Sceptre Group Limited – – California will be short offsets

California won’t have enough offsets in the early years of its carbon market, experts said.

The state’s cap-and-trade plan, which was released last Friday, allows emitters to use offsets to meet up to 8 per cent of their compliance obligation, which represents 13.2 million offsets in the first year of trading in 2012.

Derek Six, portfolio manager at offset developer Environmental Credit Corp., said most of the offset protocols that California regulators plan to allow in the state’s trading system will not generate enough carbon credits to meet demand.

“It will be very short offsets. I think the regulators will take a look at opening up to other project types” said Six, speaking at the Carbon Market Insights Americas conference in New York Tuesday.

Favouring Climate Action Reserve

The California Air Resources Board (Carb) has outlined four offset project protocols created by the Climate Action Reserve (CAR), a California-based voluntary offset programme that it would allow emitters to use for compliance.

The protocols are for livestock, urban forestry, ozone depleting substances and forestry offsets.

Carb said offsets developed using these protocols will provide a source of early action offset credits, helping to boost the supply of eligible compliance offset credits available in the short term.

CAR estimates the four protocols adopted by the regulators will supply 33 million offsets between 2012 and 2014, and 99 million offsets between 2012 and 2020.

The bulk of the offsets are expected to be generated from the ozone depleting substances protocol.

Six said he hopes Carb will consider bringing in other offset types into the California cap and trade system, such as landfill gas projects, which represent the largest source of voluntary offsets in the US.

Randy Lack, chief marketing officer for Element Markets, agreed that Carb may need to allow other offset types to meet demand for offsets.

“Besides ODS, it will be difficult to get a lot of tonnes from the CAR protocols,” said Lack, speaking at the conference.


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