California Air Resources Board

SACRAMENTO – The California Air Resources Board (ARB) today created a uniform framework to standardize air emissions credit trading that would allow businesses to buy, sell, bank or trade emissions credits within the state's 35 air pollution control districts.

        "This environmentally protective system sets down minimum requirements but allows each local district a great deal of latitude about what to put into its own rules," said ARB Chairman John Dunlap. Dunlap said emissions credit trading systems will allow creation of new businesses and the expansion of existing business while still protecting a district's air quality.

        The new state regulation, mandated by legislation (AB 1777) which was adopted in 1995, creates a uniform standard for generating emission credits and provides a general framework for trading those credits within a district. The regulation also identifies general requirements and criteria the local air districts must meet in certifying, calculating, banking and using emission credits.

        The ARB regulation also assures that emission credits represent real reductions in air pollutants, that the reductions are beyond any reductions already required and that the reductions are not "doubled counted" or credited more than once. The credits could be used by the generator, traded for use by another source, or retained and "banked" for future use. There are many ways emission credits could be used. Possible examples include: An existing business installs pollution control equipment that cuts its air emissions below required levels. That business receives emission credits which it can sell to another business that is emitting air pollutants above its required level.

        In another scenario, a local industrial source that must cut air emissions could forego new pollution control equipment by purchasing air pollution credits from another industry that has already cut its emissions below required levels.

         Or, a business that would go over its air pollution limit because of a proposed expansion could pay another industry to reduce its air pollutants so the expansion could be completed.

        The key principle established by the regulation is that of equivalency -- the use of interchangeable credits must not result in greater emissions on an annual basis than would otherwise have occurred.