BOARD MEETING DATE: February 4, 2008
AGENDA NO. 3A

PROPOSAL:

Report on Implementation of Chairman’s 2008 Initiative Regarding the SoCal Climate Solutions Exchange

SYNOPSIS:

At the January 2008 Governing Board meeting, the Chairman introduced two initiatives for 2008. This Board letter outlines the major components, public process, and schedule for how staff will develop mechanisms for certification of voluntary greenhouse gas credits and set up a registration and exchange program. The goal of the SoCal Climate Solutions Exchange is to ensure valid, regionally created credits that enhance the local economy and capture needed co-benefits for Southern California.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

Approve Work Plan.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

At the January 4, 2008 Governing Board meeting, Chairman Burke highlighted several of the Board’s previous initiatives and the progress that has resulted from their implementation. Two new initiatives were introduced for 2008: the SoCal Climate Solutions Exchange, and an initiative to correct RECLAIM and ERC stockpiling by non-facility investors and resultant price increases. This Board letter addresses the first of these initiatives. A separate board letter discusses staff’s plans relative to the second initiative.

SoCal Climate Solutions Exchange

Dr. Burke described the current regulatory landscape as one that has evolved due to improved understanding of climate change and the likely effects on local air quality. A new era in air pollution regulation affords the opportunity for the SCAQMD to demonstrate leadership and partnership with the State of California by developing a voluntary greenhouse gas emission reduction credit program. Such a program would leverage air pollution reduction programs and keep co-benefits in Southern California. Staff would certify voluntary greenhouse gas emission reduction credits and ensure their validity.

The objectives for the SoCal Climate Solutions Exchange are to:

• Ensure real, surplus, and verifiable greenhouse gas emission reduction credits from voluntary early actions;
• Provide incentives for local investments, especially in environmental justice areas;
• Assist local businesses in capturing voluntary early greenhouse gas reduction opportunities; and
• Promote, and retain locally, the co-benefits of criteria and toxic air pollutants that can result from many greenhouse gas reduction projects.

The process and schedule for this initiative are described below.

Proposed Workplan

To address the need to ensure valid, certified credits, staff will work with CARB, stakeholders, and the Board’s newly created Climate Protection Committee to develop enabling rules for in-Basin credit generation, and administrative procedures to register credits and manage the exchange. Some of the key elements will include qualification requirements for participants; mechanisms for credit certification; a credit registration program; and mechanisms for tracking credits and managing the exchange. In addition, a greenhouse gas Air Quality Investment Fund, incentives, and fees will need to be developed.

Procedures would be developed for Board-approved quantification protocols. These could include existing protocols developed by other agencies (subject to staff review for robustness), new protocols developed as part of staff’s criteria pollutant rulemaking or other mechanisms, or validation of protocols submitted by project proponents. Staff will develop criteria for protocol approval to ensure that the credits are real, surplus, and verifiable, and that these projects do not have unacceptable tradeoffs for criteria or toxic pollutants, or adverse environmental justice impacts.

To support the program, it is envisioned that fees would be assessed for Exchange services, such as protocol review and approval, credit quantification and certification, and credit registration and exchange.

Public Process

Staff recommends that the Executive Officer establish a Technical Advisory Group to assist in the development of the SoCal Climate Solutions Exchange and the supporting protocols and requirements. In addition to CARB and other agencies, the advisory group would include business and community stakeholders, and representatives that can add perspective on market issues, such as academia and financial representatives.

Staff will report to the Board’s newly created Climate Change Committee at their quarterly meetings and seek their input on program development.

Schedule

Staff will begin working on this immediately, and will bring the enabling rules to the Board in September 2008. Relative to credit generation protocols, Board approval of existing protocols can begin in two to three months. Staff will also review rules scheduled for future adoption or amendment to identify opportunities for early greenhouse gas reductions and protocol development. Those can be brought to the Board concurrently with the rule public hearings. For project proponents that develop protocols for reductions that have not previously been approved, staff will review and bring those that meet the specified criteria for valid, surplus, local reductions to the Board for approval within six months after submittal. Staff’s efforts will be closely coordinated with CARB.

CEQA and Socioeconomic Impacts

CEQA and socioeconomic impacts will be assessed as part of the rule development process. It is expected that providing an opportunity for voluntary local credit generation will be positive for job creation and air pollution in the Basin.

AQMP and Legal Mandates

There are no specific AQMP or legal mandates for implementation of this Chairman’s initiative. However, early and surplus greenhouse gas reductions will result in significant co-benefits that will accelerate progress in the SCAQMD’s programs for criteria and toxic pollutant reductions. Such effort may also facilitate the permitting process for projects in Southern California as they relate to CEQA review.

Resource Impacts

Implementation of this initiative will require additional staff resources and funding. Staff estimates that it would need 1 FTE at the supervisor level and 1 FTE for an Air Quality Specialist. Computer programming for the SoCal Climate Solutions Exchange would be needed. A preliminary estimate for software development is $200,000. Staff recommends that the existing resources be temporarily redirected toward this effort until the Exchange can be self-sustained based on fees collected. Staff believes that developing mechanisms for certification of voluntary greenhouse gas credits and setting up a registration and exchange program would increase the accuracy and the validity of the credits. It would ensure that the credits are real and it would most likely have criteria pollutant co-benefits.

Attachment (DOC 25 KB)

A. Work Plan for SoCal Climate Solutions Exchange Program