California Air Resources Board

SACRAMENTO – The California Air Resources Board (CARB) has announced that all businesses covered by the state’s cap-and-trade program have fully met their obligations for compliance in 2019 – achieving a 100 percent compliance rate.

”As in past years, the consistently high level of compliance with the cap-and-trade regulation is a testament to how the program continues to run effectively, helping to keep California on track to remain below our 2020 target,” said CARB Executive Officer Richard W. Corey. “With that said, we’re now addressing the very serious challenge of reducing GHG emissions another 40 percent by 2030.”

California has further reduction targets of 40 percent below 1990 levels by 2030 and then the goal of reaching carbon neutrality by 2045.

In Executive Order N-79-20 issued in September, Governor Newsom recognized that achieving our air quality and climate goals hinge on transforming the state’s transportation sector. In that EO, the Governor boldly calls for 100 percent sales of zero emission light-duty vehicles by 2035. The Governor issued a second Executive Order N-82-20 on October 7 elevating the role of nature in addressing climate change by enlisting California’s vast network of natural and working lands to store and remove carbon from the atmosphere and establishing a goal of conserving at least 30 percent of California’s land and coastal waters by 2030.

California’s battle against the worst impacts of climate change currently focuses on four basic programs: the Low Carbon Fuel Standard (LCFS), the cap-and-trade program, the zero emission vehicle (ZEV) mandate and the Renewables Portfolio Standard (RPS). These programs cover transportation fuels, industrial emissions, vehicle emissions and emissions from electricity generation. All these climate programs have considerably more aggressive emissions reduction targets starting in 2021.

CARB has approved additional measures, as well. Under the Short-Lived Climate Pollutant Strategy, emissions from so-called super pollutants must also be reduced dramatically. Those pollutants include methane, chlorofluorocarbon refrigerants and other chemicals with global warming impact tens to thousands of times greater than carbon dioxide. Because of the enormous potential impact of these products, reducing their emissions has a disproportionate benefit to the environment.

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 CARB-approved carbon 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. 2019 marks the second year of the 2018-2020 compliance period under AB 32 and 100 percent of the companies were verified to be holding the required minimum number of allowances under the cap-and-trade regulation.

Today CARB also released data from the Mandatory Reporting Regulation (MRR), which indicates annual reported GHG emissions continued to remain below 1990 levels in 2019. The MRR data shows a decrease in reported emission of 1.9 percent, a level that continues to keep the state on track to meet the GHG reduction target of 2020 under AB 32. The MRR data is a key component of the statewide GHG inventory released last week.

Most sources showed a decline in GHG emissions in 2019 compared to 2018 including: electricity sector emissions decreased by approximately 4,703,000 metric tons CO₂e (7.4 percent), and tailpipe emissions of transportation fuels by trucks, cars and other vehicles powered by gasoline or diesel decreased by close to three million metric tons (1.7 percent).

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.

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