# COMAR Title 26 — Department of the Environment

## Subtitle 09 — Maryland Co2 Budget Trading Program

### Chapter 02 — Applicability, Determining Compliance, and Allowance Distribution

**Authority:** Environment Article, §§1-101, 1-404, 2-103, and 2-1002(g), Annotated Code of Maryland

**Administrative History:** Effective date: July 17, 2008 (35:14 Md. R. 1247)

**Administrative History:** Chapter revised effective May 18, 2009 (36:10 Md. R. 717)

**Administrative History:** Regulation .02 amended effective January 6, 2014 (40:26 Md. R. 2165)

**Administrative History:** Regulation .03 amended effective January 21, 2013 (40:1 Md. R. 22); January 6, 2014 (40:26 Md. R. 2165); December 31, 2018 (45:26 Md. R. 1249); March 30, 2026 (53:6 Md. R. 292)

**Administrative History:** Regulation .04A amended effective December 31, 2018 (45:26 Md. R. 1249)

**Administrative History:** Regulation .05A amended as an emergency provision effective December 28, 2009 (37:4 Md. R. 336); amended permanently effective May 3, 2010 (37:9 Md. R. 674); August 6, 2012 (39:15 Md. R. 964)

**Administrative History:** Regulation .05A amended effective January 6, 2014 (40:26 Md. R. 2165)

**Administrative History:** Regulation .05C repealed effective January 6, 2014 (40:26 Md. R. 2165)

**Administrative History:** Regulation .06 amended effective March 30, 2026 (53:6 Md. R. 292)

**Administrative History:** Regulation .06B amended effective January 21, 2013 (40:1 Md. R. 22); December 31, 2018 (45:26 Md. R. 1249)

**Administrative History:** Regulation .06D amended effective December 31, 2018 (45:26 Md. R. 1249)

**Administrative History:** Regulation .06G amended effective August 6, 2012 (39:15 Md. R. 964); January 21, 2013 (40:1 Md. R. 22); December 31, 2018 (45:26 Md. R. 1249)

**Administrative History:** Regulation .07 amended effective January 21, 2013 (40:1 Md. R. 22); December 31, 2018 (45:26 Md. R. 1249)

**Administrative History:** Regulation .07H amended effective January 6, 2014 (40:26 Md. R. 2165)

**Administrative History:** Regulation .07J adopted effective March 30, 2026 (53:6 Md. R. 292

**Administrative History:** Regulation .07N amended effective August 6, 2012 (39:15 Md. R. 964)

**Administrative History:** Regulation .08 amended as an emergency provision effective February 1, 2011 (38:4 Md. R. 263); amended permanently effective May 16, 2011 (38:10 Md. R. 617)

**Administrative History:** Regulation .08A amended effective January 21, 2013 (40:1 Md. R. 22)

**Administrative History:** Regulation .08C amended effective August 6, 2012 (39:15 Md. R. 964); January 21, 2013 (40:1 Md. R. 22)

**Administrative History:** Regulation .08D adopted effective February 12, 2018 (45:3 Md. R. 157)

**Administrative History:** Regulation .09 amended effective February 12, 2018 (45:3 Md. R. 157)

**Administrative History:** Regulation .09B amended effective January 21, 2013 (40:1 Md. R. 22)

**Administrative History:** Regulation .09H amended effective August 6, 2012 (39:15 Md. R. 964); January 21, 2013 (40:1 Md. R. 22)

**Administrative History:** Regulation .10 amended effective March 30, 2026 (53:6 Md. R. 292)

**Administrative History:** Regulation .11 D, E amended effective March 30, 2026 (53:6 Md. R. 292)

**Administrative History:** Regulation .11H amended effective December 31, 2018 (45:26 Md. R. 1249)

#### Regulation .01 Purpose.

*COMAR 26.09.02.01*

The purpose of this chapter is to establish emissions limitations and procedures that apply to CO2 budget sources and units for the use of CO2 allowances. In this chapter, compliance with emission limitations is achieved through a process that involves the transfer of allowances from and into CO2 budget source accounts.

#### Regulation .02 Applicability.

*COMAR 26.09.02.02*

A. The requirements of this chapter apply to the owner or operator of a CO2 budget unit. When this chapter establishes a requirement such as the submittal of a permit application, a report, a request for allowances or transfer of allowances, or general information, these actions shall be achieved through the CO2 authorized account representative on behalf of the owner or operator of the affected CO2 budget source or unit.

B. When this chapter states that an action is to be achieved by the authorized account representative of a CO2 budget unit or source, the action may be achieved by the alternate authorized account representative, or the delegated representative, on behalf of the owner or operator of the CO2 budget unit or source.

C. The requirements of this subtitle are effective on January 1, 2009 or, for new CO2 budget units, on the day on which the unit commences operation.

D. The provisions of this subtitle do not exempt or otherwise relieve the owners or operators of a CO2 budget source from achieving compliance with any other provision of applicable State and federal laws and regulations.

E. Unless otherwise stated under this subtitle, any time period scheduled to begin:

  (1) On the occurrence of an act or event, begins on the day the act or event occurs; and

  (2) Before the occurrence of an act or event, is computed so that the period ends the day before the act or event occurs.

F. Unless otherwise stated, if the final day of any time period for performing an act required by this subtitle falls on a weekend or on a State or federal holiday, the time period is extended until or to the next business day.

#### Regulation .03 Distribution of CO

*COMAR 26.09.02.03*

A. The Maryland CO2 Budget Trading Program consists of allowances to cover CO2 emissions for the following:

  (1) 12,663,369 tons for 2027;

  (2) 11,080,448 tons for 2028;

  (3) 9,497,526 tons for 2029;

  (4) 7,914,605 tons for 2030;

  (5) 6,331,684 tons for 2031;

  (6) 4,748,763 tons for 2032;

  (7) 3,165,842 tons for 2033;

  (8) 2,713,579 tons for 2034;

  (9) 2,261,316 tons for 2035;

  (10) 1,809,053 tons for 2036; and

  (11) 1,356,790 tons for 2037 and each succeeding calendar year.

