Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Operators of
Facilities.
(1) An operator of a facility
covered under sections
95811(a) and
95812(c)(1) has a
compliance obligation for every metric ton of CO2e for
which a positive or qualified positive emissions data verification statement is
issued per section
95131 of MRR, including process
emissions, stationary combustion emissions and vented emissions. If ARB has
assigned emissions for the sources subject to a compliance obligation pursuant
to this section, the facility will have a compliance obligation equal to the
value of every metric ton of CO2e assigned emissions.
The entity's compliance obligation will be assessed at the facility level
unless otherwise noted under section
95812(c).
(2) Beginning in 2015, combustion emissions
resulting from burning RBOB, distillate fuel oils, or liquefied petroleum gas
are not included when calculating an operator's compliance
obligation.
(b) First
Deliverers of Electricity. A first deliverer of electricity covered under
sections 95811(b) and
95812(c)(2) has a
compliance obligation for every metric ton of CO2e
emissions calculated pursuant to section
95852(b)(1) for
which a positive or qualified positive emissions data verification statement is
issued pursuant to MRR, or for which there are assigned emissions, when such
emissions are from a source in California or in a jurisdiction where a GHG
emissions trading system has not been approved for linkage by the Board
pursuant to subarticle 12.
(1) Calculation of
emissions for compliance obligation.
(A) For
first deliverers that are operators of an electricity generating facility in
California, the calculation for compliance obligation includes all emissions
reported and verified or assigned pursuant to MRR, except emissions without a
compliance obligation pursuant to section
95852.2.
(B) For first deliverers that are electricity
importers, emissions with a compliance obligation are calculated using the
following equation:
CO2ecovered
= CO2eunspecified +
(CO2especified -
CO2especified-not covered) -
CO2eRPS_adjustment -
CO2elinked
Where:
CO2ecovered
= Annual metric tons of CO2e with a compliance
obligation.
CO2eunspecified
= Annual metric tons of CO2e from unspecified imported
electricity calculated pursuant to MRR 95111(b)(1).
CO2especified
= Annual metric tons of CO2e from imported electricity
from specified sources that meet the requirements of MRR section
95111(b)(2). For
EIM Participating Resource Scheduling Coordinators this includes electricity
that is imported into California through CAISO's EIM.
CO2especified-not
covered = Annual metric tons of CO2e without
a compliance obligation pursuant to section
95852.2. from specified sources
that meet the requirements in MRR section
95111(b)(2).
CO2eRPS_adjustment
= Annual metric tons of CO2e calculated pursuant to MRR
that meets the requirements of section
95852(b)(4).
CO2elinked
= Annual metric tons of CO2e from electricity with a
first point of receipt located in a jurisdiction where a GHG emissions trading
system has been approved for linkage by the Board pursuant to subarticle
12.
(C) All deliveries of
electricity not meeting the requirements for specified sources pursuant to MRR
will have emissions calculated using the default emission factor for
unspecified electricity pursuant to MRR section
95111(b)(1).
(2) Resource shuffling is prohibited and is a
violation of this article.
(A) The following
substitutions of electricity deliveries from a lower emission resource for
electricity deliveries from a higher emission resource shall not constitute
resource shuffling:
1. Electricity deliveries
that are caused by the procurement of electricity eligible to be counted
towards and purchased for Renewable Portfolio Standard (RPS) compliance in
California.
2. Electricity
deliveries made for the purpose of compliance with state or federal laws and
regulations, including the Emission Performance Standard (EPS) rules
established by CEC and the CPUC pursuant to Public Utilities Code section
8340
et. seq.
3. Electricity deliveries
made for the purpose of compliance with requirements related to maintaining
reliable grid operations, such as North American Electric Reliability
Corporation (NERC) Reliability Standards, and Reliability Coordinator
directives, including the provision of electricity between balancing
authorities or load-serving entities when required to alleviate emergency grid
conditions.
4. Electricity
deliveries made for the purpose of compliance with either a judicially approved
settlement of litigation or a settlement of a transaction dispute pursuant to
the dispute resolution terms and conditions of a contract for reasons other
than reducing GHG compliance obligations.
5. Electricity deliveries that substitute for
power previously supplied by a specified source that has been
retired.
6. Electricity deliveries
that substitute for deliveries that have been discontinued because of
termination of a contract or divestiture of resources for reasons other than
reducing a GHG compliance obligation.
