Any regulation adopted by the state board pursuant to this part or Part 5 (commencing with Section 38570) shall ensure all of the following:

(1) The greenhouse gas emission reductions achieved are real, permanent, quantifiable, verifiable, and enforceable by the state board.

(2) For regulations pursuant to Part 5 (commencing with Section 38570), the reduction is in addition to any greenhouse gas emission reduction otherwise required by law or regulation, and

any other greenhouse gas emission reduction that otherwise would occur.

Health and Safety Code § 38562(d)

HSC section 38562(d)(2) requires that any reduction of greenhouse gas emissions used for

compliance purposes, such as compliance offsets,must also be in addition to any greenhouse gasemission reduction otherwise required by law orregulation, and any other greenhouse gas emissionreduction that otherwise would occur.

Final Statement of Reasons, pp. 2107-08, R5-2805 to 2806

Definition of “Additional”

“In the context of offset credits, greenhouse gas emission reductions or removals that exceed any greenhouse gas reduction or removals otherwise required by law, regulation or legally binding mandate, and that exceed any greenhouse gas reductions or removals that would otherwise occur in a conservative business-as-usual scenario.”

Cal. Code Regs., tit. 17, § 95802(a)(3)

Definition of “Business-as-Usual Scenario”

“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.”

Cal. Code Regs., tit. 17, § 95802(a)(36)

Definition of “Conservative”

“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.”

Cal. Code Regs., tit. 17, § 95802(a)(60)

Definition of “Project Baseline”

“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.”

Cal. Code Regs., tit. 17, § 95802(a)(217)

Definition of “Offset Project Boundary”

“An ‘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.”

Cal. Code Regs., tit. 17, § 95802(a)(176)

Definition of “Offset Project”

“Offset project means 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.”

Cal. Code Regs., tit. 17, § 95802(a)(175)

Lowest Quality Offsets Fill a Cap First

“[N]umerical limits, because they will tend to favor those projects with the lowest costs, can even make things worse because non-additional projects will by definition have extremely low costs since they would have happened even in the absence of the program.” R24-23-20.

“Offset caps as envisioned in the Lieberman-Warner draft legislation, for example, do little to fix the underlyingproblem of poor quality emission offsets because the cap will simply fill first with the lowest quality offsets . . . .”R24-23-5

Wara & Victor, “A Realistic Policy on International Carbon Offsets” (April 18, 2008)