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131 CITY OF RIVERSIDE PUBLIC UTILITIES RIVERSIDE PUBLIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES DATE: APRIL 22, 2024 SUBJECT: ANNUAL REPORT ON CITY OF RIVERSIDE'S USE OF ALLOWANCE VALUE AND PROCEEDS OF GREENHOUSE GAS ALLOWANCES ISSUE: Consider an update on the City of Riverside's use of allowance value and proceeds of Greenhouse Allowances. RECOMMENDATION: That the Board of Public Utilities receive and file an update of the City of Riverside's use of allowance value and proceeds of Greenhouse Gas Allowances. LEGISLATIVE HISTORY: Assembly Bill (AB) 32, enacted in 2006, mandates the California Air Resources Board (CARB) to develop regulations to limit California's greenhouse gas (GHG) emissions to 1990 levels by 2020. In December 2011, CARB developed its framework, associated regulations, and market mechanisms to implement AB 32, effective January 1, 2012. The Cap -and -Trade Program (Program) was established as one of the market-based mechanisms established by CARB to help the state meet its GHG emissions target. Two subsequent bills, Senate Bill (SB) 32 in 2016 and AB 398 in 2017, established new GHG emissions reduction targets and extended the State's authorization to use market mechanisms to meet these targets. Specifically, SB 32 established the limit on GHG emissions to 40% below 1990 levels by 2030, and AB 398 permits the continued use of the Cap -and -Trade Program through 2030. The Program regulation in effect for the 2023 calendar year compliance period was adopted in 2019 and contains provisions from these bills. Additional state legislation and an executive order were adopted in 2018 that will affect future years of the Program with regulatory amendments currently underway. These amendments are expected to be adopted by CARB in late 2024. Most relevant to the electric utility sector was the adoption of SB 100 in 2018 that established new, more restrictive targets for renewable energy procurement and specifically mandates that 100% of electric retail sales by 2045 be produced by renewable energy and zero -carbon resources. Additionally in 2018, a statewide carbon neutrality goal was established by Executive Order (EO) B-55-18. Both of these State actions will affect the Program stringency and directly affect the cap on GHG emissions, and the number of allowances allocated to utilities and other entities subject to the regulation.