Gino DiCaro

High threat level for California economy with cap and trade

By Gino DiCaro, VP, Communications

Capitol Update, Sept. 21, 2012

On Thursday, September 20th, the California Air Resources Board (CARB) moved another step closer to the November 14 auction of allowances in the cap and trade program set to start in 2013.  The Board heard a “ready to go” report from staff based on results of a practice auction on August 30th. During public comment a representative of Southern California Edison suggested that CARB host another practice auction between now and November, but there was no immediate reaction to this idea from CARB.

The Board also adopted resolutions directing staff to take certain actions relating to the cap and trade rule, including “evaluation of trade exposure categorization and, if necessary, propose regulatory amendments by mid-2013 to modify the leakage risk determinations to be implemented prior to the allocation of allowances for the second compliance period.”

CMTA’s Dorothy Rothrock testified that all California manufacturers are trade-exposed and should receive free allowances to avoid leakage. She emphasized that companies are making investment decisions now that will impact operations in California in the next three to five years. It is urgent that CARB adjust leakage categories as soon as possible to avoid leakage happening now, right under our noses.  CMTA member companies also testified about the importance of more free allowances to protect their ability to maintain competitive.

In another resolution CARB directed that staff work with the California Energy Commission, California Public Utilities Commission and stakeholders to develop a methodology that exempts the steam and waste heat emissions for all facilities that would not be included in the cap and trade program “but for” their investment in combined heat and power. This could lead to a regulatory amendment next year.

Finally, under pressure from the universities, the Board directed staff to “develop a methodology to allocate allowances to California universities that recognizes early actions to reduce greenhouse gas emissions, energy efficiency and “Combined Heat and Power”, and to return to the Board in mid 2013 with proposed regulatory amendments.

Entities promised favorable treatment through these resolutions expressed gratitude to the Board. That the Board felt compelled to grant special exceptions is proof that the regulation is costly and burdensome.  Why manufacturers were not provided the same treatment afforded the universities was not discussed. CMTA will continue to advocate for free allowances to meet the goals of AB 32 in the most cost-effective manner possible.

You can view CMTA's (and the AB 32 Implementation Group's) detailed letter to the Governor (cc'd to CARB) here.

More than 1,000 companies and individuals signed a basic letter to CARB asking for leakage assistance and free allocation. You can sign it on CMTA's website here

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