Los Angeles Greenhouse Gas Credit Exchange Developing

By Published On: February 8, 2008

The South Coast Air Quality Management District February 1 agreed to put together a voluntary “climate solutions exchange” program. The district said its plan for the greater Los Angeles area would help cut greenhouse gas emissions in a way that stimulates local investment and reduces smog and toxic air pollution–particularly in environmental justice communities. “Our efforts will complement those of the state Air Resources Board to implement AB 32,” said SCAQMD chair William Burke. AB 32 is the state’s landmark climate protection law. The district’s parent agency, the California Air Resources Board, is on its way to implement plans to reduce greenhouse gas emissions to comply with AB 32. SCAQMD’s climate exchange program is to include greenhouse gas emissions quantification requirements for participating organizations. It also is to include a process for certifying and registering emission reductions credits, and processes for tracking and exchanging credits, according to Barry Wallerstein, SCAQMD executive officer. Companies would be able to earn emission reduction credits under the program by investing in an “air quality investment fund” that would finance projects that cut greenhouse gases, he explained. Establishing the exchange is intended to allow Los Angeles area companies to capture credit for early voluntary steps to cut greenhouse gas emissions, he added. SCAQMD plans to develop regulations and fees to put the program in place by September 2008, under the auspices of a technical advisory committee to be appointed in the weeks ahead. In other action, SCAQMD’s board approved a review of its emissions credit trading program for smog-forming pollutants. The agency said it would form a working group to study the market for the credits, which have been in short supply and when available have risen dramatically in price in the past couple of years. New power plants and industrial facilities must buy credits to offset their emissions. They can buy those credits from sources that have curbed their own pollution and freed up air quality so the new plants are able to run with their own pollution additions. In the last year, that credit market has been so tight that it has held up new power plant projects in the large, smoggy metro region. An earlier effort by SCAQMD to alleviate the tight credit market is mired in litigation. Meanwhile, recent data show that the credit market has become increasingly dominated by speculators. The board also approved a $447,000 contract with Global Energy Decisions to analyze the potential energy and capacity needs in the Southland and identify desirable locations to locate power generating facilities based on environmental and other concerns. Environmental justice advocates have fought licensing of plants in the area on grounds they would add pollution in areas already overburdened with unhealthy air.

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