B. CO2 Allowances Available for Allocation. For the allocation year 2027 and each succeeding calendar year, the Maryland CO2 Budget Trading Program base budget shall be the maximum number of allowances available for allocation in a given allocation year, except for CO2 CCR tier 1 and CO2 CCR tier 2 allowances.

C. Cost Containment Reserve Allocation.

  (1) The Department shall allocate CO2 CCR tier 1 and CO2 CCR tier 2 allowances, separate from and in addition to the Maryland CO2 Budget Trading Program base budget set forth in §A of this regulation, to the Consumer Energy Efficiency Account. The CCR allocation is for the purpose of containing the cost of CO2 allowances..

  (2) On or before January 1, 2027, and each calendar year thereafter, the Department shall allocate 2,130,856 current vintage year CO2 CCR tier 1 and 2,130,856 CO2 CCR tier 2 allowances, and withdraw the number of CO2 CCR tier 1 and CO2 CCR tier 2 allowances that remain in the Maryland CO2 Budget Trading Program at the end of the prior calendar year.

  (3) The Department shall withdraw the number of CO2 allowances that remain in the Consumer Energy Efficiency Account at the end of the prior calendar year.

D. Repealed.

E. Serial Numbers for CO2 Allowances. Before allowances are made available for allocation, the Department shall assign a unique serial number to each allowance including digits that will identify the year the allowances are made available.

F. Repealed.

G. Repealed.

H. Repealed.

I. Repealed.

J. General Distribution of CO2 Allowances.

  (1) The Department shall open and manage a general account for the following:

    (a) The Long Term Contract Set-aside Account;

    (b) The Clean Generation Set-aside Account; and

    (c) The Consumer Energy Efficiency Account.

  (2) On or before January 31 of each calendar year, the Department shall allocate all CO2 allowances from the CO2 Budget Trading Program to the Consumer Energy Efficiency Account, except as directed in §J(3) and (4) of this regulation.

  (3) The Department shall allocate CO2 allowances from the Consumer Energy Efficiency Account to each of the following accounts, except as directed in Regulation .09 of this chapter, so that the total number of allowances in each account is:

    (a) 1,600,000 in the Long Term Contract (LTC) Set-aside Account; and

    (b) The following number of allowances in the Clean Generation Set-aside Account:

      (i) 1,687,679 for 2018;

      (ii) 1,500,159 for 2019;

      (iii) 1,312,639 for 2020;

      (iv) 1,125,119 for 2021; and

      (v) 937,599 for 2022.

  (4) If, on December 31 of each year, allowances have been sold or awarded from a set-aside account such that the number of allowances in the set-aside account falls below the required allocation in §J(3)(a)—(c) of this regulation, as applicable, that account shall be replenished from the Consumer Energy Efficiency Account in the following calendar year using allowances from that calendar year.

K. Demonstrating Compliance.

  (1) Unless otherwise specified in this chapter, a CO2 budget source shall demonstrate compliance with its CO2 budget emissions limitation by holding one CO2 allowance in its compliance account for every ton of CO2 that it emits in a control period, by the allowance transfer deadline for that control period.

  (2) As of the CO2 allowance transfer deadline for an interim control period, the owners and operators of each CO2 budget source and each CO2 budget unit at the source shall hold, in the source’s compliance account for deduction under §K of this regulation, CO2 allowances for no less than 50 percent of the total number of tons of CO2 emissions for the interim control period from all CO2 budget units at the source.

  (3) Allowances Available for Compliance Deduction. The following CO2 allowances may be deducted from a compliance account for purposes of complying with a budget source's CO2 budget emissions limitation for a control period or an interim control period:

    (a) CO2 allowances that are not CO2 offset allowances and are identified as allowances falling within a prior control period, the same control period, or the same interim control period for which the allowances are deducted;

    (b) CO2 allowances that are held or transferred into the CO2 budget source's compliance account as of the CO2 allowance transfer deadline for that control period or for the interim control period contained within that control period;

    (c) CO2 offset allowances that are available to be deducted for compliance during a control period or an interim control period where the quantity of allowances is limited to:

      (i) 3.3 percent of the CO2 budget source’s CO2 emissions for that control period; or

      (ii) 3.3 percent of the CO2 budget source’s CO2 emissions for an interim control period multiplied by 0.50.

  (4) Deduction of CO2 allowances:

    (a) The Department shall deduct allowances from the CO2 budget source's compliance account until:

      (i) The number of CO2 allowances deducted equals 50 percent of the total CO2 emissions for an interim control period; or

      (ii) The number of CO2 allowances deducted equals the total CO2 emissions for the control period.

    (b) No deduction shall be made for CO2 emissions attributable to the burning of eligible biomass.

  (5) The identification of available CO2 allowances for compliance deduction by serial number or by default is as follows:

    (a) The CO2 authorized account representative for a source's compliance account may request that specific CO2 allowances, identified by serial number for a control period or interim control period, be deducted; and

    (b) In the absence of an identification or in the case of a partial identification of available CO2 allowances by serial number, the Department shall deduct CO2 allowances for a control period or interim control period in the following descending order:

      (i) For the first control period, all CO2 allowances purchased by direct sale from the Department during years 2009, 2010, and 2011 resulting from the occurrence of the $7 auction clearing price;

      (ii) All CO2 allowances for a control period allocated to a CO2 budget unit from the Long Term Contract Set-aside Account or the Clean Generation Set-aside Account;

      (iii) Subject to the relevant compliance deduction limitations identified in §K(3)(c) of this regulation, any CO2 offset allowances transferred and recorded in the compliance account, in chronological order, or, in the event that some, but not all, CO2 offset allowances from a particular allocation year are to be deduced, CO2 offset allowances shall be deducted by serial number, with lower serial number CO2 offset allowances deducted before higher serial number allowances; and

      (iv) Any CO2 allowances, other than those identified in §K(5)(b)(i)—(iii) of this regulation, that are available for deduction in the order they were recorded.

  (6) Deductions for Excess Emissions.

    (a) If a CO2 budget source has excess emissions, the Department shall deduct CO2 allowances from the CO2 budget source's compliance account equal to three times the excess emissions.

    (b) If a source’s compliance account holds insufficient CO2 allowances to cover the excess emissions, the source shall immediately transfer sufficient allowances into its compliance account.

