NEWSWATCH

AB 32 Update: Making Progress In The Fight Against Global Warming
Tiffany Rider - Senior Writer

April 9, 2013 – California remains at the forefront of the nation in the fight against climate change through its government’s use of various tools to reduce energy consumption and greenhouse gas emissions – primarily through the Global Warming Solutions Act of 2006 known as AB 32.

“California is implementing groundbreaking programs under AB 32 to reduce greenhouse gas emissions across our economy and the progress so far makes us confident the targets for 2020 and beyond will be achieved,” David Clegern, spokesperson for the California Air Resources Board (ARB), told the Business Journal in an e-mail.

Greenhouse gas rules and market mechanisms have been adopted by ARB and are legally enforceable. The cap-and-trade regulation of AB 32 became effective January 1, 2012; regulatory amendments went into effect September 1, 2012; and program compliance began January 1, 2013.

Facilities emitting more than 25,000 metric tons of greenhouse gas equivalents (including carbon) have been subject to mandatory reporting since 2008, according to Clegern. Long Beach’s waste-to-energy plant, the Southeast Resource Recovery Facility (SERRF), has reported its emissions since 2008 even though the ARB is still studying whether or not the facility should be exempt as its primary purpose is to divert waste from landfills, according to SERRF Director Charlie Tripp.

“We would have to be in the program in 2015 versus this year,” Tripp told the Business Journal. “They’re still doing analysis. I’ve gotten calls and questions about certain things. We’re kind of in a holding pattern until they complete their analysis. I think they’re looking at whether landfills should also be included in cap-and-trade.”

Some of the businesses mandated to report emissions under AB 32’s cap-and-trade program since 2008 include Occidental Petroleum Corporation, Signal Hill Petroleum, NRG Energy and AES, which both have energy generation facilities in Long Beach. The Los Angeles Department of Water and Power also has an electricity facility in Long Beach that emits above the 25,000 metric ton threshold mandated by AB 32. The first mandatory reporting deadline for greenhouse gas emitters under the cap-and-trade program is tomorrow, April 10.

These and other organizations involved in the AB 32 cap-and-trade program may reduce emissions by reducing production or finding cleaner methods of production; purchase carbon allowances for a limited amount of emissions and/or use carbon offsets. ARB will auction carbon allowances to these entities on a quarterly basis and began doing so in November.

The second carbon allowance auction was held this year, March 8. Thus far, Clegern said the ARB has auctioned 36,050,932 allowances to be used in 2013 (2013 vintage); 5,576,000 2015 vintage allowances and 4,440,000 2016 vintage allowances. The next auction is scheduled for May 16 and will offer both 2013 and 2016 vintage allowances. According to ARB records, at least one local oil production company participated in the first allowance auction – Signal Hill Petroleum. The number of allowances the company purchased in the auction is not public.

Entities eligible for carbon offsets are covered facilities (mandatory or opt-in) that generate greenhouse gas equivalent emissions in the production of gasoline, diesel, glass, cement, electricity or other products. While no carbon offset project protocols have been approved at this point, Clegern said there are currently four in the verification process: three with the American Carbon Registry and one with the Climate Action Reserve. They include U.S. forest projects, urban forest projects, livestock projects and ozone depleting substances (refrigerants) projects.

Two other offset protocols may be added – rice cultivation and coal mine methane. The public may comment on these two draft protocols as early as this summer. ARB board consideration could come this the fall and the protocols could go into effect as early as spring 2014, according to Clegern.

There are an additional 29 “early action” projects – most of which are proposed by dairies and forest conservation groups across the state – requesting approval under the Climate Action Reserve. “The first projects may be approved when they have successfully completed the verification and staff review processes,” Clegern said. “Could be early summer, but we’ve committed to no date.”

Looking ahead, Clegern said the ARB is now waiting on Gov. Jerry Brown’s “legislatively mandated findings on the stringency of the Quebec cap-and-trade program.” This examination of what Canada is working on to cut down pollution created by greenhouse gas emitters in Quebec is helping guide California to a potential linked program with the foreign project. Proposed amendments for linkage with Quebec are scheduled for discussion at an ARB Board hearing April 19.