For additional information, please visit the Cap-and-Trade Program section of the Air Resources Board (ARB) website.
Guidance on Early Action and Compliance Protocols
Glossary of ARB Terms
Taken from the Regulation for the CALIFORNIA CAP ON GREENHOUSE GAS EMISSIONS AND MARKET-BASED COMPLIANCE MECHANISMS
In the context of offset credits, GHG emission reductions or removals that exceed any GHG reduction or removal otherwise required by law, regulation or legally binding mandate and that exceed any GHG reductions or removals that would otherwise occur in a conservative business-as-usual scenario
Adverse Offset Verification Statement
An Offset Verification Statement rendered by a verification body attesting that the verification body cannot say with reasonable assurance that the submitted Offset Project Data Report is free of an offset material misstatement, or that it cannot attest that the Offset Project Data Report conforms to the requirements of this article or applicable Compliance Offset Protocol
A limited tradable authorization to emit up to one metric ton of carbon dioxide equivalent.
ARB Offset Credit
A tradable compliance instrument issued by ARB that represents a GHG reduction or GHG removal enhancement of one metric ton of CO2e. The GHG reduction or GHG removal enhancement must be real, additional, quantifiable, permanent, verifiable, and enforceable.
The process of selling California Greenhouse Gas Allowances by offering them up for bid, taking bids, and then distributing the allowances to winning bidders.
Auction Purchase Limit
The limit on the number of allowances one entity or a group of affiliated entities may purchase from the share of allowances sold at a quarterly auction.
Auction Reserve Price
A price for allowances below which bids at auction would not be accepted.
Auction Settlement Price
The price announced by the Auction Administrator at the conclusion of each quarterly auction. It is the price which all successful bidders will pay for their allowances and also the price to be paid to those entities which consigned allowances to the auction.
Authorized Project Designee
An entity authorized by an Offset Project Operator to act on behalf of the Offset Project Operator.
The holding of compliance instruments from one compliance period for the purpose of sale or surrender in a future compliance period.
Gas that is produced from the breakdown of organic material in the absence of oxygen. Biogas is produced in processes including anaerobic digestion, anaerobic decomposition, and thermochemical decomposition. These processes are applied to biodegradable biomass materials, such as manure, sewage, municipal solid waste, green waste, and waste from energy crops, to produce landfill gas, digester gas, and other forms of biogas.
The set of conditions reasonably expected to occur within the offset project boundary in the absence of the financial incentives provided by offset credits, taking into account all current laws and regulations, as well as current economic and technological trends.
The time period from January 1 through December 31.
California Greenhouse Gas Emissions Allowance or CA GHG Allowance
An allowance issued by ARB and equal to up to one metric ton of CO2 equivalent.
The total number of California GHG Allowances that the Executive Officer issues over a given period of time.
The requirements of this article.
Carbon Dioxide or CO2
The most common of the primary greenhouse gases, consisting on a molecular level of a single carbon atom and two oxygen atoms.
Carbon Dioxide Equivalent or CO2 equivalent or CO2e
The number of metric tons of CO2 emissions with the same global warming potential as one metric ton of another greenhouse gas. Global warming potential values shall be determined consistent with the definition of Carbon Dioxide Equivalent in MRR section 95102(a).
The quantity of carbon contained in an identified GHG reservoir.
An account created by the accounts administrator for a covered entity or opt-in covered entity with a compliance obligation, to which the entity transfers compliance instruments to meet its annual and triennial compliance obligations.
An allowance, ARB offset credit or sector-based offset credit. Each compliance instrument can be used to fulfill a compliance obligation equivalent to up to one metric ton of CO2e.
The quantity of verified reported emissions or assigned emissions for which an entity must submit compliance instruments to ARB.
Compliance Offset Protocol
An offset protocol adopted by the Board.
The three-year period for which the compliance obligation is calculated for covered entities except for the first compliance period. The compliance obligation for the first compliance period only considers emissions from data years of 2013 and 2014.