    (c) CO2 offset allowances may not be deducted to account for the source's excess emissions.

    (d) No CO2 allowance deduction shall relieve the owners or operators of the CO2 budget units at the source of liability for any fine, penalty, assessment or obligation to comply with any other remedy, for the same violation, as ordered under applicable State law.

  (7) Guidelines.

    (a) The following guidelines apply in assessing fines, penalties, or other obligations:

      (i) For purposes of determining the number of days of violation, if a CO2 budget unit has excess emissions for a control period or interim control period, each day in the control period or interim control period, as applicable, constitutes a separate day of violation unless the owners or operators of the unit can demonstrate to the satisfaction of the Department that a lesser number of days should be considered; and

      (ii) The Department shall consider the amount of excess emissions in determining the severity of the violation.

    (b) Each ton of excess interim emissions is a separate violation.

  (8) If the CO2 budget source's compliance account no longer exists, the CO2 allowances shall be deposited in a general account selected by the owner or operator of the CO2 budget source.

  (9) Adjustments and Errors.

    (a) The Department may review and conduct independent audits concerning any submission under this subtitle and make appropriate adjustments to the information, if necessary.

    (b) The Department may correct any error in any account and, within 10 business days of making any correction, notify the CO2 authorized account representative for the account.

#### Regulation .04 Permits.

*COMAR 26.09.02.04*

A. CO2 Budget Permit Requirements.

  (1) Each CO2 budget source shall apply for and have in effect a CO2 budget permit that contains all applicable requirements.

  (2) The CO2 authorized account representative for the source shall submit an initial CO2 budget permit application by October 1, 2008, or 12 months before the date on which the CO2 budget source, or a new unit at the source, commences operation.

  (3) The CO2 budget permit application shall include the following in a format prescribed by the Department:

    (a) The identification of the CO2 budget source;

    (b) Plant name and the ORIS (Office of Regulatory Information Systems) or facility code assigned to the source by the Energy Information Administration of the U. S. Department of Energy, if applicable;

    (c) Each CO2 budget unit at the source; and

    (d) Other information required by the Department.

B. The CO2 budget permit issued by the Department shall be separate but attached to the budget source's Part 70 permit.

C. A CO2 budget permit application is timely if the application meets the requirements of this regulation.

D. A CO2 budget permit expires 5 years from the date of issuance by the Department, unless an earlier expiration date is specified in the permit.

E. A CO2 authorized account representative for the source shall submit a complete application for the renewal of an existing CO2 budget permit on forms provided by the Department not later than 90 days before the expiration of the current CO2 budget permit and in accordance with this regulation.

#### Regulation .05 Compliance Certification and Early Reductions.

*COMAR 26.09.02.05*

A. Compliance Certification Report.

  (1) Applicability and Deadline. For each control period in which a CO2 budget source is subject to the CO2 budget emissions limitation, the CO2 authorized account representative of the source shall submit a compliance certification report by the March 1 following the relevant control period. A compliance certification report is not required as part of the compliance obligation during an interim control period.

  (2) Contents of Report. The CO2 authorized account representative shall include in the compliance certification report the following:

    (a) Identification of the source and each CO2 budget unit at the source;

    (b) At the CO2 authorized account representative's option, the serial numbers of the CO2 allowances that are to be deducted from the source's compliance account for the control period, including the serial numbers of any CO2 offset allowances that are to be deducted subject to applicable limitations; and

    (c) The compliance certification required by §A(3) of this regulation.

  (3) Compliance Certification. In the compliance certification report, the CO2 authorized account representative shall certify whether the source and each CO2 budget unit at the source for which the compliance certification is submitted was operated during the control period in compliance with the requirements of this subtitle, including:

    (a) Whether each CO2 budget unit at the source was operated in compliance with the CO2 budget emissions limitation;

    (b) Whether the monitoring plan applicable to each unit at the source:

      (i) Has been maintained to reflect the actual operation and monitoring of the unit; and

      (ii) Contains all information necessary to track CO2 emissions from the unit;

    (c) Whether all CO2 emissions from each unit at the source were monitored or accounted for through the missing data procedures and reported in the quarterly monitoring reports, including:

      (i) Whether all conditional data was reported in the quarterly reports; or

      (ii) If conditional data were reported, whether the status of all conditional data has been resolved and all necessary quarterly report resubmissions have been made;

    (d) Whether the basis for certification or for using an excepted monitoring method or approved alternative monitoring method has changed; and

    (e) If a change is required to be reported, include:

      (i) The nature and reasons for the change;

      (ii) When the change occurred; and

      (iii) How the unit's compliance status was determined after the change, including the method used to determine emissions when a change mandated the need for monitor recertification.

  (4) Format of report. The CO2 authorized account representative shall submit the compliance certification report in the following manner:

    (a) Electronically to the CO2 allowance tracking system; and

    (b) Directly to the Department in a hard copy.

B. Audit of Compliance Certifications.

  (1) The Department, at its discretion, may review and conduct independent audits of any compliance certification or other submission required under this subtitle.

  (2) The Department may deduct CO2 allowances from, or transfer CO2 allowances to, a compliance account to correct errors in the account or to accurately reflect CO2 emissions, based on the information in the compliance certification or other submissions.

C. CO2 Early Reduction Allowances. The Department may award CO2 early reduction allowances (ERAs) to a CO2 budget source for reductions in emissions, including all reductions from CO2 budget units that are achieved during the early reduction period, 2006, 2007, and 2008, if:

  (1) The CO2 budget source submits an application for the award by May 1, 2009; and

  (2) The CO2 budget source:

    (a) Demonstrates that all CO2 budget units that existed at the source during the baseline period of 2003, 2004, and 2005 are included as CO2 budget units for the early reduction period; and

    (b) Includes new CO2 budget units added at the CO2 budget source during the early reduction period.

