September 17, 2013

State clears way for use of ‘offsets’ in carbon restrictions

Starting in a couple of weeks, the hundreds of companies subject to California’s strict curbs on greenhouse-gas emissions will have a new way to meet the regulations.

Starting in a couple of weeks, the hundreds of companies subject to California’s strict curbs on greenhouse-gas emissions will have a new way to meet the regulations.

They’ll be able to buy “offset” credits generated by dairy farms and others who have managed to reduce their own carbon emissions.

After years of study, the California Air Resources Board said Tuesday it has cleared the way for heavy industries in California to start purchasing offsets. David Clegern, a spokesman for the agency, said offsets should be available by the end of this month.

By giving industrial firms greater flexibility, offsets are expected to ease the costs of complying with the state’s carbon emissions rules, the centerpiece of AB 32, the state’s 7-year-old climate-change law.

But offsets are controversial among some environmentalists, who argue that they let the companies off the hook.

Under the state’s cap-and-trade program, more than 400 oil refiners, food processors and others have to gradually reduce their carbon footprint by a certain amount. If they can’t make the necessary reductions, they can get into compliance by purchasing state-issued emissions allowances, either directly from the state or on the open market.

Buying offsets will provide a third method for abiding by the rules. Offsets essentially are a form of investment in dairy farms and others that have been able to slash their greenhouse gas pollution. The reductions are verified by independent auditors working for the Air Resources Board, and each ton of carbon eliminated generates a credit. Some 600,000 offset credits will become available for sale at month’s end.

The industrial firms governed by cap and trade will be allowed to use offsets to cover a maximum of 8 percent of their obligation.

Offsets have been around for years, frequently used on a voluntary basis by environmentally conscious consumers, and the universe of providers is large. There are dairy farmers, seeking to reduce methane emitted by their cows, as far away as upstate New York. There is a company in Arkansas that destroys greenhouse gases found in refrigerator coolants. In California, nonprofits that manage some of the North Coast forests generate offsets, too. The list of approved offsets for use in California’s carbon system will be released next Wednesday.

Some environmental groups say the industrial firms covered by the greenhouse-gas rules should be forced to reduce their own emissions – and not be allowed to meet the standards by paying someone else. Because many of the offset projects are in other states, pollution in California isn’t reduced, they argue.

But state officials say offsets represent a legitimate form of carbon reduction. With climate change a global phenomenon, officials say it doesn’t really matter where the reductions take place.

Offsets “achieve real greenhouse gas reductions ... and deliver a range of additional environmental benefits,” Air Resources Board Chair Mary Nichols said in a news release.

Offsets do carry risk for buyers. The independent auditors could determine that a particular project didn’t deliver the promised carbon reductions, making the offset credits worthless. Because of that, offsets are expected to sell for less money than the state-issued carbon emissions allowances. Allowances currently trade at around $13 a ton.

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