Background of California's Carbon Market

Science indicates that development has had negative effects on our global environment. By reducing our emission levels of greenhouse gases (GHG) we may ameliorate dangerous anthropogenic effects on global climate. The Kyoto Protocol was developed by the United Nations Framework Convention on Climate Changes (UNFCCC) to slow global warming by reducing GHG emissions on a global scale. The Kyoto Protocol called on the world's industrialized nations to trim their greenhouse gas emissions to 1990 levels by 2012, and as a means of reduction, countries would establish "carbon caps," and permit countries that exceed their targets to offset their emissions by buying "carbon credits."

Though the United States does not participate in the Kyoto Protocol many state governments are exploring creating their own "carbon markets" believing that GHG limits are inevitable, and from a concern about the adverse effects of climate change. California has played a leading role in state regulated emission reductions by creating the California Climate Action Registry (CCAR) as a non-profit voluntary registry for GHG. In 2005 the CCAR adopted the Forest Protocols to account for carbon emissions and reductions through forest conservation, improved management practices and reforestation. The Forest Protocols are new to the CCAR and though they are a landmark concept, refinement of the procedures and implementation experience is ongoing. Many policy makers in California believe that a true carbon market is inevitable.Forest managers and landowners alike will need to develop the tools and skills for certifying forestland for carbon storage credits.

The CCAR's Forest Protocols focuses on "baseline minimums" and "additionality" of carbon sequestration. Baseline minimums are set by the California Forest Practice Rules (CFPR) for maximum allowable harvesting. Under maximum allowable harvest a specific amount of carbon can be sequestered overtime. By practicing less intense forest harvesting, more carbon can be sequestered over time. This increase of carbon above and beyond the baseline minimum is called additionality. In simple terms the carbon credit is any additional carbon that is grown beyond the baseline minimums.

On September 27, 2006 AB32 was passed into law creating the California Global Warming Solutions Act of 2006. This legislation authorizes the California Air Resources Board (ARB) to regulate GHG emissions in the state by setting a cap. The new carbon market will incorporate the protocols of the CCAR.

The implementation of the legislation is currently under development.

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