What does it mean CA GHG Allowance? If somebody wish to invest in such an assets for strictly speculative purposes should apply to ARB to become VAE. Beneath an approximation of what could be expected from an investor taking into account purely formal aspects of the potential application. The issue may gain quite practical importance in 2012 already.
CA GHG Allowance and VAE
CA GHG Allowance means obviously California greenhouse gas emissions allowance i.e. an allowance issued by California Air Resources Board (ARB) and equal to up to one metric ton of CO2 equivalent.
Voluntarily Associated Entity (VAE) means an entity not identified as a covered (compliance) entity under the Californian scheme (or “opt-in covered entity”) that intends to hold California compliance instruments (CA GHG Allowance or offsets, however because offsets are a specific kind of emission allowances governed by separate and detailed rules, the rest of this article in the interest of simplification mentions only CA GHG Allowance).
The following entities may qualify as voluntarily associated entities under Californian cap-and-trade:
1) an entity that does not meet the requirements of becoming covered entity or opt-in covered entity that intends to purchase, hold, sell, or voluntarily retire compliance instruments,
2) an entity operating an offset project that is registered with ARB.
In practice as VAE may qualify entities like financial institutions, brokers, offset developers
and so on. The rest of these considerations focuses on VAE (offset developers excepting) although some of the following points would refer also to covered entities and opt-in covered entities.
Registration with ARB
VAE cannot hold an CA GHG Allowances until the Executive Officer of ARB approves the entity’s registration with ARB or the entity is registered with an external program approved by ARB pursuant to Proposed Regulation Order (assuming that designs for external programs are still under development and may not be appropriate for every category of potential investor, the procedures thereof are beneath omitted). Under the Californian scheme as accounts administrator may serve the Executive Officer of the ARB or the entity contracted by him (hereinafter in the interest of clarity only the first option is referred to).
Pursuant to the Proposed Regulation Order in order to register with ARB an entity must complete an application that contains the following information:
1) name and type of organization;
2) statement of basis for qualifying for registration – that is in this case the VAE legal status;
3) identification of all other entities registered with ARB with whom the entity has a direct or indirect corporate association (the detailed provisions for identifying such associations are laid down by the Proposed Regulation Order), and a brief description of the association;
4) identification of all entities registered with ARB for whose benefit the entity holds CA GHG Allowances.
Additionally, VAE must designate an authorized account representative – see further remarks.
Applicants may be denied registration based on (i) information provided; or (ii) if the Executive Officer of the ARB determines the applicant has provided false or misleading information, or has withheld information pertinent to its application.
Registration is completed when the Executive Officer of ARB approves the registration and informs the entity and the accounts administrator of the approval.
Any VAE that intends to hold CA GHG Allowances must register with ARB prior to acquiring such compliance instruments.