In 2022, we launched a tool that makes it easier to see how companies participating in California’s cap-and-trade program use carbon offsets. The California Air Resources Board (CARB) just released its annual data update, which we’ve now added to the tool.
California’s cap-and-trade program sets a price on carbon by requiring regulated companies to purchase and surrender compliance instruments (i.e., state-issued allowances or carbon offsets) equal to their emissions each compliance period. In theory, offsets allow companies to meet part of their obligations by funding projects that reduce or remove emissions elsewhere. However, research from our own team and others has raised concerns about the quality of these offsets. California lawmakers recently reauthorized the cap-and-trade program through 2030, ensuring that offsets will continue to play a role in California’s climate strategy. In fact, offsets promise to become even more consequential for program outcomes. Starting next year, polluters can use offsets to satisfy six percent of their compliance obligations, up from the program’s previous four percent cap. The increased prominence of offsets needs to be matched by increased scrutiny around which offsets are being used and their quality. We hope this tool can help.
With the Compliance Users tool, you can search for a specific offset project, a company, or an emitting facility and explore the connected data. The new data added to the tool reflects the cap-and-trade program’s most recent compliance period (2024). Keep in mind that during an annual compliance period, regulated companies are only required to meet 30 percent of their obligation. The remainder will come due at the end of the full compliance period (2024-2026), and will be reported publicly in 2027. In other words, this data captures only a partial view of how regulated companies will use offsets to compensate for their 2024 emissions. We'll update the tool next year when more data becomes available.
For more context on this tool and the data it surfaces, check out our original blog post or explore our GitHub repository.