In a decision handed down late Friday, January 25th, the Superior Court of California denied a petition by the Citizen’s Climate Lobby challenging the offsets component of the cap-and-trade program run by California’s Air Resources Board (ARB).

The Citizen’s Climate Lobby had argued that the ARB’s use of standardized methodologies to generate carbon offset credits was prohibited by the California State Legislature when they crafted the State’s landmark climate change legislation, AB 32. ARB currently accepts offset credits generated by four distinct sets of activities, including forestry, urban forestry, destruction of livestock methane, and destruction of ozone depleting substances.

In its decision, the Court found that the four protocols were not arbitrary, and therefore complied with the AB 32 statute. The Court also found that the use of standardized mechanisms for carbon offset creation was supported by evidence contained in ARB’s administrative record.

The decision effectively leaves in place ARB’s offset program, which is an important cost-containment mechanism for the overall cap-and-trade program. It also lifts a measure of legal uncertainty that contributed to constrained trading of offsets eligible under the ARB program.

For more information on the ruling and its impact on the California carbon offsets market, please contact our US Carbon Team at: +1 415.963.9137 or +1 914.323.0265.