Cal. Code Regs. Tit. 17, § 95852 - Emission Categories Used to Calculate Compliance Obligations

(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:

CO₂e_covered = CO₂e_unspecified + (CO₂e_specified - CO₂e_{specified-not covered}) - CO₂e_{RPS_adjustment} - CO₂e_linked

Where:

CO₂e_covered = Annual metric tons of CO₂e with a compliance obligation.

CO₂e_unspecified = Annual metric tons of CO₂e from unspecified imported electricity calculated pursuant to MRR 95111(b)(1).

CO₂e_specified = 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.

CO₂e_{specified-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).

CO₂e_{RPS_adjustment} = Annual metric tons of CO₂e calculated pursuant to MRR that meets the requirements of section 95852(b)(4).

CO₂e_linked = 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:

GHG_QTO = Q_produced * 0.06244

Where:

"GHG_QTO" is the annual covered emissions for each calendar year, in metric tons of CO₂e, associated with the production of qualified thermal output;

"Q_produced" 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 Q_produced 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 Q_produced 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:

GHG_R = GHG_Total - GHG_QTO

Where:

"GHG_R" is the annual remaining covered emissions, in metric tons of CO₂e.

"GHG_Total" 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:

GHG_sf = Q_sf * 0.06244

Where:

"GHG_sf" is the emissions associated with a single facility.

"Q_sf" 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.

Notes

Cal. Code Regs. Tit. 17, § 95852

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.

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).