Cal. Code Regs. Tit. 17, § 95891 - Allocation for Transition Assistance and Leakage Minimization

(a) The Executive Officer shall determine the amount of allowances directly allocated to each eligible covered entity or opt-in covered entity using the product output-based allocation calculation methodology specified in section 95891(b) if the entity conducts an activity listed in both Table 8-1 and Table 9-1. The Executive Officer shall determine the amount of allowances directly allocated to each eligible covered entity or opt-in covered entity using the energy-based allocation calculation methodology specified in section 95891(c) if the entity conducts an activity listed in Table 8-1 but not listed in Table 9-1.

(1) New Entrant Industrial Allocation Without Leakage Risk. Covered facilities that do not have a leakage risk in Table 8-1 are eligible to receive allocated allowances under the new entrant energy-based allocation methodology pursuant to section 95891(c)(2) if the first three digits of the facility NAICS code matches a NAICS code in Table 8-1. The leakage risk classification for these new entrant facilities shall be low until a leakage risk classification is added to Table 8-1 for the industrial activity in which the facility operates. Food processors that are only classified by a three digit NAICS code are exempt from this classification and shall have the same leakage risk as the general 311 food processing NAICS code in Table 8-1.

(b) Product Output-Based Allocation Calculation Methodology. The Executive Officer shall calculate the amount of California GHG Allowances directly allocated under a product output-based methodology annually using the following formula:

A_t = InitialAllocation_t + TrueUp_t

Where:

"A_t" is the amount of California GHG allowances directly allocated to the operator of an industrial facility for all activities with a product output-based allocation from budget year "t";

"InitialAllocation_t" is the amount of allowances allocated to an entity in advance of budget year "t" for budget year "t" industry assistance. This amount is calculated using previously reported production at the facility from year "t-2," which is an estimate of year "t" production. If the entity will not be performing activity "a" listed in Table 8-1 in year "t", then the entity is not eligible for InitialAllocation_t; and

"t" is the budget year from which the direct allocation occurs.

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Where:

"t-2" is the year two years prior to year "t";

"a" is each eligible activity as defined in Table 9-1;

"n" is the number of eligible activities at a facility;

"O_{a, t-2}" will be calculated by the Executive Officer as the output for activity "a" in year "t-2" as reported to ARB;

"B_a" is the emissions efficiency benchmark per unit of output for activity "a" defined in Table 9-1;

"AF_a,t" is the assistance factor for budget year "t" assigned to each activity "a" as specified in Table 8-1;

"c_a,t" is the adjustment factor for budget year "t" assigned to each activity "a" to account for cap decline as specified in Table 9-2; and

"TrueUp_t" is the amount of true-up allowances allocated to account for changes in production or allocation not properly accounted for in prior allocations. This value shall only be calculated if the entity was covered under the Cap-and-Trade Program in year "t-2" or if the entity received an initial allocation of vintage t-2 allowances but was not a covered entity in year "t-2." In the latter case, a negative true-up will be calculated. These true-up allowances from budget year "t" may be used for compliance for budget year "t-2" or subsequent budget years pursuant to sections 95856(h)(1)(D) and (h)(2)(D). This value is calculated using the following formula:

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Where:

"O_a,t-2" will be calculated by the Executive Officer as the output for activity "a" in year "t-2" as reported to ARB;

"AF_a,t-2" is the assistance factor for budget year "t-2" assigned to each activity "a" as specified in Table 8-1; and

"c_a,t-2" is the adjustment factor for budget year "t-2" assigned to each activity "a" to account for cap decline as specified in Table 9-2.

