The California Air Resources Board (ARB) today issued a preliminary determination to invalidate 231,154 of the more than 4 million compliance offset credits generated through the destruction of ozone depleting substances (ODS) at an incineration facility operated by Clean Harbors.
The preliminary determination is now subject to a 10-day public comment period. At the conclusion of the comment period, ARB has 30 days to make a final determination as to whether to invalidate the offsets in question.
In June, ARB announced an investigation into ODS compliance offsets generated at the Clean Harbors incineration facility in Arkansas. The facility was found to not be in compliance with regulations under the federal Resource Conservation and Recovery Act (RCRA). ARB opened the investigation to determine whether to invalidate all or a portion of the issued compliance offset credits from the facility because of the RCRA violations. The investigation pertained to approximately 4.3 million compliance offset credits, more than a third of the roughly 12 million compliance offset credits issued so far by ARB.
During the investigation, California Carbon Offset prices remained largely range bound and trading volume dropped considerably. With today’s announcement providing a measure of certainty to the California offset market, we believe conditions are present to enable an increase in offset trading liquidity in the fourth quarter and into next year.
We will continue to monitor the regulatory process and provide updates. If you have any questions regarding this issue or carbon offsets in general, please reach out to our US Carbon Markets team at: +1 415.963.9137 or +1 914.323.0265.