cap and trade

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California’s cap-and-trade program withstood a battle in court, and now the Legislature is proposing changes to the controversial program.  Senator Bob Wieckowski (Democrat – District 10), Chair of the Environmental Quality Committee, has authored Senate Bill 775 (“SB 775”) which would extend the cap-and-trade program to 2030 with modifications.  The existing cap-and-trade program, established under Assembly Bill 32 (2006) or the California Global Warming Solutions Act (“Act”), expires in 2020.  The Act requires the State Air Resources Board (“ARB”) to approve a statewide greenhouse gas emissions limit equivalent to 1990 greenhouse gas emissions level to be achieved by 2020, and to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030, as outlined in Senate Bill 32 (2016).
Continue Reading Senate Bill Proposes Major Market-Based Remodel of Cap-and-Trade Program

This is the third update on environmental regulatory and legal developments in Los Angeles and adjacent counties, as well as the Southern San Joaquin Valley.  We welcome your comments and updates.

South Coast Air Quality Management District

*Governing Board Shift:  New Governing Board Member Sheila Kuehl replaced Mike Antonovich, returning the Board to a Democratic Majority.  Ms. Kuehl calls upon the South Coast Air Quality Management District (District) to use its full regulatory power, and she has strong ties with the California Legislature.  New emphases now include further regulations of stationary facilities, such as warehouses and shopping malls that are considered “indirect sources” of air emissions because they attract emissions from cars and trucks, as well as a termination of the RECLAIM Program.  Questions on the latter include when (2025, 2023, 2031?), treatment of credits from shutdowns, and how companies that invested in long-term credits will be dealt with.  In addition, the District wants to achieve the NOx shave under RECLAIM and at the same time sunset the Program.  Collaterally, the District is pushing the California Air Resources Board (CARB) and US EPA to do their “fair share” to regulate mobile sources so that further efforts to improve air quality will not be piled on the backs of stationary businesses.Continue Reading SOUTHERN CALIFORNIA ENVIRONMENTAL UPDATE #3 – APRIL 24, 2017

As the sands shift on federal climate change policy, California’s cap-and-trade program survives to fight another day.  Yesterday, a California Court of Appeal upheld the program because it does not impose a tax subject to the two-thirds supermajority vote requirement under Proposition 13.  The Court also affirmed the California Air Resources Board’s (CARB) authority to auction GHG emissions allowances.  For the ins and outs of the decision and prior coverage of the case, pop on over to Renewable + Law for a great post by my colleagues, Allison Smith and Parissa Florez.

Now, stating the obvious here: a lot is riding on this case.  The cap-and-trade program has generated billions of dollars in fees and the program plays a crucial role in California’s goal to cut GHG emissions.  Those fees don’t get paid with monopoly money, but instead hit the bottom line of companies across many different industries.  Of course, some consider the fees to be a small price to pay to prevent flooding, the sixth mass extinction, and in their view, the end of the world. On a level that hits closer to home for many readers of this blog, the challenge to the cap-and-trade program has added to the uncertainty of how to address GHG emissions for development projects subject to CEQA.  As previously discussed by my colleague, Tom Henry, reliance on the cap-and-trade program appears to be one of the few approaches to a legally defensible CEQA GHG analysis.Continue Reading CARB Wins Again on Cap-and-Trade, But Is It Really in Any Danger of Losing?

The recent wave of climate change legislation in California also included a new and not particularly well-known law aimed at curbing greenhouse gas (“GHG”) emissions associated with water use. SB 1425 will create a voluntary registry to track the water sector’s energy use and GHG emissions.

According to Senator Pavley, the author of SB 1425, “While some of the water-energy related climate pollution is already covered in the state’s cap-and-trade program (via the electricity generation sector), the state does not currently have a clear accounting of the total greenhouse gas emissions associated with the water system.”

