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newsrel -- ARB gives green light to emissions trading program

Posted: 16 Dec 2010 19:41:18
ARB has just issued the following news release. Release #:10-63
Date:12/16/2010

ARB PIO: (916) 322-2990
CONTACT:

Stanley Young
916-956-9409
syoung@arb.ca.gov

California Air Resources Board gives green light to California’s
emissions trading program

Cap-and-trade program will drive innovation and jobs, and will
promote efficiency, clean energy


SACRAMENTO - The California Air Resources Board today endorsed
the cap-and-trade regulation, marking a significant milestone
toward reducing California’s greenhouse gas emissions under its
AB 32 law.  ARB’s cap-and-trade regulation, along with several
complementary measures will drive the development of green jobs
and set the state on track to a clean energy future.

The regulation is a key measure to achieve the greenhouse gas
reduction goals of AB 32, California’s pioneering climate change
law signed by Governor Schwarzenegger in 2006.

“This program is the capstone of our climate policy, and will
accelerate California’s progress toward a clean energy economy,”
said ARB Chairman Mary D. Nichols. “It rewards efficiency and
provides companies with the greatest flexibility to find
innovative solutions that drive green jobs, clean our
environment, increase our energy security and ensure that
California stands ready to compete in the booming global market
for clean and renewable energy.”

The regulation sets a statewide limit on the emissions from
sources responsible for 80 percent of California’s greenhouse gas
emissions and establishes a price signal needed to drive
long-term investment in cleaner fuels and more efficient use of
energy.  The program is designed to provide covered entities the
flexibility to seek out and implement the lowest-cost options to
reduce emissions.
The cap-and-trade program also works in concert with other
measures, such as standards for cleaner vehicles, low-carbon
fuels, renewable electricity and energy efficiency, and
complements and supports California’s existing efforts to reduce
smog-forming and toxic air pollutants.

The cap-and-trade program and the other measures to reduce
greenhouse gases provide a model for action that can be used at
the federal, state and regional levels.  As climate policies are
being addressed worldwide, California’s early actions are
positioning its economy to reap the benefits on the world stage
and are catalyzing action throughout the country and the world.
 
“The cap-and-trade program provides California with the
opportunity to fill the growing global demand for the projects,
patents and products needed to move away from fossil fuels and to
cleaner energy sources,” added Nichols
The regulation will cover 360 businesses representing 600
facilities and is divided into two broad phases: an initial phase
beginning in 2012 that will include all major industrial sources
along with utilities; and, a second phase that starts in 2015 and
brings in distributors of transportation fuels, natural gas and
other fuels.

Companies are not given a specific limit on their greenhouse gas
emissions but must supply a sufficient number of allowances (each
covering the equivalent of one ton of carbon dioxide) to cover
their annual emissions.  Each year, the total number of
allowances issued in the state drops, requiring companies to find
the most cost-effective and efficient approaches to reducing
their emissions.  By the end of the program in 2020 there will be
a 15 percent reduction in greenhouse gas emissions compared to
today, reaching the same level of emissions as the state
experienced in 1990, as required under AB 32.
 
To ensure a gradual transition, ARB will provide significant free
allowances to all industrial sources during the initial period
(2012-2014).  Companies that need additional allowances to cover
their emissions can purchase them at regular quarterly auctions
ARB will conduct, or buy them on the market.

Electric utilities will also be given allowances and they will be
required to sell those allowances and dedicate the revenue
generated for the benefit of their ratepayers and to help achieve
AB 32 goals.

Eight percent of a company’s emissions can be covered using
credits from compliance-grade offset projects, promoting the
development of beneficial environmental projects in the forestry
and agriculture sectors. Included in the regulation are four
protocols, or systems of rules, covering carbon accounting rules
for offset credits in forestry management, urban forestry, dairy
methane digesters, and the destruction of existing banks of
ozone-depleting substances in the U.S. (mostly in the form of
refrigerants in older refrigeration and air-conditioning
equipment).

There are also provisions to develop international offset
programs that could include the preservation of international
forests.  A Memorandum of Understanding has already been signed
with Chiapas, Mexico, and Acre, Brazil, at the Governor’s Global
Climate Summit 3 to establish these offset programs.
The regulation is designed so that California may link up with
programs in other states or provinces within the Western Climate
Initiative, including New Mexico, British Columbia, Ontario and
Quebec.  Efforts are also underway to link the WCI with other
regional climate programs, such as the Midwest Greenhouse Gas
Reduction Accord and the Regional Greenhouse Gas Initiative which
covers the power generation emissions of 10 northeastern states.

The regulation has been in development for the past two years
since the passage of the Scoping Plan in 2008.   ARB staff held
40 public workshops on every aspect of the cap-and-trade program
design, and hundreds of meetings with stakeholders.  ARB staff
also benefited from the analysis of a blue ribbon committee of
economic advisers, consultation with world-renowned institutions
that specialize in climate issues, and advice from experts with
experience from other cap-and-trade programs elsewhere in the
world.

The Air Resources Board is a department of the California
Environmental Protection Agency. ARB's mission is to promote and
protect public health, welfare, and ecological resources through
effective reduction of air pollutants while recognizing and
considering effects on the economy. The ARB oversees all air
pollution control efforts in California to attain and maintain
health based air quality standards.

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