Conflict of Interest
For purposes of this article, a situation in which, because of financial or other activities or relationships with other persons or organizations, a person or body is unable or potentially unable to render an impartial Offset Verification Statement of a potential client’s Offset Project Data Report, or the person or body’s objectivity in performing offset verification services is or might be otherwise compromised.
In the context of offsets, utilizing project baseline assumptions, emission factors, and methodologies that are more likely than not to understate net GHG reductions or GHG removal enhancements for an offset project to address uncertainties affecting the calculation or measurement of GHG reductions or GHG removal enhancements.
An entity within California that has one or more of the processes or operations and has a compliance obligation as specified in subarticle 7 of this regulation; and that has emitted, produced, imported, manufactured, or delivered in 2008 or any subsequent year more than the applicable threshold level specified in section 95812 (a) of this rule.
The reduction of absolute GHG emissions below the business-as-usual scenario or reference level across a jurisdiction’s entire sector in a sector-based crediting program after the imposition of greenhouse gas emission reduction requirements or incentives.
The pre-determined period for which an offset project will remain eligible to be issued ARB offset credits or registry offset credits for verified GHG emission reductions or GHG removal enhancements.
The calendar year in which emissions occurred.
Direct human-induced conversion of forested land to non-forested land.
Direct GHG Emission Reduction
A GHG emission reduction from applicable GHG emission sources, GHG sinks, or GHG reservoirs that are under control of the Offset Project Operator or Authorized Project Designee.
Direct GHG Removal Enhancement
A GHG removal enhancement from applicable GHG emission sources, GHG sinks, or GHG reservoirs under control of the Offset Project Operator or Authorized Project Designee.
Early Action Offset Credit
A tradable credit issued by an Early Action Offset Program that represents a GHG reduction or GHG removal enhancement equivalent to one metric ton of CO2e and meets the requirements of section 95990(c).
Early Action Offset Program
A program that meets the requirements of section 95990(a) and is approved by ARB.
Early Action Offset Project
An offset project that is registered with an Early Action Offset Program and has been issued early action offset credits.
Early Action Verification Report
A verification report submitted to an Early Action Offset Program that covers GHG reductions or GHG removal enhancements achieved by an early action offset project over a specific time period.
The release of greenhouse gases into the atmosphere from sources and processes in a facility, including from the combustion of transportation fuels such as natural gas, petroleum products, and natural gas liquids. In the context of offsets, “emissions” means the release of greenhouse gases into the atmosphere from sources and processes within an offset project boundary.
The authority for ARB to hold a particular party liable and to take appropriate action if any of the provisions of this article are violated.
A person, firm, association, organization, partnership, business trust, corporation, limited liability company, company, or government agency.
Forest Buffer Account
A holding account for ARB offset credits issued to forest offset projects. It is used as a general insurance mechanism against unintentional reversals, for all forest offset projects listed under a Compliance Offset Protocol.
The owner of any interest in the real (as opposed to personal) property involved in a forest offset project, excluding government agency third party beneficiaries of conservation easements. Generally, a Forest Owner is the owner in fee of the real property involved in a forest offset project. In some cases, one entity may be the owner in fee while another entity may have an interest in the trees or the timber on the property, in which case all entities or individuals with interest in the real property are collectively considered the Forest Owners, however, a single Forest Owner must be identified as the Offset Project Operator.
Global Warming Potential or GWP
The ratio of the time-integrated radiative forcing from the instantaneous release of one kilogram of a trace substance relative to that of one kilogram of a reference gas, i.e., CO2.
Greenhouse Gas or GHG
Carbon dioxide (CO2), methane (CH4), nitrogen trifluoride (NF3), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and other fluorinated greenhouse gases as defined in this section.
Greenhouse Gas Emission Reduction or GHG Emission Reduction or Greenhouse Gas Reduction or GHG Reduction
A calculated decrease in GHG emissions relative to a project baseline over a specified period of time.
