 22 (Part A) - Greenhouse Gas Reporting Requirements
Certain sources in Colorado are currently required to report annual GHG emissions per EPA's Mandatory Greenhouse Gas Reporting Rule. However, since this rule defines thresholds and specific source categories for emissions reporting, certain facilities are exempt from this rule. Regulation 22 (Part A) seeks to account for such exempt sources to build a more accurate inventory of all GHG sources in Colorado. This inventory will better inform strategies towards meeting the state's GHG reduction goals as it will identify the sources with the highest impact on Colorado's GHG emissions profile.Affected Sources
An extensive list of the affected sources can be found under Part III. A of Regulation 22, Part A. Source categories that would be subject to GHG monitoring, recordkeeping, and reporting requirements under the proposed rule are as follows:
- Source categories required to report under EPA's Mandatory Greenhouse Gas Reporting Rule
- Source categories subject to EPA's Mandatory Greenhouse Gas Reporting Rule and below federal reporting thresholds
- Source categories reporting emissions under Regulation 7, Part D, Sections IV and V (all oil and natural gas operations and equipment at or upstream of a natural gas processing plant and all natural gas transmission and storage)
- Source categories with voluntary reporting: Municipal Solid Waste Landfills, Domestic Wastewater Treatment Plants, and Agricultural Sector
- For sources subject to federal GHG reporting requirements, the first report required under proposed Regulation 22 (Part A) will be due by March 31, 2021, accounting for GHG emissions for calendar year 2020.
- For affected sources not subject to federal GHG reporting requirements, the first report is due by March 31, 2022 for calendar year 2021.
- For sources reporting emissions under Regulation 7, Part D, Sections IV and V, GHG emissions must be reported according to inventory reporting requirements and deadlines under Regulation 7. The first report is due by June 30, 2021.
Regulation 22 (Part B) - Greenhouse Gas Emission Reduction Requirements
The proposed requirements under Part B of Regulation 22 are aimed at the phase out of hydrofluorocarbons (HFC) for specific end-uses. The CDPHE will adopt EPA's Significant New Alternatives Policy (SNAP) program prohibitions for certain HFCs in air conditioning and refrigeration equipment, aerosol propellants, and foam end-uses. The proposed dates of prohibition for specific substances begin as early as January 1, 2021.Affected Sources
Any person who sells, offers for sale, leases, rents, installs, uses, or manufactures any product or equipment that uses or will use an HFC in specific end-uses will be subject to the proposed GHG emission reduction requirements.Requirements
Some of the requirements that would result from this proposed rule are as follows:
- Prohibition on renting, selling, leasing, installing, using, or manufacturing any product or equipment using a prohibited substance for any air-conditioning, refrigeration, foam, or aerosol propellant end-use listed in the rule
- A disclosure statement must be provided to the buyer by certain affected sources listing the prohibition for the end-use
- Manufacturers of any product or equipment in the end uses listed within the proposed rule will be subject to recordkeeping requirements for records of dates of manufacture and sale, information on HFCs that the equipment is designed to use, and copies of disclosure statements
The CDPHE will request a rulemaking hearing for the proposed Regulation 22, for May 2020. Since the Commission is required to adopt GHG reporting regulations per Section 25-7-140 of the Act, facilities not subject to federal GHG reporting requirements should begin to evaluate GHG data collection methods to prepare for potential reporting requirements in 2022. Companies will need to begin considering the time required to replace HFCs with approved alternatives to meet the proposed deadlines.
Please reach out to Sandunie Liyanagamage at (720) 638-7647 ext. 112 or Ashley Jones at ext. 103 at the Trinity Denver Office with any questions you may have regarding the proposed draft GHG reporting and emission reduction regulation in Colorado.