SB 1425 requires CalEPA to oversee the development of a registry for GHG emissions that result from the “water-energy nexus” using the best-available data. Participation in the registry is voluntary and open to water agencies, large water consumers, businesses and others conducting business in the state.  SB 1425 provides that entities participating in the registry may qualify for GHG emission reduction incentives.
Continue Reading New Law Takes Aim at GHG Associated with California’s Water Sector

Late Tuesday, the California Air Resources Board (ARB) released draft amendments to the state’s cap and trade regulation, including revisions to the current program in place through 2020, an extension of the program through 2030, and setting the stage for continued emissions reductions under the program through 2050.  ARB’s proposed amendments come in the middle of a recent milieu of uncertainty:  pending litigation challenging the legality of the existing program, an opinion from Legislative Counsel that ARB lacks authority under AB 32 to continue cap and trade past 2020, unprecedented weak demand at the most recent allowance auction, and legislation to establish a statutory emissions reductions mandate for 2030 still in process this session.  With all of these balls in the air, ARB has doubled down and drafted regulations dropping the program’s emissions cap from 334.2 million metric tons (MMT) of CO2e in 2020 to 200.5 MMT in 2030, with major elements of the cap and trade regulation continuing in effect past 2020 to achieve the emissions reductions.
Continue Reading What You Need to Know about the Proposed Revisions to Cap and Trade

The Sacramento Bee has reported that the Legislature’s budget proposal for the high-speed rail project has been finalized.  Gov. Jerry Brown and Democratic lawmakers have agreed to use 25 percent of future cap-and-trade funds, totaling $250 million, to continue construction of the $68 billion California High-Speed Rail Project (the “Project”).  The floor votes for the…

The California Air Resources Board has released its first semi-annual report to the California Legislature on the agency’s AB 32 programs, designed to meet the state’s goal of reducing greenhouse gas emissions to 1990 levels by 2020.  The report details recent developments and anticipated milestones for three of CARB’s major AB 32 initiatives:  the cap and trade program, the low carbon fuel standard (LCFS), and the advanced clean cars program.  For our primer on the cap and trade program, see our earlier post.  Some highlights from these programs in 2012 and things to look for in 2013: 

  • The first auction of cap and trade greenhouse gas emission allowances was held in November 2012, raising $233 million for the state’s investor-owned utilities (for the benefit of ratepayers) and $55 million for the state Greenhouse Gas Reduction Fund.  The next auction will take place February 19, 2013 and the first allowance price containment reserve sale will be on March 8, 2013.
  • A trial court decision is expected in 1Q 2013 in the lawsuit challenging the offset protocols adopted for the cap and trade program, Citizens Climate Lobby and Our Children’s Earth Foundation v. CARB.
  • Sacramento Superior Court will hear arguments at the end of May 2013 in California Chamber of Commerce v. CARB, which challenges the cap and trade auction mechanism.
  • In early 2013, Governor Brown will consider the proposed linkage between California’s cap and trade program and Quebec’s program.  Public comments will be accepted on the package considered by the Governor.
  • Proposed amendments to the cap and trade regulation will be released summer 2013.
  • Development of new offset protocols is anticipated for spring 2013.
  • Further study has been initiated on several hot topics in cap and trade – leakage, industry benchmarks for efficiency, and affects of cap and trade on the agricultural sector, including food processors.
  • For the LCFS, hearings will be held in spring 2013 to add fuel pathways and crude oil carbon intensities.
  • Expect amendments to the LCFS in fall 2013, with rulemaking workshops to begin in the first half of 2013.  Workshops topics will include specifications for alternative diesel fuel blends, including biodiesel.
  • Related to the advanced clean cars program, CARB withdrew its Clean Fuels Outlet regulation in December 2012, which would have required fuel providers to build hydrogen stations once a certain number of fuel cell vehicles were in the California market.  Proposed legislation – AB 8 – would reauthorize various clean air fees to fund the hydrogen fueling network.  The Assembly Transportation Committee held its first hearing on AB 8 today.

Continue Reading California Air Resources Board Issues AB 32 Report

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