Table 9-1: Product-Based Emissions Efficiency Benchmarks

NAICS Sector Definition	NAICS code	Activity (a)	Benchmark (Ba)	Benchmark Units
		Thermal EOR Crude Oil Extraction	0.0811	Allowances / Barrel of Oil Eqv. Produced Using Thermal EOR
Crude Petroleum and Natural Gas Extraction	211111	Non Thermal Crude Oil Extraction	0.0076	Allowances / Barrel of Non Thermal Crude Oil Eqv.
		Natural Gas Processing >= 25 MMscf/day	0.0220	Allowances / Barrel of Gas Processed Eqv.
Natural Gas Liquid Extraction	211112	Natural Gas Liquid Processing	0.0118	Allowances / Barrel of Natural Gas Liquids Produced
		Mining and Manufacturing of Soda Ash and Related Products (through vintage 2018 allocation)	0.948	Allowances / Short Ton of Soda Ash Equivalent (Soda Ash, Biocarb, Borax, V-Bor, DECA, PYROBOR, Boric Acid, and Sulfate)
Potash, Soda, and Borate Mineral Mining	212391	Mining and Manufacturing of Soda Ash and Related Products (vintage 2019 allocation and beyond)	1.13	Allowances / Short Ton of Soda Ash Equivalent
		Mining and Manufacturing of Borates (vintage 2019 allocation and beyond)	0.595	Allowances / Short Ton of Boric Oxide Equivalent
All Other Nonmetallic Mineral Mining	212399	Freshwater Diatomite Filter Aids Manufacturing	0.418	Allowances / Short Ton of Freshwater Diatomite Filter Aids
		Aseptic Tomato Paste Processing	0.353	Allowances / Short Ton of 31% NTSS Aseptic Tomato Paste
		Aseptic Whole and Diced Tomato Processing	0.179	Allowances / Short Ton of Aseptic Whole and Diced Tomatoes
Fruit and vegetable canning	311421	Non-Aseptic Tomato Paste and Tomato Puree Processing	0.315	Allowances / Short Ton of 24% NTSS Non-Aseptic Tomato Paste and Tomato Puree
		Non-Aseptic Whole and Diced Tomato Processing	0.135	Allowances / Short Ton of Non-Aseptic Whole and Diced Tomatoes
		Non-Aseptic Tomato Juice Processing	0.163	Allowances / Short Ton of Non-Aseptic Tomato Juice
		Whole Chicken and Chicken Parts Processing	0.0330	Allowances / Short Ton of Whole Chicken and Chicken Parts
Poultry Processing	311615	Poultry Deli Product Processing	0.0353	Allowances / Short Ton of Poultry Deli Product
		Protein Meal and Fat Processing	0.396	Allowances / Short Ton of Protein Meal and Fat
		Dehydrated Garlic Processing	0.824	Allowances / Short Ton of Dehydrated Garlic
		Dehydrated Onion Processing	1.01	Allowances / Short Ton of Dehydrated Onion
Dried and Dehydrated Food Manufacturing	311423	Dehydrated Chili Pepper Processing	1.29	Allowances / Short Ton of Dehydrated Chili Pepper
		Dehydrated Spinach Processing	5.56	Allowances / Short Ton of Dehydrated Spinach
		Dehydrated Parsley Processing	3.21	Allowances / Short Ton of Dehydrated Parsley
		Milk, Buttermilk, Skim Milk, and Ultrafiltered Milk Processing (through vintage 2018 allocation)	0.0147	Allowances / Short Ton of Milk, Buttermilk, Skim Milk, and Ultrafiltered Milk
Dairy Product Manufacturing	31151	Fluid Milk Product Processing (vintage 2019 allocation and beyond)	0.0149	Allowances / Short Ton of Fluid Milk Product
		Cream Processing (through vintage 2018 allocation)	0.0153	Allowances / Short Ton of Cream
		Butter Processing (through vintage 2018 allocation)	0.0391	Allowances / Short Ton of Butter
		Butter Processing (vintage 2019 allocation and beyond)	0.0415	Allowances / Short Ton of Butter
		Condensed Milk Processing (through vintage 2018 allocation)	0.0368	Allowances / Short Ton of Condensed Milk
		Condensed Milk Processing (vintage 2019 allocation and beyond)	0.0426	Allowances / Short Ton of Condensed Milk
Dairy Product Manufacturing	31151	Nonfat Dry Milk and Skimmed Milk Powder (Low Heat) Processing (through vintage 2018 allocation)	0.380	Allowances / Short Ton of Nonfat Dry Milk and Skimmed Milk Powder (Low Heat)
		Milk Powder (Low Heat) Processing (vintage 2019 allocation and beyond)	0.376	Allowances / Short Ton of Milk Powder (Low Heat)
		Nonfat Dry Milk and Skimmed Milk Powder (Medium Heat and High Heat) Processing (through vintage 2018 allocation)	0.425	Allowances / Short Ton of Nonfat Dry Milk and Skimmed Milk Powder (Medium Heat and High Heat)
		Milk Powder (Medium Heat and High Heat) Processing (vintage 2019 allocation and beyond)	0.423	Allowances / Short Ton of Milk Powder (Medium Heat and High Heat)
		Buttermilk Powder Processing (through vintage 2018 allocation)	0.501	Allowances / Short Ton of Buttermilk Powder
		Buttermilk Powder Processing (vintage 2019 allocation and beyond)	0.469	Allowances / Short Ton of Buttermilk Powder
		Dairy Product Solids for Animal Feed Processing (through vintage 2018 allocation)	0.0241	Allowances / Short Ton of Dairy Product Solids for Animal Feed
		Intermediate Dairy Ingredients Processing (through vintage 2018 allocation)	0.0808	Allowances / Short Ton of Intermediate Dairy Ingredients
Dairy Product Manufacturing	31151	Intermediate Dairy Ingredients Processing (vintage 2019 allocation and beyond)	0.076	Allowances / Short Ton of Intermediate Dairy Ingredients
		Cheese Processing	0.114	Allowances / Short Ton of Cheese
		Lactose Processing	0.272	Allowances / Short Ton of Lactose
		Whey Protein Concentrate Processing	1.28	Allowances / Short Ton of Whey Protein Concentrate
		Deproteinized Whey Processing	0.764	Allowances / Short Ton of Deproteinized Whey
