California emitters may use offsets from REDD projects in countries like Brazil and Mexico to comply with the state’s cap-and-trade scheme from 2018 if a new proposal from the Air Resources Board (ARB) is approved.

The Board on Tuesday released a White Paper in which it recommended the state allow for limited use of carbon credits from projects seeking to rein in deforestation from the beginning of the scheme’s third trading period.

“The inclusion of REDD sector-based offset credits within the already existing quantitative usage limit for offset credits within California’s Cap-and-Trade Program would contribute to cost-containment benefits under the program, demonstrate California’s climate leadership, and yield benefits to biodiversity, forest dependent community livelihoods, and other areas integral to low emissions rural development in tropical jurisdictions,” the White Paper said.

Emitters covered by the state carbon market would be able to use REDD offsets to cover up to 4% of their annual CO2 emissions.

If lawmakers approve the proposal, the California scheme would be the world’s first mandatory carbon market to allow REDD offsets.

The recommendation was given on the condition that a framework is developed to ensure the credibility of the offsets, including setting reference levels for emissions, putting social safeguards in place, designing crediting pathways and ensuring effective government oversight and enforcement.

BRAZIL FIRST?

California signed MOUs with Acre in Brazil and Mexico’s Chiapas in 2010 with a view to develop a framework for REDD, and the Brazilian state could become the first eligible region to sell carbon credits to California scheme participants.

“ARB staff believes that Acre’s sector-based REDD offset program is already technically capable of being considered for formal inclusion in the Cap-and-Trade Program at the beginning of the third compliance period, even while additional engagement is necessary to, among other things, ensure a clear understanding of how Acre’s program may fit within any applicable Brazilian national structures,” the paper said.

In its INDC, submitted to the UN last month, Brazil pledged to end all illegal deforestation by 2030, and to restore 12 million hectares of forested land – an area the size of England – along with 15 million hectares of degraded pastures.

The specifics of how Brazil intends to meet that target might impact Acre’s ability to generate REDD offsets that would be considered additional to business-as-usual practices.

ARB said consultation with the public, other jurisdictions and the federal government would be carried out before the proposal might be submitted to go through the state’s regular lawmaking process.

The White Paper will be out for public comment until Nov. 16.

By Stian Reklev – stian@carbon-pulse.com

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