The California Carbon Market

In 2006, the State of California enacted the “California Global Warming Solutions Act”, which requires a significant reduction in California’s greenhouse gas emissions by 2020. This law enabled the creation of a cap and trade market to help reduce greenhouse gas emissions, which became fully operational in January 2013. The California cap and trade market is the largest carbon market in North America and the second largest in the world by value. Total demand for offsets in the California market is expected to exceed 150 million offset credits through 2020. Supply of offsets is currently inadequate to meet demand.

In the California cap and trade system, businesses in California that emit more than 25,000 tons of greenhouse gas emissions each year must by law submit a permit or an offset for every metric ton of greenhouse gas pollution they emit. Permits are issued and auctioned by the State of California in limited and declining supply, creating a “cap” on emissions. Businesses regulated by the system may cover up to 8% of their emissions with offsets. Offsets are issued in accordance with regulations adopted by the State of California and may currently be sourced from projects located anywhere in the United States.

For more information about the California carbon market, please review the materials available for download below.

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What are forest carbon offset projects?

Following a protocol adopted by the State of California, forest landowners in the United States can take voluntary, legally binding actions to increase carbon sequestration on their properties and earn offset credits for sale in the California cap and trade system. There are three types of offset projects under the California forest carbon offset protocol: reforestation, improved forest management, and avoiding conversion of timberland to non-forest use. Only avoided conversion projects require a conservation easement. No project type requires a landowner to cease timber harvesting completely. Forest carbon offset projects create an ongoing cash value for leaving timber on the stump, opening a new commodity market to landowners. With an offset project, timberland owners can manage forests for both log sales and carbon offset sales.

Forest Carbon Partners offers free, no-obligation project evaluations and offset credit yield estimates for landowners with more than 1,000 acres of land. For more information, please visit our Landowner services page and contact us.