Greenhouse Gas Emissions Source or GHG Emissions Source
In the context of offset credits, any type of emitting activity that releases greenhouse gases into the atmosphere.
Greenhouse Gas Removal or GHG Removal
The calculated total mass of a GHG removed from the atmosphere over a specified period of time.
Greenhouse Gas Removal Enhancement or GHG Removal Enhancement
A calculated increase in GHG removals relative to a project baseline.
Greenhouse Gas Reservoir or GHG Reservoir
A physical unit or component of the biosphere, geosphere, or hydrosphere with the capability to store, accumulate, or release a GHG removed from the atmosphere by a GHG sink or a GHG captured from a GHG emission source.
Greenhouse Gas Sink or GHG Sink
A physical unit or process that removes a GHG from the atmosphere.
A chemical compound containing predominantly carbon and hydrogen.
Hydrofluorocarbon or HFC
A class of GHGs consisting of hydrogen, fluorine, and carbon.
The lightest of all gases, occurring chiefly in combination with oxygen in water; it exists also in acids, bases, alcohols, petroleum, and other hydrocarbons.
Initial Crediting Period
The crediting period that begins with the date that the first GHG emission reductions or GHG removal enhancements took place according to the first Positive Offset or Qualified Positive Offset Verification Statement that is received by ARB.
Any reversal caused by a forest owner’s negligence, gross negligence, or willful intent, including harvesting, development, and harm to the area within the offset project boundary.
Issue or Issuance
In the context of offset credits, the creation of ARB offset credits or registry offset credits equivalent to the number of verified GHG reductions or GHG removal enhancements for an offset project over a specified period of time. In the context of allowances, issue means the placement of an allowance into an account under the control of the Executive Officer.
For purposes of this article, a person that has met all of the requirements in section 95132(b)(2) of MRR and who may act as the lead verifier of an offset verification team providing offset verification services or as a lead verifier providing an independent review of offset verification services rendered.
Lead Verifier Independent Reviewer or Independent Reviewer
For purposes of this article, a lead verifier within a verification body who has not participated in conducting offset verification services for an Offset Project Developer or Authorized Project Designee for the current Offset Project Data Report and who provides an independent review of offset verification services rendered for an Offset Project Developer or Authorized Project Designee as required in section 95977.1(b)(3)(R).
Less Intensive Verification
For the purposes of this article, the offset verification services provided in interim years between full verifications of an Offset Project Data Report; less intensive verification of an Offset Project Data Report only requires data checks and document reviews of an Offset Project Data Report based on the analysis and risk assessment in the most current sampling plan developed as part of the most recent full offset verification services. This level of verification may only be used if the offset verifier can provide findings with a reasonable level of assurance.
The approval of compliance instruments from an external greenhouse gas emission trading system (GHG ETS) to meet compliance obligations under this article, and the reciprocal approval of compliance instruments issued by California to meet compliance obligation in an external GHG ETS.
Methane or CH4
A GHG consisting on the molecular level of a single carbon atom and four hydrogen atoms.
(160) “Metric Ton” or “MT” means a common international measurement for mass, equivalent to 2,204.6 pounds or 1.1 short tons.
In the context of offset projects, the ongoing collection and archiving of all relevant and required data for determining the project baseline, project emissions, and quantifying GHG reductions or GHG removal enhancements that are attributable to the offset project.
Offset Material Misstatement
A discrepancy, omission, misreporting, or aggregation of the three, identified in the course of offset verification services that leads an offset verification team to believe that an Offset Project Data Report contains errors resulting in an overstatement of the reported total GHG emission reductions or GHG removal enhancements greater than 5 percent. Discrepancies, omissions, or misreporting, or an aggregation of the three, that result in an understatement of total reported GHG emission reductions or GHG removal enhancements in the Offset Project Data Report is not an offset material misstatement.
All equipment, materials, items, or actions that are directly related to or have an impact upon GHG reductions, project emissions, or GHG removal enhancements within the offset project boundary.
