Bill Text: CA AB2331 | 2023-2024 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Voluntary carbon market disclosures.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2024-08-29 - Assembly Rule 77 suspended. [AB2331 Detail]

Download: California-2023-AB2331-Amended.html

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Amended  IN  Senate  August 15, 2024

Amended  IN  Senate  June 20, 2024

Amended  IN  Senate  June 06, 2024

Amended  IN  Assembly  March 21, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 2331

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Introduced by Assembly Member Gabriel

February 12, 2024

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An act to amend Sections 44475, 44475.1, 44475.2, and 44475.3 of the Health and Safety Code, relating to carbon offsets.

LEGISLATIVE COUNSEL'S DIGEST

AB 2331, as amended, Gabriel. Voluntary carbon market disclosures.

Existing law imposes various limitations on emissions of air contaminants for the control of air pollution from vehicular and nonvehicular sources. Existing law requires a business entity that is marketing or selling voluntary carbon offsets, as defined, within the state to disclose on the business entity’s internet website specified information about the applicable carbon offset project. Existing law also requires an entity that makes claims regarding the achievement of net zero emissions, claims regarding carbon neutrality, or other claims implying the entity, related or affiliated entity, or a product does not add net carbon dioxide or greenhouse gases to the climate or has made significant reductions to its carbon dioxide or greenhouse gas emissions, as described, to disclose on the entity’s internet website specified information pertaining to all greenhouse gas emissions associated with its claims. Existing law requires these disclosures to be updated no less than annually. Existing law makes a person who violates these provisions subject to a civil penalty of not more than $2,500 per day, as specified, for each violation, not to exceed a total amount of $500,000, as provided.

This bill would exclude from the definition of “voluntary carbon offset” a renewable energy certificate (REC) issued through an accounting system of a governmental regulatory body or virtual power purchase agreement of which the REC corresponds to one unit of electricity that was generated and delivered by an eligible renewable energy resource, or a low-carbon fuel standard credit, or a registry offset credit that is under review for conversion to a compliance-based credit. The bill would expand, revise, and clarify the information that a business entity is required to disclose. The bill would authorize a business entity that markets and resells a voluntary carbon offset within the state that it has not generated to satisfy the disclosure requirements by publishing on the business entity’s internet website sufficient information to direct the buyer to the disclosure made by the business entity who generated the voluntary carbon offset. offset, by furnishing that information directly to the buyer by the time of settlement when marketing or reselling voluntary carbon offsets directly to “eligible contract participants,” as defined, or by publishing on the internet website sufficient information to direct the buyer to each applicable project-specific disclosure published on a registry, as provided. The bill would also require disclosures made pursuant to these laws to be initially posted on January 1, 2025, and updated annually.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 44475 of the Health and Safety Code is amended to read:

44475.

 (a) A business entity that is marketing or selling voluntary carbon offsets within the state, on or after January 1, 2025, shall disclose on the business entity’s internet website all of the following information:

(a)

(1) Details regarding the applicable carbon offset project, including all of the following information:

(A) The project identification number, if applicable.

(B) The project name as listed in the registry or program, if applicable.

(1)

(C) The specific protocol used to estimate emissions reductions or removal benefits.

(2)

(D) The location of the offset project site.

(3)

(E) The project’s crediting period.

(4)

(F) The project start date.

(5)

(G) The year of issuance, vintage period, and vintage quantity associated with the credits and if there have been any modifications or reversals.

(6)

(H) The type of project, including whether the offsets from the project are derived from a carbon removal, an avoided emission, or both. If the offsets are derived from both a carbon removal and an avoided emission, the information shall include the percentage breakdown of offsets from each if provided in the project documentation for offsets issued prior to January 1, 2025, and for all offsets issued after January 1, 2025.

(7)

(I) Whether the project meets any standards established by law or by a nonprofit entity.

(8)

(J) The durability period over which carbon storage will be monitored, reported, verified, and compensated if reversed, for any project that is credited for carbon storage, including emission reductions and removal enhancements in natural systems and through other carbon removal activities.

(9)

(K) Whether there is independent expert or third-party validation or verification of the project attributes. Verification by third parties required by a registry shall constitute independent third-party verification.

(10)

(L) Emissions reduced or carbon removed on an annual basis.

(b)

(2) Details regarding accountability measures regarding what actions the entity, either directly or by contractual obligation, shall take if credited carbon storage is reversed.

(c)

(3) The pertinent data and calculation methods needed to independently reproduce and verify the number of emissions reduction or removal credits issued using the protocol.

(d)

(b) A business entity that markets and resells a voluntary carbon offset within the state that it has not generated may satisfy the requirements of this section by publishing on the business entity’s internet website sufficient information to direct the buyer to the disclosure made by the business entity who generated the voluntary carbon offset pursuant to subdivisions (a) to (c), inclusive. paragraphs (1) to (3), inclusive, of subdivision (a), including the project identification number, if applicable. A business entity may comply with this section when marketing or reselling voluntary carbon offsets directly to “eligible contract participants,” as defined in paragraph (18) of Section 1a of Title 7 of the United States Code, and the rules promulgated thereunder, by furnishing the information directly to the buyer at the time of settlement.

