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CARB releases draft proposal with amendments to cap-and-trade rule

TheCalifornia Air Resources Board released July 12 a preliminary draft that would make majorchanges to the state's cap-and-trade program for greenhouse gas emissions,among them, the implementation of new emissions caps post-2020.

"Witha cap decline of about three and a half percent per year, the ProposedRegulation is expected to reduce cumulative statewide [greenhouse gas]emissions between 100 and 200 million metric tons of carbon dioxide equivalent(MMTCO2e) from 2021 through 2030, and the flexibility inherent to the programwill ensure that these reductions are cost-effective," the draft states.

Theproposed annual allowance budgets from 2021 to 2030 set a straight-line pathwith an annual decrease of about 13.3 MMTCO2e per year. The linear rate ofdecline was calculated from the 334.2 MMTCO2e cap established for 2020 and the200.5 MMTCO2e cap in 2030 that is required to meet the statewide target of258.6 MMTCO2e, the CARB said.

CARBstaff is proposing to use the post-2020 program to comply with thefederally-proposed Clean Power Plan. The proposed regulation suggests thealignment of the California cap-and-trade program's compliance periods withClean Power Plan compliance periods, including a bridge period to link the twoprograms.

Followinga series of informal workshops over the last several months, CARB staffdeveloped the draft proposal that would also allow for the continued linkagewith Quebec beyond 2020, as well as future linkage with Ontario and otherjurisdictions; continue to prevent emissions leakage in the most cost-effectivemanner; and extend the allocation of allowances to the state's utilities.

TheCARB adopted the state's cap-and-trade regulation in October 2011, with theregulation going into effect Jan. 1, 2012. The first compliance period beganJan. 1, 2013, with the third compliance period running through the end of 2020.The California and Quebec cap-and-trade programs were formally linked at thestart of 2014.

TheCARB said it has revised its schedule and the draft will now be submitted tothe California Office of Administrative Law, or OAL, on July 19, which kicksoff the formal rulemaking process. After the OAL review, the CARB may revisethe draft documents and will post a final version that will be open for publiccomment starting Aug. 2. The formal public comment period will begin when OALpublishes the CARB's notice of proposed action Aug. 5.

Theproposed amendments will be considered at a CARB hearing to be held Sept. 22-23and will be voted on at a meeting slated for March 23-24, 2017.