California last week released the final draft proposals for its emissions cap-and-trade scheme, which is largely similar to the EU emission trading scheme (ETS).
The proposals from the California Air Resources Board would cover 85% of the state’s greenhouse gas emissions.
Participants in the scheme would receive tradable emissions allowances up to a cap level set in line with California’s 2006 AB 32 legislation, which sets a target of reducing emissions to 1990 levels by 2020. For emissions above the capped level, participants would have to purchase additional allowances.
The scheme would start in 2012 and initially nearly all allowances will be given away for free. The price of auctioned permits will start at $10 per tonne in 2012, rising to $15 in 2020, with ceiling prices set to $40-50 in 2012 and $60-75 in 2020.
Emissions from transport will be exempt from the scheme until 2015, by which point the state estimates that nearly 80% of emissions will be covered.
The capped level will decrease by around 2% a year from 2012-2014 and by 3% after 2015.
However, in what is deemed to be a significant compromise, participants will be able to offset up to 8% of their ‘compliance obligation’.
“This program is a crucial element of reducing our greenhouse gas emissions,” says Air Resources Board chair Mary D. Nichols. “We have worked closely with all interested parties and stakeholders to make sure that the programme provides flexibility to reach our emissions reduction goals while taking into consideration the current economic climate.”
The plans are now open for comment ahead of a public hearing in December, when the California Air Resources Board will decide on whether to adopt the proposal.