California’s Assembly Bill 32 (AB32) went into effect in January 1, 2013. The goal of AB32 is to reduce greenhouse gas emissions for activities in the state of California and for power produced outside the state but used in California.
California held its first auction of greenhouse gas allowances on November 14, 2012. And in November 14, 2014, California and Quebec announced their first combined auction of greenhouse gas emission credits. Cap-and-trade is an environmentally effective and economically efficient response to climate change. This program will help put California on the path to meet its goal of reducing GHG emissions to 1990 levels by the year 2020, and ultimately achieving an 80% reduction from 1990 levels by 2050.
The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory carbon cap and trade program established in the United States. The states which comprise RGGI are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.
The RGGI CO2 cap is expected to contribute to a 45 percent reduction in annual CO2 from the power-sector in the region in comparison to the levels in 2005. It accounts for reduction between 80 and 90 million short tons of CO2 emissions. It requires fossil fuel operated power plants over 25 megawatts within their domain of regulation to obtain an allowance for each ton of CO2 emitted. RGGI uses three-year control periods to manage compliance of entities. The first two years of each three-year compliance period constitute the Interim Control Period, during this period it is a requirement that 50% of the total emissions must be offset with allowances by placing the allowances in facilities’ compliance account. The 2013 cap was 165 million tons, but emissions in 2012 were only 91 million tons. Emissions were lower than previously anticipated due to low natural gas prices prompting a conversion to the lower-emitting fuel, and to a lesser degree energy conservation and the Great Recession. In February 2013, a major change in the RGGI cap was announced, lowering its cap to 91 million tons for 2014 with 2.5% annual reductions until 2020. Power plants within the region may comply with the cap by purchasing allowances from quarterly auctions, other generators within the region, traders or offset projects. RGGI has a 2016 Program Review which is expected to lower the cap post 2020.
Carbon offsets are used to compensate for emissions made elsewhere. One carbon offset has an equivalent measure to one ton of carbon dioxide.