Updated to include response from OAL
The California Air Resources Board (CARB) resubmitted its cap-and-invest program changes on Thursday for a required formal review by a state agency, but it still plans a 1 September implementation, the agency told Argus.
The state Office of Administrative Law (OAL) said it had decided on the cap-and-invest rulemaking documents that CARB submitted in July. CARB then resubmitted the rulemaking package for review, according to the latest information on OAL's website.
CARB withdrew the cap-and-invest package from review to align the evaluation period with another submission before OAL, which covers updates to the state's mandatory greenhouse-gas reporting program. OAL said these rulemakings are interrelated and need to be evaluated together.
CARB is still asking OAL to approve a 1 September implementation date, it told Argus.
OAL plans to complete both evaluations by or on CARB's proposed September implementation date, it said.
California Carbon Allowances (CCAs) for December delivery fell by more than $1/metric tonne (t) on the Intercontinental Exchange shortly after news of the resubmittal.
The contract traded as low as $31/t ahead of midday CT on Friday amid uncertainty around what the OAL decision and resubmittal of the package meant for CARB's intended September implementation in the absence of any official comment.
Washington Carbon Allowances (WCAs) climbed over the same period, with the December contract trading as high as $61/t ahead of midday CT. Participants likely priced in a potential risk for WCAs that CARB would not be able to start its evaluation of Washington's program for linkage with the California–Quebec market, known as the Western Climate Initiative, in September as planned if the rulemaking were delayed.
Washington joining the larger carbon market before the November 2027 compliance deadline would allow covered participants to use the more-liquid and less expensive compliance instruments from the WCI to meet their 2023–26 obligations.
Participants have been concerned about allowance availability in Washington's program since its start in 2023, with covered emissions exceeding available allowances over the first two years of the program, the latest state data show.
CCAs for December delivery later rebounded to earlier session levels above $33/t in the first half of Friday afternoon after information that CARB was still aiming for a 1 September implementation.
