CA GHG Cap and Trade Program Recommendations For Natural Gas

The Secretary for Environmental Protection in California created the Market Advisory Committee, a committee of national and international experts, to develop recommendations for designing a market-based program for reducing California’s GHG emissions.  In early, June the committee released a draft report laying out recommendations for designing the CA GHG cap and trade program   

INGAA filed comments to the draft on June 15th, which included an option for interstate pipeline to be the point of regulations.  As with its comments on similar federal proposals, INGAA’s comments strongly opposed this option and systematically pointed out the administrative and commercial pitfalls of such an approach.

on June 30th, the MAC group released their final recommendations to CARB regarding a cap and trade program for California.  INGAA’s June 15th comments focused on the mischaracterization of interstate pipelines as sellers of gas and thus, in a position to act as the point of regulation for the natural gas sector within a GHG regulatory program (attached).  We are please to report that ultimately, the MAC group revised their recommendations to be consistent with our comments.

The final recommendations include 4 options.  Options 1 is a downstream approach where the point of regulation is the point of combustion, option 2 is option 1 plus refiners for transportation, and option 3 is option 2 plus distributors of natural gas to small industrial commercial and residential users.  Finally, the natural gas point of regulation in option 4 is natural gas processors for CA produced gas and for out of state gas, the first entity that takes delivery of the gas in the state and has legal ownership of the fuel.  This is a major win for the interstate pipelines as we are not the point of regulation in either case.

 The MAC group’ final recommendations are to either (a) progress from options 1-3 or (b) start with program 4.