		Pistachio Processing (through vintage 2018 allocation)	0.221	Allowances / Short Ton of Pistachios
		Almond Processing (through vintage 2018 allocation)	0.0714	Allowances / Short Ton of Almonds
		Almond Blanching (vintage 2019 allocation and beyond)	0.0704	Allowances / Short Ton of Blanched Almonds
Roasted Nuts and Peanut Butter Manufacturing	311911	Almond Flavoring (vintage 2019 allocation and beyond)	0.127	Allowances / Short Ton of Flavored Almonds
		Almond Pasteurization (vintage 2019 allocation and beyond)	0.0420	Allowances / Short Ton of Pasteurized Almonds
		Pistachio Flavoring (vintage 2019 allocation and beyond)	0.0710	Allowances / Short Ton of Flavored Pistachios
		Pistachio Hulling and Drying (vintage 2019 allocation and beyond)	0.187	Allowances / Short Ton of Adjusted Hulled and Dried Pistachios
		Fried Potato Chips Processing	0.834	Allowances / Short Ton of Fried Potato Chips
		Baked Potato Chips Processing	0.517	Allowances / Short Ton of Baked Potato Chips
Snack Food Manufacturing	31191	Corn Chips Processing	0.580	Allowances / Short Ton of Corn Chips
		Corn Curls Processing	0.446	Allowances / Short Ton of Corn Curls
		Pretzel Processing	0.633	Allowances / Short Ton of Pretzels
Beet sugar manufacturing	311313	Beet sugar manufacturing	0.611	Allowances / short ton Granulated-Refined Sugar
Breweries	312120	Lager Beer Manufacturing	0.178	Allowances / Thousand Gallons of Lager Beer
		Distilled Spirits Production	1.13x10-3	Allowances / Proof Gallons of Distilled Spirits
		Dry Color Concentrate Production	12.0	Allowances / Short ton of Dry Color Concentrate
Wineries	312130	Grape Juice Concentrate Production	1.59x10-3	Allowances / Gallons of Grape Juice Concentrate
		Grape Seed Extract Production	9.48	Allowances / Short ton of Grape Seed Extract
		Liquid Color Concentrate Production	6.95x10-3	Allowances / Gallons of Liquid Color Concentrate
		Recycled Boxboard Manufacturing	0.516	Allowances / Air Dried Short Ton of Recycled Boxboard
Paperboard Mills	322130	Recycled Linerboard (Testliner) Manufacturing	0.562	Allowances / Air Dried Short Ton of Recycled Linerboard
		Recycled Medium (Fluting) Manufacturing	0.392	Allowances / Air Dried Short Ton of Recycled Medium
Petroleum Refineries	324110	Petroleum Refining	3.89	Allowances / Complexity Weighted Barrel
All Other Petroleum and Coal Products Manufacturing	324199	Coke Calcining	0.632	Allowances/ Metric Ton Calcined Coke
Industrial Gas Manufacturing	325120	On-Purpose Hydrogen Gas Production	8.94	Allowances / Metric Ton of On-Purpose Hydrogen Gas
		Liquid Hydrogen Production	11.9	Allowances / Metric Ton of Liquid Hydrogen Sold
All Other Basic Inorganic Chemical Manufacturing	325188	Sulfuric Acid Regeneration (vintage 2019 allocation and beyond)	0.147	Allowances / Short Ton of Sulfuric Acid Produced
Nitrogenous Fertilizer Manufacturing	325311	Nitric Acid Production	0.0957	Allowances / Short ton of nitric acid (HNO3 100%)
		Calcium Ammonium Nitrate Solution Production	0.00	Allowances / Short ton of Calcium Ammonium Nitrate Solution
Flat Glass Manufacturing	327211	Flat glass Manufacturing	0.495	Allowances / Short Ton of Flat Glass Pulled
Glass Container Manufacturing	327213	Container Glass Manufacturing	0.270	Allowances / Short Ton of Container Glass Pulled
Mineral Wool Manufacturing	327993	Fiber Glass Manufacturing	0.394	Allowances / Short Ton of Fiberglass Pulled
Cement Manufacturing	327310	Cement Manufacturing	0.742	Allowances / Short ton of adjusted clinker and mineral additives produced
Lime Manufacturing	327410	Dolime Manufacturing	1.40	Allowances / Short Ton of Dolime Produced
Gypsum Product Manufacturing	327420	Plaster Manufacturing	0.0454	Allowances / Short Ton of Plaster Sold as a Separate Finished Product
		Stucco Manufacturing	0.134	Allowances / Short Ton of Stucco used to produce saleable plasterboard
Iron and Steel Mills	331111	Steel Production Using an Electric Arc Furnace	0.170	Allowances / Short ton of Steel produced using EAF
Secondary smelting and alloying of aluminum	331314	Aluminum and Aluminum Alloy Billet Manufacturing	0.371	Allowances / Short ton of Aluminum and Aluminum alloy Billet
Secondary smelting, refining, and alloying of nonferrous metal (except copper and aluminum)	331492	Lead Acid Battery Recycling	0.511	Allowances / Short Ton of Lead and Lead Alloys
Iron Foundries	331511	Ductile Iron Pipe Manufacturing	0.561	Allowances / Short ton of Ductile Iron Pipes
Nonferrous Forging	332112	Seamless Rolled Ring	3.14	Allowances / Short ton of Seamless Rolled Ring
		Hot Rolled Steel Sheet Production	0.0843	Allowances / Short ton of hot rolled steel sheet
		Pickled Steel Sheet Production	0.0123	Allowances / Short ton of pickled steel sheet
Rolled Steel Shape Manufacturing	331221	Cold Rolled and Annealed Steel Sheet Production	0.0520	Allowances / Short ton of cold rolled and annealed steel sheet
		Galvanized Steel Sheet Production	0.0504	Allowances / Short ton of galvanized steel sheet
		Tin Steel Plate Production	0.111	Allowances / Short ton of tin plate
Turbine and Turbine Generator Set Units Manufacturing	333611	Testing of Turbines and Turbine Generator Sets	0.00782	Allowances / Horsepower tested

