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California Leading the Way Towards REDD+ Carbon Markets

Independent REDD+ Consultant Christopher Cosslett reviews the implications of California's newly approved cap-and-trade regulations for REDD+, that have been called, "one of REDD+'s most significant milestones in 2010".

On the ballot in California for the U.S. mid-term elections this past November was Proposition 23, a referendum question backed by big oil companies and aimed at overturning Assembly Bill 32 (AB 32), California's Global Warming Solutions Act of 2006. According to AB 32’s Scoping Plan (2008), the creation of a cap-and-trade program would be a central instrument in reducing the state’s greenhouse gas (GHG) emissions to 1990 levels by 2020, followed by an 80 per cent reduction by 2050. However, ‘Prop 23’ called for suspending implementation of AB 32 until the state's unemployment rate dropped below 5.5 percent for one full year, something that has rarely happened. In the end, the measure was soundly defeated.

Both before and after the defeat of Prop 23, the rulemaking, or process by which California's Air Resources Board (ARB) develops the regulations needed to implement AB 32, continued apace, culminating in California's approval, on 16 December, of detailed regulations governing AB 32's cap-and-trade mechanism. This event has been called one of REDD+’s most significant milestones in 2010, not least because it establishes a compliance market with demand for up to 74 million tons of CO2e between 2010 and 2020.

In the words of the regulation:


ARB will place a limit, or cap, on GHG emissions by issuing a limited number of tradable permits (called allowances) equal to the cap. Over time, the cap will steadily decline…In addition to allowances, a limited number of credits for emissions reductions from sources that are outside the cap coverage, called offsets, can be used for compliance with the program…Offset credits are issued from projects developed using ARB-adopted compliance offset protocols. Compliance offset protocols contain the project eligibility criteria to ensure reductions are additional, quantification methodologies and regulatory verification and enforcement requirements...They contain the basic methods and procedures to conduct the offset project and determine the greenhouse gas reduction benefits.

The regulation includes and adopts four compliance offset protocols, namely: (i) U.S. Forest Projects, (ii) Urban Forest Projects, (iii) U.S. Ozone Depleting Substances Projects; (iv) Livestock Manure [Digester] Projects. As a result, beginning on 1 January 2012, forestry offsets generated by US landholders will be eligible to begin trading under the new system. However, the regulation and its protocols did not pass without controversy, as 47 environmental and conservation organizations complained vehemently about references to “even-aged management” which, they argued, would lead to clear-cutting and the replacement of natural forest with tree plantations. This debate will be familiar to those who have followed as similar concerns were raised within the UNFCCC negotiations.

The regulation also recommends that the first sector-based credits to become eligible for trading under the state's cap-and-trade system should come from ARB-approved REDD sector-based crediting programs. In order to encourage further movement in this direction, the regulation provides a "framework" for REDD credits. In order to move from framework to a full-fledged Protocol and subsequent trading, California is expected to rely heavily on the Governor's Climate and Forests Taskforce (GCF), which it helped to establish in 2008. The GCF includes sixteen states and provinces from the USA, Brazil, Indonesia, Mexico and Nigeria. The GCF has already made substantial progress, including drafting a set of design recommendations for sub-national REDD frameworks, which parallels the UNFCCC decision in allowing for interim reference emission levels to be set at sub-national level. During 2011, the GCF Task Force is expected to work closely with the ARB, as well as with REDD technical experts, scientists, stakeholders and research institutes, in order to refine guidance for a high-quality sub-national REDD program. ARB staff anticipate that REDD offset credits from Board-approved programs could enter the California market by 2015.

Chris Cosslett is Director of Environment Strategies International, LLC. He created and operates www.redd-plus.com, a REDD+ networking and news site. An extended version of this article can be found here.












In this issue


UN-REDD Releases its First 5-year Programme Strategy

REDD+ Safeguards, Governance Emphasized by UN-REDD Agencies at Forests 2011 Launch

Features & Commentary

California Leading the Way Towards REDD+ Carbon Markets
By: Christopher Cosslett

Mangrove Forests and REDD+
By: Gabriel Grimsditch
Reports & Analysis

UN-REDD Free, Prior and Informed Consent Consultation in Tanzania

National Systems for GHG Inventories
Looking ahead

Programme of Anti-Corruption on REDD (PAC-REDD) Workshop
25 February 2011, Jakarta, Indonesia

Extractive Industries Transparency Initiative Conference
2 - 3 March 2011, Paris, France

CARE International and CCBA Social Impacts of REDD+ Workshop
3 - 4 March 2011, London, UK

CBD Asia-Pacific Regional Consultation and Capacity Building Workshop on REDD+
15 - 18 March 2011, Singapore City, Singapore

UN-REDD Programme 6th Policy Board Meeting
21 - 23 March 2011, Da Lat, Viet Nam

FCPF 8th Participants Committee Meeting
24 - 25 March 2011 Da Lat, Viet Nam

UNFCCC Climate Change Talks
3-8 April 2011, Bangkok, Thailand
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