Emissions Trading Worldwide

California Cap-and-Trade Program
Phases and Allocation
Trading periods California’s trading period is referred to as a “compliance
period” (see “compliance period” below).
Allowances are allocated and auctioned with calendar year vintages. Some
allowances from future vintages are offered for sale at each auction and may
be traded but not used for compliance until the compliance date for the vintage
year.
allocation Allowances are allocated by benchmarks in each sector. Provisions
for new entrants follow established methodologies for vulnerability to leakage.
The vast majority of industrial allocation is based on production benchmarks
and is updated annually based on verified production data. There is no cap
on the total amount of industrial allocation. Publicly-owned and regulated
investor-owned electric utilities: Receive allowances on behalf
of their ratepayers. Investor-owned utilities must consign the allowances they
receive to state-run auctions. Allowances are also provided to natural gas utilities
on behalf of their ratepayers. All natural gas and electrical utilities must
use the allowance value for ratepayer benefit and for emissions reductions.
Industrial facilities: Receive free allowances for transition assistance and
to prevent leakage. Leakage risk is determined by emissions intensity and trade
exposure. Transition assistance declines with each compliance period. Other
categories of transition assistance are provided for public wholesale water
entities, legacy contract generators, universities, and public service facilities.
The remainder of allowances is auctioned. This will be about 10% of allowances
in the first compliance period, and will increase in subsequent compliance
periods.
compliance period Three calendar years (after first compliance period of two
years). Allowances for emissions of the whole compliance period must be surrendered
by 1 November (or the first business day thereafter) of the year following
the last year of a compliance period.
NB: California’s trading period is referred to as ‘compliance period’ though a portion
of allowances must be submitted for each year’s emissions depending on
the year of the trading/compliance period. First compliance period: 2013–2014
Second compliance period: 2015–2017 Third compliance period: 2018–2020
If the allowances in the reserve are all sold, allowances from future years are
transferred to the reserve and made available for sale.
compliance
MRV Reporting frequency: One year Verification: Emission data reports
and their underlying data require independent third-party verification annually
for all reporters that equal or exceed 25,000 tCO 2e (metric). Other: Reporting
is required for most operators at or above 10,000 tCO 2e (metric). Operators
must implement internal audits, quality assurance and control systems for the
reporting program and the data reported.
Enforcement Penalties may be assessed pursuant to Health and Safety Code
section 38580 (misdemeanor, fines, and possibly imprisonment).
There are separate and substantial penalties for mis- or non-reporting under
the Mandatory GHG Reporting Regulation.
Under the Cap-and-Trade Regulation, if an entity fails to surrender a sufficient
number of compliance instruments to meet its compliance obligation, there
is a separate violation of this article for each required compliance instrument
that has not been surrendered, or otherwise obtained by the Executive Officer.
A separate violation accrues every 45 days after the end of the Untimely
Surrender Period for each required compliance instrument that has not been
surrendered.
Adjustment to Compliance Obligation: Outside of enforcement, there is also an
automatic adjustment to the compliance obligation due equal to the number
of allowances short for that compliance surrender deadline multiplied by four.
A quarter of that amount is retired and the remaining amount is auctioned by
the state.
other information
Institutions involved California Air Resources Board (CARB)
Links with other systems California linked with Québec’s ETS on 1 January
2014.
Flexibility
Banking and borrowing Banking is allowed but the emitter is subject to
a general holding limit. Borrowing across compliance periods is not allowed.
Offsets and Credits Quantitative limit: Up to 8% of each entity’s compliance
obligation. Qualitative Limit: Currently six domestic offset types are
accepted as compliance units originating from projects carried out according
to six ‘protocols’: 1. U.S. forest projects, 2. Urban forest projects, 3. Livestock
projects (methane management), 4. Ozone depleting substances projects, 5.
Mine methane capture (MMC) projects, 6. Rice cultivation projects
PRICE MANAGEMENT PROVISIONS Auction Reserve Floor Price: USD 12.73 in
2016 (EUR 11.60) per allowance. The auction reserve price increases annually
by 5% plus inflation, as measured by the Consumer Price Index. Allowance
Price Containment Reserve: Will be allocated allowances from various
budgets (1% from budget years 2013–2014; 4% from budget years 2015–2017;
and 7% from budget years 2018–2020).
In 2016, the reserve sale administrator can sell accumulated allowances on
a regular basis in three equal price tiers at USD 47.54, 53.49, and 59.43 (EUR
43.36, 48.79 and 52.20). Tier prices increase by 5% plus inflation (as measured
by the Consumer Price Index).
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