California Proposes 258.6 Million Ton Emissions Cap for 2030

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By Carolyn Whetzel

July 13 — California would cap statewide greenhouse gas emissions at 258.6 million metric tons in 2030, under a draft regulatory proposal headed to the state's Office of Administrative Law for review.

California's existing statewide emissions cap for 2020 is 431 million metric tons, a limit designed to reduce carbon dioxide emissions to 1990 levels by that date.

Released by the California Air Resources Board July 12, the proposal aims to update rules governing the state's cap-and-trade program to extend the program beyond 2020, provide a path to linkage with Ontario, Canada's, trading system in 2018 and use the state's program to comply with the federal Clean Power Plan.

The proposal comes as the future of California's cap-and-trade program is being questioned. A legislative proposal to establish emissions goals that are lower than stipulated in the Global Warming Solutions Act of 2006 stalled last year. Another proposal is pending, but the likelihood of its passage is unknown. Pending litigation alleging the cap-and-trade auction is an illegal tax also adds to the uncertainty.

CARB's draft rules would administratively establish new emissions caps, allow future auction and allocation of allowances and continue all other elements of the economywide cap-and-trade program.

Cap-and-Trade Allowance Caps

The draft rules would require entities regulated under the trading program to reduce carbon dioxide emissions about 13.3 million metric tons per year beginning in 2021 through 2030. Total emissions allowances in 2030 would be capped at 200.5 million metric tons, compared to the existing 2020 cap of 334.2 million metric tons.

Emissions caps under the existing rules decline at about 3 percent a year until 2020. Under the proposal, caps would drop about 3.5 percent a year through 2030.

CARB's proposal also would require annual reductions of about 6.7 million metric tons of greenhouse gases from 2031 to 2050.

Other Proposed Changes

The proposal also includes changes to cap-and-trade rules designed to prevent emissions leakage, clarify compliance obligations for certain sectors and simplify participation in the trading program by streamlining registration, information management processes and issuance of offset credits.

CARB plans on submitting the draft rules to the Office of Administrative Law July 19. Based on OAL's review, the proposal could be updated, and the formal comment period is launched Aug. 5.

The agency's governing board is scheduled to consider the proposed amendments Sept. 22-23 in Sacramento, but a vote on the proposal isn't expected until March 2017.

Given the uncertainties of the pending litigation and legislation to extend the trading program past 2020, CARB's proposal, if it becomes final, would likely draw legal challenges questioning its authority to administratively establish new emissions caps, several attorneys have told Bloomberg BNA.

Super Majority Needed for Amendment

To avoid litigation, a super majority vote of the Legislature would be needed to amend the Global Warming Solutions Act of 2006, or A.B. 32, to extend the state's climate policies beyond 2020 and set new emissions caps.

Gov. Jerry Brown (D) has been meeting with representatives of the oil industry, who have resisted extending the program legislatively. So far, no agreement is in sight.

To contact the reporter on this story: Carolyn Whetzel in Los Angeles at cwhetzel@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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