7. Electricity deliveries that are
necessitated by early termination of a contract for, or full or partial
divestiture of, resources subject to the EPS rules.
8. Electricity deliveries that are
necessitated by expiration of a contract.
9. Electricity deliveries pursuant to
contracts for short-term delivery of electricity with terms of no more than 12
months, for either specified or unspecified power, linked to the selling off of
power from, or assigning of a contract for, electricity subject to the EPS
rules from a power plant that does not meet the EPS with which a California
Electrical Distribution Utility has a contract, or in which a California
Electrical Distribution Utility has an ownership share, and based on economic
decisions including congestion costs but excluding implicit and explicit GHG
costs. In evaluating these short-term deliveries of electricity, ARB will
consider the levels of past sales and purchases from similar resources of
electricity, among other factors, to judge whether the activity is resource
shuffling.
10. Short-term
transactions and contracts for delivery of electricity with terms of no more
than 12 months, or resulting from an economic bid or self-schedule that clears
the CAISO day-ahead or real-time market, for either specified or unspecified
power, based on economic decisions including implicit and explicit GHG costs
and congestion costs, unless such activity is linked to the selling off of
power from, or assigning of a contract for, electricity subject to the EPS
rules from a power plant that does not meet the EPS with which a California
Electricity Distribution Utility has a contract, or in which a California
Electricity Distribution Utility has an ownership share, that is not covered
under paragraphs 11., 12., or 13. below.
11. Electricity deliveries that are
necessitated by operational emergencies or transmission or distribution
constraints, including constraints caused by the inability to obtain or retain
transmission rights, transmission curtailments or outages, or
emergencies.
12. Electricity
deliveries that are necessitated because a First Deliverer has more than enough
electricity to meet demand as a result of the First Deliverer being required to
take electricity from specific generating units, including requirements due to
electricity contracts with "must-take" or "must-run" provisions.
13. Deliveries of electricity that are
required to make up for transmission losses associated with electricity
deliveries in California.
(B) Prohibited substitutions of electricity
deliveries from a higher emission resource with electricity deliveries from a
lower emission resource include:
1.
Substituting relatively lower emission electricity to replace electricity
generated at a high emission power plant procured by a First Deliverer under a
long-term contract or ownership arrangement, when the power plant does not meet
California's EPS, and the substitution is made to reduce a First Deliverer's
compliance obligation.
2. Assigning
a long-term contract for high emission electricity specified in section
95852(b)(2)(B)1.
to a third party for the purpose of reducing a compliance
obligation.
(3)
The following criteria must be met for electricity importers to claim a
compliance obligation for delivered electricity based on a specified source
emission factor or asset controlling supplier emission factor.
(A) Electricity deliveries must be reported
to ARB and emissions must be calculated pursuant to MRR section
95111.
(B) The electricity importer must be the
facility operator or have right of ownership or a written power contract, as
defined in MRR section
95102(a), to the
amount of electricity claimed and generated by the facility or unit claimed;
and
(C) The electricity must be
directly delivered, as defined in MRR section
95102(a), to the
California grid.
(4) RPS
adjustment. Electricity procured from an eligible renewable energy resource
reported pursuant to MRR must meet the following conditions to be included in
the calculation of the RPS adjustment:
(A) The
electricity importer must have
1. Ownership or
contract rights to procure the electricity and the associated RECs generated by
the eligible renewable energy resource; or
2. A contract with an entity subject to the
California RPS that has ownership or contract rights to the electricity and
associated RECs generated by the eligible renewable energy resource, as
verified pursuant to MRR.
(B) The RECs associated with the electricity
claimed for the RPS adjustment must be placed in the retirement subaccount of
the entity subject to the California RPS, and party to the contract in
95852(b)(4)(A), in the accounting system established by the CEC pursuant to PUC
399.25, and designated as retired for the purpose of compliance with the
California RPS program within 45 days of the reporting deadline specified in
section 95111(g) of MRR
for the year for which the RPS adjustment is claimed.
(C) The quantity of emissions included in the
RPS adjustment is calculated as the product of the default emission factor for
unspecified sources, pursuant to MRR, and the reported electricity generated
(MWh) that meets the requirements of section
95852(b)(4).
(D) No RPS adjustment may be claimed for an
eligible renewable energy resource when its electricity is directly
delivered.
(E) No RPS adjustment
may be claimed for electricity generated by an eligible renewable energy
resource in a jurisdiction where a GHG emissions trading system has been
approved for linkage by the Board pursuant to subarticle 12.
