Item 18 - Appeal Application Nos. 2023-02 and 2023-03 for Cabrillo Town Center project

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The Cap -and -Trade Program works with other direct regulatory measures and provides an economic incentive to reduce emissions. If California's direct regulatory measures reduce GHG emissions more than expected, then the Cap -and -Trade Program will be responsible for relatively fewer emissions reductions. If California's direct regulatory measures reduce GHG emissions less than expected, then the Cap -and -Trade Program will be responsible for relatively more emissions reductions. Thus, the Cap - and -Trade Program assures that California will meet its 2030 GHG emissions reduction mandate. The Cap -and -Trade Program establishes an overall limit on GHG emissions from most of the California economy —the "capped sectors." Within the capped sectors, some of the reductions are being accomplished through direct regulations, such as improved building and appliance efficiency standards, the [Low Carbon Fuel Standard] LCFS, and the 33 percent [Renewables Portfolio Standard] RPS. Whatever additional reductions are needed to bring emissions within the cap is accomplished through price incentives posed by emissions allowance prices. Together, direct regulation and price incentives assure that emissions are brought down cost- effectively to the level of the overall cap. (...]50 Overall, the Cap -and -Trade Program will achieve aggregate, rather than site -specific or project -level, GHG emissions reductions. Also, due to the regulatory framework adopted by CARB in AB 32, the reductions attributed to the Cap -and -Trade Program can change over time depending on the state's emissions forecasts and the effectiveness of direct regulatory measures. The Cap -and -Trade Program covered approximately 450 businesses responsible for about 85 percent of California's GHG emissions.51 The Cap -and -Trade Program covers the GHG emissions associated with electricity consumed in California, whether generated in -state or imported. Accordingly, GHG emissions associated with CEQA projects' electricity usage are covered by the Cap -and- Trade Program. The Cap -and -Trade Program also covers fuel suppliers (natural gas and propane fuel providers and transportation fuel providers) to address emissions from such fuels and from combustion of other fossil fuels not directly covered at large sources in the Program's first compliance period.52 Furthermore, the Cap -and -Trade Program also covers the GHG emissions associated with the combustion of transportation fuels in California, whether refined in state or imported. The point of regulation for transportation fuels is when they are "supplied" (i.e., delivered into commerce). Accordingly, as with stationary source GHG emissions and GHG emissions attributable to electricity use, virtually all, if not all, of GHG emissions from CEQA projects associated with vehicle -miles traveled (VMT) are covered by the Cap -and -Trade Program. 50 California Air Resources Board, First Update, May 2014, p. 88. 51 Center for Climate and Energy Solutions, California Cap-and-Trade,https://www.c2es.org/content/california- cap-and-trade/, accessed April 2020. 52 While the Cap -and -Trade Program technically covered fuel suppliers as early as 2012, fuel suppliers did not have a compliance obligation (i.e., they were not fully regulated) until 2015. Cabrillo Town Center Project PAGE 19 City of Santa Ana GreenhouC VS ouncil Report 18 — 984 10/3/2023 July 2023