Offset Project Boundary
Is defined by and includes all GHG emission sources, GHG sinks or GHG reservoirs that are affected by an offset project and under control of the Offset Project Operator or Authorized Project Designee. GHG emissions sources, GHG sinks or GHG reservoirs not under control of the Offset Project Operator or Authorized Project Designee are not included in the offset project boundary.
Offset Project Commencement
Unless otherwise specified in a Compliance Offset Protocol, the date of the beginning of construction, work, or installation for an offset project involving physical construction, other work at an offset project site, or installation of equipment or materials. For an offset project that involves the implementation of a management activity, “offset project commencement” means, unless otherwise specified in a Compliance Offset Protocol, the date on which such activity is first implemented.
Offset Project Data Report
The report prepared by an Offset Project Operator or Authorized Project Designee each year that provides the information and documentation required by this article or a Compliance Offset Protocol.
Offset Project Operator
The entity(ies) with legal authority to implement the offset project.
Offset Project Registry
An entity that meets the requirements of section 95986 and is approved by ARB that lists offset projects, collects Offset Project Data Reports, facilitates verification of Offset Project Data Reports, and issues registry offset credits for offset projects being implemented using a Compliance Offset Protocol.
A documented set of procedures and requirements to quantify ongoing GHG reductions or GHG removal enhancements achieved by an offset project and calculate the project baseline. Offset protocols specify relevant data collection and monitoring procedures, emission factors, and conservatively account for uncertainty and activity-shifting and market-shifting leakage risks associated with an offset project.
A systematic, independent, and documented process for evaluation of an Offset Project Operator’s or Authorized Project Designee’s Offset Project Data Report against ARB’s Compliance Offset Protocols and this article for calculating and reporting project baseline emissions, project emissions, GHG reductions, and GHG removal enhancements.
Offset Verification Services
Services provided during offset verification as specified in sections 95977.1 and 95977.2, including reviewing an Offset Project Operator’s or Authorized Project Designee’s Offset Project Data Report, verifying its accuracy according to the standards specified in this article and applicable Compliance Offset Protocol, assessing the Offset Project Operator’s or Authorized Project Designee’s compliance with this article and applicable Compliance Offset Protocol, and submitting an Offset Verification Statement to ARB or an Offset Project Registry.
Offset Verification Statement
The final statement rendered by a verification body attesting whether an Offset Project Operator’s or Authorized Project Designee’s Offset Project Data Report is free of an offset material misstatement, and whether the Offset Project Data Report conforms to the requirements of this article and applicable Compliance Offset Protocol.
Offset Verification Team
All of those working for a verification body, including all subcontractors, to provide offset verification services for an Offset Project Operator or Authorized Project Designee.
Ozone Depleting Substances or ODS
A compound that contributes to stratospheric ozone depletion.
Perfluorocarbons or PFCs
A class of greenhouse gases consisting on the molecular level of carbon and fluorine.
In the context of offset credits, either that GHG reductions and GHG removal enhancements are not reversible, or when GHG reductions and GHG removal enhancements may be reversible, that mechanisms are in place to replace any reversed GHG emission reductions and GHG removal enhancements to ensure that all credited reductions endure for at least 100 years.
Permanent Retirement Registry
The publicly available registry in which the Executive Officer will record the serial numbers of the retired compliance instruments.
Positive Offset Verification Statement
An Offset Verification Statement rendered by a verification body attesting that the verification body can say with reasonable assurance that the submitted Offset Project Data Report is free of an offset material misstatement and that the Offset Project Data Report conforms to the requirements of this article and applicable Compliance Offset Protocol.
In the context of a specific offset project, a conservative estimate of business-as-usual GHG emission reductions or GHG removal enhancements for the offset project’s GHG emission sources, GHG sinks, or GHG reservoirs within the offset project boundary.
Any GHG emissions associated with the implementation of an offset project that must be accounted for in the Offset Project Data Report.
