New York finalizes tighter carbon cap on power plants, effective January 1, 2027
DEC and NYSERDA adopted amendments, effective January 1, 2027, that lower the CO2 allowance budget, add a second cost-containment tier, raise the minimum reserve price and end offsets. The changes bear on electricity generating units and on projects whose economics depend on them.
On August 5, 2026, the New York State Department of Environmental Conservation ("DEC") and the New York State Energy Research and Development Authority ("NYSERDA") announced final amendments to the state's Regional Greenhouse Gas Initiative regulations: 6 NYCRR Part 242 (the CO2 Budget Trading Program), a conforming change to 6 NYCRR § 200.9, and NYSERDA's auction rule at 21 NYCRR Part 507. DEC's Notice of Adoption states that the amendments lower the annual budget of CO2 allowances, remove the offset provisions and end the eligible biomass provisions and set-aside, and that they take effect on January 1, 2027. The regulations apply to electricity generating units and to the entities that take part in the allowance auctions; the applicability section of Part 242 (§ 242-1.4) in the adopted text refers to units serving generators of 25 MWe or more and, in certain cases, 15 MWe or more.
6 NYCRR Part 242; 6 NYCRR § 200.9; 21 NYCRR Part 507; DEC Notice of Adoption, ENB Aug. 5, 2026