Jerry Brown moves offset market forward
While California seems to be in the lead among states that have firm limits on carbon dioxide, no regulation is scheduled go into effect before 2012.
That changed today, when Attorney General Jerry Brown announced an agreement with ConocoPhillips to let them proceed with a expansion of their refinery, if they offset the 500,000 metric tons of CO2 its anticipated to add to California’s carbon footprint each year.
SF Chronicle’s Jane Kay has the full scoop. The highlight, and interesting element for TerraPass readers, is a creation of a $7 million fund, administered by the Bay Area Air Quality Management District (BAAQM) to achieve those reductions. There’s another $2.8M for mature forestry expansion, but we’re not sure yet if that’s carbon related or not.
This is the first offset deal of its kind between regulators and the oil and gas industry and may pave the way for further deals both in the state and across the nation. It also paves the way for the state to get some operational experience with offset rules, which haven’t yet been written for California’s AB32 regulation. Many of us in the policy community will be focusing on what those rules look like and how much BAAQM leverages the good work already underway at the California Climate Action Registry.
Finally, for those of you pulling spreadsheets out to do the calculations, I’ll save you some time. Assuming the obligation is just for four years (2008-2012) then $7M for 1.5 million metric tons (the plant is online in 2009) works out to be about $4.67 per metric ton. Based on what we are seeing in the marketplace this is a very aggressive cost target, especially if the projects are all to be conducted in the Bay Area.
Nevertheless, if anyone can get it done, it’s policy makers in California.
Photo available under Creative Commons license from Flickr user Sheffieldstar.