Qualified Positive Offset Verification Statement
An Offset Verification Statement rendered by a verification body attesting that the verification body can say with reasonable assurance that the submitted Offset Project Data Report is free of an offset material misstatement, but the Offset Project Data Report may include one or more nonconformance(s) with the quantification, monitoring, or metering requirements of this article and applicable Compliance Offset Protocol which do not result in an offset material misstatement.
In the context of offset projects, the ability to accurately measure and calculate GHG reductions or GHG removal enhancements relative to a project baseline in a reliable and replicable manner for all GHG emission sources, GHG sinks, or GHG reservoirs included within the offset project boundary, while accounting for uncertainty and activity-shifting leakage and market-shifting leakage.
Quantitative Usage Limit
A limit on the percentage of an entity’s compliance obligation that may be met by surrendering offset credits, sector-based credits, or other compliance instruments designated to be subject to the limit under this article.
In the context of offset projects, that GHG reductions or GHG enhancements result from a demonstrable action or set of actions, and are quantified using appropriate, accurate, and conservative methodologies that account for all GHG emissions sources, GHG sinks, and GHG reservoirs within the offset project boundary and account for uncertainty and the potential for activity-shifting leakage and market-shifting leakage.
In the context of a compliance instrument, means the act of entering the serial number of a compliance instrument into an account.
Registrant or Registered Entity
An entity that has completed the process for registration.
Registry Offset Credit
A credit issued by an Offset Project Registry for a GHG reduction or GHG removal enhancement of one metric ton of CO2e. The GHG reduction or GHG removal enhancement must be real, additional, quantifiable, permanent, verifiable, and enforceable and may only be issued for offset projects using Compliance Offset Protocols. Pursuant to section 95981.1, ARB may determine that a registry offset credit may be removed and issued as an ARB offset credit.
All services provided by an ARB approved Offset Project Registry in section 95987.
In the context of offsets, the period of time for which an Offset Project Operator or Authorized Project Designee quantifies and reports GHG reductions or GHG removal enhancements covered in an Offset Project Data Report. The first reporting period for an offset project in an initial crediting period may consist of 6 to 24 consecutive months; all subsequent reporting periods in an initial crediting and all reporting periods in any renewed crediting period must consist of 12 consecutive months.
Retire or Retired or Retirement
The serial number for a compliance instrument is registered into the Retirement Account under the control of the Executive Officer. Compliance instruments registered into this account cannot be removed.
A GHG emission reduction or GHG removal enhancement for which an ARB offset credit or registry offset credit has been issued that is subsequently released or emitted back into the atmosphere due to any intentional or unintentional circumstance.
Sector-Based Offset Credit
A credit issued from a sector-based crediting program once the crediting baseline for a sector has been reached.
A unique number assigned to each compliance instrument for identification.
The removal and storage of carbon from the atmosphere in GHG sinks or GHG reservoirs through physical or biological processes.
Of a compliance instrument means the removal of the serial number of a compliance instrument from one account and placement into another account.
The communication by an authorized account representative or an alternate authorized account representative to the accounts administrator to register into the tracking system the transfer of allowances between accounts.
Any reversal, including wildfires or disease that is not the result of the forest owner’s negligence, gross negligence, or willful intent.
An Offset Project Data Report assertion is well documented and transparent such that it lends itself to an objective review by an accredited verification body.
A firm accredited by ARB, which is able to render an offset verification statement and provide offset verification services for Offset Project Operators or Authorized Project Designees subject to providing an Offset Project Data Report under this article.
An individual accredited by ARB to carry out offset verification services as specified in sections 95977.1 and 95977.2.
The budget year to which an individual Californian GHG allowance is assigned pursuant to subarticle 6.
Voluntarily Associated Entity
Any entity which does not meet the requirements of section 95811 or 95813 in this article and that intends to purchase, hold, sell, or voluntarily retire compliance instruments or an entity operating an offset project or early action offset project that is registered with ARB pursuant to subarticle 13 or 14 in this article.