The California Air Resources Board ("CARB") has taken several recent steps to amend, implement, and defend its regulations establishing a state greenhouse gas "cap and trade" program, which sets a declining cap on such emissions and requires covered sources to have sufficient "compliance instruments," which include emission allowances and offset credits, to cover their emissions.
On December 14, 2012, CARB announced its approval of two offset registries. The registries are authorized to list offset projects that comply with protocols approved by CARB. On January 25, 2013, the San Francisco Superior Court denied a petition for writ of mandate filed by two environmental groups challenging the offset protocols. The court concluded that the protocols' standards-based approach to additionality is consistent with A.B. 32, the authorizing statute, and that the four approved protocols are neither arbitrary nor capricious.
In early January 2013, CARB proposed amendments to link the California cap and trade program with the program enacted by Quebec. If the two cap and trade programs are linked, allowances and offset credits issued by either jurisdiction may be used to meet compliance obligations in either program.
CARB continues to hold auctions for the sale of allowances and will hold its second auction on February 19, 2013. CARB's notice of the upcoming auction describes steps that must be followed to participate in the auction. The California Chamber of Commerce has filed suit challenging CARB's regulations authorizing the auctioning and sale of emission allowances. California Chamber of Commerce et al. v. California Air Resources Board et al., Sacramento Superior Court, Case No. 34-2012-80001313.
For a more detailed discussion of these developments, please see Jones Day's Special California Update to The Climate Report.
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