An outcropping of California's Global Warming Solutions Act, the California Air Resources Board has given the go-ahead to the state's cap-and-trade program. What does it mean for businesses and consumers in the Golden State?
When do the regulations take effect?
Businesses affected by the emissions trading -- and carbon credit regulations -- associated with the cap-and-trade program are expected to comply on Jan. 1, 2013. Officials of these businesses must register them with CARB by Jan. 31, 2012. Fast forward to 2015, and the second tier of the plan takes effect.
Why did California institute this cap-and-trade program?
Golden State politicians intend to turn back the clock and ensure a 2020 California only has an emission rate that is equivalent to the state's emissions in 1990. As CARB points out, the cap of the program refers to greenhouse gasses and it is gradually lowered on an annual basis by about 2 percent.
Who is affected?
Primarily targeted are California's electricity-generating businesses. Other targets are operators of facilities engaged in the generation of electricity and energy import. To gauge applicability, businesses should check their annual emissions reports from 2008 to 2011. If self-reported amounts went above "25,000 metric tons or more of carbon dioxide equivalent per data year," compliance becomes mandatory. In 2015, the rules are expanded to include fuel providers. It is noteworthy that emissions figures do not apply to "biogenic emissions generated by biomass fuel sources."
What are the affected businesses expected to do?
Starting with 2013 emissions data, each business "must surrender one compliance instrument for each metric ton of CO2e." Another term for compliance instrument is carbon credit, CARB offset credit or allowance.
How do companies obtain carbon credits?
A business may participate in two compliance instrument auctions currently scheduled for Aug. 15 and Nov. 14, 2012. Starting in 2013, businesses can expect to participate in these auctions quarterly. CARB also issues allowances to the tune of 90 percent of the businesses' average emissions.
Are there noncompliance penalties?
CARB tracks the amounts of allowances and carbon credits that a business turns in. If the company falls short, the business receives a notice of noncompliance. The business then has 45 days to get current. If the business fails to comply in this time, further violations are added at 45-day intervals.
Sylvia Cochran is a Los Angeles area resident with a firm finger on the pulse of California politics. Talk radio junkie, community volunteer and politically independent, she scrutinizes the good and the bad from both sides of the political aisle.
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