(F) Only RECs representing electricity
generated after 12/31/2012 are eligible to be used towards the RPS
adjustment.
(c)
Suppliers of Natural Gas. A supplier of natural gas covered under sections
95811(c) and
95812(d) has a
compliance obligation for every metric ton CO2e of GHG
emissions that would result from full combustion or oxidation of all fuel
delivered to end users in California contained in an emissions data report that
has received a positive or qualified positive emissions data verification
statement or for which emissions have been assigned, less the fuel that is
delivered to covered entities, as follows:
(1)
Suppliers of natural gas shall report the total metric tons
CO2e of GHG emissions delivered to all end users in
California pursuant to section
95122 of MRR;
(2) ARB shall calculate the metric tons
CO2e of GHG emissions for natural gas delivered to
covered entities which are customers of the supplier. The emissions will be
calculated using the reconciled reported deliveries (in MMBtu) contained in
natural gas supplier emissions data reports that received a positive or
qualified positive emissions data verification statement. Natural gas received
data (in MMBtu) contained in covered facility emissions data reports that
received positive or qualified positive emissions data verification statements
will be used to reconcile delivery data reported by natural gas suppliers, and
will serve as a second source of data in instances of missing supplier data. In
the event that a natural gas supplier receives an adverse verification
statement, ARB will use the provisions described in section
95131(c)(5) of
the MRR to calculate the supplier's assigned emission level;
(3) ARB shall provide the supplier of natural
gas a listing of all customers and aggregate natural gas (in MMBtu) and
emissions calculated from the supplier's natural gas delivered to covered
entities; and
(4) The Executive
Officer shall calculate the metric tons CO2e for which
the supplier will be required to hold a compliance obligation based on the
supplier's reported emissions less ARB's calculated emissions from deliveries
to covered entities which are customers of the supplier. The Executive Officer
shall provide this value to the supplier of natural gas within 30 days of the
verification deadline in section
95103 of MRR.
(d) Suppliers of RBOB and Distillate Fuel
Oils. A supplier of petroleum products covered under sections
95811(d) or
95812(d) has a
compliance obligation for every metric ton CO2e of GHG
emissions included in an emissions data report that has received a positive or
qualified positive emissions data verification statement or for which emissions
have been assigned that would result from full combustion or oxidation of the
quantities of the following fuels that are removed from the rack in California,
sold to entities not licensed by the California Board of Equalization as a fuel
supplier, or imported into California and not directly delivered to the
bulk-transfer/terminal system as defined in section
95102 of MRR, except for products
for which a final destination outside California can be demonstrated:
(1) RBOB;
(2) Distillate Fuel Oil No. 1; and
(3) Distillate Fuel Oil No.
2.
(e) Suppliers of
Liquefied Petroleum Gas:
(1) A producer of
liquefied petroleum gas covered under sections
95811(e) and
95812(d) has a
compliance obligation for every metric ton CO2e of GHG
emissions included in an emissions data report that has received a positive or
qualified positive emissions data verification statement or for which emissions
have been assigned that would result from full combustion or oxidation of all
fuel sold, distributed, or otherwise transferred for consumption in California;
and
(2) An importer of liquefied
petroleum gas covered under section
95811(e) has a
compliance obligation for every metric ton CO2e of GHG
emissions included in an emissions data report that has received a positive or
qualified positive emissions data verification statement or for which emissions
have been assigned that would result from full combustion or oxidation of all
fuel imported into California.
(f) Suppliers of Blended Fuels. An entity
that supplies any of the fuels covered under sections
95811(f) and
95812(d) as
blended fuels has an aggregated compliance obligation for every metric ton of
CO2e of GHG emissions based on the separate constituents
of the blend included in an emissions data report that has received a positive
or qualified positive emissions data verification statement or for which
emissions have been assigned that would result from full combustion or
oxidation of the fuel.
(g) Carbon
Dioxide Suppliers. An entity that supplies carbon dioxide, "Carbon Dioxide
Supplier" or "CO2 Supplier", covered under sections
95811(h) and
95812(c)(3), has
an aggregated compliance obligation based on the sum of MT
CO2 included in an emissions data report that has
received a positive or qualified positive emissions data verification statement
or for which emissions have been assigned minus exported
CO2 that is not geologically sequestered, and minus
CO2 verified to be geologically sequestered through use
of a Board-approved carbon capture and geologic sequestration quantification
methodology that ensures that the emissions reductions are real, permanent,
quantifiable, verifiable, and enforceable. The Board-approved quantification
methodology must be incorporated into the Cap-and-Trade Regulation before it
can be used to reduce a CO2 supplier's compliance
obligation. Emissions of CO2 already covered with a
compliance obligation upstream are not included.