D. Calculation of Early Reduction Allowances.

  (1) The Department shall calculate the number of ERAs to be awarded to a CO2 budget source for the early reduction period based on the following methodology:

    (a) If the total heat input for all CO2 budget units at the CO2 budget source during the early reduction period is less than or equal to the total heat input for all the CO2 budget units at the CO2 budget source during the baseline period, then ERAs shall be calculated as follows:

      (i) AEERBASELINE = the average CO2 emissions rate resulting from electric energy output and thermal energy output for all of the CO2 budget units at the CO2 budget source during the baseline period (in pounds of CO2/megawatt hours (MWhth+e);

      (ii) AEERERP = the average CO2 emissions rate resulting from electric energy output and thermal energy output for all of the CO2 budget units at the CO2 budget source during the early reduction period (in pounds of CO2/ megawatt hours (MWhth+e);

      (iii) EOERP = the total electric energy output from all CO2 budget units at the CO2 budget source during the early reduction period (in megawatt hours (MWhe); and

      (iv) TOERP = the total useful thermal energy output from all CO2 budget units at the CO2 budget source during the early reduction period (in MMBtu). For purposes of this regulation, thermal energy output is converted to units of MWh by the conversion factor 1 MWh = 3.413 MMBtu;

    (b) If the total heat input to all CO2 budget units at the CO2 budget source during the early reduction period is greater than the total heat input for all the CO2 budget units at the CO2 budget source during the baseline period, then:

      (i) EBASELINE = the total CO2 emissions from all of the CO2 budget units at the CO2 budget source during the baseline period (in tons); and

      (ii) EERP = the total CO2 emissions from all of the CO2 budget units at the CO2 budget source during the early reduction period (in tons).

  (2) The CO2 budget source shall demonstrate that the data submitted in support of the early reduction application was recorded in compliance with applicable requirements for all of the baseline years and the early reduction years for which the budget source was required to report CO2 data pursuant to 40 CFR Part 75.

  (3) A CO2 budget source that was not required to submit CO2 data pursuant to 40 CFR Part 75 for any of the years contained in the baseline period or early reduction period may petition the Department as part of its application for the use of an alternative data source or sources for the calculation of early reduction allowances.

  (4) Following confirmation of a CO2 budget source's early reductions, the Department shall award the ERAs to the CO2 budget source's compliance account by December 31, 2009.

  (5) Total facility shutdowns are not eligible for ERAs.

#### Regulation .06 Limited Industrial Exemption.

*COMAR 26.09.02.06*

A. The Department shall administer the Limited Industrial Exemption in accordance with the procedures of this regulation.

B. A CO2 budget source is exempt from the requirements of Regulation .03K of this chapter if it meets the following criteria:

  (1) Obtains from the Department a condition in its CO2 budget permit that limits the CO2 budget source's annual electrical output to the electric grid in the PJM region to not more than 10 percent of its annual gross generation;

  (2) Submits a request for and receives the Department's approval of a climate action plan which requires reduction of CO2e emissions through reasonably available reduction practices not limited to the following:

    (a) Energy efficiency;

    (b) Fuel switching;

    (c) Alternative transportation options; and

    (d) Modification to manufacturing processes; and

  (3) Receives written notice of the Department's approval of the exemption based on the criteria in §B(1) and (2) of this regulation.

C. Once the Department approves the CO2 budget source's exemption and notifies the CO2 budget source of its approval, the exemption shall become effective as follows:

  (1) For a CO2 budget source that commenced operation before January 1, 2009, retroactively on the January 1 that began a control period; or

  (2) For a CO2 budget source that commenced operation after January 1, 2009, the January 1 of the calendar year that the CO2 budget source commenced operation.

D. An exempt CO2 budget source shall:

  (1) Comply with the CO2 budget permit condition issued pursuant to §B(1) of this regulation;

  (2) Comply with the terms of the climate action plan approved pursuant to §B(2) of this regulation;

  (3) Beginning the April 1 of the year after the Department approved the CO2 budget source's exemption, report annually to the Department the following:

    (a) Its annual gross electricity generation; and

    (b) The amount of electricity that it supplied to the electric grid in the PJM region during the calendar year;

  (4) Report reductions achieved by the approved climate action plan; and

  (5) Retain all reports required by this regulation at the CO2 budget source for a period of 10 years from the date the reports are created.

E. A CO2 budget source's exemption pursuant to §B of this regulation shall no longer apply if the CO2 budget source fails to comply with any of the requirements of §D of this regulation.

F. On or after January 1, 2027, the Department may reallocate any CO2 allowances previously allocated for retirement on behalf of CO2 budget sources eligible for the Limited Industrial Exemption to the Consumer Energy Efficiency Account..

#### Regulation .07 Long Term Contract Set-aside Account.

*COMAR 26.09.02.07*

A. The Department shall administer the Long Term Contract Set-aside Account in accordance with the procedures of this regulation.

B. A long term contract applicant may purchase allowances from the Long Term Contract Set-aside Account through direct sale from the Department at the long term contract price if:

  (1) A long term contract with the applicant for the electrical output of its budget units has been in existence since January 1, 2001; and

  (2) The applicant is unable to recover the cost of purchasing allowances through electricity pricing or other mechanism.

C. The number of allowances purchased from the Long Term Contract Set-aside Account by an applicant may not exceed the equivalent tons of CO2 that the applicant emits in the prior calendar year.

D. To remain eligible to purchase allowances from the Long Term Contract Set-aside Account through direct sale from the Department, the applicant shall renegotiate the long term contract to include the cost of purchasing CO2 allowances when the first opportunity to exercise any option in the existing contract occurs.

E. Each calendar year, the CO2 authorized account representative for the compliance account, referred to in this subtitle as the LTC applicant, shall make all requests for purchase of allowances from the Long Term Contract Set-aside Account to the Department in writing by November 15 of each year.

F. If all the allowances are not sold from the Long Term Contract Set-aside Account by the end of the calendar year, the undistributed allowances shall remain in the account. On or before January 31 of the following year, the Department shall transfer from the Consumer Energy Efficiency Account the number of allowances needed to restore the balance of the Long Term Contract Set-aside Account to 1,600,000.

G. Allowances Available for Purchase by LTC Applicants.

  (1) All allowances purchased by LTC applicants in accordance with §D of this regulation shall be maintained in the CO2 budget source's compliance account and only used to demonstrate compliance for a control period.

  (2) Allowances purchased by LTC applicants in accordance with §D of this regulation may not be resold.

