1. (a) The Executive Officer shall determine the amount of allowances directly allocated to each eligible covered entity or opt-in covered entity using the product output-based allocation calculation methodology specified in section 95891(b) if the entity conducts an activity listed in both Table 8-1 and Table 9-1. The Executive Officer shall determine the amount of allowances directly allocated to each eligible covered entity or opt-in covered entity using the energy-based allocation calculation methodology specified in section 95891(c) if the entity conducts an activity listed in Table 8-1 but not listed in Table 9-1.

   1. (1) New Entrant Industrial Allocation Without Leakage Risk. Covered facilities that do not have a leakage risk in Table 8-1 are eligible to receive allocated allowances under the new entrant energy-based allocation methodology pursuant to section 95891(c)(2) if the first three digits of the facility NAICS code matches a NAICS code in Table 8-1. The leakage risk classification for these new entrant facilities shall be low until a leakage risk classification is added to Table 8-1 for the industrial activity in which the facility operates. Food processors that are only classified by a three digit NAICS code are exempt from this classification and shall have the same leakage risk as the general 311 food processing NAICS code in Table 8-1.

2. (b) Product Output-Based Allocation Calculation Methodology. The Executive Officer shall calculate the amount of California GHG Allowances directly allocated under a product output-based methodology annually using the following formula:

   A_t = InitialAllocation_t + TrueUp_t

   Where:

   “A_t” is the amount of California GHG allowances directly allocated to the operator of an industrial facility for all activities with a product output-based allocation from budget year “t”;

   “InitialAllocation_t” is the amount of allowances allocated to an entity in advance of budget year “t” for budget year “t” industry assistance. This amount is calculated using previously reported production at the facility from year “t-2,” which is an estimate of year “t” production. If the entity will not be performing activity “a” listed in Table 8-1 in year “t”, then the entity is not eligible for InitialAllocation_t; and

   “t” is the budget year from which the direct allocation occurs.

   

   Where:

   “t-2” is the year two years prior to year “t”;

   “a” is each eligible activity as defined in Table 9-1;

   “n” is the number of eligible activities at a facility;

   “O_{a, t-2}” will be calculated by the Executive Officer as the output for activity “a” in year “t-2” as reported to ARB;

   “B_a” is the emissions efficiency benchmark per unit of output for activity “a” defined in Table 9-1;

   “AF_a,t” is the assistance factor for budget year “t” assigned to each activity “a” as specified in Table 8-1;

   “c_a,t” is the adjustment factor for budget year “t” assigned to each activity “a” to account for cap decline as specified in Table 9-2; and

   “TrueUp_t” is the amount of true-up allowances allocated to account for changes in production or allocation not properly accounted for in prior allocations. This value shall only be calculated if the entity was covered under the Cap-and-Trade Program in year “t-2” or if the entity received an initial allocation of vintage t-2 allowances but was not a covered entity in year “t-2.” In the latter case, a negative true-up will be calculated. These true-up allowances from budget year “t” may be used for compliance for budget year “t-2” or subsequent budget years pursuant to sections 95856(h)(1)(D) and (h)(2)(D). This value is calculated using the following formula:

   

   Where:

   “O_a,t-2” will be calculated by the Executive Officer as the output for activity “a” in year “t-2” as reported to ARB;

   “AF_a,t-2” is the assistance factor for budget year “t-2” assigned to each activity “a” as specified in Table 8-1; and

   “c_a,t-2” is the adjustment factor for budget year “t-2” assigned to each activity “a” to account for cap decline as specified in Table 9-2.

   Table 9-1: Product-Based Emissions Efficiency Benchmarks

   NAICS Sector Definition

   NAICS code

   Activity (a)

   Benchmark (B_a)

   Benchmark Units

   Thermal EOR Crude Oil Extraction

   0.0811

   Allowances / Barrel of Oil Eqv. Produced Using Thermal EOR

   Crude Petroleum and Natural Gas Extraction

   211111

   Non Thermal Crude Oil Extraction

   0.0076

   Allowances / Barrel of Non Thermal Crude Oil Eqv.

   Natural Gas Processing ≥ 25 MMscf/day

   0.0220

   Allowances / Barrel of Gas Processed Eqv.

   Natural Gas Liquid Extraction

   211112

   Natural Gas Liquid Processing

   0.0118

   Allowances / Barrel of Natural Gas Liquids Produced

   Mining and Manufacturing of Soda Ash and Related Products (through vintage 2018 allocation)

   0.948

   Allowances / Short Ton of Soda Ash Equivalent (Soda Ash, Biocarb, Borax, V-Bor, DECA, PYROBOR, Boric Acid, and Sulfate)

   Potash, Soda, and Borate Mineral Mining

   212391

   Mining and Manufacturing of Soda Ash and Related Products (vintage 2019 allocation and beyond)

   1.13

   Allowances / Short Ton of Soda Ash Equivalent

   Mining and Manufacturing of Borates (vintage 2019 allocation and beyond)

