The California Air Resources Board (CARB) has finalized the rules for the state’s cap-and-trade program, which is a key part of California’s climate change law (AB 32) which mandates greenhouse gas emissions (GHG) be reduced to 1990 levels by 2020. The program will affect 360 businesses and will be implemented in two phases. Phase one will start in 2013 and includes all major industrial sources of GHG including electric power utilities. The second phase, which starts in 2015, includes transportation fuels, natural gas and other fuels. The intention of the program is that by 2020 California will have reduced GHG emissions to 1990 levels.
The program will affect organizations that are responsible for 85 % of California’s GHG emissions. During the first phase CARB will give allowances to industrial GHG sources using a calculation that rewards efficient companies. Companies that need more allowances for their emissions can purchase them at quarterly CARB auctions or buy them on the carbon market. The first auction is scheduled for August 2012. Up to 80 % of a company’s emissions can be covered using credits from CARB-certified offset projects, for example urban forests.
The program is designed to be compatible with cap-and-trade programs in the Western Climate Initiative (WCI) which includes six U.S. states (California, Montana, New Mexico, Oregon, Utah and Washington) and four Canadian provinces (British Columbia, Manitoba, Ontario and Quebec).
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