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FMRC recommends board adopt update to energy risk policy to allow procurement of California carbon allowances and offsets
Summary
The committee voted to recommend that the board adopt an addendum to the energy risk management policy allowing the CEO to approve procurement of California carbon allowances and offsets to meet cap-and-trade compliance within volumetric and notional limits.
The San Diego Community Power Finance and Risk Management Committee on June 12 recommended that the board adopt an addendum to the agency’s energy risk management policy to permit procurement of California carbon allowances and carbon offset products.
Janine Camara, director of portfolio management, told the committee the change would authorize the CEO to approve procurement of allowances and offsets available at quarterly auctions and in secondary markets to meet the agency’s compliance obligations under California’s cap-and-trade program. Camara said the addendum is intended to ensure compliance while prohibiting speculative positions and establishing transaction limits.
The addendum specifies that individual carbon allowance transactions will not exceed 20,000 allowances (covering 20,000 metric tons of CO2e) or $1,000,000 per transaction. Camara said the agency will acquire carbon products only to meet forecasted obligations, consider carbon costs and renewable priorities in procurement decisions, and maintain limits consistent with the broader energy risk management policy.
The committee made a formal recommendation to the board for approval of Resolution 2025-05 (approving Addendum 2 to the Energy Risk Management Policy for California carbon allowance and carbon offset transactions). The committee recorded a roll-call vote in favor.
The item was framed by staff as a compliance action to ensure the agency can meet obligations under the state cap-and-trade program and to set guardrails (volumetric and notional limits and an explicit prohibition on speculative positions) for carbon products procurement.
