The California Air Resources Board voted 9-1 to adopt cap and trade regulations for AB32, California’s 2006 climate law. The move, which establishes the first compliance carbon trading system in the United States, opens the door for carbon offsets generated via forest conservation projects.
The new rules will allow polluting industries to buy and sell emissions allowances. 90 percent of allowances would be free during the early stages of the program, but as the cap tightens, fewer allowances will be available. By 2020 the cap would limit emissions to 1990 levels.
In the early years of the cap, companies that are unable to reduce CO2 emissions to target levels would be allowed to “offset” a portion of their emissions–up to 8 percent of total emissions reductions–via carbon credits generated through various activities, including forest conservation projects in tropical countries. In total, California will accept up to 74.3 million tons of CO2 reductions from such credits by 2020, according to John O. Niles, director of the Tropical Forest Group, a forest policy organization.
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Last month California signed an agreement with two states–Acre, Brazil and Chiapas, Mexico–to integrate credits generated by the reducing emissions from deforestation (RED) mechanism into its cap-and-trade system.
California’s climate law enjoys strong voter support. A ballot challenge mounted last month–Proposition 23, which would have repealed AB32–was soundly defeated at the polls.
Analysts say California’s AB32 could serve as a model for future cap-and-trade legislation in other states.
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