H. The request shall include the following:

  (1) A copy of the long term contract if it has not been provided to the Department previously, or if it has, a letter certifying that the contract has not changed; and

  (2) A letter certifying that the LTC applicant is unable to recover the cost of allowances through electricity pricing or other mechanism.

I. Calculation of Long Term Contract Price.

  (1) The Long Term Contract Price (LTCP) in calendar year 2013 shall be $1.98.

  (2) The LTCP in calendar year 2014 shall be $2.00.

  (3) For years subsequent to calendar year 2014, the LTCP shall be established as of the first day of each calendar year, and each calendar year thereafter, the LTCP shall be the LTCP from the previous calendar year multiplied by 1.025, rounded to the nearest whole cent.

J. The Long Term Contract Set-aside Account shall expire on January 1, 2027.

#### Regulation .08 Voluntary Renewable Set-aside Account.

*COMAR 26.09.02.08*

A. Administration and Participation.

  (1) The Department shall administer the Voluntary Renewable Set-aside Account in accordance with the procedures of this regulation.

  (2) When a person, electricity supplier, retail marketer, or renewable energy facility residing or doing business in Maryland or on behalf of a person residing or doing business in Maryland accumulates renewable energy credits (RECs) equal to 1 or more tons of CO2 as calculated pursuant to §C(1) of this regulation, the person, electricity supplier, retail marketer or renewable energy facility may submit the documentation identified in §B(2) of this regulation to the Department in exchange for the permanent retirement of CO2 allowances from the Voluntary Renewable Set-aside Account, if the renewable energy is generated or created, as applicable, in a state or states participating in a multi-state CO2 air pollution control and emissions reduction program established pursuant to this chapter or corresponding rules and regulations in other participating states as a means of reducing emissions of CO2 from CO2 budget sources.

  (3) An electricity supplier, retail marketer, or a renewable energy facility may purchase RECs using funds provided to it for that purpose by a person residing or doing business in Maryland.

  (4) An electricity supplier, retail marketer, or a renewable energy facility may demonstrate retirement of RECs purchased under §A(3) of this regulation by submitting the documentation identified in §B(2) of this regulation.

  (5) A person residing or doing business in Maryland may acquire RECs by generating renewable energy that results in the creation of RECs.

  (6) A person residing or doing business in Maryland may demonstrate retirement of RECs acquired by generating renewable energy under §A(5) of this regulation by submitting documentation outlined in §B(2) of this regulation.

  (7) A person residing or doing business in Maryland may acquire RECs from a renewable energy facility.

  (8) A person residing or doing business in Maryland may demonstrate the retirement of RECs acquired from a renewable energy facility under §A(7) of this regulation by submitting documentation outlined in §B(2) of this regulation.

  (9) The Department shall, upon its approval of the documentation submitted under §A(4), (6), or (8) of this regulation, permanently retire CO2 allowances in accordance with this regulation.

  (10) The Department shall permanently retire one CO2 allowance for every ton of CO2 emissions avoided as represented by the submitted RECs.

  (11) The Department may not accept RECs that do not equal at least 1 ton of CO2 emissions.

  (12) The Department may not permanently retire partial CO2 allowances.

  (13) The Department shall permanently retire CO2 allowances into the CO2 Allowance Retirement Account at least annually and by not later than December 31 of the calendar year.

B. Documentation of Energy Purchases.

  (1) Documentation of the purchase of RECs for the purpose of this regulation shall be submitted to the Department not later than July 1 of the year following purchase. All submittals received by the Department after July 1 of each year shall be applied toward retirement of CO2 allowances from the Voluntary Renewable Set-aside Account in the next calendar year.

  (2) In order for the Department to retire CO2 allowances from the Voluntary Renewable Set-aside Account on behalf of voluntary purchases of RECs, a person, electricity supplier, retail marketer, or renewable energy facility shall submit to the Department for approval the following documentation:

    (a) A GATS reserve subaccount report from PJM EIS that documents transfer of the REC to a GATS retirement subaccount for the purposes of this subtitle;

    (b) The name of the state in which the REC was created, the name of the facility that generated the renewable energy and its unique generator ID number, and the fuel type;

    (c) Any additional information that the Department determines necessary to demonstrate that the RECs purchased are not being credited in more than one state or to satisfy compliance with any state renewable energy portfolio standard program.

C. Determining the Number of CO2 Allowances to be Retired.

  (1) The number of CO2 allowances to be retired by the Department shall equal the number of megawatt hours of renewable energy represented by the RECs submitted to the Department, multiplied by a voluntary renewable CO2 emissions factor as calculated annually using the previous year’s fuel mix data from GATS.

  (2) If the total number of CO2 allowances calculated for retirement equals or exceeds the number of CO2 allowances in the Voluntary Renewable Set-aside Account, then the Department shall retire not more than the total number of allowances in the Voluntary Renewable Set-aside Account.

  (3) For a given calendar year, if the number of CO2 allowances calculated for retirement is less than 350,000, the allowances remaining in the Voluntary Renewable Set-aside Account shall remain in that account. After the retirement of allowances for the preceding calendar year, the Department shall transfer from the Consumer Energy Efficiency Account the number of allowances needed to restore the balance of the Voluntary Renewable Set-aside Account to 350,000.

  (4) Every 2 years, the Department, in consultation with the Committee, shall review, and if appropriate, increase the number of CO2 allowances allocated to the Voluntary Renewable Set-aside Account, considering projected voluntary renewable sales, REC market impact, associated impacts pertaining to Maryland’s renewable portfolio standard, and other relevant factors.

D. The Voluntary Renewable Set-aside Account shall expire on March 1, 2018.

#### Regulation .09 Clean Generation Set-aside Account.

*COMAR 26.09.02.09*

A. The Department shall administer the Clean Generation Set-aside Account in accordance with the procedures of this regulation.

B. A CO2 budget unit that commences operation after January 1, 2009, is eligible for an award of CO2 allowances from the Clean Generation Set-aside Account if the CO2 budget unit:

  (1) Uses gaseous fossil fuel as the primary fuel;

  (2) Has applied best available control technology (BACT) or lowest achievable emission rates (LAER) as applicable; and

  (3) Has not been constructed pursuant to an order issued by the Public Service Commission of Maryland or by agreement with the State.

