US: California gas leak not covered by allowances

Southern California Gas would not be able to use allowances or offsets to mitigate emissions from its gas leak at its Aliso Canyon natural gas storage facility, according to a draft mitigation plan.

The utility has been dealing with an ongoing leak the facility that has emitted an estimated 2.4m tCO2e, according to Air Resources Board (ARB) data.

Earlier this year, Governor Jerry Brown said Southern California Gas would be obligated to mitigate the emissions released from the leak. Company officials said it intends to pay for the mitigation efforts.

In a draft proposal, the ARB, which is the state regulator, suggests the mitigation programme focus on methane reduction projects that occur within the state. Those projects could also concentrate on methane reductions from the agriculture and waste sectors and promote sustainable energy infrastructure.

The mitigation proposal would not involve allowances or offsets used in the state’s cap-and-trade programme.

“Use of these instruments for mitigation would be inappropriate for several reasons,” officials wrote in the white paper. “Among them, the cap-and-trade programme, with its carefully calibrated annual emissions caps, was not designed to capture fugitive emissions.”

The ARB said using allowances could also impact the cost and availability of allowances for other regulated entities.

Lawmakers had previously introduced a bill that would have prohibited Southern California Gas from using allowances or offsets to mitigate the methane emissions. ARB officials have also said the fugitive emissions are not part of the cap-and-trade programme.

Market participants said the market would not see any significant impact even if Southern California Gas was allowed to comply with allowances or offsets, because of significant oversupply.

The ARB is asking for public comments on the proposed mitigation plan. Entities can submitted feedback until 24 March. dan.mcgraw@icis.com