CPP Celebrates a Birthday and California Releases Details About Its Proposed Implementation Plan

One year ago yesterday, the EPA released the Clean Power Plan.  Despite the uncertainty created by the judicial stay and ongoing litigation, some states are forging ahead with developing their implementation plans.  This week California became the first state to release to the public draft copies of its proposed CPP compliance plan and the environmental analysis performed for the proposed plan.  The draft plan has been prepared by California’s Air Resources Board (ARB) with assistance from an interagency working group that includes staff from the California Energy Commission and the California Public Utilities Commission.

California proposes to comply with the CPP through a mass-based, single-state plan that utilizes a “‘state measures’ approach, with the [existing] Cap-and-Trade Program as the state measure.”  Under this approach, units qualifying as covered electric generating units (EGUs) will be required to participate (or to continue participating) in the state’s Cap-and-Trade Program.  Starting with emission targets in calendar year 2022, the EGUs “will have a federally-enforceable obligation to comply with key Program requirements,” including that the unit “surrender emissions allowances equal to reported CO2 emissions, and meet monitoring and reporting requirements.”  Non-EGU participants in the market program will continue to have only state-enforceable obligations.

The plan also includes a backstop provision which will be triggered if the state’s annual emission targets are exceeded by 10%. Under the backstop provision—which is designed to bring the state into compliance within eighteen months—the ARB would create and distribute an additional pool of backstop allowances.  Affected EGUs will be required to retire allowances for each ton of carbon dioxide that is emitted during the backstop compliance period.  The backstop allowances may be traded among the affected EGUs, though they will not be auctioned.

The plan does not currently include a clean energy incentive program (CEIP) election. ARB is evaluating the CEIP and may take further action before finalizing its plan.

The comment period for the drafts will run from August 5, 2016 to September 19, 2016.  The ARB plans to hold a public meeting on September 22, 2016 at its office in Sacramento.

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