C. Allocation of CO2 Allowances.

  (1) The Department shall allocate CO2 allowances from the Consumer Energy Efficiency Account to the Clean Generation Set-aside Account so that the total number of CO2 allowances in the Clean Generation Set-aside Account is:

    (a) 1,687,679 CO2 allowances for 2018;

    (b) 1,500,159 CO2 allowances for 2019;

    (c) 1,312,639 CO2 allowances for 2020;

    (d) 1,125,119 CO2 allowances for 2021; and

    (e) 937,599 CO2 allowances for 2022.

D. Awarding of CO2 Allowances.

  (1) Within 60 days after the end of the calendar year, the Department shall award one CO2 allowance to an eligible CO2 budget unit from the Clean Generation Set-aside Account for each ton of CO2 actually emitted by the eligible CO2 budget unit for that calendar year.

  (2) Calculating Award of CO2 Allowances for Early Applicants until December 31, 2022.

    (a) Except as directed in §D(2)(b) of this regulation, each Early Applicant is guaranteed the following allowances from the Clean Generation Set-aside Account:

      (i) 421,920 CO2 allowances for 2018;

      (ii) 375,040 CO2 allowances for 2019;

      (iii) 328,160 CO2 allowances for 2020;

      (iv) 281,280 CO2 allowances for 2021; and

      (v) 234,400 CO2 allowances for 2022.

    (b) Early Applicants may not be awarded more CO2 allowances than they are eligible to receive as directed in §D(1) of this regulation.

  (3) Calculating Award of CO2 Allowances When Requests Are Less than Allocation.

    (a) If, after all the allowances are awarded under §D(2)(a), the Department finds that it has only received requests for CO2 allowances for a calendar year from Early Applicants, and the number of allowances requested does not exceed the remaining number of allowances in the Clean Generation Set-aside Account, the remaining CO2 allowances will be awarded based on the number of CO2 allowances requested by the number of eligible Early-Applicants for each calendar year, not to exceed the amount directed in §D(1) of this regulation.

    (b) If, after all the allowances are awarded under §D(2)(a), the Department finds that it has received requests for allowances for a calendar year from both Early Applicants and Non-early Applicants, and the number of CO2 allowances requested by both Early Applicants and Non-early Applicants does not exceed the number of remaining CO2 allowances in the Clean Generation Set-aside Account, the remaining CO2 allowances will be awarded based on the number of CO2 allowances requested by the number of eligible Early Applicants and Non-early Applicants, not to exceed the amount directed in §D(1) of this regulation.

  (4) Calculating Award of CO2 Allowances When Requests Are Greater than Allocation.

    (a) If, after all the allowances are awarded under §D(2)(a), the Department finds that it has only received requests for CO2 allowances for a calendar year from Early Applicants, and the number of allowances requested by Early Applicants exceeds the number of remaining allowances in the Clean Generation Set-aside Account, the remaining CO2 allowances will be awarded in proportion to the number of CO2 allowances requested by the number of eligible Early-Applicants for each calendar year, not to exceed the amount directed in <D1>D(1) of this regulation.

    (b) If, after all the allowances are awarded under §D)(2)(a), the Department finds that it has received requests for allowances for a calendar year from both Early Applicant and Non-early Applicants, and the number of CO2 allowances requested by both Early Applicants and Non-early Applicants exceeds the number of remaining CO2 allowances in the Clean Generation Set-aside Account, the remaining CO2 allowances will be awarded in proportion to the number of CO2 allowances requested by the number of eligible Early Applicants and Non-early Applicants, not to exceed the amount directed in §D(1) of this regulation.

E. All CO2 allowances awarded by the Department under this regulation shall be maintained in the CO2 budget unit’s compliance account and shall only be used to demonstrate compliance.

F. CO2 allowances awarded by the Department under this regulation may not be resold by the recipient of the award.

G. At the end of each calendar year, any CO2 allowances that remain in the Clean Generation Set-aside Account will remain in the Clean Generation Set-aside Account. After awarding CO2 allowances for the preceding calendar year, the Department shall transfer from the Consumer Energy Efficiency Account the number of CO2 allowances needed to restore the balance of the Clean Generation Set-aside Account to the allocations defined in §C(1)(a)—(e) of this regulation.

H. The Clean Generation Set-aside Account shall expire on January 1, 2023.

#### Regulation .10 Monitoring Requirements.

*COMAR 26.09.02.10*

A. The owner or operator of a CO2 budget unit shall install monitoring systems to monitor CO 2 mass emissions including CO2 concentration, stack gas flow rate, oxygen concentration, heat input, and fuel flow rate.

B. The owner or operator of a CO2 budget unit shall install all monitoring systems in accordance with 40 CFR Part 75.13, 75.71, and 75.72 except for equation G-1 in Appendix G.

C. The owner or operator of a CO2 budget unit shall record, report, and verify the data from the monitoring systems in accordance with §§A and B of this regulation.

#### Regulation .11 Record Keeping and Reporting.

*COMAR 26.09.02.11*

A. General Provisions. The CO2 authorized account representative shall comply with all record-keeping and reporting requirements in this chapter and the applicable record-keeping and reporting requirements under 40 CFR §75.73.

B. Quarterly Reports.

  (1) The CO2 authorized account representative shall submit quarterly reports as described in this section.

  (2) The report shall contain the CO2 mass emissions data for the CO2 budget unit in an electronic format, unless otherwise required by the Department, for each calendar quarter beginning with:

    (a) The calendar quarter covering January 1, 2009—March 31, 2009, for a unit that commences commercial operation before July 1, 2008; or

    (b) For a unit commencing commercial operation on or after July 1, 2008, the calendar quarter corresponding to the earlier of the:

      (i) Date of provisional certification; or

      (ii) Applicable deadline for initial certification.

  (3) If the quarter is the third or fourth quarter of 2008, reporting shall commence in the quarter covering January 1, 2009 through March 31, 2009.

  (4) The CO2 authorized account representative shall submit each quarterly report within 30 days following the end of the calendar quarter covered by the report and in accordance with 40 CFR Part 75, Subpart H, §75.64 and 40 CFR Part 75, Subpart G except for the opacity, NOX, and SO2 provisions.

