ARB’s Cap-and-Trade regulation allows each covered entities under this program to use offset compliance instrument generated from an Offset Project in order to fulfill up to 8% for their compliance obligation. Currently, the Board approves the offset instruments that are generated from the offset projects pursuant to the following four protocols:

  • Compliance Offset Protocol Ozone Depleting Substances Projects, October 20, 2011;
  • Compliance Offset Protocol Livestock Projects, October 20, 2011;
  • Compliance Offset Protocol U.S. Forest Projects, October 20, 2011; and
  • Compliance Offset Protocol Urban Forest Projects, October 20, 2011.

Each of these protocols explains the required methodologies that need to be followed in order to quantify the greenhouse gas reduction credits associated to each type of project. ARB has issued about 7.6 million offset credits from the first three project types above (i.e. no credit has been issued for Urban Forest Projects as of now). Comparison of these offset credits brokerage prices with ARB’s most recent greenhouse gas allowances auction results concludes that these offset credits are roughly 15 to 20 percent cheaper than ARB’s allowances recently auctioned (February 19, 2014).

As part of the proposed recent amendments to the Cap-and-Trade regulations, ARB has proposed adopting new compliance offset projects for Mine Methane Capture (MMC) projects. These proposed offset projects will result in reductions in methane emissions from the following key sources of methane emissions in an active mine:

  • Ventilation air methane (dilute methane that is vented through mine ventilation shafts)
  • Drainage systems (serve to remove and collect methane through vertical and horizontal wells before, during, and after mining)

The proposed amendments to the regulation including the new compliance offset protocol for Mine Methane Capture (MMC) projects are scheduled to be considered for final adoption during ARB’s final Board hearing on April 25, 2014.

The proposed protocol for Mine Methane Capture Offset Projects can be found here.