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California Adopts Greenhouse Gas Reporting Regulations

Beveridge & Diamond, P.C., December 13, 2007

On December 6, the California Air Resources Board (CARB) adopted regulations requiring the largest facilities in California to report their annual greenhouse gas (GHG) emissions. The adoption of the reporting regulations is an important benchmark in the implementation of AB 32, California’s landmark climate change legislation, which requires that California reduce its GHG emissions to 1990 levels by 2020. “The mandatory reporting requirements are a crucial part of the state’s efforts to reach [its emission reduction] goal,” said CARB Chair Mary Nichols. “We are now giving businesses and industry the clear guidance they need to calculate and report their greenhouse gas emissions for their largest facilities.”

The reporting regulations require the largest facilities in California to report their GHG emissions annually. These facilities account for 94 percent of the state’s emissions from industrial and commercial stationary sources. The new reporting rules cover about 800 separate sources in a variety of different sectors, including:  electricity generating facilities, electricity retail providers and power marketers; oil refineries; hydrogen plants; cement plants; cogeneration facilities; and industrial sources that emit over 25,000 tons of carbon dioxide each year from on-site stationary source combustions such as large boilers, furnaces, foundries, and colleges and universities. Transportation sources, which account for 38 percent of California’s total GHG emissions, are not covered by these regulations; their GHG emissions will continue to be tracked through existing means. Backup generators, schools, and hospitals are also excluded from the requirements.

Affected facilities are required to start tracking their emissions in 2008, to be reported beginning in 2009 with a phase-in process to allow facilities to develop reporting systems. Emissions for 2008 may be based on best available emission data; however, beginning in 2010 emissions reports will be more rigorous and will require third-party verification. This verification must be conducted by CARB-accredited verifiers and must be done either annually or every three years, depending on the type of facility. The reporting standards were developed in consultation with the California Climate Action Registry, as required by AB 32. Development of the regulations included five public workshops and 15 technical workgroup meetings, as well as coordination with other state agencies. 

California’s mandatory reporting regulations are significant outside of California, as they will serve as a model for reporting requirements under development across the country. For example, The Climate Registry (TCR), a non-profit organization representing a broad coalition of 39 U.S. states, 4 Canadian provinces, the Mexican state of Sonora, and several tribes, is currently developing its reporting protocols. TCR is intended to provide a means for emitting entities to measure, track, verify and report GHG emissions, and is intended to support market-based and regulatory GHG emissions reporting programs. It represents a linking of several state-sponsored reporting requirements, including the California Climate Action Registry. The Climate Registry’s “Draft General Reporting Protocol” was released for public comment on October 29, and likely will be finalized at TCR’s Board meeting in January 2008. It is anticipated that any mandatory state-level GHG reporting, such as that  prescribed by AB 32, will be conducted through or be linked with registries such as TCR’s.

At its December 6 meeting CARB met a second important AB 32 benchmark by adopting a 1990 GHG emissions level of 427 million metric tons of CO2 equivalents. This number also will serve as the 2020 statewide cap. The next major step in implementing AB 32 is CARB’s development of a Scoping Plan by January 1, 2009.  That process is already underway, as the first public workshop was held on November 30. The Scoping Plan essentially will be the state’s blueprint for determining how required emission reductions are to be achieved via regulations, market mechanisms, and other actions.  Many significant strategic issues will be decided in the course of developing the Scoping Plan. Once adopted, CARB will draft regulations in 2009 to implement the Scoping Plan.  These tasks will involve multiple opportunities for stakeholder input through public meetings and workshops.

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For more information, please contact Nicholas van Aelstyn, nvanaelstyn@bdlaw.com, (415) 262-4008.