   0.595

   Allowances / Short Ton of Boric Oxide Equivalent

   All Other Nonmetallic Mineral Mining

   212399

   Freshwater Diatomite Filter Aids Manufacturing

   0.418

   Allowances / Short Ton of Freshwater Diatomite Filter Aids

   Aseptic Tomato Paste Processing

   0.353

   Allowances / Short Ton of 31% NTSS Aseptic Tomato Paste

   Aseptic Whole and Diced Tomato Processing

   0.179

   Allowances / Short Ton of Aseptic Whole and Diced Tomatoes

   Fruit and vegetable canning

   311421

   Non-Aseptic Tomato Paste and Tomato Puree Processing

   0.315

   Allowances / Short Ton of 24% NTSS Non-Aseptic Tomato Paste and Tomato Puree

   Non-Aseptic Whole and Diced Tomato Processing

   0.135

   Allowances / Short Ton of Non-Aseptic Whole and Diced Tomatoes

   Non-Aseptic Tomato Juice Processing

   0.163

   Allowances / Short Ton of Non-Aseptic Tomato Juice

   Whole Chicken and Chicken Parts Processing

   0.0330

   Allowances / Short Ton of Whole Chicken and Chicken Parts

   Poultry Processing

   311615

   Poultry Deli Product Processing

   0.0353

   Allowances / Short Ton of Poultry Deli Product

   Protein Meal and Fat Processing

   0.396

   Allowances / Short Ton of Protein Meal and Fat

   Dehydrated Garlic Processing

   0.824

   Allowances / Short Ton of Dehydrated Garlic

   Dehydrated Onion Processing

   1.01

   Allowances / Short Ton of Dehydrated Onion

   Dried and Dehydrated Food Manufacturing

   311423

   Dehydrated Chili Pepper Processing

   1.29

   Allowances / Short Ton of Dehydrated Chili Pepper

   Dehydrated Spinach Processing

   5.56

   Allowances / Short Ton of Dehydrated Spinach

   Dehydrated Parsley Processing

   3.21

   Allowances / Short Ton of Dehydrated Parsley

   Milk, Buttermilk, Skim Milk, and Ultrafiltered Milk Processing (through vintage 2018 allocation)

   0.0147

   Allowances / Short Ton of Milk, Buttermilk, Skim Milk, and Ultrafiltered Milk

   Dairy Product Manufacturing

   31151

   Fluid Milk Product Processing (vintage 2019 allocation and beyond)

   0.0149

   Allowances / Short Ton of Fluid Milk Product

   Cream Processing (through vintage 2018 allocation)

   0.0153

   Allowances / Short Ton of Cream

   Butter Processing (through vintage 2018 allocation)

   0.0391

   Allowances / Short Ton of Butter

   Butter Processing (vintage 2019 allocation and beyond)

   0.0415

   Allowances / Short Ton of Butter

   Condensed Milk Processing (through vintage 2018 allocation)

   0.0368

   Allowances / Short Ton of Condensed Milk

   Condensed Milk Processing (vintage 2019 allocation and beyond)

   0.0426

   Allowances / Short Ton of Condensed Milk

   Dairy Product Manufacturing

   31151

   Nonfat Dry Milk and Skimmed Milk Powder (Low Heat) Processing (through vintage 2018 allocation)

   0.380

   Allowances / Short Ton of Nonfat Dry Milk and Skimmed Milk Powder (Low Heat)

   Milk Powder (Low Heat) Processing (vintage 2019 allocation and beyond)

   0.376

   Allowances / Short Ton of Milk Powder (Low Heat)

   Nonfat Dry Milk and Skimmed Milk Powder (Medium Heat and High Heat) Processing (through vintage 2018 allocation)

   0.425

   Allowances / Short Ton of Nonfat Dry Milk and Skimmed Milk Powder (Medium Heat and High Heat)

   Milk Powder (Medium Heat and High Heat) Processing (vintage 2019 allocation and beyond)

   0.423

   Allowances / Short Ton of Milk Powder (Medium Heat and High Heat)

   Buttermilk Powder Processing (through vintage 2018 allocation)

   0.501

   Allowances / Short Ton of Buttermilk Powder

   Buttermilk Powder Processing (vintage 2019 allocation and beyond)

   0.469

   Allowances / Short Ton of Buttermilk Powder

   Dairy Product Solids for Animal Feed Processing (through vintage 2018 allocation)

   0.0241

   Allowances / Short Ton of Dairy Product Solids for Animal Feed

   Intermediate Dairy Ingredients Processing (through vintage 2018 allocation)

   0.0808

   Allowances / Short Ton of Intermediate Dairy Ingredients

   Dairy Product Manufacturing

   31151

   Intermediate Dairy Ingredients Processing (vintage 2019 allocation and beyond)

