What You Need to Know about the Proposed Revisions to Cap and Trade

By Allison Smith, JDSupra.

Late Tuesday, the California Air Resources Board (ARB) released draft amendments to the state’s cap and trade regulation, including revisions to the current program in place through 2020, an extension of the program through 2030, and setting the stage for continued emissions reductions under the program through 2050.  ARB’s proposed amendments come in the middle of a recent milieu of uncertainty:  pending litigation challenging the legality of the existing program, an opinionfrom Legislative Counsel that ARB lacks authority under AB 32 to continue cap and trade past 2020, unprecedented weak demand at the most recent allowance auction, and legislation to establish a statutory emissions reductions mandate for 2030 still in process this session.  With all of these balls in the air, ARB has doubled down and drafted regulations dropping the program’s emissions cap from 334.2 million metric tons (MMT) of CO2e in 2020 to 200.5 MMT in 2030, with major elements of the cap and trade regulation continuing in effect past 2020 to achieve the emissions reductions.

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