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California Global Warming Solutions Act, AB 32, Explained - Part Two
Compliance, Consequences And Clauses
By Tiffany Rider - Senior Writer
September 25, 2012 - Steve Rogers is preparing for a project that will reduce emissions and cut costs at the plant he manages in Long Beach.
That plant is one of several throughout the country owned by National Gypsum, a manufacturer of drywall. The Long Beach plant opened in 1965 and currently employs 57 people. Rogers was transferred to the Long Beach plant in December, and has worked at plants in Waukegan, Illinois, Fort Dodge, Iowa, and Baltimore.
According to Rogers, the Long Beach plant operates an older dryer kiln for heating sheets of drywall. The kiln uses a significant amount of natural gas to fuel it, contributing to the company’s carbon footprint. To cut costs on natural gas, the company plans to install an energy optimization system at the plant in January.
Rogers described the system as a large fan that will exhaust the hot air from the kiln’s existing fan, circumventing the warm air to be mixed in with the combustion air for the kiln. This process, he said, reduces the amount of air that needs to be heated, thus reducing the fuel needs. It also happens to reduce the level of greenhouse gas emissions coming from the plant.
Rogers said the energy optimization system project was not a reaction to California Assembly Bill 32, known as the Global Warming Solutions Act.
“We’ve been working on putting it in here for a while,” he said.
In this second part of a series of articles on the impacts of AB 32, the Long Beach Business Journal explores compliance, consequences and clauses for special cases under the law.
Nancy Spurlock, director of corporate communications for National Gypsum, said the company has been reporting its emissions to the California Air Resources Board (ARB) in preparation of the program requirements of AB 32 coming online in January.
AB 32 requires companies that emit more than 10,000 metric tons of greenhouse gases or carbon equivalents to report their emissions to ARB. If an entity does not provide the required data to the board, then it is assigned a default number of emissions based on the industry it belongs to, according to Dave Clegern, ARB spokesperson.
“We begin calculating their compliance obligation based on that default,” he said. “We would do the same if a report is incomplete.”
ARB will work with different facilities to make sure the numbers add up, Clegern said, but if an entity is not participating, ARB has “the full range of enforcement options” that could include fines, penalties or criminal charges.
Spurlock said the Long Beach plant reduced its emissions levels from 2009 to 2010.
“We have, in that timeframe, reduced our metric tons of greenhouse gas emissions from 27,000 metric tons to 20,000 metric tons,” she said. “That reduction is a matter of our reduced business. . . . We did not do anything to cause that dramatic shift downward other than business has been down.”
Business has picked up, Spurlock said, and today the plant’s greenhouse gas emissions are above AB 32’s cap-and-trade program threshold of 25,000 metric tons. The energy optimization system will help bring their current emissions down, but National Gypsum will still need to purchase allowances and/or create offsets to comply with AB 32. How much needs to be purchased is unknown at this point, Spurlock said. The first allowance auction is scheduled for November. ARB will provide 90 percent of allowances to impacted facilities at first, leaving the entities responsible for 10 percent of the emissions above the 25,000 metric-ton threshold. Based on an estimated overall reduction of emissions under the cap after each of the 2014, 2017 and 2020 compliance periods, the number of available allowances will continually decrease.
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