   0.076

   Allowances / Short Ton of Intermediate Dairy Ingredients

   Cheese Processing

   0.114

   Allowances / Short Ton of Cheese

   Lactose Processing

   0.272

   Allowances / Short Ton of Lactose

   Whey Protein Concentrate Processing

   1.28

   Allowances / Short Ton of Whey Protein Concentrate

   Deproteinized Whey Processing

   0.764

   Allowances / Short Ton of Deproteinized Whey

   Pistachio Processing (through vintage 2018 allocation)

   0.221

   Allowances / Short Ton of Pistachios

   Almond Processing (through vintage 2018 allocation)

   0.0714

   Allowances / Short Ton of Almonds

   Almond Blanching (vintage 2019 allocation and beyond)

   0.0704

   Allowances / Short Ton of Blanched Almonds

   Roasted Nuts and Peanut Butter Manufacturing

   311911

   Almond Flavoring (vintage 2019 allocation and beyond)

   0.127

   Allowances / Short Ton of Flavored Almonds

   Almond Pasteurization (vintage 2019 allocation and beyond)

   0.0420

   Allowances / Short Ton of Pasteurized Almonds

   Pistachio Flavoring (vintage 2019 allocation and beyond)

   0.0710

   Allowances / Short Ton of Flavored Pistachios

   Pistachio Hulling and Drying (vintage 2019 allocation and beyond)

   0.187

   Allowances / Short Ton of Adjusted Hulled and Dried Pistachios

   Fried Potato Chips Processing

   0.834

   Allowances / Short Ton of Fried Potato Chips

   Baked Potato Chips Processing

   0.517

   Allowances / Short Ton of Baked Potato Chips

   Snack Food Manufacturing

   31191

   Corn Chips Processing

   0.580

   Allowances / Short Ton of Corn Chips

   Corn Curls Processing

   0.446

   Allowances / Short Ton of Corn Curls

   Pretzel Processing

   0.633

   Allowances / Short Ton of Pretzels

   Beet sugar manufacturing

   311313

   Beet sugar manufacturing

   0.611

   Allowances / short ton Granulated-Refined Sugar

   Breweries

   312120

   Lager Beer Manufacturing

   0.178

   Allowances / Thousand Gallons of Lager Beer

   Distilled Spirits Production

   1.13x10^-3

   Allowances / Proof Gallons of Distilled Spirits

   Dry Color Concentrate Production

   12.0

   Allowances / Short ton of Dry Color Concentrate

   Wineries

   312130

   Grape Juice Concentrate Production

   1.59x10^-3

   Allowances / Gallons of Grape Juice Concentrate

   Grape Seed Extract Production

   9.48

   Allowances / Short ton of Grape Seed Extract

   Liquid Color Concentrate Production

   6.95x10^-3

   Allowances / Gallons of Liquid Color Concentrate

   Recycled Boxboard Manufacturing

   0.516

   Allowances / Air Dried Short Ton of Recycled Boxboard

   Paperboard Mills

   322130

   Recycled Linerboard (Testliner) Manufacturing

   0.562

   Allowances / Air Dried Short Ton of Recycled Linerboard

   Recycled Medium (Fluting) Manufacturing

   0.392

   Allowances / Air Dried Short Ton of Recycled Medium

   Petroleum Refineries

   324110

   Petroleum Refining

   3.89

   Allowances / Complexity Weighted Barrel

   All Other Petroleum and Coal Products Manufacturing

   324199

   Coke Calcining

   0.632

   Allowances/ Metric Ton Calcined Coke

   Industrial Gas Manufacturing

   325120

   On-Purpose Hydrogen Gas Production

   8.94

   Allowances / Metric Ton of On-Purpose Hydrogen Gas

   Liquid Hydrogen Production

   11.9

   Allowances / Metric Ton of Liquid Hydrogen Sold

   All Other Basic Inorganic Chemical Manufacturing

   325188

   Sulfuric Acid Regeneration (vintage 2019 allocation and beyond)

   0.147

   Allowances / Short Ton of Sulfuric Acid Produced

   Nitrogenous Fertilizer Manufacturing

   325311

   Nitric Acid Production

   0.0957

   Allowances / Short ton of nitric acid (HNO₃ 100%)

   Calcium Ammonium Nitrate Solution Production

   0.00

   Allowances / Short ton of Calcium Ammonium Nitrate Solution

   Flat Glass Manufacturing

   327211

   Flat glass Manufacturing

   0.495

   Allowances / Short Ton of Flat Glass Pulled

   Glass Container Manufacturing

   327213

   Container Glass Manufacturing

   0.270

   Allowances / Short Ton of Container Glass Pulled

   Mineral Wool Manufacturing

   327993

   Fiber Glass Manufacturing

   0.394

   Allowances / Short Ton of Fiberglass Pulled

   Cement Manufacturing

   327310

   Cement Manufacturing

   0.742

   Allowances / Short ton of adjusted clinker and mineral additives produced

   Lime Manufacturing

   327410

   Dolime Manufacturing

   1.40

   Allowances / Short Ton of Dolime Produced

   Gypsum Product Manufacturing

   327420

   Plaster Manufacturing

   0.0454

   Allowances / Short Ton of Plaster Sold as a Separate Finished Product

   Stucco Manufacturing

   0.134

   Allowances / Short Ton of Stucco used to produce saleable plasterboard

   Iron and Steel Mills

   331111

   Steel Production Using an Electric Arc Furnace

   0.170

   Allowances / Short ton of Steel produced using EAF

   Secondary smelting and alloying of aluminum

   331314

   Aluminum and Aluminum Alloy Billet Manufacturing

   0.371

   Allowances / Short ton of Aluminum and Aluminum alloy Billet

   Secondary smelting, refining, and alloying of nonferrous metal (except copper and aluminum)

