Carbon Trading Timeline

I've been hearing a lot of questions lately about what I expect the timeline for carbon trading to be in the United States. So, very quickly here is what it looks like.

June 30 2007: California Climate Registry must publish discrete early action greenhouse gas emission reduction measures that can be implemented prior to January 1, 2012.

3rd Quarter 2007: I believe APX will be hired by California Climate Registry to administer trading program

January 1 2008: By this date California must pass legislation to require monitoring and reporting of GHG emissions by "beginning with the sources or categories of sources that contribute the most to statewide emissions."- AB 32

2nd Quarter 2008: Agreements will be made between NEPOOL, PJM, and ERCOT to make RECs fungible with the developing carbon market based on local emission factors of RECs

January 1 2009: Regional Greenhouse Gas Initiative begins
January 1 2009- January 1 2010: Midwest Greenhouse Gas Initiative likely to begin

January 1 2011: California Climate Registry deadline for early action
January 1 2012: California Climate Registry allocates allowances and trading begins

I expect that California will continue to explore joining Kyoto and will indeed move up its allowance trading by at least 1 year. I expect the United States to ratify Kyoto in the year 2009 and will join for Phase III trading in 2013.

Conversations with Corporate Decision Makers #4 Voluntary Programs

So, you've defined your carbon footprint and purhcased green power; what next? This conversation will discuss a few different options for reporting your entity's actions.

Him/Her: Hey, thanks for sitting down with us today.
Me: My pleasure.

Him/Her: We've defined our carbon footprint for our 25 US facilities and have made 20% of our energy consumption green by purchasing RECs. You've also helped us qualify for the EPA Green Power Partnership; so what's next.
Me: The next step is reporting your emissions. You have a few choices:

1. US DOE Voluntary Reporting Program 1605(b)
2. California Climate Registry
3. EPA Climate Leaders
4. WWF Climate Savers

Him/Her: Ok, could you quickly discuss each one?
Me: Sure.

1. US DOE 1605(b) - This program is probably the most underutilized of the four choices. It gives industrial companies a means for differentiating themselves, as it actually rates your overall carbon emissions measurement and quantification methodologies. The more direct your company is (by using CEMS - Continuous Emissions Monitoring Systems) the more robust your results will be. In my opinion this options is more attractive for industrial polluters who may have invested more capital in their monitoring technology and want to receive credit for their efforts.

2. California Climate Registry - This program is the most appropriate for large office based organizations and entities with offices located in California. It is important to understand that you need not have any facilities in the state of California to register your emissions. It is also important to understand that California will likely merge with RGGI (and possibly preempt the federal government and join Kyoto). This means that early voluntary actions now will likely have a real financial benefit once allowances are doled out beginning Jan. 1 2012. Also, California Climate Registry requires 3rd party verification - which is integral to the process of carbon trading.

3. EPA Climate Leaders - This program is very similar to the California Climate Registry, but will not result in trading benefits. This has been the standard for US corporations for the last few years, but CCR is likely to replace it.

4. WWF Climate Savers - This program focuses more on helping its participants become more active in reducing emissions, but the formal reporting program will not likely be as robust as the CCR. The first six participants in the WWF Climate Savers were International Business Machines (IBM), Johnson & Johnson, Polaroid Corporation, Nike, Lafarge, The Collins Companies, and Sagawa Express.

Him/Her: Which program would you suggest for us?
Me: Well, since over 90% of businesses carbon emissions are from office/facility occupation and not direct combustion or industrial process emission - I would suggest California Climate Registry. The program is robust, user friendly, and will likely become a part of the national reporting system in the US.

Him/Her: Ok, thank you. Next time could we talk about the steps and time horizons involved with reporting emissions to California Climate Registry.
Me: Absolutely.