At the September 22, 2016 public hearing, ARB staff initially proposed amendments to California's existing Regulation for the Mandatory Reporting of Greenhouse Gas Emissions (MRR) and also the California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms Regulation, including Compliance Offset Protocols (Cap-and-Trade Regulation). On December 21, 2016, staff released a Notice of Public Availability of Modified Text (Notice). Comments that were received during the formal public comment period for the modified text, as well as further staff analysis, are reflected in proposed modifications in a second 15-day Notice, which was posted on April 13, 2017. The key changes of the second Notice are highlighted below.

MRR

  • Verification deadline pushed back from August 1 to August 10 of each year.
  • The six-year timing requirement for inspections of differential pressure devices in section 95103(k)(6)(A) is modified to include devices at hydrogen plants.
  • Restored text in section 95103(1) which allows for the voluntary exclusion of accurate covered product data for the purposes of conformance and material misstatement.
  • Minor clarifications to the reporting requirements for imported electricity from the California Independent System Operator's (CAISO) Energy Imbalance Market (EIM).
  • Reinstated exemptions to the lesser of analysis for grandfathered contracts and dynamically tagged power deliveries.
  • Added requirements for borate manufacturing facilities to report the quantity of boric oxide equivalent produced.
  • Modified product data reporting requirements for almond and pistachio processing facilities.
  • Updated the flash test procedure for oil and gas facilities.

Cap-and-Trade

  • Proposed disposition of allowances post-2020 listed in Table 8-3 and described in section 95871(d) are removed from the Regulation due to serious concerns raised by numerous industry representatives. ARB plans to have separate meeting(s) with industry stakeholders to develop a post-2020 allocation framework in the near future.
  • Assistance factors in Table 8-1 for the 2013-2020 period assigned for Other food crops grown under cover (NAICS 111419); Wet corn milling (NAICS 311221); Cyclic crude, intermediate, and gum and wood chemical manufacturing (NAICS 325194); and Automobile manufacturing (NAICS 336111).
  • The following activities in Table 8-1 were added/modified to match the benchmark changes in Table 9-1: mining and manufacturing of borates, sulfuric acid regeneration, fluid milk product processing, cream processing, milk powder (low heat) processing, milk powder (medium heat and high heat) processing, dairy product solids for animal feed processing, almond blanching, almond flavoring, almond pasteurizing, pistachio flavoring, and pistachio hulling and drying.
  • Staff is no longer proposing changes to benchmarks for cream, freshwater diatomite filter aids, and seamless rolled ring.
  • Section 95852(b)(2)(A)(10) is modified to reinstate the clarification that imports of power via the CAISO EIM shall not constitute resource shuffling.
  • Table 9-4 (Annual Allowances Allocated to Each Electrical Distribution Utility) is replaced with updated 2021 through 2030 electric distribution utility (EDU) allocations.
  • Staff proposes to remove the application of the cap adjustment factors from post-2020 EDU allocation calculations.
  • When calculating EDU allowance allocations, the assumed amount of zero emission electricity used to fulfill RPS requirements is reduced by five percent.
  • For natural gas suppliers, Table 9-6 (Minimum Annual Percentage Consignment Requirements for Natural Gas Utilities) is modified to remove the initially proposed 100 percent consignment requirement by 2021 and instead continue the existing annual percent increase of 5 percent per year, reaching full consignment by 2030.

More information about the regulatory activity can be found at MRR and Cap-and-Trade. If you have any questions or inquiries, please email Dr. Charles Lee, our lead consultant on this topic.