(c) Energy-Based Allocation Calculation Methodology. The Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the following formula:

A_t= (S_Consumed * B_Steam + F_Consumed * B_Fuel - e_Sold * B_Electricity + ProcessEmissions) * AF_a,t * c_a,t + TrueUp_t,CP3

Where:

"A_t" is the amount of California GHG allowances directly allocated to the operator of an industrial facility with an energy-based allocation from budget year "t";

"t" is the budget year from which the direct allocation occurs;

"S_Consumed" is the historical baseline annual arithmetic mean amount of steam consumed, measured in MMBtu, at the industrial facility for any industrial process, including heating or cooling applications. This value shall exclude any steam used to produce electricity. This value shall exclude steam produced from an onsite cogeneration unit;

"B_Steam" is the emissions efficiency benchmark per unit of steam, 0.06244 California GHG Allowances/MMBtu Steam;

"F_Consumed" is the historical baseline annual arithmetic mean amount of energy produced due to fuel combustion at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (October 20, 2009). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit. This value shall exclude energy to generate the steam accounted for in the "S_Consumed" term;

"B_Fuel" is the emissions efficiency benchmark per unit of energy from fuel combustion, 0.05307 California GHG Allowances/MMBtu;

"e_Sold" is the historical baseline annual arithmetic mean amount of electricity sold or provided for off-site use, measured in MWh;

"B_Electricity" is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 California GHG Allowances/MWh;

"ProcessEmissions" is the historical baseline annual arithmetic mean process emissions, as defined in section 95802(a), for the industrial facility, measured in metric tons of CO₂ equivalent;

"AF_a,t" is the assistance factor for budget year "t" assigned to the facility for activity "a" as specified in Table 8-1;

"c_a,t" is the cap adjustment factor for budget year "t" assigned to the facility for activity "a" to account for cap decline as specified in Table 9-2; and

"TrueUp_t,CP3" is the amount of true-up allowances allocated from budget years 2020 and 2021. This value shall only be calculated if the entity has received an initial allowance allocation from budget year t-2. These true-up allowances from budget year "t" may be used for compliance for budget year "t-2" or subsequent budget years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). This value shall be zero for all budget years except 2020 and 2021. For budget years 2020 and 2021, this value is calculated using the following formula:

TrueUp_t,CP3 = (S_Consumed * B_Steam + F_Consumed * B_Fuel - e_Sold * B_Electricity + ProcessEmissions) * AF_a,t-2 * c_a,t-2 - A_t-2

Where:

"AF_a,t-2" is the assistance factor for budget year "t-2" assigned to each activity "a" as specified in Table 8-1;

"c_a,t-2" is the cap adjustment factor for budget year "t-2" assigned to each activity "a" to account for cap decline as specified in Table 9-2; and

"A_t-2" is the amount of California GHG allowances directly allocated to the operator of the industrial facility with an energy-based allocation from budget year "t-2".

