SENATE DOCKET, NO. 371        FILED ON: 1/13/2023

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 2096

The Commonwealth of Massachusetts

_________________

PRESENTED BY:

Cynthia Stone Creem

_________________

To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to Massachusetts' carbon dioxide removal leadership.

_______________

PETITION OF:

SENATE DOCKET, NO. 371        FILED ON: 1/13/2023

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 2096

The Commonwealth of Massachusetts

_______________

In the One Hundred and Ninety-Third General Court
(2023-2024)

_______________

An Act relative to Massachusetts' carbon dioxide removal leadership.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Chapter 23J of the General Laws, as amended by chapter 179 of the acts of 2022, is hereby amended by inserting the following section:-

Section 16. (a) For the purposes of this section, the following terms shall have the following meanings unless the context clearly requires otherwise:

“Advance market commitment” means the purchase in advance of carbon dioxide removal.

"Annual removal target" means the minimum total volume of carbon dioxide removal, expressed in metric tons of carbon dioxide equivalent, for which the Authority will made advance market commitment and solicit bids in a given year, such amount to be increased by the portion of the annual removal target not met in the prior year.

“Center” means the Massachusetts clean energy center established in chapter 23J of the General Laws.

"Qualifying bid" means a bid fulfilling the requirements of subsection (d) of this section.

"Bid price" means the total price the bidder is willing to be paid in a given bid for providing carbon dioxide removal.

"Bidder" means a person, entity or entities qualified to submit a bid pursuant to the requirements set forth in subsection (d) of this section.

"Carbon dioxide equivalent'', the amount of carbon dioxide by weight that would produce the same global warming impact as a given weight of another greenhouse gas, based on the best available science, including from the Intergovernmental Panel on Climate Change.

"Carbon dioxide removal" means removing greenhouse gas, measured in carbon dioxide equivalent emissions, from the atmosphere, and durably storing it in geological, terrestrial, or ocean reservoirs, or in long-lived products for a minimum period of 100 years.

"Carbon dioxide removal process" means the physical process by which greenhouse gases are removed from the atmosphere and durably sequestered or stored.

"Carbon dioxide removal project" means a specific project that delivers the carbon dioxide removal described in a given bid.

“Director of environmental justice” means the director of environmental justice in the executive office of energy and environmental affairs.

"Disadvantaged communities" means communities identified by the center that bear disproportionate burdens from environmental pollution and from the impacts of climate change, and which are comprised of high concentrations of low- and moderate-income households.

"Durability" or "durable" means the secure sequestration of carbon dioxide equivalent in the geosphere, in the ocean, in long-lived products, or otherwise, measured as a unit of time.

“Environmental justice and community engagement report” means a form developed by the director of environmental justice and completed by the bidder that documents evidence that residents of disadvantaged communities have been consulted and afforded the opportunity to provide comment and suggestions concerning the proposed project. All reports submitted by bidders must be reviewed and approved by the director of environmental justice as a condition of selection. The report shall include a description and quantification, where possible, of the proposed carbon dioxide removal project’s effects on: (i) equity and environmental justice, including health and quality of life; (ii) the local ecosystem, including soil health, biodiversity, and water and air quality; and (iii) job creation and economic development.

"Greenhouse gas'', any chemical or physical substance that is emitted into the air and that the department of environmental protection may reasonably anticipate will cause or contribute to climate change including, but not limited to, carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluorid

"Life-cycle analysis" means a complete, end-to-end analysis of the greenhouse gas emissions resulting from a carbon dioxide removal process, including, but not limited to, manufacturing, transportation, utilization, sequestration and other processes occurring prior to, during, or after, the carbon dioxide removal process which are required to achieve carbon dioxide removal.

"Measurement, reporting and verification" means the verified measurement and reporting of carbon dioxide removal using an objective, peer-reviewed and scientifically supported accounting methodology and taking into account regionally appropriate sampling and data collection methods to quantify emissions and removals associated with the carbon dioxide removal process and durability of removal instead of solely model-based or statistical methods.

"Reverse auction" means a bidding process in which qualified bidders submit bids to remove and durably store a specified quantity of carbon dioxide equivalent emissions in exchange for payment by the state.

"Social cost" means a measure, in dollars, of the long-term damage done by a ton of carbon dioxide equivalent emissions in a given year.

"Ton" means a metric ton of one thousand kilograms.

"Total annual bid" means the total volume of carbon dioxide removal for which qualifying bids were submitted in a given year.

