(California) Air Resources Board Cap and Trade Regulation

Source: International Energy Agency
Last updated: 10 February 2023

California's Cap-and-Trade Regulation was issued in 2012 to reduce emissions of greenhouse gases in different sectors and enforce the Greenhouse Gas Cap-and Trade Program. Its main objective is to continually incentivise investment in efficient technologies and processes that reduce or limit emissions. It is enforced by the California Air Resources Board (CARB).

The Regulation establishes a limit for major sources of GHG emissions that declines each year; consequently, the Program applies an aggregate greenhouse gas allowance budget on covered entities. One allowance is equal to one metric ton of carbon dioxide equivalent emissions (Mt CO2-eq). Fewer allowances are created every year and the annual cap declines, reducing overall emissions in line with California's emissions targets.

The Regulation also provides the procedure of a trading mechanism for compliance instruments. 
The latest version was issued in 2018.

The Compliance Offset Program is also part of the Cap-and-Trade Program, through which CARB issues ARB Offset Credits to qualified projects that sequester greenhouse gases in accordance with Compliance Offset Protocols.

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