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

March 2022

has now been incorporated into California law as a basis for approval of Sector-Based Crediting Programs and Sector-Based Offset Credits, but no approval has yet been forthcoming. Within the context of the CCTP regulatory structure described above, the CCTP could be a funding source for the protection of blue carbon coastal ecosystems in the Baja California Peninsula under two alternative strategies: In 2020, Mexico began its pilot program for a Cap and Trade System ( Sistema de Comercio de Emisiones , or “SCE”), as discussed further below. If the SCE becomes fully operational and has appropriate protocols for issuance of offsets based on protection of blue carbon resources, it could, at least in principle, be linked with the CCTP and become a “Linked System” with authority to issue blue carbon offsets, such as Quebec’s. 60 Once SCE is so linked, an offset project operator could establish one or more “offset projects” with respect to blue carbon coastal ecosystems in the Baja Peninsula which could provide the basis for SCE to issue offsets to the project operator based on protection of those ecosystems. 61 A. Mexico to Establish a Linked System to the CCTP. As an alternative, the Mexican states of Baja California and Baja California Sur, acting jointly pursuant to appropriate authorization under Mexican law, or the Mexican federal government acting on behalf of the two states, could establish 60 https://www.environnement.gouv.qc.ca/changemen tsclimatiques/marche-carbone_en.asp 61 Here, it is relevant to mention that in December 2021, Mexico’s current administration disappeared the National Ecology and Climate Change Institute (INECC), which would have been the natural governmental partner to explore these opportunities. INECC managed the country’s B. Establishment of a Sector-Based Crediting Program in Mexico.

a Sector-Based Crediting Program for the entire Baja California peninsula, subject to approval by the CARB through a regulatory procedure. The applicable economic sector would be tropical forests—to include mangroves—or perhaps all blue carbon assets if a new California standard could be established that is broader than the existing California Tropical Forest Standard. Then, if the Sector-Based Crediting Program could reduce GHG emissions in the tropical forest against a baseline, then that Program could issue Sector-Based Offset Credits at the jurisdiction level, for the benefit of the entire sector (but not to any specific project operator).

That said, there are a number of challenges to both of these strategies that would have to be overcome. On the one hand, environmental justice advocates in the State of California have been critical of the CTTP, arguing that cross-border offsets (such as those currently permitted through the linkage with Quebec) are exporting financial resources that could otherwise be invested in protecting vulnerable Californians in the shadow of fossil fuel polluters. 62 Environmental and conservation organizations, National Emissions Registry. According to the government, SEMARNAT will acquire INECC’s capacities and functions. policy making. 62 https://www.kqed.org/science/1972789/california says-it-will-review-cap-and-trade-amid-growing criticism Balandra, municipio La Paz, B.C.S.Balandra is one of the most important and popular mangrove forests in Baja California Sur. Photo: Octavio Aburto

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