A state-wide limit on the emissions from sources responsible for 80 per cent of California’s greenhouse gas emissions and a price signal aimed at driving long-term investment in cleaner fuels has been endorsed by the California Air Resources Board.
The reduction goals were initially outlined in 2008 and feature a cap, which declines each year, and uses allowances to control total emissions. The idea is that covered entities must reduce emissions or compete for a decreasing supply of allowances. It will also work alongside other measures, including standards for cleaner vehicles and low-carbon fuels, as well as renewable electricity and energy efficiency.
In total, the regulation covers 360 businesses and represents 600 facilities while being divided into two phases: a first phase that begins in 2012 and includes all major industrial sources; and a second phase that starts in 2015 and brings in distributors of transportation fuels, natural gas and other fuels.
There is no specific limit on greenhouse gas emissions but companies must supply a sufficient number of allowances to cover their annual emissions and each year the total number issued in the state drops. By the end of the programme in 2020, there should be a 15 per cent reduction in greenhouse gas emissions when compared to today.
Initially, a number of free allowances will be made from 2012-2014 to allow industrial sources to make a gradual transition; while electric utilities will also be given allowances but will be required to sell those and dedicate revenue towards achieving the goals and for the benefit of ratepayers.
