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CARB looking at Ontario cap-and-trade linkage, new offsets protocol

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CARB looking at Ontario cap-and-trade linkage, new offsets protocol

The California Air Resources Board held a public workshopApril 28 to discuss the potential linkage of the state's carbon cap-and-trademarket with a similar program proposed for Ontario. In , officials in Ontarioproposed legislation that would introduce a cap-and-trade program in Canada'smost-populous province in 2017. The province said it plans to reduce greenhousegas pollution to 15% below 1990 levels by 2020 and to 37% below 1990 levels by2030.

The planned legislation would also make Ontario's greenhousegas reduction targets legally binding and require five-year action plans tomeet the targets. Large industrial emitters would initially be giventransitional allowances that would be phased out over time.

Ontario expectsto raise about C$1.9 billion per year starting in 2017 by auctioning offemissions allowances with California and Quebec.

A linkage with the Western Climate Initiative, which ispresently comprised of California and the Canadian province of Quebec, isexpected in 2018, at which time Ontario would account for about 20% of thecombined market. In 2017, Ontario will conduct its own allowance auctions.

Once the programs are formally linked, allowance allocationswill remain at the discretion of the jurisdictions, the CARB officials saidApril 28.

At the April 28 workshop, officials from the CARB alsoaddressed the neighboring state of Washington and that state's Clean Air Rule.The Washington Department of Ecology saidApril 27 that it continues to make tweaks to the proposed Clean Air Rule.

The Washington Department of Ecology began writing the rulein September 2015 torequire the state's largest industries to reduce their greenhouse gases,targeting any source responsible for producing 100,000 metric tons or more ofcarbon dioxide equivalent. Sources that emit 10,000 metric tons of CO2e peryear have been required to provide annual emissions reports to the departmentsince 2012.

The Washington Department of Ecology released a draft ruleand economic analysis in December 2015, proposing that allowances and offsetcredits from external markets, such as California, could be used for complianceunder the Washington State Clean Air Rule.

During the April 28 workshop, the CARB staff said officialsare looking to add a structure under the rules of its cap-and-trade programthat would account for the use of California carbon allowance instruments forcompliance in other jurisdictions, like Washington state.

CARB looks topossibility of adding new offset protocol

Also, during the April 28 workshop, staff discussed thepossibility of including a new offset protocol: international, sector-basedoffset credits issued by subnational programs to reduce emissions from tropicaldeforestation and forest degradation. The program would provide Californiacompanies the opportunity to use carbon offsets from protecting tropicalforests for no more than 4% of a company's compliance obligation under thecap-and-trade program.

Under the California cap-and-trade system, up to 8% of anentity's emissions can be covered using offset credits from certified projectscertified by the CARB. Initially during the early years of the Californiacap-and-trade program, four offset project types were approved by the CARB:forestry, urban forestry, dairy digesters and destruction of ozone-depletingsubstances. The board later approved coal mine methane capture and ricecultivation practices.