   331492

   Lead Acid Battery Recycling

   0.511

   Allowances / Short Ton of Lead and Lead Alloys

   Iron Foundries

   331511

   Ductile Iron Pipe Manufacturing

   0.561

   Allowances / Short ton of Ductile Iron Pipes

   Nonferrous Forging

   332112

   Seamless Rolled Ring

   3.14

   Allowances / Short ton of Seamless Rolled Ring

   Hot Rolled Steel Sheet Production

   0.0843

   Allowances / Short ton of hot rolled steel sheet

   Pickled Steel Sheet Production

   0.0123

   Allowances / Short ton of pickled steel sheet

   Rolled Steel Shape Manufacturing

   331221

   Cold Rolled and Annealed Steel Sheet Production

   0.0520

   Allowances / Short ton of cold rolled and annealed steel sheet

   Galvanized Steel Sheet Production

   0.0504

   Allowances / Short ton of galvanized steel sheet

   Tin Steel Plate Production

   0.111

   Allowances / Short ton of tin plate

   Turbine and Turbine Generator Set Units Manufacturing

   333611

   Testing of Turbines and Turbine Generator Sets

   0.00782

   Allowances / Horsepower tested

3. (c) Energy-Based Allocation Calculation Methodology. The Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the following formula:

   1. (1) Data Sources.

      1. (A) In determining the appropriate baseline values, the Executive Officer may employ all available data reported to ARB under MRR for data years 2008-2010. If necessary, the Executive Officer will solicit additional data to establish a representative baseline allocation.
      2. (B) Recognition of California Climate Action Registry membership. If a facility reported facility level, third-party verified, greenhouse gas emissions data to the California Climate Action Registry for data years 2000-2007, the Executive Officer may consider these years in determining the representative annual baseline value. If necessary the Executive Officer will solicit additional data for these data years.

   2. (2) New Entrants Energy-Based Allocation Methodology. For covered facilities that are eligible for free allocation pursuant to section 95891(c) and either were not allocated InitialAllocation from budget year t-1 or were allocated pursuant to section 95891(c)(2) from budget year t-1, allowance allocation shall be determined by the Executive Officer using the following methodology.

      1. (A) Opt-In Covered Entities without Historical Baseline Emissions Data. For opt-in covered entities that have no historical emissions data reported to ARB under MRR, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the following formula:

         A_a,t = (F_Consumed,est * B_Fuel - e_Sold,est * B_Electricity + ProcessEmissions_est) * AF_a,t * c_a,t

         Where:

         “A_a,t” is the amount of California GHG Allowances directly allocated to the operator of an industrial facility for activity “a” with an energy-based allocation from budget year “t”;

         “t” is the budget year from which the direct allocation occurs;

         “F_Consumed,est” is the estimated amount of energy produced due to fuel combustion at the facility, measured in MMBtu. This value shall exclude fuel used to produce steam that is provided or sold offsite. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (December 17, 2010). The Executive Officer shall calculate this value utilizing any available data on the design of the facility and equipment;

         “B_Fuel” is the emissions efficiency benchmark per unit of energy from fuel combustion, 0.05307 California GHG Allowances/MMBtu;

         “e_Sold,est” is the estimated amount of electricity sold or provided for offsite use, measured in MWh. The Executive Officer shall calculate this value utilizing any available data on the design of the facility and equipment;

         “B_Electricity” is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 California GHG Allowances/MWh;

         “ProcessEmissions_est” is the estimated annual process emissions, as defined in section 95802(a), for the industrial facility, measured in metric tons of CO₂ equivalent;

         “AF_a,t” is the assistance factor for budget year “t” assigned to the facility activity “a” as specified in Table 8-1; and “c_a,t” is the cap adjustment factor for budget year “t” assigned to the facility activity “a” to account for cap decline as specified in Table 9-2.

      2. (B) Entities with Transitional Emissions Data. For covered entities or opt-in covered entities that are classified as transitional in the stability formula in section 95891(c)(2)(D), the Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the following formula:

         A_a,t = InitialAllocation_t + TrueUp_t

         Where:

         “A_a,t” is the amount of California GHG Allowances directly allocated to the operator of an industrial facility with activity “a” with an energy-based allocation from budget year “t”;

         “InitialAllocation_t” is the amount of allowances allocated to an entity in advance of budget year “t” for industry assistance for budget year “t.” This amount is based on energy use in year “t-2,” which is an estimate of year “t” energy use. These allowances shall be returned to the Executive Officer pursuant to section 95890(k) if the entity does not incur a compliance obligation for year “t” or does not perform activity “a” listed in Table 8-1, in year “t”; and “t” is the budget year from which the direct allocation occurs.

