Starting January 1, 2013, GHG emissions from entities covered by the California Cap-and-Trade Program count towards their compliance obligation. Further legislative anticipations for the first half of 2013 are revealed by the California regulator.

 

 

California Air Resources Board annual report published in January 2013 contains, among other things, several 2013 milestones anticipated in the first half of 2013 for the California Cap-and-Trade Program.

A brief summary of some of them pursuant to the above report is as follows:

 

In early 2013, California Air Resources Board (ARB) expects to transmit a package for the Governor to review the proposed linkage of California’s Cap-and-Trade program with Québec’s program.

 

The annual report indicates that under State law, the Governor has 45 days to make findings about whether Québec has adopted a GHG emission reduction program that is equivalent or stricter than California's program and that any linking failure will not impose significant liability on the State. If the Governor finds in the affirmative, the Board will consider the regulatory changes necessary to link the two programs at a noticed public hearing. These changes were initially released for public review in May 2012 as part of the 2012 package of amendments to the Regulation. In January, ARB will be releasing a 15-day package for public comment containing information that will be provided to the Governor. The 15-day package and all comments received will be provided to the Governor to make a determination.

 

In this context it is useful to comment that, contrary to the linking with the Québec GHG emission reduction program, the said ARB annual report does not contain any mention on potential linking with the Australia carbon scheme.

 

1. On February 19, 2013, the second quarterly Cap-and-Trade auction will take place.

 

2. On March 8, 2013, the first allowance price containment reserve sale will occur.

 

3. In Spring 2013, ARB anticipates beginning the public process on development of new offset project protocols for: (a) avoided fugitive methane emissions from coal mine methane projects; and (b) avoided methane emissions from changes in rice cultivation practices.

 

4. In Summer 2013, ARB expects to propose amendments to the Cap-and-Trade Regulation for consideration by the Board. The proposed amendments will address several topics that are likely to include, but are not limited to:

 

- A methodology to provide free allowances for transition assistance until legacy contracts for generators of electricity, which do not allow for the pass-through of carbon costs, expire.

 

- A mechanism to deal with "But-For CHP" entities that are subject to the Regulation only because emissions from combined heat and power (CHP) operations put the entities over the 25,000 metric tons of GHG emissions threshold.

 

- A methodology to provide allowances to new industrial sources not currently included in the Regulation, as well as upstream natural gas suppliers.

 

- Updates to benchmarks and allocation assistance factors to provide more free allowances to existing sectors in the second compliance period to reduce the risk of leakage.

 

- A methodology for providing compliance assistance to public universities.

 

- Clarification of resource shuffling provisions.

 

- A provision for additional price containment to address the risk of higher than anticipated future emissions, while maintaining environmental integrity.

 

- A mechanism to exempt waste-to-energy facilities from the Cap-and-Trade Program for the first compliance period.

 

- Further processes to ensure clarity in offset implementation.

 

Among the above points the clarification on resource shuffling would be particularly interesting since there are many ambiguities in that regard (for details see What is resource shuffling and why it can cause problems).

 

 

Starting January 1, 2013, GHG emissions from entities covered by the California Cap-and-Trade Program count towards their compliance obligation. Further legislative anticipations for the first half of 2013 are revealed by the California regulator.


 

California Air Resources Board annual report published in January 2013 contains, among other things, several 2013 milestones anticipated in the first half of 2013 for the California Cap-and-Trade Program.

A brief summary of some of them pursuant to the above report is as follows:

In early 2013, California Air Resources Board (ARB) expects to transmit a package for the Governor to review the proposed linkage of California’s Cap-and-Trade program with Québec’s program.

The annual report indicates that under State law, the Governor has 45 days to make findings about whether Québec has adopted a GHG emission reduction program that is equivalent or stricter than California's program and that any linking failure will not impose significant liability on the State. If the Governor finds in the affirmative, the Board will consider the regulatory changes necessary to link the two programs at a noticed public hearing. These changes were initially released for public review in May 2012 as part of the 2012 package of amendments to the Regulation. In January, ARB will be releasing a 15-day package for public comment containing information that will be provided to the Governor. The 15-day package and all comments received will be provided to the Governor to make a determination.

In this context it is useful to comment that, contrary to the linking with the Québec GHG emission reduction program, the said ARB annual report does not contain any mention on potential linking with the Australia carbon scheme.

1. On February 19, 2013, the second quarterly Cap-and-Trade auction will take place.

2. On March 8, 2013, the first allowance price containment reserve sale will occur.

3. In Spring 2013, ARB anticipates beginning the public process on development of new offset project protocols for: (a) avoided fugitive methane emissions from coal mine methane projects; and (b) avoided methane emissions from changes in rice cultivation practices.

4. In Summer 2013, ARB expects to propose amendments to the Cap-and-Trade Regulation for consideration by the Board. The proposed amendments will address several topics that are likely to include, but are not limited to:

- A methodology to provide free allowances for transition assistance until legacy contracts for generators of electricity, which do not allow for the pass-through of carbon costs, expire.

- A mechanism to deal with "But-For CHP" entities that are subject to the Regulation only because emissions from combined heat and power (CHP) operations put the entities over the 25,000 metric tons of GHG emissions threshold.

- A methodology to provide allowances to new industrial sources not currently included in the Regulation, as well as upstream natural gas suppliers.

- Updates to benchmarks and allocation assistance factors to provide more free allowances to existing sectors in the second compliance period to reduce the risk of leakage.

- A methodology for providing compliance assistance to public universities.

- Clarification of resource shuffling provisions.

- A provision for additional price containment to address the risk of higher than anticipated future emissions, while maintaining environmental integrity.

- A mechanism to exempt waste-to-energy facilities from the Cap-and-Trade Program for the first compliance period.

- Further processes to ensure clarity in offset implementation.

Among the above points the clarification on resource shuffling would be particularly interesting since there are many ambiguities in that regard (for details see What is resource shuffling and why it can cause problems).

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