At a legislative hearing on the status of California’s cap-and-trade system yesterday, the Chair of the California Air Resources Board (CARB), Mary Nichols, indicated they are proposing to start the program in 2012 but delay the first compliance period to 2013.
Cap-and-trade is a cornerstone of California’s approach to reducing greenhouse gas (GHG) emissions to 1990 levels by 2020. This reduction is preserved in AB32, the state’s climate change legislation. Cap-and-trade is also a key component of the state’s participation in the Western Climate Initiative, which involves a number of US states and Canadian provinces and aims to reduce carbon emissions across the partner jurisdictions.
Nichols said the quarterly auctions of emissions allowances that each large emitter in the state must turn in would begin in the second half of 2012, rather than February 2012 as planned. The first three-year compliance period, which originally covered 2012-14, will be shortened to two years.
CARB indicates that the one-year delay will provide flexibility and allow them to “stress test” the market mechanisms. They intend to release a draft of regulations covering allowance distribution and details on offset protocols within the next two weeks. Nichols indicated the agency is also on track to finish its regulations by the end of October.