         InitialAllocation_t = (F_t-2 * 0.05307 + (S_{Purchased,t-2} - S_Sold,t-2) * 0.06244 - e_Sold,t-2 * 0.431 + ProcessEmissions_t-2)* AF_a,t * c_a,t

         Where:

         “t-2” is the year two years prior to year “t”;

         “F_t-2” is the annual amount of energy produced due to fuel combustion at the facility for year “t-2”, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (November 29, 2013). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

         “S_{Purchased,t-2}” is the annual amount of steam purchased for year “t-2” by the facility in MMBtu as reported to ARB under MRR;

         “S_Sold,t-2” is the annual amount of steam provided or sold for year “t-2” from the facility in MMBtu as reported to ARB under MRR;

         “e_Sold,t-2” is the annual amount of electricity sold for year “t-2” from the facility in MWh as reported to ARB under MRR;

         “ProcessEmissions_t-2” is the annual process emissions, as defined in section 95802(a), in year “t-2” for the industrial facility measured in metric tons of CO₂ equivalent;

         “AF_a,t” is the assistance factor for budget year “t” assigned to the facility activity “a” as specified in Table 8-1;

         “c_a,t” is the cap adjustment factor for budget year “t” assigned to the facility activity “a” to account for cap decline as specified in Table 9-2; and

         “TrueUp_t” is the amount of true-up allowances allocated to account for changes in production or allocation not properly accounted for in prior allocations. This value shall only be calculated if the entity was covered under the Cap-and-Trade Program in year “t-2” or if the entity received an initial allocation of vintage t-2 allowances but was not a covered entity in year “t-2.” In the latter case, a negative true-up will be calculated. This value of allowances for budget year “t” shall be allowed to be used for compliance for budget year “t-2” or subsequent budget years pursuant to section 95856(h)(1)(D) and 95856(h)(2)(D). This value is calculated using the following formula:

         TrueUp_t = BE_t-2 * AF_a,t-2 * c_a,t-2 - InitialAllocation_t-2

         Where:

         “t-2” is the year two years prior to year “t”;

         “AF_a,t-2” is the assistance factor for budget year “t-2” assigned to the facility activity “a” as specified in Table 8-1;

         “c_a,t-2” is the cap adjustment factor for budget year “t-2” assigned to the facility activity “a” to account for cap decline as specified in Table 9-2;

         “BE_t-2” is the baseline annual greenhouse gas emissions for year “t-2” adjusted for steam purchases and sales and electricity sales using the following equation:

         BE_t-2 = F_t-2 * 0.05307 + (S_{Purchased,t-2} - S_Sold,t-2) * 0.06244 - e_Sold,t-2 * 0.431 + ProcessEmissions_t-2

         Where:

         “F_t-2” is the annual amount of energy produced due to fuel combustion in year “t-2” at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (November 29, 2013). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

         “S_{Purchased,t-2}” is the annual amount of steam purchased for year “t-2” by the facility in MMBtu;

         “S_Sold,t-2” is the annual amount of steam sold for year “t-2” from the facility in MMBtu;

         “e_Sold,t-2” is the annual amount of electricity sold for year “t-2” from the facility in MWh; and

         “ProcessEmissions_t-2” is the annual process emissions, as defined in section 95802(a), in year “t-2” for the industrial facility measured in metric tons of CO₂ equivalent.

      3. (C) Entities with Stable Emissions Data. For covered entities or opt-in covered entities classified as stable in the stability formula in 95891(c)(2)(D), the Executive Officer shall calculate the amount of California GHG Allowances directly allocated under the energy-based methodology annually using the methodology in 95891(c). The allocation for all subsequent years shall be determined using this methodology.

         1. 1. Data Years. The data years used in determining the appropriate baseline values shall match “t-2”, “t-3”, and “t-4” used in the stability formula when the emissions were first classified stable. The Executive Officer may employ all available data reported to ARB under MRR. If necessary, the Executive Officer will solicit additional data to establish a representative baseline allocation.

