Overview Of California's Preliminary Draft Cap And Trade Program

The California Air Resources Control Board ("CARB") released its preliminary draft regulation ("PDR") for a California cap and trade program on November 24, 2009. This is an incredibly ambitious, far-reaching, and complex program that, if adopted, will affect virtually every company that does business in California.

Under California's Global Warming Solutions Act ("AB 32"), California must reduce greenhouse gas ("GHG") emissions to 1990 levels by 2020. The AB 32 Scoping Plan adopted by CARB calls for a California cap and trade program that links with other regional partner jurisdictions in the Western Climate Initiative ("WCI") to create a regional market system. As adopted in the Scoping Plan, the cap and trade program would establish a cap covering about 85 percent of California's GHG emissions and allow trading to promote cost-effective emissions reductions. The cap and trade regulation will set up the framework and requirements for participation in the cap and