Connect News, London:California Air Resource Board has released a guidance document for the opt-in entities for its cap-and-trade program. The opt-in entities are the entities that voluntarily elect to surrender allowances for each tonne of GHGs they emit.

The opt-in entities are required to be covered under the Cap-and-Trade Program, but are not required to comply with the regulation of emitting more than 25,000 MTCO2e annually to take part in the trading program.

The entities willing to opt-in the cap-and-trade program need to submit the opt-in request form to the California Air Resources Board’s (ARB) Executive Officer (EO) for approval.

The opt-in entities can also receive free allowances based on the same criteria as covered entities. But the opt-in entities willing to receive free allowances are required to submit a request asking to opt-in by May 1, 2012 and report emissions from the previous year by June 1, 2012. For the entities not intending to receive free allocation of allowances, the information contained in the form requesting to opt-in must be submitted by November 30 of the calendar year prior to the year it desires to voluntarily participate in the program.

Also, the opt-in covered entity can elect to opt out of the program at the end of a compliance period if its greenhouse gas emissions remain under the inclusion threshold. This can be done by surrendering allowances equivalent to total greenhouse gas emissions during the compliance period or turning in allowances equivalent to the number free allowances it received from ARB during the compliance period.

The option of voluntarily opt-in the cap-and-trade is expected to prove good for entities which are more efficient than other entities in the sector. Also, entity that purchases steam from another entity may also be eligible to receive allowances to compensate for a portion of the cap-and-trade costs included in purchased steam.

California’s cap-&-trade regulation required all covered entities to register for the cap-&-trade program by January 31, 2012. The first compliance period for the program is two years and begins from January 1, 2013. On 12th January 2012, ARB started online registration for the registered entities. Along with this ARB is also developing the Compliance Instrument Tracking System Service (CITSS) to support the cap-&-trade regulation.

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