(h) Petroleum and Natural Gas Systems.
Operators of the facilities specified in section
95101(e)(2)-(5)
of MRR have a compliance obligation for every metric ton of
CO2e from the source types specified in sections
95152(c)-(f) of
MRR, except as specified in section
95852.2 of this article, that is
contained in an emissions data report that has received a positive or qualified
positive emissions data verification statement, or for which emissions have
been assigned.
(i) The compliance
obligation for sources specified in sections
95852(a) through
(h), and
95852(k) is
calculated based on the sum of the following, as applicable:
(1) Emissions of CO2,
CH4, and N2O which resulted from
combustion of fossil fuel;
(2)
Emissions of CH4 and N2O which
resulted from combustion of all biomass-derived fuel;
(3) Emissions of CO2
which resulted from combustion of biomass-derived fuels that do not meet the
requirements in section
95852.2(a);
(4) Emissions of CO2
which resulted from combustion of biomass-derived fuels pursuant to section
95852.1; and
(5) All process and vented emissions of
CO2, CH4, and
N2O as specified in the MRR except for those listed in
section 95852.2(b).
(j) Limited Exemption of Emissions from the
Production of Qualified Thermal Output. From 2013 through the year before which
natural gas suppliers are required to consign 100% of allocated allowances to
auction pursuant to Table 9-5 or 9-6, emissions from the production of
qualified thermal output from a district heating facility or a facility with a
cogeneration unit that meets the requirements of this section and has been
approved by the Executive Officer for an emissions exemption shall not have a
compliance obligation and shall not count toward the inclusion threshold of
section 95812(c)(1). A
facility that qualifies for this limited exemption shall not be a covered
entity until the year in which natural gas suppliers are required to consign
100% of allocated allowances to auction pursuant to Table 9-5 or 9-6.
(1) A facility with a cogeneration unit may
apply for the emissions exemption if it meets the following two conditions for
each year from 2008-2013, starting with the first year that a cogeneration unit
was operational at the facility, and will remain eligible until the year in
which either condition is not met, based on data reported pursuant to MRR:
(A) The facility's annual covered emissions
as defined in MRR associated with the production of qualified thermal output,
calculated using the following equation, are less than 25,000 metric tons of
CO2e:
GHGQTO =
Qproduced * 0.06244
Where:
"GHGQTO" is the annual covered
emissions for each calendar year, in metric tons of
CO2e, associated with the production of qualified
thermal output;
"Qproduced" is the annual amount
of qualified thermal output produced for each calendar year from fuels that
result in covered emissions, measured in MMBtu, at the cogeneration facility.
If Qproduced is produced from a cogeneration unit that
burns both fuels that result in covered emissions and fuels that result in
emissions without a compliance obligation pursuant to Subarticle 7, then
Qproduced is calculated as total qualified thermal
output multiplied by the ratio of the MMBtus of fuel that produces covered
emissions divided by the total MMBtu of all fuels combusted in the unit;
and,
(B) The facility's
remaining covered emissions, calculated pursuant to the following equation, are
less than 25,000 metric tons of CO2e:
GHGR =
GHGTotal - GHGQTO
Where:
"GHGR" is the annual remaining
covered emissions, in metric tons of CO2e.
"GHGTotal" is total annual
covered emissions, in metric tons of
CO2e.
(2) A district heating facility may apply for
the qualified thermal output emissions exemption if the annual emissions
associated with qualified thermal output distributed to each single facility on
its system do not exceed 25,000 MTCO2e for each year
from 2008 to 2013, and will remain eligible until the year in which this
condition is not met:
(A) Emissions
associated with a single facility are calculated using the following equation:
GHGsf =
Qsf * 0.06244
Where:
"GHGsf" is the emissions
associated with a single facility.
"Qsf" is the amount of Qualified
Thermal Output provided to a single facility, measured in
MMBtu.
(3) Data
Sources. The Executive Officer may employ all available data reported to ARB
under MRR for data years 2008-2013 to determine a facility's initial
eligibility for the limited exemption of emissions from the production of
qualified thermal output.
