LawFlash

CARB Proposes Amendments to State Mandatory Greenhouse Gas Emissions Reporting

August 17, 2012

On Aug. 1, 2012, the California Air Resources Board (CARB) released proposed amendments to the mandatory reporting requirements of its statewide climate change regulations (AB 32). According to CARB, the proposed amendments are intended to:

  • Harmonize mandatory reporting regulations with U.S. Environmental Protection Agency (EPA) national greenhouse gas (GHG) reporting requirements;
  • Enhance accuracy and completeness in reporting; and
  • Clarify reporting requirements and methodologies.

In order to ensure consistency with existing cap-and-trade and fee regulations, CARB also proposed conforming amendments to the definition sections of the AB 32 Cost of Implementation Fee Regulation and the GHG cap-and-trade regulations.

Key Elements of the Proposed Amendments

Since the mandatory GHG reporting regulations were first implemented in January 2009, CARB has taken steps to harmonize the regulations more closely with EPA’s own mandatory GHG reporting regulations (40 CFR Part 98). A first round of amendments to the California reporting regulations were adopted in December 2010 and became effective Jan. 1, 2012. Since the 2010 changes, EPA has adopted additional revisions to the federal reporting rules, and California has adopted regulations implementing the AB 32 cap-and-trade program, prompting CARB to propose adopting a second round of amendments to the reporting rules to reflect and implement these changes.

Several key aspects of the proposed amendments are described below.

  • Under the proposed amendments, in order to facilitate leakage analysis as required by AB 32, facilities emitting between 10,000 to 25,000 metric tons of carbon dioxide equivalent (MTCO2e) that are allowed to submit an abbreviated emissions data report must now report process emissions in addition to combustion emissions and must include process emissions in assessing whether the facility meets the thresholds for abbreviated reporting.
  • The proposed amendments would no longer require third-party verification for reporters emitting below the 25,000 MTCO2e threshold.
  • Reporting accuracy requirements would now apply only to “covered product data” used in the allocation of allowances under the cap-and-trade regulation. The proposed amendments also add calcined coke to product data to be reported by refinery and hydrogen production sectors since it is used to determine the allocation of allowances in the cap-and-trade program.
  • Each asset-controlling supplier would now be required report, verify and submit all information necessary to calculate its system emission factor and could lose its status as an asset-controlling supplier (including its system emission factor) if it receives an adverse verification statement. If an asset-controlling supplier fails to report and verify, the default emissions rate would apply for purposes of calculating CO2e emissions to be reported.
  • The proposed amendments now specify the time period from which data would be used to calculate the emission factors for specified sources and for asset-controlling suppliers. For specified sources, reports to be submitted in 2013 would be based on 2012 transaction data and 2011 emission factor data, but for asset-controlling suppliers the same 2013 reports would be based on 2012 transaction data and 2010 emission factor data. Asset-controlling suppliers would use emissions factor data from two years prior to the emission data report, rather than the previous year, to ensure that power entities have advanced knowledge of the suppliers’ reporting and verification status and the ability to consider the appropriate system emission factor before importing electricity into California.
  • The proposed amendments clarify the requirement that third-party verifiers must evaluate electric power entities for compliance obligations, Renewable Portfolio Standard adjustment and qualified export reporting requirements.
  • The full reporting requirements and calculation methods from the currently referenced U.S. EPA rule for Petroleum and Natural Gas Systems (Subpart W) would now be included directly in the reporting regulations. However, the proposed amendments do not adopt U.S. EPA’s onshore petroleum and natural gas production industry segment definition requiring reporting of emissions “associated with a single well pad.” Instead, the proposed amendments require reporting of the full breadth of emissions from onshore production by retaining the existing requirement to report emissions “associated with a well pad” (including from separators and tanks receiving oil from combined streams from multiple well pads).
  • Best available monitoring methods (BAMM) would no longer be permitted beginning in 2013, and certain modifications would apply to calculations made in accordance with BAMM based upon data collected through 2012.
  • CARB also proposes updating the definitions in the cap-and-trade and fee regulations to conform with the proposed changes to the mandatory reporting regulation. 

CARB will be accepting comments on the proposed amendments to the mandatory reporting regulations from Aug. 6 to Sept. 19, 2012. The public hearing on the proposed regulations is scheduled to take place on Sept. 20, 2012, at Byron Sher Auditorium, 1001 I Street, Sacramento, Calif., 95814. 

Affected entities will want to stay apprised of any further developments.

For additional information, please visit CARB’s website.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Rothman-Rick
Strohbehn-Edward
Brown-David

This article was originally published by Bingham McCutchen LLP.