California considering more carbon credits
The California Air Resources Board will vote on whether to include additional carbon offset credit project protocols at its upcoming committee meeting in October.
Starting this year, businesses in the state like power plants and fuel refineries have had to begin accounting for their annual emissions.
These regulated companies must account for every ton of carbon dioxide emitted, either by purchasing carbon allowances at quarterly auctions held by the ARB, or by buying carbon offset credits.
Carbon offset credits are generated from only a few ARB-approved project types, including Forestry.
Forest carbon projects are expected to provide a significant amount of carbon offset credits since woodlands store millions of tons of carbon across the US.
Regulated businesses can use carbon offset credits to account for up to 8% of their annual emissions, creating the potential demand for over 200 million credits by 2020.
However, the limited number of ARB-eligible projects is expected to strain the available supply of carbon offset credits, by perhaps as much as 67% in 2020.
Carbon offset credits have been shown to be a crucial aspect of cap-and-trade markets, since they act as a cost containment mechanism to keep allowance prices from ballooning to exorbitant prices.
According to the ARB website, only 55 projects have been listed to offer credits to the California market.
In an effort to reduce the shortfall in supply, the ARB has looked into alternative project types.
They are expected to approve Coal Mine Methane projects, which will capture the potent greenhouse gas as it tries to escape into the atmosphere.
Since methane is roughly 56 times as harmful to the atmosphere as carbon dioxide, these projects will provide very positive environmental benefits.
The ARB is also considering a project protocol for improved Rice Cultivation, but it is doubtful that this protocol will be approved this year.