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California Carbon Credits Will Soon Be Good In Quebec

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A deal's been in the works for some time, but the California Air Resources Board (CARB) made it official Friday: greenhouse gas emission allowances acquired as part of California's cap and trade auction program can soon be traded along with those issued under a similar program in the Canadian province of Quebec.

As of January 1, 2014, the carbon emissions markets in California and Quebec will essentially merge; though each government will retain control over its program, the two will share a compliance protocol, and online auction platform, and administrative management by contractor WCI, Inc. Emissions credits purchased in California will be able to be used to offset greenhouse gas emissions in Quebec, and vice versa.

"The Board's action today broadens the environmental impact of California's cap-and-trade program and helps fight climate change by reducing greenhouse gases," said CARB Chair Mary D. Nichols in a press release. "California retains absolute control over its own program, and the larger carbon market overall provides additional options for California businesses."

According to CARB, the basic criterion the state faced in deciding whether to approve the merger of the two emissions markets was whether Quebec's program matched California's for stringency. California's cap and trade program, enacted with the California Global Warming Solutions Act (AB 32) in 2006, requires industrial emitters of large amounts of carbon dioxide and other greenhouse gases acquire allowances for each ton of greenhouse gases they emit. (That's a "ton" of carbon dioxide, or the amount of greenhouse gases equivalent to a ton of CO2 in warming potential. For methane, that'd be 87 pounds; for the hydrofluorocarbon coolants in your auto AC it's as little as one and a half pounds.)

As California's cap and trade program evolves over the next few years the number of emissions allowances available to companies will drop, and more firms will fall under the requirements to buy them. As a result, the effective price of emitting greenhouse gases will go up. This creates an incentive for firms to reduce their emissions, not only to avoid having to buy allowances but to allow trading the allowances a firm doesn't use. Combining the allowance markets in California and Quebec will, in theory, increase the number of potential buyers for unused allowances.

Though California's law has come under fire from fossil fuel trade groups and businesses, it's overwhelmingly popular among voters, who backed the law by a nearly 2-1 margin in 2010 by voting down Proposition 23, which would have postponed the Golbal Warming Solutions Act's taking effect until unemployment in the state dropped below 5.5 percent for an entire year.

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