Well AB 32 has arrived. The State of California has compiled a preliminary list of companies that are to be targeted for emission reduction (HIT LIST) commencing January 2012. These companies like Exxon, SMUD, PG&E to name a few will have to reduce their carbon footprint or they incure penalties.
The following footnote #4 on the emission reduction list sparked my curiousity.
"Eligible Free Allocation" means an entity could receive free allowances based on the sector classification in MRR reports from 2008-2010 and activities voluntarily reported to ARB if not currently reported pursuant to MRR. Entities are expected to receive allowances pursuant to Subarticle 9 of the cap-and-trade regulation if they are in a sector and conduct and activity listed in Subarticle 8, Table 8-1 or are listed in Section 95892, Table 9-3. "N/A" in the activity column means this is not an entity that conducts an activity as listed in Table 8-1. "Electrical Distribution Utility" is as listed in Table 9-3.
I looked up Eligible Free Allocation and found that New Zealand, and most of Europe is basing the reduction on the Kyoto Protocol which the US has not joined. I spoke to this earlier in the blog. The "Eligible Free Allocation" is determined by sector and based on historic usage. A sector means forestry, stationary energy, industrial processes, waste, liquid fuel and so on. So what this means in the HIT LIST is California is catogorizing the types of energy used based on industry, they have formulae to determine the cap on emission and as of tax year 2013 these companies will pay fines if they are out of compliance.
How do they determine property rights for the atmosphere. I think this is an important question. The atmosphere is a "global public good."
GHG emissions are an international cost/benefit not transmitted through prices. The emissions from all sources of GHGs contribute to the overall stock of GHGs in the atmosphere. In the cap-and-trade variant of emissions trading, a limit on access to a resource (the cap) is defined and then allocated among users in the form of permits. Compliance is established by comparing actual emissions with permits surrendered including any permits traded within the cap. The environmental integrity of emissions trading is dependant on the setting of the cap, not the decision to allow trading.The Preliminary Draft List can be found at http://www.arb.ca.gov/cc/capandtrade/covered_entities_list.pdf
The following footnote #4 on the emission reduction list sparked my curiousity.
"Eligible Free Allocation" means an entity could receive free allowances based on the sector classification in MRR reports from 2008-2010 and activities voluntarily reported to ARB if not currently reported pursuant to MRR. Entities are expected to receive allowances pursuant to Subarticle 9 of the cap-and-trade regulation if they are in a sector and conduct and activity listed in Subarticle 8, Table 8-1 or are listed in Section 95892, Table 9-3. "N/A" in the activity column means this is not an entity that conducts an activity as listed in Table 8-1. "Electrical Distribution Utility" is as listed in Table 9-3.
I looked up Eligible Free Allocation and found that New Zealand, and most of Europe is basing the reduction on the Kyoto Protocol which the US has not joined. I spoke to this earlier in the blog. The "Eligible Free Allocation" is determined by sector and based on historic usage. A sector means forestry, stationary energy, industrial processes, waste, liquid fuel and so on. So what this means in the HIT LIST is California is catogorizing the types of energy used based on industry, they have formulae to determine the cap on emission and as of tax year 2013 these companies will pay fines if they are out of compliance.
How do they determine property rights for the atmosphere. I think this is an important question. The atmosphere is a "global public good."
GHG emissions are an international cost/benefit not transmitted through prices. The emissions from all sources of GHGs contribute to the overall stock of GHGs in the atmosphere. In the cap-and-trade variant of emissions trading, a limit on access to a resource (the cap) is defined and then allocated among users in the form of permits. Compliance is established by comparing actual emissions with permits surrendered including any permits traded within the cap. The environmental integrity of emissions trading is dependant on the setting of the cap, not the decision to allow trading.The Preliminary Draft List can be found at http://www.arb.ca.gov/cc/capandtrade/covered_entities_list.pdf
