Location:

Morrison & Foerster - 425 Market Street, San Francisco, CA 94105

California's Global Warming Solutions Act (AB 32) includes a Cap-and-Trade program as a primary tool, with the overarching objective of reducing greenhouse gas emissions (GHG) in California to 1990 levels by 2020.  A longer term objective is to further reduce GHG emissions to 80 percent of 1990 levels by 2050. The California Air Resources Board (CARB) is establishing an overall ceiling on GHG emissions from capped sectors, and facilities subject to the cap will be able to trade permits (allowances) to emit GHGs.  The program sets the statewide limit on sources responsible for about 85 percent of all GHG emissions.

The California Cap-and-Trade program officially begins on January 1^st, 2013, as the California Air Resources Board (CARB) initiates the compliance period for utilities and large industrial facilities. The program will be expanded to distributors of transportation, natural gas, and other fuels on January 1^st, 2015.  The overall cap will be set around 2 percent below the 2012 GHG emissions level  forecast  for 2012, and will decline about 2 percent in 2014, and about 3 percent annually from 2015 to 2020.  Initially, GHG emission allowances will be mostly free, and the amount of allowances will be set at around 90 percent of average emissions from recent data.

Issues which will be addressed:

• What are the results of the first GHG market auction (which took place on November 14, 2012)?
• What are the implications of CARB’s proposed new program for allowing free carbon allowances for companies at risk of leaving the state due to the impact on their competitiveness?
• Is the Cap and Trade program susceptible to fraud and market manipulation?
• How will the expected billions of dollars of revenue generated be spent (e.g. AB 1532)?
• What can be expected from the remaining two market auctions during the 2012-2013 Fiscal year?
• How is CARB working to reduce the risk of fraud and market manipulation?
• What other market-based programs are likely to link with California’s Cap and Trade program (e.g. Québec;  Regional Greenhouse Gas Initiative; European Union)?
• How difficult is it to establish a feasible common set of rules between these regional programs?
• What are the advantages and disadvantages of linking regional programs?