California Air Resources Board

SACRAMENTO – The California Air Resources Board (CARB) today announced that all businesses covered by the state’s cap-and-trade program have fully met their obligations for the three-year compliance period covering 2015 through 2017.

”One hundred percent compliance demonstrates that the program is running effectively, helping to reduce greenhouse gas emissions,” said CARB Executive Officer Richard Corey. “California’s industrial, fuel supply, and utility sectors are working to avoid the worst impacts of climate change.”

The cap-and-trade program requires companies to account for their greenhouse gas emissions by purchasing allowances and turning them in to the state. Companies are also allowed to purchase a limited number of offsets. The program sets a declining cap on carbon emissions and allows companies to trade emission allowances to achieve statewide greenhouse gas (GHG) reductions in the most cost-effective manner and create incentives for investments in clean technology. Businesses in the cap-and-trade program account for approximately 80 percent of California’s climate-changing emissions.

The program uses multi-year compliance periods to provide companies additional flexibility. For the first two years of each period, companies are required to surrender allowances or limited offsets to cover only 30 percent of their emissions for that year. At the end of each three-year year period, however, they are required to surrender allowances or limited offsets to cover all outstanding emissions for the entire compliance period.

Today CARB also released data from the Mandatory Reporting Regulation (MRR), which indicates emissions continued to remain below 1990 levels in 2017. The MRR data shows a reduction of 5.1 million metric tons (1.4 percent) from 2016.

Similar to the previous year, the biggest reported reductions for 2017 continue to come from California’s electricity sector, which saw a 10.7 percent drop in emissions from in-state electricity generation, due largely to more renewable fuels such as hydroelectric power, which increased 50 percent compared to 2016 and solar power, which saw a 22 percent increase. Emissions from out-of-state generation declined 10.1 percent due primarily to reduced use of out-of-state energy and cleaner sources.

Emissions from other sectors were similar to the previous year with minimal increases in emissions from fuel suppliers, refiners and hydrogen production, transportation fuels, and cement plants. Emissions from oil and gas production decreased slightly by 0.9 percent.

Recently released Greenhouse Gas Inventory figures indicated that California reached its initial 2020 reduction target -- bringing emissions down to 1990 levels – in 2016, four years ahead of schedule. (The inventory includes data on emissions that companies must report for cap-and-trade under the MRR as well as statistical data from a variety of state and federal agencies.)

The cap-and-trade program is one of several major GHG emissions reduction programs developed under Assembly Bill 32 (the 2006 Global Warming Solutions Act). AB 32 requires the state to reduce GHG emissions back to 1990 levels by 2020. 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.

Additional details on cap-and-trade compliance will be released in early December.