      4. (D) Stability Formula for New Entrants. The following formula classifies the allocation methodology for budget year “t”:

         

         Where:

         “t” is the budget year from which the direct allocation occurs;

         “t-2” is the year two years prior to year “t”;

         “t-3” is the year three years prior to year “t”;

         “t-4” is the year four years prior to year “t”; and

         “BE_t” is the baseline annual greenhouse gas emissions for year “t” adjusted for steam purchases and sales and electricity sales. If the new entrant was not a covered entity in year “t” and conducted an activity that during year “t” was listed in Table 8-1, then BE_t is equal to zero for year “t.” If the new entrant either was a covered entity in year “t” or was both not a covered entity and conducted an activity that during year “t” was not listed in Table 8-1, then BE_t for year “t” is calculated using the following equation:

         BE_t = F_t * 0.05307 + (S_Purchased,t - S_Sold,t) * 0.06244 - e_Sold,t * 0.431 + ProcessEmissions_t

         Where:

         “F_t” is the annual amount of energy produced due to fuel combustion in year “t” at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (November 29, 2013). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

         “S_Purchased,t” is the annual amount of steam purchased for year “t” by the facility in MMBtu;

         “S_Sold,t” is the annual amount of steam sold for year “t” from the facility in MMBtu;

         “e_Sold,t” is the annual amount of electricity sold for year “t” from the facility in MWh; and

         “ProcessEmissions_t” is the annual process emissions, as defined in section 95802(a), in year “t” for the industrial facility measured in metric tons of CO₂ equivalent.

   3. (3) Facilities Newly Eligible for Allocation. Only for allowance allocation that occurs in the first calendar year, “t-1,” in which a covered entity that meets all the criteria set forth in sections 95891(c)(3)(A) through (c)(3)(C), the Executive Officer shall calculate the amount of California GHG allowances directly allocated under an energy-based methodology using the following equation. All subsequent allocation shall be calculated pursuant to section 95891, excluding section 95891(c)(3).

      1. (A) The facility conducted an activity that was not listed in Table 8-1 prior to year “t-1;”
      2. (B) The facility is eligible to receive an allowance allocation under the energy-based allocation methodology pursuant to 95891(c) for budget year “t;” and
      3. (C) The facility is classified as stable pursuant to the stability formula in section 95891(c)(2)(D).

      

      Where:

      “TA_t” is the total amount of California GHG allowances from budget year “t” directly allocated to the operator of an industrial facility;

      “A_EB,t” is the amount of California GHG allowances from budget year “t” calculated by the energy-based allocation methodology in section 95891(c);

      “n” is the first year in which the entity incurred a compliance obligation and in which the entity performed an activity and reported a NAICS code listed in Table 8-1; and

      “TrueUp_n” is the amount of true-up allowances allocated to account for allocation not properly accounted for in prior allocations. This value of allowances from budget year “t” shall be allowed to be used for compliance for budget year t-2 and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). This value is calculated by the following equation:

      

      Where:

      “AF_a,t” is the assistance factor for budget year “t” assigned to each activity “a” as specified in Table 8-1;

      “AF_a,n” is the assistance factor for budget year “n” assigned to each activity “a” as specified in Table 8-1;

      “c_a,t” is the adjustment factor for budget year “t” assigned to each activity “a” as specified in Table 9-2.

      “c_a,n” is the adjustment factor for budget year “n” assigned to each activity “a” as specified in Table 9-2.

   4. (4) If an entity receiving allocation pursuant to section 95891(c) does not perform activity “a” in a year for which it was allocated allowances, and is not otherwise subject to true-up allocation pursuant to section 95891(c), the entity must return to the Executive Officer all allowances allocated for that year, pursuant to section 95890(k). Further, if an entity receiving allocation pursuant to section 95891(c) shuts down and therefore ceases to perform activity “a” part way through a year for which it was allocated allowances, and the entity is not otherwise subject to true-up allocation under section 95891(c), the entity must return to the Executive Officer allowances equivalent to the proportion of the year during which activity “a” was not performed. These allowances must be returned pursuant to section 95890(k).

   A_t= (S_Consumed * B_Steam + F_Consumed * B_Fuel - e_Sold * B_Electricity + ProcessEmissions) * AF_a,t * c_a,t + TrueUp_t,CP3

   Where:

   “A_t” is the amount of California GHG allowances directly allocated to the operator of an industrial facility with an energy-based allocation from budget year “t”;

   “t” is the budget year from which the direct allocation occurs;

   “S_Consumed” is the historical baseline annual arithmetic mean amount of steam consumed, measured in MMBtu, at the industrial facility for any industrial process, including heating or cooling applications. This value shall exclude any steam used to produce electricity. This value shall exclude steam produced from an onsite cogeneration unit;

   “B_Steam” is the emissions efficiency benchmark per unit of steam, 0.06244 California GHG Allowances/MMBtu Steam;

   “F_Consumed” is the historical baseline annual arithmetic mean amount of energy produced due to fuel combustion at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98 (October 20, 2009). This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit. This value shall exclude energy to generate the steam accounted for in the “S_Consumed” term;

   “B_Fuel” is the emissions efficiency benchmark per unit of energy from fuel combustion, 0.05307 California GHG Allowances/MMBtu;

   “e_Sold” is the historical baseline annual arithmetic mean amount of electricity sold or provided for off-site use, measured in MWh;

   “B_Electricity” is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 California GHG Allowances/MWh;

   “ProcessEmissions” is the historical baseline annual arithmetic mean process emissions, as defined in section 95802(a), for the industrial facility, measured in metric tons of CO₂ equivalent;

