The State of New York has taken a significant step in combating climate change by issuing a draft regulation that introduces a greenhouse gas reporting obligation for major emission sectors. Scheduled to enter into force in 2027, this regulation aims to establish the data infrastructure for the state’s long-term “cap-and-invest” emissions trading system and to enhance the effectiveness of climate policies. The draft has been opened for public consultation and will be finalized based on feedback and suggestions received from the public until July 1, 2025.

The New York State Department of Environmental Conservation (DEC) has issued a new draft regulation proposing a mandatory annual greenhouse gas emissions reporting requirement for high-emission sources, to take effect beginning in 2027.

Reporting will be based on data from the previous calendar year and is intended as a preparatory step for the comprehensive cap-and-invest program envisioned under the directive of Governor Kathy Hochul.

While the proposed regulation does not impose any direct obligations to reduce emissions or to obtain emission allowances, it constitutes a foundational component of the forthcoming emissions trading system.

Under the cap-and-invest framework to be implemented, an annual emissions cap will be established, and major emission sources and fuel distributors operating within that cap will be expected to purchase emission allowances.

The program would require large greenhouse gas emitters and fuel distributors in New York to pay more than $1 billion per year to purchase allowances for the emissions associated with their activities, based on an economy-wide emissions cap, which would be reduced every year, on a trajectory aligned with the state’s Climate Act, with proceeds used to fund emissions reduction initiatives and support vulnerable communities facing rising energy prices.

Entities subject to the new reporting obligation include owners and operators of facilities emitting more than 10,000 metric tons of carbon dioxide equivalent (CO₂e) annually. This includes electricity generation facilities, stationary combustion units, landfills, waste-to-energy plants, natural gas compressor stations, and similar infrastructure.

In addition, fuel suppliers, waste haulers, suppliers of fertilizers and agricultural lime, and facilities that manage liquid waste storage or anaerobic digestion—provided they meet certain thresholds—will also be required to report their annual greenhouse gas emissions.

DEC has also stated that it will provide various support mechanisms to assist regulated entities in complying with the new reporting requirements. These include:

  • The development of an online platform to streamline the reporting process,
  • Training sessions on the use of the platform,
  • A simplified estimator tool to help entities determine whether they meet the threshold for reporting.

Additionally, in order to enhance cost-effectiveness, the proposed regulation is expected to align with data already collected under existing federal and state-level reporting requirements.

The legal nature of the draft regulation is significant in terms of the principles of transparency, accountability, and the development of effective climate policy. Transparent monitoring of emissions is a prerequisite both for conducting impact assessments of environmental policies and for the efficient functioning of carbon pricing mechanisms.

This reporting requirement is expected to play a central role in achieving New York’s climate goals by addressing the data gaps resulting from federal regulations that were proposed but later withdrawn.

The mandatory reporting regulation proposed by New York State not only aims to collect emissions data but also serves as a foundational step toward the future establishment of a statewide emissions trading system.

The draft regulation has been released for public review and will be finalized based on the feedback and comments received from the public through July 1, 2025.