Alert for California potential opt-in entities
Thursday, 12 April 2012 10:48

 

May 1, 2012 – overlooking this date means heavy loses for California potential opt-in entities wishing to receive free allocation of 2013-vintage allowances in 2012.

 

The EUETS covered participants don’t have this problem because in the EUETS opt-in framework does not exist.

 

 

California Air Resources Board (ARB) has released the Cap-and-Trade Program guidance document for opt-in covered entities and the accompanying Opt-In Request Form on the ARB website.

 

It is interesting that the EUETS cap-and-trade rules does not envision analogous opt-in procedure. Although the thresholds in EUETS are set for installations at generally approximate level, the ETS Directive (2003/87/EC) provides only for opt-out framework (Article 27). The said provision stipulates that following consultation with the operator, Member States may exclude from the emissions trading scheme installations which have reported to the competent authority emissions of less than 25 000 tonnes of carbon dioxide equivalent and, where they carry out combustion activities, have a rated thermal input below 35 MW, excluding emissions from biomass, in each of the three years preceding the notification under point (a), and which are subject to measures that will achieve an equivalent contribution to emission reductions, if the Member State concerned complies with the conditions specified in Article 27 of the Directive 2003/87/EC (for details see: Exclusion of small installations and hospitals from EU ETS – time for conclusive decisions).

 

For installations within the scope of the EUETS see Annex I to the Directive 2003/87/EC.

 

Another important divergence between the schemes in that regard is that the opt-in decisions in the California cap-and-trade are individual and autonomous decisions of the operators of installations. As is apparent from the provisions of the cited Article 27, under the EUETS rules entities competent to take decisions as regards opt-out are Member States, not installations.

 

The ARB guidance document discusses information regarding opting into the program as well as suggested dates for submitting documentation. To download a copy of the Cap-and-Trade Program opt-in guidance document, go to:

http://www.arb.ca.gov/cc/capandtrade/optinguidance.pdf

 

To download a copy of the Cap-and-Trade Program Opt-In Request Form, go to:

http://www.arb.ca.gov/cc/capandtrade/optinform.docx

 

An opt-in covered entity is an entity that voluntarily elects to be covered under the Cap-and-Trade Program and surrender allowances for each metric ton of greenhouse gas it emits.

Opt-in covered entities may be eligible to receive free allowances based on the same criteria as covered entities, and 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.

Opt-in covered entities must adhere to all reporting, verification, and compliance requirements applicable to covered entities, or they will be subject to enforcement actions. For example, opt-in participants must surrender compliance instruments equivalent to their emissions by the same deadline as the covered entities, and are subject to the same penalties if allowances and/or offset credits are surrendered in an untimely manner.

 

In order to become an opt-in covered entity, the entity must be in one of the sectors covered under the Cap-and-Trade Program, but must not already be required to comply with the regulation because it emits less than 25,000 MTCO2e annually. In order for an entity to voluntarily participate in the Cap-and-Trade Program as an opt-in covered entity, ARB requests that an entity submits the Opt-in Request Form, distributed through the link above, to the Air Resources Board’s Executive Officer for approval by the dates:

 

- for entities not intending to receive free allocation of allowances, the information contained in the form must be submitted by November 30 of the calendar year prior to the year it desires to voluntarily participate in the program.

 

- for entities wishing to receive free allocation of 2013-vintage allowances in 2012, the information contained in the form must be submitted to the Executive Officer by certified mail, to be received by ARB by May 1, 2012.

 



 

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