Climate Connect News, London: The California Air Resources Board (ARB) has proposed that the oldest offsets will be retired first and the limit of 8% of annual compliance shall not be applicable to such offsets. Additionally, allowances of the earlier vintages will be retired first.

The Board has also proposed to streamline the process of verification of offset projects that would provide compliance offsets for entities covered under the state’s cap-and-trade scheme. The board has clarified the procedure wherein the project developers can approach the board to offer their offsets directly.

The Board has also finally proposed two new offset methodologies – Mine methane capture protocol and Rice cultivation protocol. Changes in the regulations have also been made to include potential new offset protocols in the future.

The proposed amendments to the cap-and-trade regulations also include some directions to the offset project developers. Conflict of interest requirements have been added and strengthened. Projects with commencement date after 01 January 2015 are required to e listed within one year or they will become ineligible. Listing information of the project cannot be changed once the project has been approved.

Amendments have been proposed for increasing the maximum time to complete verification services from 9 months to 11 months. Changes have also been proposed regarding rotation of verification bodies and offset verifiers. The Board has clarified what is covered under offset verification services and proposed that the Notice of Offset Verification Services (NOVS) must be submitted 30 calendar days prior to start of verification.

The new version of the Compliance Instrument Tracking System Service (CITSS) will be launched next week and notice for the same will be sent to all account holders. A number of new functionalities have been added to the latest version.

Entities participating in the auction of allowances would be required to report purchase limit and holding limit in the auction application. The entities would also be required to report the status of an ongoing investigation alleging misdeeds in the commodities, securities or financial markets. Entities must inform the reserve sale administrator of an intent to bid in the reserve sale 20 days prior to the sale.

The Board has proposed to make additional source of allowances available for the Reserve. Starting in 2015, 10% of future vintage allowances will be made available to the Reserve if needed to satisfy demand.

Entities can submit application to opt-in into the cap-and-trade by 01 March for the following year. The entities can rescind the opt-in application by 01 October.

The Board has announced a list of new sectors which could receive assistance (probably through additional allowances). These sectors include Hardware Manufacturing, Ethyl Alcohol Manufacturing, Rare Earth Metal Mining, Nonferrous Metal Forging, Guided Missile and Space Vehicle Manufacturing, Asphalt Paving Mixture and Block Manufacturing. Product-based benchmarking for certain sectors has also been proposed which would be used for calculating the number of allowances they’ll receive.

The Board has opened the proposed changes for comments by the public and stakeholders till 02 August 2013. The Board will issue notice for amendment on 04 September 2013 after considering the submitted comments and making any changes to the proposals, if any. The final form of the amended regulations will be considered by the Board on 24-25 October 2013.

Author: Climate Connect Limited

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