(1) Data Sources.

(A) In determining the appropriate baseline values, the Executive Officer may employ all available data reported to ARB under MRR for data years 2008-2010. If necessary, the Executive Officer will solicit additional data to establish a representative baseline allocation.

(B) Recognition of California Climate Action Registry membership. If a facility reported facility level, third-party verified, greenhouse gas emissions data to the California Climate Action Registry for data years 2000-2007, the Executive Officer may consider these years in determining the representative annual baseline value. If necessary the Executive Officer will solicit additional data for these data years.

(2) New Entrants Energy-Based Allocation Methodology. For covered facilities that are eligible for free allocation pursuant to section 95891(c) and either were not allocated InitialAllocation from budget year t-1 or were allocated pursuant to section 95891(c)(2) from budget year t-1, allowance allocation shall be determined by the Executive Officer using the following methodology.

(A) Opt-In Covered Entities without Historical Baseline Emissions Data. For opt-in covered entities that have no historical emissions data reported to ARB under MRR, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the following formula:

A_a,t = (F_Consumed,est * B_Fuel - e_Sold,est * B_Electricity + ProcessEmissions_est) * AF_a,t * c_a,t

Where:

"A_a,t" is the amount of California GHG Allowances directly allocated to the operator of an industrial facility for activity "a" with an energy-based allocation from budget year "t";

"t" is the budget year from which the direct allocation occurs;

"F_Consumed,est" is the estimated amount of energy produced due to fuel combustion at the facility, measured in MMBtu. This value shall exclude fuel used to produce steam that is provided or sold offsite. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (December 17, 2010). The Executive Officer shall calculate this value utilizing any available data on the design of the facility and equipment;

"B_Fuel" is the emissions efficiency benchmark per unit of energy from fuel combustion, 0.05307 California GHG Allowances/MMBtu;

"e_Sold,est" is the estimated amount of electricity sold or provided for offsite use, measured in MWh. The Executive Officer shall calculate this value utilizing any available data on the design of the facility and equipment;

"B_Electricity" is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 California GHG Allowances/MWh;

"ProcessEmissions_est" is the estimated annual process emissions, as defined in section 95802(a), for the industrial facility, measured in metric tons of CO₂ equivalent;

"AF_a,t" is the assistance factor for budget year "t" assigned to the facility activity "a" as specified in Table 8-1; and "c_a,t" is the cap adjustment factor for budget year "t" assigned to the facility activity "a" to account for cap decline as specified in Table 9-2.

(B) Entities with Transitional Emissions Data. For covered entities or opt-in covered entities that are classified as transitional in the stability formula in section 95891(c)(2)(D), the Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the following formula:

A_a,t = InitialAllocation_t + TrueUp_t

Where:

"A_a,t" is the amount of California GHG Allowances directly allocated to the operator of an industrial facility with activity "a" with an energy-based allocation from budget year "t";

"InitialAllocation_t" is the amount of allowances allocated to an entity in advance of budget year "t" for industry assistance for budget year "t." This amount is based on energy use in year "t-2," which is an estimate of year "t" energy use. These allowances shall be returned to the Executive Officer pursuant to section 95890(k) if the entity does not incur a compliance obligation for year "t" or does not perform activity "a" listed in Table 8-1, in year "t"; and "t" is the budget year from which the direct allocation occurs.

InitialAllocation_t = (F_t-2 * 0.05307 + (S_{Purchased,t-2} - S_Sold,t-2) * 0.06244 - e_Sold,t-2 * 0.431 + ProcessEmissions_t-2)* AF_a,t * c_a,t

Where:

"t-2" is the year two years prior to year "t";

"F_t-2" is the annual amount of energy produced due to fuel combustion at the facility for year "t-2", measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (November 29, 2013). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

"S_{Purchased,t-2}" is the annual amount of steam purchased for year "t-2" by the facility in MMBtu as reported to ARB under MRR;

"S_Sold,t-2" is the annual amount of steam provided or sold for year "t-2" from the facility in MMBtu as reported to ARB under MRR;

"e_Sold,t-2" is the annual amount of electricity sold for year "t-2" from the facility in MWh as reported to ARB under MRR;

"ProcessEmissions_t-2" is the annual process emissions, as defined in section 95802(a), in year "t-2" for the industrial facility measured in metric tons of CO₂ equivalent;

"AF_a,t" is the assistance factor for budget year "t" assigned to the facility activity "a" as specified in Table 8-1;

"c_a,t" is the cap adjustment factor for budget year "t" assigned to the facility activity "a" to account for cap decline as specified in Table 9-2; and