(4) A
facility with a cogeneration unit or a district heating facility must apply to
the Executive Officer for the emissions exemption by providing the following
data by September 2, 2020:
(A) Annual
qualified thermal output for each year from 2008 to 2013, in MMBtu.
(B) A district heating facility must provide
the amount of qualified thermal output provided to each single facility it
serves.
(C) The application must
include the following attestation:
"I certify under penalty of perjury of the laws of the
State of California that I am duly authorized by [name of entity] to sign this
attestation on behalf of [name of entity], and that the information submitted
herein is true, accurate, and complete."
(D) Operators of facilities that meet the
requirements of this section must register in the tracking system pursuant to
section 95830.
(E) Operators of facilities that meet the
requirements of this section must report and verify emissions pursuant to
MRR.
(k)
Suppliers of Liquefied Natural Gas and Compressed Natural Gas. A supplier of
liquefied natural gas and/or compressed natural gas covered under sections
95811(g) or
95812(d) has a
compliance obligation for every metric ton CO2e of GHG
emissions included in an emissions data report that has received a positive or
qualified positive emissions data verification statement or for which emissions
have been assigned that would result from full combustion or oxidation of the
quantities of liquefied natural gas or compressed natural gas imported into
California and/or produced in California from gas received from an interstate
pipeline, excluding products for which a final destination outside California
can be demonstrated, less the emissions from liquefied natural gas delivered to
other covered entities as determined by ARB based on end-user delivery
information reported by the supplier.
(l) EIM Outstanding Emissions and EIM
Purchaser Emissions. EIM Outstanding Emissions are the metric tons of
CO2e emissions from electricity imported into California
through EIM but not reported by EIM participating resource scheduling
coordinators as calculated pursuant to MRR section
95111(h)(1).
Beginning April 1, 2019, EIM Purchaser Emissions for each EIM Purchaser are
calculated pursuant to MRR section
95111(h)(2) as a
share of EIM Outstanding Emissions. EIM Outstanding Emissions and EIM Purchaser
Emissions are not included in the calculation of any entity's covered emissions
as defined under MRR section
95102.
(1) In 2019, the Executive Officer will
retire vintage 2022 allowances in the full amount of 2018 EIM Outstanding
Emissions as calculated in MRR section
95111(h)(1). The
Executive Officer will retire these allowances no later than November 1,
2019.
(2) In 2020, the Executive
Officer will retire vintage 2023 allowances in the full amount of 2019 EIM
Outstanding Emissions for January 1, 2019 through March 31, 2019 as calculated
in MRR section
95111(h)(1). The
Executive Officer will retire vintage 2021 allowances from the Allocation
Holding Account in the full amount of 2019 EIM Outstanding Emissions for April
1, 2019 through December 31, 2019 as calculated in MRR section
95111(h)(1),
which is equal to the total number of allowances designated for EIM Purchaser
Emissions pursuant to section
95892(a)(3). The
Executive Officer will retire these allowances no later than November 1,
2020.
(3) In 2021 and subsequent
years, the Executive Officer will annually retire allowances from the
Allocation Holding Account in the full amount of the most recent data year's
EIM Outstanding Emissions. The allowances retired to meet EIM Outstanding
Emissions are also equal to the total number of allowances designated for EIM
Purchaser Emissions pursuant to section
95892(a)(3). Each
year, the Executive Officer will retire these allowances no later than November
1.
1. New
section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code
section
11343.4
(Register 2011, No. 50).
2. Change without regulatory effect
amending subsection (b)(1)(B)-(C) filed 2-15-2012 pursuant to section
100, title 1, California Code of
Regulations (Register 2012, No. 7).
3. Amendment filed 6-26-2014;
operative 7-1-2014 pursuant to Government Code section
11343.4(b)(3)
(Register 2014, No. 26).
4. Amendment of subsection (g) filed
12-31-2014; operative 1-1-2015 pursuant to Government Code section
11343.4(b)(3)
(Register 2015, No. 1).
5. Amendment filed 9-18-2017; operative
10-1-2017 pursuant to Government Code section
11343.4(b)(3)
(Register 2017, No. 38).
6. Amendment filed 3-29-2019; operative
3-29-2019 pursuant to Government Code section
11343.4(b)(3)
(Register 2019, No. 13).
Note: Authority cited: Sections
38510,
38560,
38562,
38570,
38571,
38580,
39600
and
39601,
Health and Safety Code. Reference: Sections
38530,
38560.5,
38564,
38565,
38570
and
39600,
Health and Safety Code.
