‘Banking’ under the California emissions trading legislation means ‘the holding of compliance instruments from one compliance period for the purpose of sale or surrender in a future compliance period.’
California Final Regulation Order (California Cap On Greenhouse Gas Emissions And Market-Based Compliance Mechanisms) clearly states ‘California compliance instruments do not expire’. As opposite to the EU ETS, California cap-and-trade program introduced banking of allowances from the outset of the scheme already (i.e. from 1 January 2013). Statement of Reasons to the California cap-and-trade regulation explains that the intention is to allow entities ‘to hold the instrument until it is needed’, and ‘to save instruments across compliance periods.’
The said Statement of Reasons further clarifies that banking is intended ‘to limit price variability, as entities buy additional instruments during times of relative oversupply and use or sell them when supplies are short and prices are higher.’
The recent reform of the California emissions trading program (effective on 1 September 2012) has not introduced any changes to the said rules.