Today the Washington State Department of Ecology adopted a new rule to limit carbon dioxide emissions from major sources.

Beginning in 2017, entities that emit more than 100,000 metric tons of carbon dioxide per year must reduce their emissions by 1.7 percent each year. Entities with lower emissions will be phased in over two decades. 

The annual emission reduction level for a business that is classified as “energy intensive and trade exposed” (“EITE”) will be based on a comparison between that entity’s energy efficiency and the energy efficiency of the trade sector that it participates in. Less efficient entities will be subject to higher reduction requirements and more efficient entities will be subject to lower requirements. Those in the middle will be subject to similar requirements as non-EITE entities. Examples of EITE entities are cement manufacturers, pulp mills, and aluminum producers.

Regulated entities have the option of using emission reduction units (“ERUs”) to achieve compliance. An ERU is an accounting unit representing the emission reduction of one metric ton of carbon dioxide (or its greenhouse gas equivalent). Thus, a business could buy ERUs on the open market and retire them instead of reducing emissions at its own facility. The new rule also sets out the requirements for generating, banking, exchanging, and using ERUs to achieve compliance. The Department of Ecology will develop a database to track the creation, transfer, and retirement of ERUs.