(c) A business entity may satisfy the requirements of this section by publishing on the business entity’s internet website sufficient information to direct the buyer to each applicable project-specific disclosure published on a registry pursuant to paragraphs (1) to (3), inclusive, of subdivision (a), including the project identification number, if applicable. General information to direct the buyer to a business entity’s entitywide or programwide disclosures is not sufficient.

(e)

(d) For the purposes of this part, the following definitions apply:

(1) “Durability period” means the duration of time over which an offset project operator commits to maintain its greenhouse gas reductions and greenhouse gas removal enhancements, as applicable, exclusive of any aspirational outcomes that exceed or extend beyond the mandatory outcomes required of the offset project pursuant to its offset protocol.

(2) “Protocol” means a documented set of procedures and requirements to quantify ongoing greenhouse gas reductions or greenhouse gas removal enhancements achieved by an offset project and to calculate the project baseline, including specification of relevant data collection and monitoring procedures, emission factors, and methodologies used to conservatively account for uncertainty and activity-shifting and market-shifting leakage risks associated with an offset project.

(3) (A) “Voluntary carbon offset” means any product sold or marketed in the state that claims to be a “greenhouse gas emissions offset,” a “voluntary emissions reduction,” a “retail offset,” or any like term, that connotes that the product represents or corresponds to a reduction in the amount of greenhouse gases present in the atmosphere or that prevents the emission of greenhouse gases into the atmosphere that would have otherwise been emitted.

(B) “Voluntary carbon offset” does not include products that represent or correspond to legal or regulatory mandates for either of the following:

(i) Reduction of the amount of greenhouse gases present in the atmosphere.

(ii) Prevention of the emissions of greenhouse gases into the atmosphere.

(C) “Voluntary carbon offset” does not include a renewable energy certificate (REC), issued through an accounting system of a governmental regulatory body or virtual power purchase agreement, of which the REC corresponds to one unit of electricity that was generated and delivered by an eligible renewable energy resource, or a low-carbon fuel standard credit. credit, or a registry offset credit that is under review for conversion to a compliance-based credit.

SEC. 2.

 Section 44475.1 of the Health and Safety Code is amended to read:

44475.1.

 (a) An entity that purchases or uses voluntary carbon offsets that makes claims regarding the achievement of net zero emissions, claims that the entity, related entity, or a product is “carbon neutral,” or makes other claims implying the entity, related entity, or a product does not add net carbon dioxide or greenhouse gases to the climate or has made significant reductions to its carbon dioxide or greenhouse gas emissions, on or after January 1, 2025, shall disclose on the entity’s internet website all of the following information pertaining to each project or program:

(a)

(1) The name of the business entity selling the offset and the offset registry or program.

(b)

(2) The project identification number, if applicable.

(c)

(3) The project name as listed in the registry or program, if applicable.

(d)

(4) The offset project type, including whether the offsets purchased were derived from a carbon removal, an avoided emission, or a combination of both a carbon removal and an avoided emission.

(e)

(5) The location of the offset project site.

(f)

(6) The specific protocol used to estimate emissions reductions or removal benefits.

(g)

(7) Whether the claimed reductions were verified by an independent third party. Verification by third parties required by a registry shall constitute independent third-party verification.

(8) The quantity of voluntary offset credits used.

(b) A business entity may satisfy the requirements of this section by publishing on the business entity’s internet website sufficient information to direct the buyer to each applicable project-specific disclosure published on a registry pursuant to paragraphs (1) to (8), inclusive, of subdivision (a), including the project identification number, if applicable. General information to direct the buyer to a business entity’s entitywide or programwide disclosures is not sufficient.

(h)

(c) This section does not apply to entities that do not operate within the state or do not purchase or use voluntary carbon offsets sold within the state.

SEC. 3.

 Section 44475.2 of the Health and Safety Code is amended to read:

44475.2.

 (a) An entity that makes claims regarding the achievement of net zero emissions, claims that the entity, a related or affiliated entity, or a product is “carbon neutral,” or makes other claims implying the entity, related or affiliated entity, or a product does not add net carbon dioxide or greenhouse gases, as defined in Section 38505, to the climate or has made significant reductions to its carbon dioxide or greenhouse gas emissions, as described in Section 38505, on or after January 1, 2025, shall disclose on the entity’s internet website all of the following information pertaining to all greenhouse gas emissions associated with its claims:

(a)

(1) Information documenting how a “carbon neutral,” “net zero emission,” or other similar claim was determined to be accurate or actually accomplished, and how interim progress toward that goal is being measured. This information may include, but not be limited to, disclosure of independent third-party verification of all of the entity’s greenhouse gas emissions, identification of the entity’s science-based targets for its emissions reduction pathway, and disclosure of the relevant sector methodology and third-party verification used for the entity’s science-based targets and emissions reduction pathway.

(b)

(2) Whether there is independent third-party verification of the data or claims.

(c)

(b) This section does not apply to entities that do not operate within the state, or entities that do not make claims within the state.

SEC. 4.

 Section 44475.3 of the Health and Safety Code is amended to read:

44475.3.

 (a) A person who violates this part is subject to a civil penalty of not more than two thousand five hundred dollars ($2,500) per day, for each day that information is not available or is inaccurate on the person’s internet website, for each violation, not to exceed a total amount of five hundred thousand dollars ($500,000), which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General or by a district attorney, county counsel, or city attorney in a court of competent jurisdiction.

(b) Initial disclosures pursuant to this part shall be posted by January 1, 2025, and updated annually.