"TrueUp_t" is the amount of true-up allowances allocated to account for changes in production or allocation not properly accounted for in prior allocations. This value shall only be calculated if the entity was covered under the Cap-and-Trade Program in year "t-2" or if the entity received an initial allocation of vintage t-2 allowances but was not a covered entity in year "t-2." In the latter case, a negative true-up will be calculated. This value of allowances for budget year "t" shall be allowed to be used for compliance for budget year "t-2" or subsequent budget years pursuant to section 95856(h)(1)(D) and 95856(h)(2)(D). This value is calculated using the following formula:

TrueUp_t = BE_t-2 * AF_a,t-2 * c_a,t-2 - InitialAllocation_t-2

Where:

"t-2" is the year two years prior to year "t";

"AF_a,t-2" is the assistance factor for budget year "t-2" assigned to the facility activity "a" as specified in Table 8-1;

"c_a,t-2" is the cap adjustment factor for budget year "t-2" assigned to the facility activity "a" to account for cap decline as specified in Table 9-2;

"BE_t-2" is the baseline annual greenhouse gas emissions for year "t-2" adjusted for steam purchases and sales and electricity sales using the following equation:

BE_t-2 = F_t-2 * 0.05307 + (S_{Purchased,t-2} - S_Sold,t-2) * 0.06244 - e_Sold,t-2 * 0.431 + ProcessEmissions_t-2

Where:

"F_t-2" is the annual amount of energy produced due to fuel combustion in year "t-2" at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (November 29, 2013). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

"S_{Purchased,t-2}" is the annual amount of steam purchased for year "t-2" by the facility in MMBtu;

"S_Sold,t-2" is the annual amount of steam sold for year "t-2" from the facility in MMBtu;

"e_Sold,t-2" is the annual amount of electricity sold for year "t-2" from the facility in MWh; and

"ProcessEmissions_t-2" is the annual process emissions, as defined in section 95802(a), in year "t-2" for the industrial facility measured in metric tons of CO₂ equivalent.

(C) Entities with Stable Emissions Data. For covered entities or opt-in covered entities classified as stable in the stability formula in 95891(c)(2)(D), the Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the methodology in 95891(c). The allocation for all subsequent years shall be determined using this methodology.

1. Data Years. The data years used in determining the appropriate baseline values shall match "t-2", "t-3", and "t-4" used in the stability formula when the emissions were first classified stable. The Executive Officer may employ all available data reported to ARB under MRR. If necessary, the Executive Officer will solicit additional data to establish a representative baseline allocation.

(D) Stability Formula for New Entrants. The following formula classifies the allocation methodology for budget year "t":

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Where:

"t" is the budget year from which the direct allocation occurs;

"t-2" is the year two years prior to year "t";

"t-3" is the year three years prior to year "t";

"t-4" is the year four years prior to year "t"; and

"BE_t" is the baseline annual greenhouse gas emissions for year "t" adjusted for steam purchases and sales and electricity sales. If the new entrant was not a covered entity in year "t" and conducted an activity that during year "t" was listed in Table 8-1, then BE_t is equal to zero for year "t." If the new entrant either was a covered entity in year "t" or was both not a covered entity and conducted an activity that during year "t" was not listed in Table 8-1, then BE_t for year "t" is calculated using the following equation:

BE_t = F_t * 0.05307 + (S_Purchased,t - S_Sold,t) * 0.06244 - e_Sold,t * 0.431 + ProcessEmissions_t

Where:

"F_t" is the annual amount of energy produced due to fuel combustion in year "t" at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (November 29, 2013). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

"S_Purchased,t" is the annual amount of steam purchased for year "t" by the facility in MMBtu;

"S_Sold,t" is the annual amount of steam sold for year "t" from the facility in MMBtu;

"e_Sold,t" is the annual amount of electricity sold for year "t" from the facility in MWh; and

"ProcessEmissions_t" is the annual process emissions, as defined in section 95802(a), in year "t" for the industrial facility measured in metric tons of CO₂ equivalent.

(3) Facilities Newly Eligible for Allocation. Only for allowance allocation that occurs in the first calendar year, "t-1," in which a covered entity that meets all the criteria set forth in sections 95891(c)(3)(A) through (c)(3)(C), the Executive Officer shall calculate the amount of California GHG allowances directly allocated under an energy-based methodology using the following equation. All subsequent allocation shall be calculated pursuant to section 95891, excluding section 95891(c)(3).

