North American group outlines carbon trade rules

VANCOUVER (Reuters) - Members of the Western Climate Initiative laid out some of the ground rules on Thursday on the use and timing of carbon-offset credits allowed under its planned emission cap-and-trade system.

The seven western U.S. states and four Canadian provinces have decided to stay with a plan laid out last year that would limit use of offset credits and allowances to no more than 49 percent of emission reductions.

The offset limit will be calculated as a percentage of compliance to allow the WCI to be more easily linked with other trading systems, such as one now under way in the Eastern United States, an official of the group said.

Offsets are credits for projects or technology, such as tree planting. that reduce greenhouse gas emissions. Emitters such as power plants can buy offsets to meet the requirements on cutting emissions blamed for climate change.

The use of offsets is among the many details the WCI is working on for the trading system, which is set to launch in 2012 and is designed to meet a goal of cutting greenhouse gas emissions to 15 percent below 2005 levels by 2020.

The recommendations endorsed by the WCI last week in Vancouver, but not made public until Thursday, will now be adopted by each of the jurisdictions as they draft their regulations.

The WCI said placing limits on the use of offsets would be easier to administer, and it rejected suggestions the offset limit be adjusted annually to allow for a carry-over of unused offsets, saying that would make it too complex.

In addition to California -- which has the eighth largest economy in the world -- the WCI’s members are: Arizona, New Mexico, British Columbia, Oregon, Ontario, Montana, Utah, Washington, Quebec, and Manitoba.

Not all of the members expect to be ready when the trading system starts in 2012.

Reporting Allan Dowd; editing by Rob Wilson