   “AF_a,t” is the assistance factor for budget year “t” assigned to the facility for activity “a” as specified in Table 8-1;

   “c_a,t” is the cap adjustment factor for budget year “t” assigned to the facility for activity “a” to account for cap decline as specified in Table 9-2; and

   “TrueUp_t,CP3” is the amount of true-up allowances allocated from budget years 2020 and 2021. This value shall only be calculated if the entity has received an initial allowance allocation from budget year t-2. These true-up allowances from budget year “t” may be used for compliance for budget year “t-2” or subsequent budget years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). This value shall be zero for all budget years except 2020 and 2021. For budget years 2020 and 2021, this value is calculated using the following formula:

   TrueUp_t,CP3 = (S_Consumed * B_Steam + F_Consumed * B_Fuel - e_Sold * B_Electricity + ProcessEmissions) * AF_a,t-2 * c_a,t-2 - A_t-2

   Where:

   “AF_a,t-2” is the assistance factor for budget year “t-2” assigned to each activity “a” as specified in Table 8-1;

   “c_a,t-2” is the cap adjustment factor for budget year “t-2” assigned to each activity “a” to account for cap decline as specified in Table 9-2; and

   “A_t-2” is the amount of California GHG allowances directly allocated to the operator of the industrial facility with an energy-based allocation from budget year “t-2”.

4. (d) Allocation to University Covered Entities and Public Service Facilities. The Executive Officer shall calculate the amount of allowances directly allocated to a university covered entity or a public service facility using the following methods.

   1. (1) Allocation for Budget Years 2016 and Beyond. For budget years 2016 and subsequent years, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated to eligible university covered entities or public service facilities using the following formula:

      A_t = (F_Consumed * B_Fuel + Q_Purchased - Q_Sold * 0.06244 - e_Sold * B_Electricity) * c_t

      Where:

      “A_t” is the amount of California GHG allowances directly allocated to a university covered entity or public service facility for budget year “t” from 2016 and beyond.

      “F_Consumed” is the historical baseline annual arithmetic mean amount of energy produced due to fuel combustion at the facility, measured in MMBtu. The Executive Officer shall calculate this value based on measured higher heating values or the default higher heating value of the applicable fuel in Table C-1 of subpart C, title 40, Code of Federal Regulations, Part 98. This value shall include any energy from fuel combusted in an onsite electricity generation or cogeneration unit;

      “B_Fuel” is the emissions efficiency benchmark per unit of energy from fuel combustion, 0.05307 allowances/MMBtu;

      “Q_Purchased” is the quantity of qualified thermal output purchased by a university opt-in covered entity that purchases qualified thermal output from a public service facility;

      “Q_Sold” is the quantity of qualified thermal output sold or provided to an entity other than the university or local government which owns the facility, or which takes service from the public service facility;

      “e_Sold” is the historical baseline annual arithmetic mean amount of electricity sold or provided to an entity other than the university or local government which owns or takes service from the public service facility, measured in MWh;

      “B_Electricity” is the emissions efficiency benchmark per unit of electricity sold or provided to off-site end users, 0.431 allowances/MWh; and

      “c_t” is the adjustment factor for budget year “t” to account for cap decline as specified in Table 9-2.

   2. (2) Data Sources. In determining the appropriate baseline values, the Executive Officer may employ all available data reported to ARB under MRR for data years 2008 through 2013. If a facility ownership change causes an entity to change from an opt-in covered entity to a covered entity, the Executive Officer may employ all data reported to ARB pursuant to MRR to determine the appropriate baseline values.

   3. (3) Reporting on the Use of Allowance Value. No later than June 30, 2016, and each calendar year thereafter, each university and public service facility shall submit a report to the Executive Officer describing the disposition of any allowance value from allowances from the previous budget year, and how the allowance value was used to achieve additional environmental and economic benefits for California. This report shall include:

      1. (A) The monetary value of allowances received by the university or public service facility. The university or public service facility shall calculate the value of these allowances based on the average market clearing price of the four Current Auctions held in the same budget year from which the allowances are allocated; and
      2. (B) How the university or public service facility's disposition of the monetary value of allowances complies with the requirements of California Health and Safety Code sections 38500 et seq.

5. (e) Adjustment of Allowance Allocation to a Legacy Contract Counterparty. Industrial entities that receive an allowance allocation pursuant to section 95891 and are designated as a legacy contract counterparty shall have an adjustment to their allowance allocation. The Executive Officer shall subtract the allowances from the number of California GHG Allowances directly allocated to the legacy contract counterparty pursuant to 95891(b) or (c). If the legacy contract counterparty was not eligible for allocation pursuant to sections 95891(b) or (c) and the legacy contract counterparty has a direct corporate association pursuant to section 95833 with any other covered or opt-in covered entity that was eligible for allocation pursuant to sections 95891(b) or (c) then the entity with a direct corporate association who received industrial allocation pursuant to sections 95891(b) or (c) shall have its allowance allocation adjusted by the equations in this section.

