California Legislature Approves State Cap-And-Trade Program Extension Through 2030

On July 17, 2017, California lawmakers passed AB 398, which extends California's cap-and-trade program beyond its current expiration date in 2020, until the end of 2030. A companion bill, AB 617, that was also passed bolsters monitoring, reporting, and control methods for criteria air pollutants and toxic air contaminant emissions. The two-bill legislative package was approved by a bipartisan super majority vote and was signed into law by Governor Brown in late July.

California's cap-and-trade program, as implemented by the California Air Resources Board ("State Board"), imposes a statewide aggregate greenhouse gas ("GHG") emissions cap on covered entities. Covered entities—large emitters of GHGs—comply with the cap by surrendering compliance instruments in proportion to their annual GHG emissions. Compliance instruments include allowances purchased at public auctions or traded in private markets, free allowances to certain industry participants, and offset credits