100% of companies in cap-and-trade program meet 2020 compliance obligations
SACRAMENTO – The California Air Resources Board has announced that all businesses covered by the state’s cap-and-trade program have fully met their compliance obligations for their greenhouse gas emissions from 2018-2020 – achieving a 100% compliance rate.
“Today’s data makes it clear – California’s comprehensive regulatory structure continues to deliver greenhouse gas reductions. This high level of compliance with the cap-and-trade regulation demonstrates the continued rigor of the program and the important role it played in California meeting its 2020 emissions reduction target four years ahead of schedule,” said CARB Executive Officer Richard W. Corey. “The program doubled in stringency this year with much steeper cap reductions. This accelerated rate of reduction will help California meet an additional 40 percent total reduction target of greenhouse gases by 2030. That will help put us on the path to achieving the deep decarbonization needed to limit the worst effects of climate change.”
The cap-and-trade program requires companies to fully account for their GHG emissions by reducing emissions and/or purchasing allowances and turning them in to the state. Companies are also allowed to turn in a limited number of CARB-approved carbon offsets. The program sets a declining cap on carbon emissions to cost-effectively achieve statewide GHG reductions and to create incentives for investments in clean technology. Businesses in the cap-and-trade program account for approximately 80% of California’s climate-changing emissions.
Proceeds from the state’s quarterly allowance auctions are invested into projects and programs reducing greenhouse gas emissions, strengthening the economy and improving public health and the environment - especially in disadvantaged communities. Since 2013, the Legislature has appropriated $15.4 billion in California Climate Investments funds for projects statewide, $9 billion of which are either underway or completed. Approximately $4.5 billion of all implemented funds directly benefit California’s priority populations, which include disadvantaged and low-income communities and low-income households statewide:
California’s cap-and-trade program has been linked to the cap-and-trade system of Québec since 2014. Québec saw a similar compliance rate for this period. For more information, read Québec’s compliance press release.
The program is one of several major GHG emissions reduction programs developed under Assembly Bill 32 (the 2006 Global Warming Solutions Act). AB 32 required the state to reduce GHG emissions back to 1990 levels by 2020, which California achieved four years early in 2016. The state’s 2030 reduction target is a further 40 percent reduction below the 1990 levels. Other AB 32 programs work in tandem with cap-and-trade to reduce emissions across the economy. Those other programs include the Low Carbon Fuel Standard, the Renewables Portfolio Standard and the Advanced Clean Cars program.
The program uses multi-year compliance periods to provide companies with additional flexibility and to account for year-to year variations, such as availability of hydropower which impacts the demand for natural gas power generation. 2020 marks the end of the 2018-2020 compliance period under AB 32 and 100% percent of the companies have surrendered the required number of compliance instruments under the cap-and-trade regulation to fulfill their obligations for the entire three-year compliance period.
Details on each business’s compliance and instruments retired will be made available in a more detailed report on December 1, 2021.