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Where:

"TA_t" is the total amount of California GHG allowances from budget year "t" directly allocated to the operator of an industrial facility;

"A_EB,t" is the amount of California GHG allowances from budget year "t" calculated by the energy-based allocation methodology in section 95891(c);

"n" is the first year in which the entity incurred a compliance obligation and in which the entity performed an activity and reported a NAICS code listed in Table 8-1; and

"TrueUp_n" is the amount of true-up allowances allocated to account for allocation not properly accounted for in prior allocations. This value of allowances from budget year "t" shall be allowed to be used for compliance for budget year t-2 and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). This value is calculated by the following equation:

Click here to view image

Where:

"AF_a,t" is the assistance factor for budget year "t" assigned to each activity "a" as specified in Table 8-1;

"AF_a,n" is the assistance factor for budget year "n" assigned to each activity "a" as specified in Table 8-1;

"c_a,t" is the adjustment factor for budget year "t" assigned to each activity "a" as specified in Table 9-2.

"c_a,n" is the adjustment factor for budget year "n" assigned to each activity "a" as specified in Table 9-2.

(A) The facility conducted an activity that was not listed in Table 8-1 prior to year "t-1;"

(B) The facility is eligible to receive an allowance allocation under the energy-based allocation methodology pursuant to 95891(c) for budget year "t;" and

(C) The facility is classified as stable pursuant to the stability formula in section 95891(c)(2)(D).

(4) If an entity receiving allocation pursuant to section 95891(c) does not perform activity "a" in a year for which it was allocated allowances, and is not otherwise subject to true-up allocation pursuant to section 95891(c), the entity must return to the Executive Officer all allowances allocated for that year, pursuant to section 95890(k). Further, if an entity receiving allocation pursuant to section 95891(c) shuts down and therefore ceases to perform activity "a" part way through a year for which it was allocated allowances, and the entity is not otherwise subject to true-up allocation under section 95891(c), the entity must return to the Executive Officer allowances equivalent to the proportion of the year during which activity "a" was not performed. These allowances must be returned pursuant to section 95890(k).

(d) Allocation to University Covered Entities and Public Service Facilities. The Executive Officer shall calculate the amount of allowances directly allocated to a university covered entity or a public service facility using the following methods.

(1) Allocation for Budget Years 2016 and Beyond. For budget years 2016 and subsequent years, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated to eligible university covered entities or public service facilities using the following formula:

A_t = (F_Consumed * B_Fuel + Q_Purchased - Q_Sold * 0.06244 - e_Sold * B_Electricity) * c_t

Where:

"A_t" is the amount of California GHG allowances directly allocated to a university covered entity or public service facility for budget year "t" from 2016 and beyond.

"F_Consumed" is the historical baseline annual arithmetic mean amount of energy produced due to fuel combustion at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98. This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

"B_Fuel" is the emissions efficiency benchmark per unit of energy from fuel combustion, 0.05307 allowances/MMBtu;

"Q_Purchased" is the quantity of qualified thermal output purchased by a university opt-in covered entity that purchases qualified thermal output from a public service facility;

"Q_Sold" is the quantity of qualified thermal output sold or provided to an entity other than the university or local government which owns the facility, or which takes service from the public service facility;

"e_Sold" is the historical baseline annual arithmetic mean amount of electricity sold or provided to an entity other than the university or local government which owns or takes service from the public service facility, measured in MWh;

"B_Electricity" is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 allowances/MWh; and

"c_t" is the adjustment factor for budget year "t" to account for cap decline as specified in Table 9-2.

(2) Data Sources. In determining the appropriate baseline values, the Executive Officer may employ all available data reported to ARB under MRR for data years 2008 through 2013. If a facility ownership change causes an entity to change from an opt-in covered entity to a covered entity, the Executive Officer may employ all data reported to ARB pursuant to MRR to determine the appropriate baseline values.

(3) Reporting on the Use of Allowance Value. No later than June 30, 2016, and each calendar year thereafter, each university and public service facility shall submit a report to the Executive Officer describing the disposition of any allowance value from allowances from the previous budget year, and how the allowance value was used to achieve additional environmental and economic benefits for California. This report shall include:

(A) The monetary value of allowances received by the university or public service facility. The university or public service facility shall calculate the value of these allowances based on the average market clearing price of the four Current Auctions held in the same budget year from which the allowances are allocated; and

(B) How the university or public service facility's disposition of the monetary value of allowances complies with the requirements of California Health and Safety Code sections 38500 et seq.

(e) Adjustment of Allowance Allocation to a Legacy Contract Counterparty. Industrial entities that receive an allowance allocation pursuant to section 95891 and are designated as a legacy contract counterparty shall have an adjustment to their allowance allocation. The Executive Officer shall subtract the allowances from the number of California GHG Allowances directly allocated to the legacy contract counterparty pursuant to 95891(b) or (c). If the legacy contract counterparty was not eligible for allocation pursuant to sections 95891(b) or (c) and the legacy contract counterparty has a direct corporate association pursuant to section 95833 with any other covered or opt-in covered entity that was eligible for allocation pursuant to sections 95891(b) or (c) then the entity with a direct corporate association who received industrial allocation pursuant to sections 95891(b) or (c) shall have its allowance allocation adjusted by the equations in this section.

