Carbon offsets from forestry projects are expected to make up a significant portion of the offsets sold into developing carbon markets. The two projects recently approved by CARB are located in California’s Mendocino County and in eastern Maine, demonstrating the point that the California compliance market is not limited to offset credits generated in that State. This is an important milestone, confirming the market for forestry-based carbon offsets. Some environmental groups opposed the out of state offset component of the program.
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.
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.
CARB currently has four approved offset protocols that can generate compliance-grade carbon offset credits:
- Forestry management projects (in the lower 48 states)
- Urban forestry projects
- Dairy digester projects (to capture methane from manure at dairy facilities)
- Ozone depleting substances (ODS) destruction projects
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