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ARB is also considering other options where CHP facilities would
hold allowances and be subject to a declining level of allowances
over time.   GPI believes that these options are not appropriate
for CHP.  In CHP operations, there are not many small changes a
facility can make to reduce GHG.  In short order, a facility will
be faced with a major capital investment to replace the turbine,
duct burners, HRSG, or all of the above.   All very expensive
investments.  This would likely occur because a declining allowance
is demanded, regardless of the size of that decline.  Existing CHP
will then have a choice as to whether to invest or shutdown. To
avoid unnecessary shutdowns of CHP, ARB should choose the “But For”
CHP option.  Alternatively, ARB could choose a double-benchmark
standard for CHP that would serve as the basis for allowances,
adjusting the standard downward over time only when it is
cost-effective retrofits are justified.  This is how retrofit
regulations have been implemented in California, and we would hope
that ARB does not deviate from this approach for AB32.