   1. (1) For each budget year after 2015, the allocation adjustment formula is as follows:

      Adj_t= A_LC,t

      Where:

      “Adj_t” is the allocation adjustment for budget year “t”. This number shall be subtracted from the number of California GHG allowances directly allocated to the Legacy Contract Counterparty or the entity with a direct corporate association for budget year “t”; and

      “A_LC,t” is the allocation received by the legacy contract generator with an industrial counterparty in year “t” pursuant to section 95894.

   2. (2) If the allocation adjustment is greater than the number of California GHG Allowances directly allocated to a legacy contract counterparty pursuant to sections 95891(b) and (c), then the legacy contract counterparty will have a negative allowance allocation. If this occurs and the legacy contract counterparty has a direct corporate association pursuant to section 95833 with any other covered or opt-in covered entity that was eligible for allocation pursuant to sections 95891(b) or (c), then after the legacy contract counterparty's allowance allocation has been adjusted to zero, the entity with the direct corporate association that received allocation pursuant to section 95891(b) or (c) shall have its allowance allocation adjusted by the remainder of the adjustment as calculated earlier in this section.

6. (f) Allocation to Waste-to-Energy Facilities. The Executive Officer shall calculate the amount of allowances directly allocated to waste-to-energy facilities using the following methods.

   1. (1) Allocation for Budget Year 2020. For budget year 2020, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated to waste-to-energy covered facilities using the following equation:

      

      Where:

      “A₂₀₂₀” is the amount of California GHG allowances directly allocated to a facility for budget year 2020;

      “BaselineAllocation” is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement. This value is calculated by the following equation:

      BaselineAllocation = GHG

      Where:

      “GHG” is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement;

      “c_t” is the cap adjustment factor for budget year “t” to account for cap decline as specified in Table 9-2;

      “t” is the budget year from which the direct allocation occurs; and

      “TrueUp_t” is the amount of true-up allowances allocated to account for allocation not properly accounted for in prior allocations. This value of allowances from budget year “t” shall be allowed to be used for compliance for budget year t-2 and subsequent years pursuant to sections 95856(h)(1)(D) and 95856(h)(2)(D). This value is calculated by the following equation:

      Trueup_t = BaselineAllocation x c_t

   2. (2) Allocation for Budget Years 2021 and beyond. For budget years 2021 and beyond, the Executive Officer shall calculate the amount of California GHG Allowances directly allocated to eligible waste-to-energy covered entities using the following formula:

      A_t = BaselineAllocation x c_t

      Where:

      “A_t” is the amount of California GHG allowances directly allocated to a facility for budget year “t”;

      “t” is the budget year from which the direct allocation occurs;

      “BaselineAllocation” is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement. This value is calculated by the following equation:

      BaselineAllocation = GHG

      “GHG” is the historical arithmetic mean of annual covered emissions, as defined in MRR, for the facility based on a positive or qualified positive emissions data verification statement; and

      “c_t” is the cap adjustment factor for budget year “t” to account for cap decline as specified in Table 9-2.

   3. (3) Data Sources. To determine the appropriate baseline values, the Executive Officer employed data reported to ARB pursuant to MRR for the data years 2011-2017. The Executive Officer may solicit additional data as needed.

      Table 9-2: Cap Adjustment Factors for Allowance Allocation

      Cap Adjustment Factor, c

      Budget Year

      Standard Activities

      Industrial Activities with NAICS codes 325311, 327310, and 327410#

      2013

      0.981

      0.991

      2014

      0.963

      0.981

      2015

      0.944

      0.972

      2016

      0.925

      0.963

      2017

      0.907

      0.953

      2018

      0.888

      0.944

      2019

      0.869

      0.935

      2020

      0.851

      0.925

      Cap Adjustment Factor, c

      Budget Year

      Standard Activities

      Industrial Activities with NAICS codes 324199 (coke calcining only), 325311, 327310, 327410#

      2021

      0.817

      0.909

      2022

      0.783

      0.892

      2023

      0.749

      0.875

      2024

      0.715

      0.858

      2025

      0.681

      0.841

      2026

      0.647

      0.824

      2027

      0.613

      0.807

      2028

      0.579

      0.790

      2029

      0.545

      0.773

      2030

      0.511

      0.756

      2031

      0.494

      0.747

      #These are activities with over 50 percent of total emissions from process emissions, high emissions intensity and a high leakage risk classification in Table 8-1.

      The activities are coke calcining under the NAICS code 324199, activities under the NAICS code 325311, activites under the NAICS code 327310, and the activities under the NAICS code 327410.

Note: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, Health and Safety Code. Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.

History

1. New section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).

2. Change without regulatory effect amending subsection (c) filed 2-15-2012 pursuant to section 100, title 1, California Code of Regulations (Register 2012, No. 7).

3. Amendment filed 6-26-2014; operative 7-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26).

4. Amendment filed 9-18-2017; operative 10-1-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).

5. Amendment of section heading and section filed 3-29-2019; operative 3-29-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).