On Friday, April 25, 2014, the California Air Resources Board (CARB) approved amendments to California’s climate change greenhouse gas reduction carbon credit cap-and-trade program. CARB also voted to adopt a new carbon offset protocol that would generate compliance-grade carbon offsets for the capture of methane from coal mines. These amendments to the cap-and-trade regulation will be effective July 1, 2014. Among other things, the amendments will provide additional market oversight and extend transition assistance for the industrial sector through the second compliance period (2015-2017) as regulated entities take steps to reduce their emissions.
Cap-and-trade is a market-based incentive program which is part of the suite of programs created under the Global Warming Solutions Act of 2006 (otherwise known as AB 32) which are designed to reduce greenhouse gas emissions by at least 20 percent by 2020. Compliance with the first phase of California’s cap-and-trade program (which addresses industrial sources) began on January 1, 2013. The second phase begins on January 1, 2015 and will involve natural gas and transportation fuels.
In addition, the Mine Methane Capture (MMC) offset protocol provides a new opportunity for achieving compliance-grade greenhouse gas emissions reductions from sectors which are not under the cap. Methane now leaking from active and abandoned coal mines around the country represents the equivalent of 70 million metric tons of the greenhouse gas carbon dioxide. This carbon offset protocol addresses the two primary sources of methane from active mining: methane released through ventilation shafts, and methane released from drainage systems. Emission reductions will be achieved through methane capture and use or destruction of methane from these sources. The reduction of methane is critical to the success of the California climate change program because it can warm the atmosphere almost 25 times as much as carbon dioxide.
The MMC protocol is now added to the Forestry, Urban Forestry, Livestock and Ozone Depleting Substance protocols as sources of potential offsets under California’s cap-and-trade program. Regulated entities may meet up to 8% of their greenhouse gas reduction commitments through these carbon offsets in unregulated sectors such as agriculture, forestry and coal mines.
The MMC protocol provides methods for quantifying reductions in methane emissions from coal mines. There are two key sources of methane from active mining: ventilation air methane (VAM) and methane released from drainage systems. VAM is dilute methane that is vented through mine ventilation shafts. Drainage, or degasification, systems serve to remove and collect methane through vertical and horizontal wells before, during, and after mining. Emission reductions will be achieved through methane capture and use or destruction. All reductions must be fully documented and accurately quantified. The protocol uses both metering and modeling to quantify capture of eligible methane. Projects would be allowed throughout the United States. ARB can consider three project types: (1) active underground mines, (2) abandoned underground mines, and (3) active surface mines. The potential protocol will provide methods to quantify and report greenhouse gas (GHG) emission reductions associated with the installation or operation of a device or set of devices associated with the capture and destruction of methane gas that would otherwise be vented into the atmosphere as a result of mining activities.
Any Offset Project Operator or Authorized Project Designee will be required to use this protocol to quantify and report GHG emission reductions. The protocol provides eligibility rules, methods to quantify GHG emission reductions, offset project monitoring instructions, and procedures for preparing Offset Project Data Reports. All offset projects would be required to submit to independent verification by CARB-accredited verification bodies. The general regulatory requirements for verification of Offset Project Data Reports are addressed in the cap-and-trade Regulation. This protocol is intended to ensure the complete, consistent, transparent, accurate, and conservative quantification of GHG emission reductions associated with MMC projects. The protocol is comprised of both quantification methodologies and regulatory program requirements to develop an MMC project for generating CARB offset credits.
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For further information about this announcement, please call partner Keith Casto. His contact information is:
Direct telephone: 415/765-6272