US: ARB expects to remove carbon offset backlog by fall

The Air Resources Board (ARB) expects to have the backlog of early-action offset projects cleared by this fall after adding additional resources to the offset review process, an ARB official has confirmed to ICIS.

The ARB, the cap-and-trade regulator, has more than 12m early-action offsets awaiting approval, according to public data. At least some of those credits will not be converted into ARB carbon offsets because they will be used in the voluntary market, which would exclude the credits from the programme.

ARB-issued credits can be used to cover up to 8% of a company’s compliance obligation.

During its board meeting, ARB officials hinted to additional resources being allocated to the early-action offset review process. Officials also said early-action forestry offset owners would be contacted about their project’s status this fall, but an ARB official said the status-update would not include projects from other protocols.

An ARB official said one employee has been hired and another reassigned to help alleviate the backlog of early-action offset credits. Those additional resources are expected to help the regulator issue more credits by this fall.

Developers are sceptical about whether the ARB can work through the logjam by the fall. Multiple offset developers have previously expressed frustration about the length of time it takes the ARB to issue early-action offset credits, and developers reiterated those concerns after the ARB’s comments.

An offset market participant said the ARB should create a parity between the two offset timelines to ensure early-action projects are issued credits during the same time period as compliance projects.

The compliance protocols, which use a slightly different process, require the ARB to issue credits 45 days after all the information is complete. Early-action projects do not have a mandated approval timeline. According to offset registry data, early-action offset credits have taken an average of nearly two years to get approval from the ARB.

In general, offset developers are concerned about the rate the ARB issues offset credits. So far, the ARB has issued 21.2m credits, but some offset developers are doubting whether the ARB can issue a combined 26m by the first compliance deadline, this November.

The 26m offsets would meet the maximum demand for offsets for that compliance period. Market participants, however, expect some compliance entities to use less than their maximum amount. dan.mcgraw@icis.com