  (5) Compliance Certification. The CO2 authorized account representative shall submit a compliance certification in support of each quarterly report. The certification shall state that:

    (a) The monitoring data submitted were recorded in accordance with the applicable requirements of this chapter and 40 CFR Part 75, including the quality assurance procedures and specifications;

    (b) For a unit with add-on CO2 emissions controls and for all hours where data are substituted in accordance with 40 CFR §75.34(a)(1), the add-on emissions controls were operating within the range of parameters listed in the quality assurance and quality control program under 40 CFR Part 75, Appendix B, and the substitute values do not systematically underestimate CO2 emissions; and

    (c) The CO2 concentration values substituted for missing data under 40 CFR Part 75, Subpart D, do not systematically underestimate CO2 emissions.

C. Petitions for Alternative Requirements. The CO2 authorized account representative of a CO2 budget unit may submit a petition to the Department under 40 CFR §75.66 requesting approval to apply an alternative to any requirement of this chapter.

D. CO2 Budget Units that Burn Eligible Biomass.

  (1) The CO2 authorized account representative or alternate CO2 authorized account representative of a CO2 budget unit that burns eligible biomass as a compliance mechanism under this chapter shall report the following information for each calendar quarter:

    (a) For each shipment of solid eligible biomass fuel fired at the CO2 budget unit:

      (i) Total eligible biomass fuel input, on an as-fired basis, in pounds; and

      (ii) The moisture content, on an as-fired basis, as a fraction of weight;

    (b) For each distinct type of gaseous eligible biomass fuel fired at the CO2 budget unit:

      (i) The density of the biogas, on an as-fired basis, in pounds per standard cubic foot; and

      (ii) The moisture content of the biogas, as a fraction by total weight;

    (c) For each distinct type of eligible biomass fuel fired at the CO2 budget unit:

      (i) The dry basis carbon content of the fuel type, as a fraction by dry weight;

      (ii) The dry basis higher heating value, in MMBtu per dry pound;

      (iii) The total dry basis eligible biomass fuel input, in pounds;

      (iv) The total eligible biomass fuel heat input; and

      (v) Chemical analysis, including heat value and carbon content;

    (d) The total amount of CO2 emitted from the CO2 budget unit due to firing eligible biomass fuel, in tons, calculated as in §D(2)(b) of this regulation;

    (e) The total heat input to the CO2 budget unit due to firing eligible biomass fuel, in MMBtu, calculated in §D(4)(b) of this regulation; and

    (f) Descriptions and documentation of monitoring technology and fuel sampling methodology employed, including sampling frequency;

  (2) An owner or operator of a CO2 budget unit shall calculate and submit on a quarterly basis the total dry weight for each distinct type of eligible biomass fired by the CO2 budget unit during the reporting quarter as follows:

    (a) For solid eligible biomass fuel, determined as follows:

      (i) Fj = Total eligible biomass dry basis fuel input (pounds) for fuel type j;

      (ii) Fi = Eligible biomass as fired fuel input (pounds) for fired shipment i;

      (iii) Mi = Moisture content (fraction) for fired shipment i;

      (iv) i = fired fuel shipment;

      (v) j = fuel type; and

      (vi) m = number of shipments;

    (b) For gaseous eligible biomass fuel, as determined as follows:

      (i) Fj = Total eligible biomass dry basis fuel input (pounds) for fuel type j;

      (ii) Dj = Density of biogas (pounds/scf) for fuel type j;

      (iii) Vj = Total volume (scf) for fuel type j;

      (iv) Mj = Moisture content (fraction) for fuel type j; and

      (v) j = fuel type.

  (3) The amount of CO2 emissions that is produced from the firing of eligible biomass for any full calendar quarter, during which either no fuel other than eligible biomass is combusted or during which fuels other than eligible biomass are combusted, is determined as follows:

    (a) CO2 tons = CO2 emissions due to firing of eligible biomass for the reporting quarter;

    (b) Fj = Total eligible biomass dry basis fuel input (pounds) for fuel type j, as calculated in §D(2)(a) of this regulation;

    (c) Cj = Carbon fraction (dry basis) for fuel type j;

    (d) Oj = Oxidation factor for eligible biomass fuel type j, derived for solid fuels based on the ash content of the eligible biomass fired and the carbon content of this ash; for gaseous eligible biomass fuels, a default oxidation factor of 0.995 may be used;

    (e) 0.0005 = The number of short tons which is equal to 1 pound;

    (f) j = Fuel type; and

    (g) n = number of distinct fuel types.

  (4) Heat input due to firing of eligible biomass for each quarter shall be determined as follows:

    (a) For each distinct fuel type:

      (i) Hj = Heat input (MMBtu) for fuel type j;

      (ii) Fj = Total eligible biomass dry basis fuel input (pounds) for fuel type j;

      (iii) HHVj = Higher heating value (MMBtu/pound), dry basis, for fuel type j, as determined through chemical analysis;

      (iv) j = Fuel type;

    (b) For all fuel types:

      (i) Hj = Heat input (MMBtu) for fuel type j;

      (ii) j = fuel type; and

      (iii) n = number of distinct fuel types.

  (5) Fuel sampling methods and fuel sampling technology shall be consistent with the New York State Renewable Energy Standard Biomass Power Guide, June 2018.

E. Additional Requirements to Provide Output Data.

  (1) Report of Megawatt-Hours of Electrical Output. A CO2 budget unit shall submit to the Department the megawatt-hour value and a statement certifying that the megawatt-hour of electrical output reported reflects the total actual electrical output for all CO2 budget units at the facility used by the independent system operator (ISO) to determine settlement resources of energy market participants.

  (2) Report of Gross Hourly Megawatts. A CO2 budget unit shall report gross hourly megawatts to the Department in the same electronic data report (EDR) for gross output as submitted to the EPA Administrator, for the operating time in the hour, added for all hours in a year.

  (3) Report of Net Electrical Output. A CO2 budget unit shall submit the net electrical output to be used to the Department in accordance with this regulation. A CO2 budget source whose electrical output is not used in the independent system operator (ISO) energy market settlement determinations shall propose a method for quantification of net electrical output.

