California to Issue First Carbon Offset Credits

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California skyThe California Air Resources Board (CARB) says it will issue the first compliance offset credits eligible for use in California’s cap-and-trade greenhouse gas emissions reduction program by the end of the month.

The first batch of 600,000 offsets includes a combination of early action projects and compliance offset projects.

Carbon offset credits are issued for GHG reductions that take place in sectors not covered under the state's cap-and-trade program. Each credit represents 1 metric ton of carbon dioxide and only carbon offset credits issued by CARB are considered compliance offset credits.

CARB Chair Mary D. Nichols says the offsets have undergone “the most rigorous verification of any existing program.” The evaluation process included third-party verification to ensure that the offset credits achieve real GHG reductions under CARB-approved protocols.

Covered facilities may use carbon offsets to cover up to 8 percent of their compliance obligation. Carbon offsets also act as a cost-control measure for covered facilities because offsets generally cost less than allowances, which are issued by the state.

The offsets come from projects that provide additional environmental benefits beyond reducing GHGs. These include protecting the ozone layer or supporting improved forest management, which upgrades water quality and habitat.

The first compliance offset credits are all for projects developed under the Ozone Depleting Substances Protocol. This protocol requires the destruction of potent GHGs that leak into the atmosphere. Eligible ozone depleting substances have been used as refrigerants and as foam-blowing agents. Their release into the atmosphere damages the earth’s ozone layer and also contributes to global warming.

Early action projects are GHG reductions generated under CARB-approved voluntary carbon registry protocols. These credits for early action recognize that real and verified greenhouse gas reductions were made in good faith before the cap-and-trade program began.

For carbon offset projects to be considered for CARB offset credits, they must first be registered with a CARB-approved carbon registry. Each project developer must then provide a complete history of the project. The documentation and the project site itself must be evaluated by CARB trained, independent, third-party verifiers.

CARB staff then review each project as well.

CARB compliance offset credits will be issued within the Compliance Instrument Tracking System Service (CITSS), the same system in which state-issued allowances reside. Once the determination to issue credits is made by CARB, it can take up to 30 days for the credits to be placed in the holder's account in CITSS.

CARB currently has four approved offset protocols that can generate compliance-grade carbon offset credits:

  1. Forestry management projects (in the lower 48 states)
  2. Urban forestry projects
  3. Dairy digester projects (to capture methane from manure at dairy facilities)
  4. Ozone depleting substances (ODS) destruction projects
An Ecofys-led consortium has helped CARB establish product-level greenhouse gas emission benchmarks for various production processes. The benchmarks will be used to determine the amounts of free emission allowances for individual plants in the California cap-and-trade program.

Photo Credit: Kevin Lawrance via Flickr

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