Yesterday, the California Air Resources Board (ARB) approved regulatory changes to the State’s cap-and-trade program. Board passage of the amendments set in place a schedule for implementation of the program, which includes an opening in July of the program’s carbon allowance and offset credit tracking system.
ARB also indicated they would open a public process for the acceptance of new offset protocols. Plans to link the California cap-and-trade program to a similar scheme in Quebec, however, were put on hold.
California’s Tracking System Available for Registration in July
During yesterday’s meeting, ARB put in place the latest program implementation timeline. First on the agenda is registration for the Compliance Instrument Tracking System Service (CITSS). The Board will allow market participants to register and open their CITSS account in early July.
CITSS is the market tracking system for compliance instruments (allowances and offsets) in California’s carbon market. CITSS will hold participants’ compliance instruments and will be the system to issue, consign, and transfer allowances and offsets.
In order for regulated entities to receive their free allocations in October and November, they’ll need to open an account by submitting the necessary corporate documentation and application materials. Likewise, for offsets developers or other participants in the market, user account registration will be required.
It is advisable that regulated entities submit their applications and documentation no later than August 1, 2012. Once registration is complete, ARB will test the system in August-early September and operationalize the system by September. This means compliance instrument issuance, tracking, consignment and transfer functions should be available by September.
Rice and Coalmine Methane Protocols Move Ahead, Pneumatic Valve Protocol Shelved
The Air Resources Board indicated during their meeting yesterday they would move ahead with a public process for approving additional carbon offset protocols for inclusion in the cap-and-trade program. Regulators agreed to continue study of protocols for the reduction of carbon emissions from changes in rice cultivation practices and the collection and destruction of methane from coal mines.
An offset protocol to reduce fugitive methane emissions from natural gas pipelines through installation of pneumatic valves was also under review, but ARB announced yesterday they did not intend to give this methodology continued consideration.
Should ARB ultimately approve the rice and coal mine methane protocols, they will join four existing offset methodologies for forestry, urban forestry, livestock methane, and the destruction of ozone depleting substances.
California’s Linkage to Quebec Carbon Program Put on Hold
California regulators delayed a vote yesterday to approve regulations authorizing the State’s carbon cap-and-trade program to link with a similar program in the Canadian province of Quebec.
The regulations were considered complete and ready for Board consideration yesterday. However, approval was put on hold in order to comply with recently passed legislation requiring the Governor to fully review and approve an agreement to link with the Quebec program.
California Governor Jerry Brown will have 45 days to review linkage and submit his findings to the State Legislature. Should the Governor approve the agreement with Quebec, ARB will be able to move ahead with implementation of regulations to affect the linkage. Linkage of the California and Quebec programs is expected to create a larger and more liquid carbon trading market.
If you have any questions on the current market conditions, please contact our US Carbon team at: +1 415.963.9137 or +1 914.323.0265.