California is serious about reducing carbon emissions from industrial sources. Your company operating in California (or providing power to California) needs to know (1) IF and (2) HOW it could be affected by California’s actions over the next two to three years. Answering the question of IF it could be affected begins with whether California’s mandatory emissions inventory regulations apply.

California is on the move to meet its statutory goal to reduce carbon emissions to 1990 levels by 2020 (the statewide emissions cap, including emissions from imported power). One of the first steps required by law to achieve that goal is adoption of Greenhouse Gas (GHG) Mandatory Emissions Reporting (MER) by January 1, 2008. The Preliminary Draft of the MER Regulations (Draft MER) was issued for public comment by the Air Resources Board on August 10, 2007. The Draft MER Regulations will be considered by CARB at its last 2007 meeting in early December.

According to the Draft MER Regulations, inventory requirements will apply to three groups: (1) electric retail providers operating in California; (2) specific types of GHG emitting facilities operating in California; and (3) large emitters of GHG not otherwise identified in (1) or (2). In a unique twist, the term “electric retail providers” will encompass providers whose facilities are physically located outside California. The other facilities in California that must comply are large quantity fuel burning facilities, including cement plants, petroleum refineries, greater than 1-megawatt electrical generating and cogeneration facilities, and hydrogen production plants. Other GHG emitters exceeding 25,000 metric tons per year from a stationary source are also included.

What Must Be Reported? All direct carbon dioxide (CO2), nitrogen dioxide (NO2), and methane (CH4) emissions from stationery combustion sources are included, along with all process and fugitive emissions. Each GHG (defined for Draft MER as CO2, CH4, NO2, sulfur hexaflouride (SF6), hydroflurocarbons (HFCs), and perfluorcarbons (PFCs) – the so-called “Kyoto Six”) must be reported separately for each fuel used and for each process unit where process fuel is separately metered.

How Must the Data Be Gathered? The Draft MER Regulations incorporate very specific technical methodologies to be used to generate emissions data.

What is the Time Period for Data Gathering? Calendar Year 2008.

When Must Data Be Submitted? Dates for submittal vary by industry, but generally reporting will be required by early to mid-2009.

Must the Data Be Verified? YES. The Draft MER Regulations contain an elaborate scheme to require emissions to be verified by trained and educated consultants who will be subject to complex conflict-ofinterest rules. Potential conflict issues will be resolved by CARB’s Executive Director. The purpose of verification is to thwart over-reporting in 2008 in order to make future reductions easier to achieve.