5 Colo. Code Regs. § 1001-31-D-III

Current through Register Vol. 47, No. 24, December 25, 2024

Section 5 CCR 1001-31-D-III - Greenhouse Gas Credit Trading Requirements

III.A. GHG credits will be generated as follows.

III.A.1. For the purpose of trading GHG credits between EITE facilities, EITE facilities will generate one (1) GHG credit per metric ton of CO2e for each metric ton of CO2e that the relevant facility's annual direct GHG emissions are less than its annual emissions limitation in the relevant year.

III.A.2. For the purpose of trading GHG credits between GEMM 2 facilities:

III.A.2.a. Subject to Section III.A.2.a.(i), in any compliance year, a GEMM 2 facility will generate one (1) GHG credit for each metric ton of CO2e that the facility's annual direct GHG emissions are less than its GEMM 2 annual GHG emissions requirement for 2030.

III.A.2.a.(i) In any compliance year, a GEMM 2 facility with a production-related adjusted baseline will generate one (1) GHG credit for each metric ton of CO2e that the facility's annual direct GHG emissions are less than the result of the below calculation:

(Higher of the GEMM 2 facility's 2021 or 2022 emissions, as reported under Regulation Number 22) * 2030 GEMM 2 facility GHG percentage reduction requirement as specified in Part B, Section I.A.)

III.A.2.b. Beginning in the 2031 compliance year, a GEMM 2 facility may generate one (1) GHG credit per one (1) metric ton of CO2e quantifiably reduced through offsite direct air carbon capture projects, provided, however, that such projects may be used for compliance with this Regulation Number 27 only after the Division approves a protocol governing the implementation of such projects.

III.A.3. GHG credit trading between EITE and GEMM 2 facilities will be allowed beginning in 2025 subject to Division guidance to be published no later than December 1, 2024.

III.B. The Division will issue GHG credits to manufacturing stationary sources as follows.

III.B.1. On an annual basis beginning with the 2024 compliance year, and by the first Tuesday of May 2025 and on the first Tuesday of each May thereafter, the Division will credit GHG credit trading system credit accounts of an operating GEMM 2 facility that have submitted all reports in accordance with Section IV.A, as verified by the Division, with GHG credits equal to the difference between the facility's annual direct GHG emissions in the applicable compliance year and its GEMM 2 annual GHG emissions requirement for 2030 as established in Part B, Section I. A GEMM 2 facility which has ceased operations may not generate GHG credits.

III.B.2. The Division will annually issue GHG credits in the GHG credit trading system to an EITE stationary source to the extent its annual direct GHG emissions in the applicable compliance year are less than its annual emissions limitation in the applicable compliance year, as a result of permanent, real, and verifiable emission reduction measures implemented at the EITE stationary source.

III.B.3. Each GHG credit issued by the Division in the GHG credit trading system will be uniquely identifiable.

III.B.4 By the third Tuesday of May 2025 and each third Tuesday of May thereafter, the Division will publish on its website the total amount of any GHG credits credited collectively to the compliance accounts of manufacturing stationary sources for the previous calendar year, and the cumulative surplus or shortfall of credits for that vintage year.

III.C. A GHG credit will expire three (3) years after its issuance date in the GHG credit trading system unless it is retired prior to expiration in the GHG credit trading system. An expired GHG credit may no longer be retired, sold, or transferred in the GHG credit trading system.

III.D. To avoid double-counting of GHG emission reductions, GHG credits generated under this Regulation Number 27, Part D, may not be sold into or used in any carbon or GHG offset registry or trading market outside of the GHG credit trading system.

III.E. Subject to Part D, Section III.A.3, any manufacturing stationary source may sell GHG credits to any other manufacturing stationary source upon such terms as agreed upon between the manufacturing stationary sources at any time, except to the extent the GHG credits are offered for sale pursuant to an auction under Part D, Section IV. Within thirty (30) days of completing any GHG credit sale, the manufacturing stationary sources participating in the transaction will report to the Division, through a Division-approved process, the quantity and price or other consideration, for each vintage year(s) of GHG credits sold, and the Division shall post on its website the parties, quantity, and vintage year(s) of GHG credits sold within thirty (30) days of receiving such report. The Division may elect to publish pricing information from such reports.

III.E.1. Upon reporting of a GHG credit transaction, the GHG credits subject to the trade will be transferred from the selling party's compliance account to the buying party's compliance account within the GHG credit trading system.

III.E.2. In selling GHG credits, the seller warrants and represents that the credits generated are based on an accurate reporting of GHG emissions for the relevant year. Buyers of GHG credits buy GHG credits with this assurance.

5 CCR 1001-31-D-III

46 CR 21, November 10, 2023, effective 12/15/2023