Overview

Description

The Massachusetts Limits on Emissions from Electricity Generators (regulation “310 CMR 7.74”), began operating in 2018. It covers around 8% of the state’s CO2 emissions, all from the power sector. Under this regulation, covered entities must surrender allowances for all of their covered emissions. Since 2021, 100% of allowances have been allocated in quarterly auctions. Since 2022, future vintage allowances have also been sold in the regular auctions. Revenues are used to reduce GHG emissions and fund adaptation programs and projects targeting communities adversely impacted by air pollution. Potomac Economics monitors the market for indications of anti-competitive conduct. The program complements RGGI where electricity generators in the state must comply with both RGGI and the Massachusetts program.

Recent Developments

In 2024 Massachussetts Department of Environmental Protection (MasDEP) opened a proposal to increase the minimum auction reserve price from its current level of $0.50.

Coverage

The Massachusetts ETS applies to CO2 emissions from the power sector.

Pricing and Allocation Approaches

Auctioning

Compliance Approaches

Annual

Relation to Other Compliance CPIs

The program complements the Regional Greenhous Gas Initiative (RGGI): electricity generators in the state must comply (i.e., hold and surrender allowances) with both RGGI and the Massachusetts program.

Covered Sectors

Electricity and heat