(b) Prior to the initiation of the reverse auction for the commonwealth’s advance market commitment for carbon dioxide removal services, the center shall publish a survey of carbon dioxide removal opportunities within the commonwealth. Such survey shall include, but shall not be limited to: (i) data gathered by the center pursuant to carbon dioxide removal verification as required by subsection (f) of this section; (ii) a review of carbon dioxide removal processes in the commonwealth with 100,000 metric tons or greater scale potential this decade and 100-year or greater durability, with a description for each of water and land-use requirements, life-cycle analysis and energy requirements, potential harms and potential co-benefits, including job creation or loss, industrial development, ecosystem sustainability, and advancement or degradation of environmental equity or social justice. Following the publication of the survey, the center shall conduct regional direct engagement with members of disadvantaged communities throughout the commonwealth in order for the center to provide information concerning the objectives, and intended benefits and outcomes of the carbon dioxide removal pilot program and enable members of the public to provide comment and suggestions related to the carbon dioxide removal pilot program's design, implementation and shared community benefits.

(c) Beginning in 2024, the center shall conduct an annual reverse auction for the commonwealth’s advance market commitment. The center shall initiate the reverse auction on April 1 and close the reverse auction on June 30 in each year during which a reverse auction is held. The center shall conduct the reverse auction subject to the following requirements:

(1) the center shall select qualifying bids, based on the criteria outlined in subsection (e) of this section, sufficient to meet the annual removal target; provided, that if the total annual bid is less than the annual removal target, the center shall increase the annual removal target in the subsequent year by the difference between the annual removal target and the total annual bid; and

(2) at least 30 percent of the annual carbon removal target shall be met by carbon dioxide removal projects that each deliver a maximum removal volume that does not exceed 10 percent of the annual removal target, unless the center does not receive an adequate number of qualifying bids proposing such projects;

(3) at least 25 percent of the annual removal target shall be met by carbon dioxide removal projects that have a minimum durability of 1,000 years; at least 50 percent of the annual removal target shall be met by carbon dioxide removal projects that have a minimum durability of 250 years; and 100 percent of the annual removal target shall be met by carbon dioxide removal projects that have a minimum durability of 100 years; provided, that if the center does not receive sufficient qualifying bids proposing carbon dioxide removal projects with 1,000- or 250-year durability to meet the requirements of this paragraph, it may modify the requirements for projects with 1,000- or 250-year durability;

(4) selected carbon dioxide removal projects will be compensated for carbon dioxide removal provided over a maximum contract term of 10 years; payment shall be made on an annual basis and contingent upon successful, complete and verified removal of the agreed upon carbon dioxide from the atmosphere;

(5) the maximum average price per ton of carbon dioxide removal shall be 350 dollars in 2024, and shall decrease by at least 5 percent each year, adjusted for inflation; the center shall not accept qualifying bids causing the average price per ton of carbon dioxide removal to exceed the maximum average price per ton for the year;

(6) during the authorized 5-year term of the pilot program, the center will make an advance market commitment to purchase carbon dioxide removal in the following quantities: (i) 10,000 tons of carbon dioxide equivalent emissions in 2024; (ii) 20,000 tons of carbon dioxide equivalent emissions in 2025; (iii) 30,000 tons of carbon dioxide equivalent emissions in 2026; (iv) 40,000 tons of carbon dioxide equivalent emissions in 2027; and (v) 50,000 tons of carbon dioxide equivalent emissions in 2028;

(7) the center shall publicly announce the winning bids, publicly release the winning bidders' proposals and scorecards, and contract with the winning bidders no later than September 30 of each year in which reverse auction is held.

(d) (i) Each bid submitted to the center shall contain the following information: (1) the legal name, address, contact information and history of prior participation in the carbon dioxide removal reverse auction, or other public or private-market purchases of carbon removal services, for each entity or person submitting a bid; (2) the total volume of carbon dioxide removal to be achieved pursuant to the bid; (3) when carbon dioxide removal will commence, and the delivery term the proposed carbon dioxide removal project; (4) a description of the carbon dioxide removal process and the carbon dioxide removal project; (5) a full life-cycle analysis of the proposed carbon dioxide removal project, which demonstrates that the project will remove carbon dioxide from the atmosphere and store it securely and durably in at least the quantity and for at least the period committed to in the bid; (6) the and area and water volume which would be required by the proposed carbon dioxide removal project; (7) a completed environmental justice and community engagement report (8) a declaration that the carbon dioxide removal project will not cause adverse impacts to the environment or disadvantaged communities; (9) a description of the measurement, reporting and verification the bidder will employ for the carbon dioxide removal project, from an independent third-party deemed acceptable by the center that verifies all requirements of this section; (10) a legally binding attestation by each bidder that the information provided is accurate and that all requirements of this section are met; and (11) any additional information the center reasonably requests to assess the bid.

