Comment Log Display

 The Gypsum Association represents the collective interests of the
United States gypsum board manufacturing industry.  On May 12,
2011, the Association submitted aggregate average gypsum board
industry CO2e emissions data to the ARB to assist in the ARB’s
effort to establish a product-based benchmark for the Gypsum
Product Manufacturing sector.  The data submitted represented the
average CO2e emissions data for the gypsum wallboard (i.e.,
plasterboard) manufacturing facilities anticipated to be subject to
the cap-and-trade regulations normalized to a production parameter
of metric tons of stucco used to produce saleable plasterboard. 
The ARB used this data to establish a proposed product-based
benchmark for plasterboard manufacturing within the gypsum product
manufacturing sector (NAICS 327420) and to incorporate additional
production reporting requirements for gypsum manufacturing
facilities.  

On August 11, 2011, the Gypsum Association submitted public
comments on Board item capandtrade10.  The public comments
submitted by the Association were not incorporated into the Second
Notice draft for capandtrade10 posted by the ARB on September 12,
2011.  At this time, we wish to submit a single, original comment
on the draft (Comment #1 below) and to re-submit the previous
comments for the public record.  In re-submitting the previous
comments, it is our understanding that the items proposed in
comment #2 below were inadvertently excluded from the revised text
and are to be incorporated in a subsequent edition of the
regulation.   

Comment #1 – The Document Needs a Definition for Stucco

Comments submitted by the Gypsum Association on ghg2010 regarding
the correct unit benchmarks for gypsum board caused a dialog to
occur between the Association and ARB staff regarding the proper
definition for stucco.  On the basis of the conversations, the
ghg2010 document now includes a definition for stucco.  

Since the proposed modification in Comment #2 incorporates the use
of the term stucco, the capandtrade10 document should incorporate
the definition for stucco that is contained in the Proposed Second
15 Day Modifications for the ghg2010 document.  It is therefore
proposed that the following definition be added to the
capandtrade10 document:

“Stucco means hemihydrate plaster (CaSO4●1/2H2O) produced by
heating (“calcining”) raw gypsum, thereby removing three-quarters
of its chemically combined water. “

Comment #2 - The Listed Unit for the Proposed Benchmarks for
Plasterboard is Incorrect

Our review indicates that the documents posted by the ARB on July
25, 2011, incorrectly identify the unit for the proposed
plasterboard benchmark as “Allowances / Short Ton of Plaster Board”
in the cap-and-trade regulations and incorrectly identify the
production reporting requirement as “the amount of plaster board
produced” in the mandatory reporting requirements.  The Gypsum
Association and its members request that the ARB change the
relevant references to correctly identify that the benchmark unit
for plasterboard production is based on the mass quantity of stucco
used to produce salable plasterboard and not the quantity of
plasterboard produced.  It is noted that the units of the EU ETS
benchmark should also be changed to reflect the mass quantity of
stucco used to produce plasterboard rather than mass of
plasterboard itself as is currently listed in ARB’s 15-day change
documents.

Specifically, ARB needs to correct the errors in the following
sections of the cap-and-trade regulations, and other 15-day change
documents:
•	Cap-and-Trade Regulations:  Subchapter 10, Article 5, Subarticle
9, §95891.  Allocation for Industry Assistance, Table 9-1:  Product
Based Emissions Efficiency Benchmarks.  Units should be changed for
the benchmark in the “Plaster Board Manufacturing” activity from
“Allowance / Short Ton of Plaster Board” to “Allowance / Short Ton
of Stucco Used to Produce Saleable Plasterboard”.
•	 Appendix B:  Development of Product Benchmarks for Allowance
Allocation, Table B.  Comparison of California and EU ETS Product
Benchmarks.  Units should be changed for all benchmarks (CA
Imperial Units, CA SI Units, and EU ETS) in the “Plaster Board
Manufacturing” activity from “…Ton of Plaster Board”  to “…Ton of
Stucco Used to Produce Saleable Plasterboard”.

Comment #3 - The Base Year Selected by ARB should Reflect Both
Present and Future Production Constraints

The Gypsum Association wants to ensure that the base year that the
ARB selects to allocate 2013 allowances for each gypsum board
manufacturing plant reflects a fair and reasonable production
level.  Specifically, the base year should acknowledge both the
current economic recession and its impacts on the gypsum board
industry and the impact on allocations that will occur when idled
capacity is brought back on line at a future date. The Proposed
Regulations do not appear to address this very important issue. In
May of this year, The Gypsum Association submitted a chart that
displays monthly shipments of gypsum board to locations in the
State of California for the period 2005 to 2010. This data points
out the precipitous decline in shipments in the state during the
period noted and reinforces the need for the ARB to be judicious
when it establishes a base year for the gypsum board manufacturing
facilities located in the State of California. The Gypsum
Association requests further information from the ARB on whether or
not this base year has been determined for 2013 and would value the
opportunity to enter into discussions with the ARB regarding the
importance of setting an achievable allocation for 2013  and years
beyond. 

Comment #4 - The Industry Assistance Factor for the Gypsum Product
Manufacturing Industry in Table 8-1 should be Higher.

The Gypsum Association believes that the annual Industry Assistance
Factor for the Gypsum Product Manufacturing (“GPM”) industry should
be 100 percent for the entire period 2013 through 2020.  It is our
position that in assigning a “medium” leakage risk classification
to the GPM industry the ARB has understated the risk leakage for
the industry.

In assigning a leakage risk classification to an industry, the ARB
applies a methodology that assigns equal weight to the concepts of
emissions intensity and trade exposure.  While we are of the
opinion that the GPM industry should not be evaluated as an
“emissions intense” industry, we are concerned that the ARB may be
understating the local trade exposure risk to the industry. 

Gypsum board is a consistent quality, commodity material that is
often transported by rail.  As a consequence, gypsum board can be
produced in a specific state or country and transported over land
and sold in a different state or country.  While the ARB is correct
in its assessment that gypsum board is not readily imported from or
into the State of California from locations outside of North
America, it is our opinion that the Appendix K methodology and its
reliance on national and regional data may be understating the
potential intra-regional trade exposure for gypsum products in the
State of California. Our concern is that the ARB has not taken this
attribute fully into account when assigning the risk leakage
classification to the GPM industry.

The Gypsum Association would value the opportunity to enter into
discussions with the ARB regarding this matter.