This article was originally published in the Voluntary Carbon newsletter. Click here to read the original.
30 April 2014 | California has long been taking its cues from the voluntary carbon markets in developing the offset component of its cap-and-trade program. The US state has now welcomed another voluntary project type into its program, but market participants are lobbying for the addition of even more protocols to help thwart any potential offset shortages.
The California Air Resources Board (ARB) announced on Friday that it has approved a new protocol that would generate compliance-grade carbon offsets from coal mine methane projects. This project type joins forestry, urban forestry, livestock and ozone-depleting substances protocols also originally developed in the voluntary markets as being eligible to produce offsets for entities regulated by the cap-and-trade program. ARB staffers have previously estimated that the coal mine methane protocol could produce a potential domestic offset supply of 60 million tonnes of carbon dioxide (tCO2e) in emissions reductions.
The ARB sees emission reductions from carbon offset projects, including from agriculture and forestry projects, as a vital factor in achieving California’s ambitious greenhouse gas (GHG) reduction goals. In 2006, then-California Governor Arnold Schwarzenegger signed into law Assembly Bill 32 (AB 32) – a landmark piece of legislation that outlined the state’s efforts to mitigate climate change. The legislation featured targets for reducing California’s GHG emissions to 1990 levels by 2020 and 80% below 1990 levels by 2050. The cap-and-trade regulation is currently in place through 2020 but may be extended.
Market participants see opportunities for more land-based offsets – emissions reductions generated via agriculture and forestry projects – to be added to the system, including avoided grassland conversion, wetland restoration, composting, rangelands and rice cultivation projects. The ARB could add rice cultivation as a new compliance offset protocol in September, making it eligible to generate carbon offsets for the program starting on January 1, 2015.
But bringing more of these types of projects into the state’s regulated carbon market will not be an easy task, given the high costs involved, particularly the costs of monitoring and verifying these emissions reductions.
“There is a lot of potential for relatively low-cost reductions in the agriculture sector, but some of these opportunities we’re talking about can be fairly marginal at the going price of carbon offsets,” Derik Broekhoff, the Climate Action Reserve’s (CAR) Vice President of Policy, said at the Navigating the American Carbon World conference in San Francisco last month. The prices for California-bound offsets have generally hovered around $9 per tonne.
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