ARB’s Cap-and-Trade Regulation provides a fixed limit on greenhouse gas (GHG) emissions from the sources responsible for about 85 percent of the State’s total GHG emissions. It also reduces GHG emissions by applying a declining aggregate cap on GHG emissions, and creates a flexible compliance system through the use of tradable compliance instruments (allowances and offset credits). It became effective in the beginning of 2012 and has been amended few times since then.

On September 2013, the board proposed a series of amendments to the California cap on greenhouse gas emissions and market-based compliance mechanisms in the regulation. The regulation has been further modified based on the results of the board’s October 25, 2013 public hearing and recently gone through 15 day-s comment period. Currently, it is scheduled to be considered for final adoption during ARB’s final board hearing on April 25, 2014. A list of the proposed modification and the details regarding the rule making processes can be found here.

The proposed revisions include but are not limited to:

  • New definitions most of which are the related to the new product-base emission efficiency benchmarks
  • Additional applicability categories in order to address the new reporting sectors added under ARB’s Mandatory Reporting Regulation (MRR)
  • Revised Allowance Disposition requirements
  • New product-base emission efficiency benchmarks
  • Revised Industry Assistance Factors
  • Revised equations for product output-base allocation calculations which addresses the true-up calculations for the facilities that will switch their allocation calculation methodology from energy-based to product-based in second and third compliance periods.

Please refer to the marked up version of the Cap-and-Trade regulation here for more details regarding the recent revisions.