ARB Releases Draft Proposed Amendments To Cap-and-Trade Program

The California Air Resources Board has released its draft amendments to the state’s Cap-and-Trade regulation as part of implementing Governor Brown’s Executive Order extending the program beyond the year 2020.

While ARB proposes establishing new emissions caps and provisions to streamline the cap-and-trade process, international sector-based credits for tropical forests jurisdictions are not included in the proposed amendments at this time. ARB will consider the amendments at a Board hearing in mid-September, 2016,and vote to finalize in Spring 2017.

Public comment period ends on September 19th. We urge you to file comment on the version that can be found here: ARB Proposed Changes to Cap and Trade  Program: Draft Proposed Regulation Order and Staff Report: Initial Statement of Reasons (ISOR) (PDF – 1509K)

Revised Office of Administrative Law Schedule

In order to finalize the formal regulatory package to commence the Administrative Procedure Act process, ARB staff has modified the schedule initially included in the July 1, 2016 listserv by one week. The revised schedule is as follows:

  • Jul. 19, 2016
    ARB will provide a draft of the formal regulatory package, including the full Staff Report: Initial Statement of Reasons (ISOR) (including appendices), and the Proposed Regulation Order, to the Office of Administrative Law (OAL). This submittal initiates a review by OAL prior to opening the formal comment period.
  • Aug. 2, 2016
    Based on OAL’s review, ARB may revise the draft documents and will post final versions of all documents related to the rulemaking (including the Notice of Public Hearing, ISOR, Proposed Regulation Order, and other Appendices) to ARB’s Cap-and-Trade Rulemaking webpage. ARB will also make a rulemaking file for the proposed amendments available to the public on this date.
  • Aug. 5, 2016
    The formal public comment period will begin when OAL publishes ARB’s Notice of Public Hearing on August 5, 2016.
  • Sept. 19, 2016
    The formal comment period will close.
  • Sept. 22–23, 2016
    ARB Board Hearing to consider proposed amendments.
  • Oct. 2016– Mar. 2017
    Continued stakeholder engagement and 15-day formal comment periods for any changes to the proposed amendments.
  • Mar. 23–24, 2017
    Second Board Hearing to vote on proposed amendments.

Draft Proposed Regulation Order and Staff Report

Section 4. Linkage with External Greenhouse Gas Emissions Trading Systems and Programs

b. Other Linkages and Linkage-Related Partnerships

Sector-Based Crediting Programs, including Acre, Brazil

As described in Chapter I of this Staff Report, ARB held public workshops on a number of topics that helped inform the amendments contained in this proposal. Four of those workshops addressed the potential of approving the use of sector-based offset credits from the tropical forestry sector within the Cap-and-Trade Program by developing a set of regulatory standards against which potential partner jurisdictions’ tropical forestry programs would be assessed for linkage. More information on these workshops is presented in Chapter IX and Appendix F of this Staff Report. ARB staff identified the jurisdictional program in Acre, Brazil as a program that is ready to be considered for linkage with California. ARB staff received numerous informal comments following the workshops. Some comments suggested specific recommended approaches, some opposed any action, some supported ARB staff’s initial thinking as outlined in an October 19, 2015 staff paper and as described in the four workshops, and some recommended that staff conduct additional stakeholder engagement before proposing any regulatory amendments.

ARB staff has presented information about how linkage with a state-of-the-art, jurisdictional sector-based offset program can provide significant benefits to California’s Cap-and-Trade Program by assuring an adequate supply of high-quality compliance offsets to keep the cost of compliance within reasonable bounds, up to the quantitative usage limit for sector-based offsets. Linkage would also support California’s broad climate goals, as well as global biodiversity and tropical forest communities. (ARB 2015a) After reviewing the workshop results, and in order to ensure coordination with Québec and Ontario, ARB staff is proposing to continue discussing with stakeholders and partner jurisdictions, including Acre and others in the Governors’ Climate and Forests Task Force,15 on the regulatory path to optimize the multiple benefits of including sector-based offsets in California’s program, including through a linkage with Acre, in time to be used to meet compliance obligations incurred in the third compliance period and thereafter. ARB staff is not proposing any regulatory amendments related to sector-based offset crediting or tropical forests in this rulemaking; rather, ARB staff anticipates that ongoing discussions with stakeholders will resume with additional informal public meetings outside of this rulemaking starting in the fall of 2016. These meetings will also solicit and consider additional tools the State of California could employ to mitigate tropical deforestation, including measures to encourage sustainable supply chain efforts by public and private entities.

Review the documents here:

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