Isramart : Calif Proposal:Fuel Sellers Should Start Cutting CO2 In 2012

Isramart news:
California regulators Tuesday proposed requiring petroleum-fuel sellers and other companies to comply with state greenhouse-gas emission-reduction rules starting in 2012–three years earlier than initially proposed–as part of the state’s 2006 plan to combat climate change.

The state Air Resources Board issued the proposed rules as part of a set of regulations it plans to adopt in December 2010 to implement a state law that requires industries to cut greenhouse-gas emissions to 1990 levels by 2020, or about 25%.

An earlier proposal called for power plants, oil refineries, cement factories and large industrial facilities to cap and then start cutting their carbon- dioxide emissions starting in 2012, with petroleum-fuel and natural-gas sellers and smaller industrial facilities joining the program in 2015. Tuesday’s proposal calls for all California facilities that emit carbon dioxide to cap and start cutting emissions in 2012–moving up the compliance date three years for sellers of petroleum fuels and natural gas for heating, and for small industrial facilities.

Making most emitters comply with the rules in 2012 would create a bigger pool of buyers and sellers of emission allowances and carbon credits, said ARB Chair Mary Nichols. She noted that requiring gasoline and other fuel sellers to start the program in 2012 would likely cut costs for other participants in the program, although it would likely increase costs for oil and gas companies.

“They’re likely not to think this is a good idea,” Nichols said, speaking with reporters by telephone.

The Western States Petroleum Association, which represents oil companies at the state capital, in Sacramento, didn’t immediately return telephone calls seeking comment.

Companies can cut emissions by improving the energy efficiency of their plants, purchasing emission allowances from the government and buying allowances from other companies that have cut emissions or otherwise have more allowances than they need. They can also buy carbon credits, or offsets, tied to projects that cut greenhouse-gas emissions, to comply with up to half of their emission- reduction requirement. Offset projects include dairies that capture and store methane, and forests that are managed to capture carbon dioxide, and are generally bought and sold through brokers or exchanges.

Although lengthy, the proposal released Tuesday doesn’t include a plan for allocating pollution allowances among California energy companies and other emitters–a key item that companies have been waiting for before they decide what investments to make to comply with state regulations. Also missing is a thorough economic analysis that explains the expected impact of the regulations on California’s economy and on the energy and industrial sectors subject to regulation.

ARB’s Nichols said a proposed scheme for allocating emission allowances would be issued early next year. She declined to provide any details on what that proposal might contain, although she suggested that state officials favor auctioning many emission allowances that companies will need.

“I think it’s fair to say, from the beginning, California has expressed a preference to move to auction as soon as possible,” Nichols said.

The agency will also propose how auction funds, which could reach $2 billion to $4 billion a year, should be spent, Nichols said.

By contrast, federal climate-change legislation passed by the U.S. House of Representatives earlier this year included a detailed proposal for a mix of government allocation of free allowances and allowances that would be purchased by power-plant operators, utilities, oil refiners and others, with the mix moving to more auctioning of allowances in later years.