What is the Cap & Trade Program? How does it work?
- Started in 2012 -Targets GHG (Green House Gas) Emissions
- By 2013 Major Emitting Entities are identified as
-Refineries, Cement Production Electricity Generation Plants, Oil and Gas production facilities, Glass manufacturing facilities and Food processing
- Facilities within these Specified Sectors MUST COMPLY with the Cap Trade Program for Mandatory Reporting
Cap & Trade Sets a FIRM Cap STATEWIDE on GHG EMISSIONS
- The Cap will commence in 2013 and decline (allow less) over time, achieving GHG emissions reductions throughout the programs duration with fewer and fewer credits available to everyone.
- Each Entity will be required to surrender one permit to emit (the majority of which will be allowances, or ARB (Air Resources Board) a limited number of ARB offset credits per specified time for your industry.
- Facilities will be allocated allowances and will be able to buy additional allowances at auction for purchase from others or purchase offset credits.
Who's Making Money
- OPIS reported that KINDER MORGAN is Generating 700,000 RINs per month from Transmix which they are selling to others who pay 70 Cents to $1.10 for each credit.
- Transmix processors are not obligated to blend renewable fuel into processed gasoline they supply so any ethanol used in unleaded they sell generates EXCESS RINs that can be SOLD.
- The Gasoline portion of transmix the blend of dissimilar products has already been counted against a refiner’s or importers renewable fuel obligation making Transmix processors non-obligated parties under the renewable fuel standard.
- Kinder Morgan sees GHG – RINs as a positive earning them $1.9 million in RIN sales in the first quarter January – March period.
- EPA estimates 750 million gallons of transmix is produced annually in the U.S. about 40% is gasoline and 60% distillate.
Why is this important to you
- 2015 the program will expand to include all fuel handling companies.
- 18 months to get ready is NOT a lot of time to identify what you have to do to comply and know what your options are.
2015 Expansion of Cap & Trade Requirements
- The Program will expand to include Fuel distributors of
- NATURAL GAS
- PROPANE Fuel Processors and Transportation
- Fuel Providers- Gasoline, Diesel and Alternative Fuel Handlers and Distribution
- ALSO ANYONE who has Combustors not covered under the large source requirements of 2012.
- Most facilities within these specified sectors mentioned will have to comply with the 2015 CAP & TRADE program and Mandatory Reporting Regulations.
- Some will be required to report annual emissions but not have to surrender compliance instruments (verification equipment)
2015 Reporting Regulations
- This will be determined by the type of energy or industrial sector their annual GHG emissions review has placed them in.
- To Comply – Each facility MUST register with the ARB (Air Resources Board) and report its annual GHG emissions, create necessary accounts and designate an account authorized representative.
- Facilities are required to retain their records for 10 years.
- Facilities that do not adhere to the Cap and Trade Program requirements will be subject to stringent penalties.
- Health and Safety Code allows ARB to determine the appropriate enforcement mechanism based on the specific circumstances for a rule violation.
- ARB (Air Resources will decide the FINES)
Why do you CARE
- You will be seeing inspections increase from the ARB. They WILL be verifying you are in compliance or you will have to purchase more RIN credits. You must keep accurate records of what products you handle and the emissions credits necessary to cover it. IF NOT you must KNOW so you can purchase additional credits.
- BEST CASE you KNOW you don’t need all your credits and you can SELL your credits but ……
Key is to have accurate reports and keep them available for audit
GHG = Additional Inspections by Air Resources Board
- Presently the majors already required to meet the 2013 reporting/accounting requirements are being audited
- They are reporting seeing more inspections by ARB and they are receiving NOV’s (NOTICE OF VIOLATION) from sniffers being utilized by these inspectors
- So starting in 2015 ALL registered CAP & TRADE sites will also see these same inspections per the requirements of the GHG Initiative
- Remember this is California and we have the strictest set of RIN rules in the U.S. and we are the test site for the U.S. Governments GHG Compliance for the rest of the USA