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W A T E R E N E R G Y I T F F <br />r� E <br />ItV RIVERSIDE PUBLIC UTILITIES <br />.kl& <br />P U B L I C U T I L I l I L S Board Memorandum <br />BOARD OF PUBLIC UTILITIES DATE: JUNE 13, 2022 <br />SUBJECT: ANNUAL REPORT ON CITY OF RIVERSIDE'S USE OF ALLOWANCE VALUE <br />AND PROCEEDS OF GREENHOUSE GAS ALLOWANCES <br />ISSUE: <br />Consider receiving an update on City of Riverside's use of allowance value and proceeds of <br />Greenhouse Allowances. <br />RECOMMENDATION: <br />That the Board of Public Utilities receive and file an update of the City of Riverside's use of <br />allowance value and proceeds of Greenhouse Gas Allowances. <br />LEGISLATIVE HISTORY: <br />Assembly Bill (AB) 32, enacted in 2006, mandates the California Air Resources Board (CARB) to <br />develop regulations to limit California's greenhouse gas (GHG) emissions to 1990 levels by 2020. <br />In December 2011, CARB developed its framework, associated regulations, and market <br />mechanisms to implement AB 32, effective January 1, 2012. The Cap and Trade program was <br />established as one of the market-based mechanisms established by CARB to help the state meet <br />its GHG emissions target. <br />Two subsequent bills, Senate Bill (SB) 32 in 2016 and AB 398 in 2017, established new GHG <br />emissions reduction targets and extended the State's authorization to use market mechanisms to <br />meet these targets. Specifically, SB 32 established the limit on GHG emissions to 40% below <br />1990 levels by 2030, and AB 398 permits the continued use of the Cap and Trade Program <br />through 2030. <br />BACKGROUND: <br />The cornerstone of CARB's GHG regulations is the statewide Cap and Trade Program. Electric <br />distribution utilities and other industries that emit GHGs, such as from the use of fossil fuels (e.g., <br />coal and natural gas) to generate electricity, have an annual compliance obligation and must <br />annually submit to the CARB sufficient GHG allowances to cover the total GHG emissions. To <br />mitigate rate impacts for electric distribution utilities' customers, the Cap and Trade Program <br />provides the utilities with allocations of GHG allowances through 2030. Publicly owned utilities <br />