CARB Board Hears Staff Proposals for Cap-and-Trade Regulation Changes

For the first time, the California Air Resources Board (CARB) discussed significant amendments to the Cap-and-Trade program when it reviewed CARB staff’s recommendations at a meeting on September 22. There was a mix of opinions from commenters on the draft regulation, including significant criticism from the environmental justice community calling for the elimination of the trade portion of Cap-and-Trade.

CLFP testified in opposition to CARB staff’s proposal to eliminate transition assistance in the fourth compliance period beginning in 2020. Citing the lack of new technology to aid food processors in meeting this compliance obligation, CLFP recommended that any proposed reductions in transition assistance be tied to new technology development on a sector basis. Currently, CARB’s proposal lacks significant detail in the post 2020 timeframe on plans to reduce industry assistance or free allocation of allowances.

 

The proposed regulation did not include a plan to change the industry assistance for the third compliance, but did indicate that there would be an undefined change beyond 2020 that would likely result in significant reduction of emissions allowances and a consequent increase in cost for California manufacturers. CLFP, however, noted that the recent study on leakage in the food processing sector did conclude that the industry should be designated a high leakage risk. Given there has yet been no comment on the study from CARB, CLFP stated that CARB should heed the study’s conclusions and make the change to provide 100% allowance allocation to food processors in the third compliance period.

CLFP also supported comments from the business community calling for the establishment of an industry advisory council that would provide formal and early feedback to CARB staff on proposed regulations and compliance mechanisms.

 

The formal close of the initial 45-day comment period occurred on September 19 and CARB staff will now make changes to the draft regulation based on public comment and board feedback. CARB will then issue another draft regulation giving industry 15 days to comment before the regulation goes to the board for a vote.

 

CLFP will continue to meet with CARB staff to discuss concerns of California food processors and recommend improvements that will lead to a well-designed Cap-and-Trade program. Please contact John Larrea at CLFP at john@clfp.com with any questions.