(1) For each budget year after 2015, the allocation adjustment formula is as follows:

Adj_t= A_LC,t

Where:

"Adj_t" is the allocation adjustment for budget year "t". This number shall be subtracted from the number of California GHG allowances directly allocated to the Legacy Contract Counterparty or the entity with a direct corporate association for budget year "t"; and

"A_LC,t" is the allocation received by the legacy contract generator with an industrial counterparty in year "t" pursuant to section 95894.

(2) If the allocation adjustment is greater than the number of California GHG Allowances directly allocated to a legacy contract counterparty pursuant to sections 95891(b) and (c), then the legacy contract counterparty will have a negative allowance allocation. If this occurs and the legacy contract counterparty has a direct corporate association pursuant to section 95833 with any other covered or opt-in covered entity that was eligible for allocation pursuant to sections 95891(b) or (c), then after the legacy contract counterparty's allowance allocation has been adjusted to zero, the entity with the direct corporate association that received allocation pursuant to section 95891(b) or (c) shall have its allowance allocation adjusted by the remainder of the adjustment as calculated earlier in this section.

(f) Allocation to Waste-to-Energy Facilities. The Executive Officer shall calculate the amount of allowances directly allocated to waste-to-energy facilities using the following methods.

(1) Allocation for Budget Year 2020. For budget year 2020, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated to waste-to-energy covered facilities using the following equation:

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Where:

"A₂₀₂₀" is the amount of California GHG allowances directly allocated to a facility for budget year 2020;

"BaselineAllocation" is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement. This value is calculated by the following equation:

BaselineAllocation = GHG

Where:

"GHG" is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement;

"c_t" is the cap adjustment factor for budget year "t" to account for cap decline as specified in Table 9-2;

"t" is the budget year from which the direct allocation occurs; and

"TrueUp_t" is the amount of true-up allowances allocated to account for allocation not properly accounted for in prior allocations. This value of allowances from budget year "t" shall be allowed to be used for compliance for budget year t-2 and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). This value is calculated by the following equation:

Trueup_t = BaselineAllocation x c_t

(2) Allocation for Budget Years 2021 and beyond. For budget years 2021 and beyond, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated to eligible waste-to-energy covered entities using the following formula:

A_t = BaselineAllocation x c_t

Where:

"A_t" is the amount of California GHG allowances directly allocated to a facility for budget year "t";

"t" is the budget year from which the direct allocation occurs;

"BaselineAllocation" is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement. This value is calculated by the following equation:

BaselineAllocation = GHG

"GHG" is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement; and

"c_t" is the cap adjustment factor for budget year "t" to account for cap decline as specified in Table 9-2.

(3) Data Sources. To determine the appropriate baseline values, the Executive Officer employed data reported to ARB pursuant to MRR for the data years 2011-2017. The Executive Officer may solicit additional data as needed.

Table 9-2: Cap Adjustment Factors for Allowance Allocation

	Cap Adjustment Factor, c
Budget Year	Standard Activities	Industrial Activities with NAICS codes 325311, 327310, and 327410#
2013	0.981	0.991
2014	0.963	0.981
2015	0.944	0.972
2016	0.925	0.963
2017	0.907	0.953
2018	0.888	0.944
2019	0.869	0.935
2020	0.851	0.925
	Cap Adjustment Factor, c
Budget Year	Standard Activities	Industrial Activities with NAICS codes 324199 (coke calcining only), 325311, 327310, 327410#
2021	0.817	0.909
2022	0.783	0.892
2023	0.749	0.875
2024	0.715	0.858
2025	0.681	0.841
2026	0.647	0.824
2027	0.613	0.807
2028	0.579	0.790
2029	0.545	0.773
2030	0.511	0.756
2031	0.494	0.747

#These are activities with over 50 percent of total emissions from process emissions, high emissions intensity and a high leakage risk classification in Table 8-1.

The activities are coke calcining under the NAICS code 324199, activities under the NAICS code 325311, activites under the NAICS code 327310, and the activities under the NAICS code 327410.

Notes

Cal. Code Regs. Tit. 17, § 95891

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 (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 filed 9-18-2017; operative 10-1-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
5. Amendment of section heading and section 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 (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 filed 9-18-2017; operative 10/1/2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
5. Amendment of section heading and section filed 3-29-2019; operative 3/29/2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).