Governor Newsom Signs First-In-The-Nation Bill to Regulate Voluntary Carbon Offsets

SACRAMENTO, CA — This past weekend, Governor Gavin Newsom signed legislation to establish first-in-the-nation regulations for the voluntary carbon offset market, which has been beset by disturbing allegations of corporate “greenwashing” and media reports suggesting that up to 90 percent of offsets marketed by certain companies do not achieve any meaningful reduction in carbon emissions. Assembly Bill (AB) 1305, authored by Assemblymember Jesse Gabriel (D - Encino), would require new transparency and disclosure requirements for buyers and sellers of carbon offsets, thereby helping to ensure that companies engage in careful due diligence before making climate-related claims and encouraging them to rely only on high-quality offsets that correspond to real emission reductions or removals.

“AB 1305 is an important new tool to address the devastating impacts of climate change,” said Assemblymember Jesse Gabriel. “As we confront the climate crisis, we cannot afford to waste time with corporate greenwashing or bogus offsets that do nothing for our planet. This new law will ensure that corporations are living up to their promises when it comes to climate action and that we are protecting our planet for future generations.”

“Many carbon offsets on the voluntary carbon market do not represent real emissions reductions or represent far less than claimed,” said Barbara Hays, Director of the UC Berkeley Carbon Trading Project. “Offset credit quality varies widely and lack of transparency in project details and carbon calculations makes it difficult for credit buyers, evaluators, and researchers to assess which credits are real, and evaluate overall program effectiveness. A lot is at stake. We are entrusting the efficacy of our climate mitigation efforts today on a set of claims and calculations we can’t review, under programs with known problems.”

Background on AB 1305

The voluntary carbon offset market is growing quickly, with a Reuters report placing the global value of the current market north of $2 billion and projected growth estimated between $10 and $40 billion by 2030. Unfortunately, researchers have grown increasingly concerned with the impact of credits sold on the voluntary market. Indeed, a recent investigation found that greater than 90% of rainforest offset projects listed on one of the largest voluntary offset standards bodies did not represent genuine carbon reductions.

Given the absence of regulations for this market, there is a clear need for additional transparency to ensure that consumers are not misled by corporate “greenwashing.” AB 1305 will require buyers and sellers of voluntary offset credits to disclose the details of the offset projects, the methodology for determining the number of credits issued, and the data and calculation methods needed to allow for independent recreation of emissions reduction estimates. AB 1305 will also combat corporate greenwashing by requiring entities making claims about significant emission reductions or being “carbon neutral” to disclose how those claims are accurate. This information will allow researchers and the public to better assess the legitimacy and efficacy of credits, as well as spotlight misleading claims by corporate polluters.