Air Resources Board announces 100 percent compliance for cap-and-trade regulation
For immediate release
SACRAMENTO - The California Air Resources Board (CARB) today announced that on November 1, 2016, regulated entities with a compliance obligation under the cap-and-trade program had submitted 100 percent of the required number of compliance instruments to comply with the annual surrender obligation for 2015 greenhouse gas emissions under the regulation.
“The fact that we achieved 100-percent compliance clearly shows that the cap-and-trade program is working well and on track for delivering the greenhouse gas emissions reductions needed to meet the target called for in law,” said CARB Executive Officer Richard Corey. “There can be no doubt that the cap-and-trade program has become part of the economic fabric of the state’s fuel, energy and industrial sectors, and will continue to deliver multiple benefits to California’s environment and communities.”
2015 marks the first year of the second multi-year ‘compliance period’ (2015-2017) of the cap-and-trade program. CARB developed multi-year compliance periods to provide companies in the program more planning flexibility to comply with their greenhouse gas emissions obligations.
Under the regulation, every regulated company must surrender a sufficient number of compliance instruments (carbon allowances and a limited number of offset credits) to cover 30 percent of their reported and verified annual emissions for the first years in each multi-year compliance period–in this case 2015 and 2016. This approach ensures that California stays on track for reducing its emissions of greenhouse gases.
For the last year in a compliance period, companies are required to surrender a sufficient number of compliance instruments to cover the combined remaining emissions for all years of the compliance period.
The cap-and-trade program is one of the programs set in place under the Global Warming Solutions Act (AB 32), which has a goal of reducing greenhouse gas emissions back to 1990 levels by 2020. Cap-and-trade sets an annual cap, or total amount of greenhouse gas emissions, which declines about three percent each year, guaranteeing reductions.
California’s program linked with the program in Québec in 2014. Under the linked program, covered entities must account for every ton of greenhouse gas they emit by providing California-issued or Québec-issued carbon allowances or offsets. Carbon allowances can be purchased at quarterly auctions held by California and Quebec, or on the secondary carbon market.
California’s cap-and-trade program covers facilities in the state which emit more than the equivalent of 25,000 metric tons of carbon dioxide each year. At present it covers about 600 reporting entities statewide, responsible for about 85 percent of California’s greenhouse gas emissions.
To date more than $2 billion from cap-and-trade auction proceeds has been invested in projects throughout California, with a focus on disadvantaged communities, to reduce greenhouse gas emissions and provide multiple co-benefits.