Cross-Border, Nature Based Market Solutions to Protect Blue Carbon Coastal Ecosystems in the Californias

March 2022

enhancement, restoration or in some cases preservation of the mitigation site in Mexico; and (5) the mitigation project in Mexico can be protected, managed and financed for the indefinite future to the satisfaction of state and federal authorities in California. Here, it would be appropriate to establish a test case for the protection of those Baja California peninsula coastal habitats of importance to Pacific Flyway migratory bird species as many of those species are protected under California law, appropriate habitats for these species in California are rapidly being lost to development, and many of these sites are already receiving support from the U.S. Fish & Wildlife Service under its grants program pursuant to the North American Wetlands Conservation Act. 54 Funding from mitigation banks and other in-leu fee programs in California could serve to complement existing NAWCA funding.

was introduced as a key element of the state’s strategy to abate greenhouse gas emissions to 1990 levels by 2020 55 . Administered by the California Air Resources Board (CARB), the CCTP sets a statewide limit on sources responsible for 85% of California’s greenhouse gas emissions, and is intended to establish a price signal to incentivize long-term investment in cleaner fuels and more efficient uses of energy. 56 Over 450 entities—including oil refineries, power plants and manufacturers operating in the state—are covered by this program (“covered entities”). The goal of the CCTP is to reduce GHG emissions by requiring covered entities to acquire a “compliance certificate” for each metric ton of carbon dioxide equivalent (tC0 2 e) that they emit. Compliance certificates consist of the following: • Allowances or offsets issued by the CARB; • Allowances or offsets issued by a GHG emissions trading system administered by a jurisdiction outside of California (an “External GHG ETS”) to which California has linked the CCTP (a “Linked System”); or • A “Sector-Based Offset Credit” from a “Sector Based Crediting Program” established with respect to an entire economic sector—such as tropical forests—by a country, region, or subnational jurisdiction in a developing country. Within this framework, allowances issued by CARB are the primary driver of the California Cap and Trade System. The number of allowances made available by law each year sets a cap of GHG emissions, which is reduced each year. The combination of a declining annual cap and increasing minimum prices for auctioned

CALIFORNIA CAP AND TRADE SYSTEM

Evening view of a large oil refinery/chemical plant and resulting airborne emissions located on the Carquinez

Strait in the San Francisco Bay Area. Credit: halbergman, Getty Images.

54 https://www.fws.gov/birds/grants/north american-wetland-conservation-act.php 55 https://ww2.arb.ca.gov/resources/fact-sheets/ab 32-global-warming-solutions-act-2006 Established pursuant to Global Warming Solution Act of 2006 otherwise known as Assembly Bill 32, the California’s Cap and Trade Program (CCTP)

56 https://ww2.arb.ca.gov/sites/default/files/cap and-trade/guidance/cap_trade_overview.pdf

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