Calif Proposal:Fuel Sellers Should Start Cutting CO2 In 2012
By Cassandra Sweet, Of DOW JONES NEWSWIRES
SAN FRANCISCO -(Dow Jones)- California regulators Tuesday proposed requiring
petroleum-fuel sellers and other companies to comply with state greenhouse-gas
emission-reduction rules starting in 2012--three years earlier than initially
proposed--as part of the state's 2006 plan to combat climate change.
The state Air Resources Board issued the proposed rules as part of a set of
regulations it plans to adopt in December 2010 to implement a state law that
requires industries to cut greenhouse-gas emissions to 1990 levels by 2020, or
about 25%.
An earlier proposal called for power plants, oil refineries, cement factories
and large industrial facilities to cap and then start cutting their carbon-
dioxide emissions starting in 2012, with petroleum-fuel and natural-gas sellers
and smaller industrial facilities joining the program in 2015. Tuesday's
proposal calls for all California facilities that emit carbon dioxide to cap and
start cutting emissions in 2012--moving up the compliance date three years for
sellers of petroleum fuels and natural gas for heating, and for small industrial
facilities.
Making most emitters comply with the rules in 2012 would create a bigger pool
of buyers and sellers of emission allowances and carbon credits, said ARB Chair
Mary Nichols. She noted that requiring gasoline and other fuel sellers to start
the program in 2012 would likely cut costs for other participants in the
program, although it would likely increase costs for oil and gas companies.
"They're likely not to think this is a good idea," Nichols said, speaking with
reporters by telephone.
The Western States Petroleum Association, which represents oil companies at
the state capital, in Sacramento, didn't immediately return telephone calls
seeking comment.
Companies can cut emissions by improving the energy efficiency of their
plants, purchasing emission allowances from the government and buying allowances
from other companies that have cut emissions or otherwise have more allowances
than they need. They can also buy carbon credits, or offsets, tied to projects
that cut greenhouse-gas emissions, to comply with up to half of their emission-
reduction requirement. Offset projects include dairies that capture and store
methane, and forests that are managed to capture carbon dioxide, and are
generally bought and sold through brokers or exchanges.
Although lengthy, the proposal released Tuesday doesn't include a plan for
allocating pollution allowances among California energy companies and other
emitters--a key item that companies have been waiting for before they decide
what investments to make to comply with state regulations. Also missing is a
thorough economic analysis that explains the expected impact of the regulations
on California's economy and on the energy and industrial sectors subject to
regulation.
ARB's Nichols said a proposed scheme for allocating emission allowances would
be issued early next year. She declined to provide any details on what that
proposal might contain, although she suggested that state officials favor
auctioning many emission allowances that companies will need.
"I think it's fair to say, from the beginning, California has expressed a
preference to move to auction as soon as possible," Nichols said.
The agency will also propose how auction funds, which could reach $2 billion
to $4 billion a year, should be spent, Nichols said.
By contrast, federal climate-change legislation passed by the U.S. House of
Representatives earlier this year included a detailed proposal for a mix of
government allocation of free allowances and allowances that would be purchased
by power-plant operators, utilities, oil refiners and others, with the mix
moving to more auctioning of allowances in later years.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@
dowjones.com
(END) Dow Jones Newswires
11-24-091756ET
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