  (4) Report of Net Steam Output.

    (a) CO2 budget sources selling steam shall use billing meters to determine net steam output or an alternative method to measure net steam output approved by the Department.

    (b) If data for steam output is not available, the CO2 budget source may report heat input, substituting useful steam output for steam output.

F. Output Monitoring Plan.

  (1) The owner or operator of each CO2 budget unit shall report net output described in this section.

  (2) Each CO2 budget source shall submit an output monitoring plan with a description and diagram that include the following:

    (a) If the CO2 budget unit monitors net electric output, the diagram shall contain all CO2 budget units and all generators served by each CO2 budget unit and the relationship between CO2 budget units and generators;

    (b) If a generator served by a CO2 budget unit is also served by a nonaffected unit, the nonaffected unit and its relationship to each generator shall be indicated on the diagram;

    (c) The diagram shall indicate where the net electric output is measured and include all electrical inputs and outputs to and from the plant;

    (d) If net electric output is determined using a billing meter, the diagram shall show each billing meter used to determine net sales of electricity and show that all electricity measured at the point of sale is generated by the CO2 budget units;

    (e) If the CO2 budget unit monitors net thermal output, the diagram shall indicate all steam or hot water coming into the net steam system, including steam from CO2 budget units and nonaffected units, and all exit points of steam or hot water from the net steam system;

    (f) Each input and output stream shall have an estimated temperature, pressure and phase indicator, and an enthalpy in Btu per pound;

    (g) The diagram of the net steam system shall identify all useful loads, house loads, parasitic loads, any other steam loads, and all boiler feedwater returns;

    (h) The diagram shall represent all energy losses in the system as either usable or unusable losses;

    (i) The diagram shall indicate all flow meters, temperature or pressure sensors, or other equipment used to calculate gross thermal output; and

    (j) If a sales agreement is used to determine net thermal output, the diagram shall show the monitoring equipment used to determine the sales of steam.

  (3) Description of Output Monitoring System.

    (a) The description of the output monitoring system shall include:

      (i) A written description of the output system and the equations used to calculate output, and, for net thermal output systems, descriptions and justifications of each useful load;

      (ii) A detailed description of all quality assurance and quality control activities that will be performed to maintain the output system; and

      (iii) Documentation supporting any output value to be used as a missing data value if there are periods of invalid output data.

    (b) The missing data output value shall be either zero or an output value that is likely to be lower than a measured value and approved as part of the required monitoring plan.

G. Initial Certification Statement and Billing Meters.

  (1) A certification statement shall be submitted by the CO2 authorized account representative stating that either:

    (a) The output monitoring system consists entirely of billing meters; or

    (b) The output monitoring system meets one of the accuracy requirements for nonbilling meters.

  (2) The billing meter shall record the electric or thermal output. Any electric or thermal output values reported shall be the same as the values used in billing for the output.

  (3) For nonbilling meters, either the output monitoring system shall meet an accuracy of within 10 percent of the reference value, or each component monitor for the output system shall meet an accuracy of within 3 percent of the full scale value, whichever is less stringent.

  (4) The system approach to accuracy shall include:

    (a) A determination of how the system accuracy of 10 percent is achieved using the individual components in the system; and

    (b) Data loggers and any wattmeters used to calculate the final net electric output data or any flowmeters for steam or condensate, temperature measurement devices, absolute pressure measurement devices, and differential pressure devices used for measuring thermal energy.

  (5) If, upon testing a piece of output measurement equipment, it is determined that the output readings are not accurate to within 3 percent of the full scale value, then the equipment shall be repaired or replaced to meet that requirement.

  (6) Data is invalid until the output measurement equipment passes an accuracy test or is replaced with another piece of equipment that passes the accuracy test.

H. Ongoing Quality Assurance and Quality Control.

  (1) Ongoing quality assurance and quality control activities shall be performed in order to maintain the output system.

  (2) Billing Meters. If billing meters are used to determine output, quality assurance and quality control activities are not required beyond what are already performed.

  (3) Nonbilling Meters.

    (a) Certain types of equipment such as potential transformers, current transformers, nozzle and venturi type meters, and the primary element of an orifice plate only require an initial certification of calibration and do not require periodic recalibration unless the equipment is physically changed.

    (b) Pressure and temperature transmitters accompanying an orifice plate will require periodic retesting.

    (c) For other types of equipment, the meter accuracy shall be recalibrated or verified at least once every 2 years, unless a consensus standard allows for less frequent calibrations or accuracy tests.

    (d) For nonbilling meters, either the output monitoring system shall meet an accuracy of within 10 percent of the reference value, or each component monitor for the output system shall meet an accuracy of within 3 percent of the full scale value, whichever is less stringent.

    (e) If, upon testing a piece of output measurement equipment, it is determined that the output readings are not accurate to within 3 percent of the full scale value, then the equipment shall be repaired or replaced to meet that requirement.

  (4) Out-of-Control Periods.

    (a) If, upon testing a piece of output measurement equipment, it is determined that the output readings are not accurate to the certification value, data is invalid until the output measurement equipment passes an accuracy test or is replaced with another piece of equipment that passes the accuracy test.

    (b) All invalid data shall be replaced by either zero or an output value that is likely to be lower than a measured value and that is approved as part of the required monitoring plan.

I. Annual Reports. The CO2 authorized account representative shall submit annual output reports, as follows:

  (1) Data shall be sent both electronically and in hardcopy by March 1 for the immediately preceding calendar year; and

  (2) The annual report shall include unit level megawatt hours, all useful steam output, and a certification statement from the CO2 authorized account representative stating the following, “I am authorized to make this submission on behalf of the owners and operators of the CO2 budget sources or CO2 budget units for which the submission is made. I certify under penalty of law that I have personally examined, and am familiar with, the statements and information submitted in this document and all its attachments. Based on my inquiry of those individuals with primary responsibility for obtaining the information, I certify that the statements and information are to the best of my knowledge and belief true, accurate, and complete. I am aware that there are significant penalties for submitting false statements and information or omitting required statements and information, including the possibility of fine or imprisonment”.