(ii) All carbon dioxide removal and material operations of each proposed carbon dioxide removal project submitted by bidders must be located within the commonwealth or waters within fifty nautical miles of the commonwealth.

(iii) Carbon dioxide removal project proposals shall not incorporate enhanced oil recovery or otherwise facilitate the extraction, refinement or delivery of fossil fuel energy sources including petroleum, natural gas and coal, or which serve to perpetuate fossil fuel use in any sector of the economy in the commonwealth, the United States or globally.

(iv) The carbon dioxide removal project for which the bid is submitted shall be unique to this transaction and additional to any prior or otherwise existing or planned carbon dioxide removal, may not be used as part of any other private or public transaction for carbon dioxide removal, and shall create new and additional climate benefit, and not take credit for climate benefit that would occur in a no-intervention scenario.

(v) Carbon dioxide removal project proposals shall demonstrate the ability to commence carbon dioxide removal no later than 2 years following the entering into contract with the center.

(vi) Methods of carbon dioxide removal may include, but are not limited to: (1) terrestrial mineralization or enhanced rock weathering; (2) terrestrial biomass-based pathways such as biochar; (3) ocean-based pathways including electro-chemical alkalinity enhancement, marine permaculture, deep-ocean sequestration of biomass, and coastal enhanced weathering; (4) construction materials and products, the production of which directly contribute to the sequestration of carbon dioxide or other greenhouse gases, including mass timber; and (5) direct air capture with durable geologic sequestration, or durable sequestration in the built environment including in concrete.

(e) The center shall create a scorecard to evaluate the bids received based on the following factors: (i) the price per ton of carbon dioxide removed; (ii) the extent to which the project will promote equity or environmental justice within the commonwealth, including by generating economic benefits to one or more disadvantaged communities (iii) the conservation efficiency of the project in its use of water, land, and  energy resources, with explicit preference for projects with low water, land, and energy requirements and projects that exclusively employ renewable energy; (iv) the number of jobs created by the project in the commonwealth; (v) whether the project will employ at least one bona fide labor organization that is actively engaged in representing employees providing necessary operations and maintenance services for the project; (vi) whether and to what extent the project will involve the purchase of equipment and supplies from businesses located in the commonwealth; (vii) whether the project will generate significant agricultural, ecological, or ecosystem co-benefits or harms; (viii) the scale potential of the carbon dioxide removal process; (ix) the durability of the proposed carbon dioxide removal process; and (x) the delivery term for the proposed project, with a preference for carbon dioxide removal that is delivered more quickly.

(f) The center shall require each winning bidder to provide periodic verification from an independent third party deemed satisfactory by the center that the volume of carbon dioxide removed from the atmosphere and stored meets or exceeds the amount described in the bid and that there has been no carbon dioxide equivalent leakage and no reduction in carbon dioxide removal durability.

A winning bidder, its successors, assigns, and transferees of responsibilities, liabilities, rights or economic benefits of the carbon dioxide removal, shall be liable for the social cost, as determined by the center, of any carbon dioxide equivalent leakage or reduction in carbon dioxide removal durability.

During the project contract period, carbon dioxide removal projects may be subject to audit and review by the director of environmental justice to determine whether the winning bidder is fulfilling and complying with all terms and stipulations in the environmental justice and community engagement report approved by the director of environmental justice.

Upon a failure by the winning bidder to provide the verification required by the center or to fulfill or comply with all terms and stipulations in the environmental justice and community engagement report approved by the director of environmental justice, the center may take action to penalize the winning bidder, including, but not limited to: (i) termination of the contract; (ii) levying fines or penalties against the bidder to recoup funds paid pursuant to the bid; or (iii) rejection of future bids by the bidder.

(g) Nothing in this section shall relieve any person, entity, or public agency of compliance with other applicable federal, state, or local laws or regulations, including state air and water quality requirements, and other requirements for protecting public health or the environment.

(h) If any word, phrase, clause, sentence, paragraph, section, or part of this section shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the word, phrase, clause, sentence, paragraph, section, or part thereof directly involved in the controversy in which such judgment shall have been rendered.

(i) Funding for the administration of this section and for the authorized five-year reverse auction period, beginning in 2024 and ending in 2028, shall be derived entirely from state revenues that have been accrued in preceding tax years from certain reinstated taxes on sales of aircraft or sales of repair or replacement parts exclusively for use in aircraft or in the significant overhauling or rebuilding of aircraft or aircraft parts or components on a factory basis.

(j) The center shall promulgate regulations for the administration and enforcement of this section.

SECTION 2. Section 6 of said Chapter 64H of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by striking out subsections (uu) and (vv).