California Senate Bill 1036 Threatens Climate Progress

By: Janet Peace, Head of Policy, Anew Climate and Teresa Lang, Senior Director, Policy, Anew Climate

Over the last week, large strides have been made for the climate. The Biden-Harris Administration released a Joint Policy Statement in support of the Voluntary Carbon Markets (VCM), and a call to action with Principles for Responsible Participation in Voluntary Carbon Markets. The Statement and Principles are pragmatic and well-aligned with the Integrity Council for the Voluntary Carbon Market (ICVCM), which has been working to set a global standard for integrity and quality in the VCM. Just today, ICVCM announced its first Core Carbon Principle (CCP) approved project types.

Yet, California lawmakers moved in a different direction when SB 1036 progressed from the State Senate to the Assembly. This legislation has the potential to severely impact the ability for the voluntary carbon market to function in California and possibly beyond. Rather than supporting the international advancement of the voluntary carbon market that is well underway, California policy makers are going in the opposite direction of what’s needed.

The climate needs more investment into nature-based climate solutions, not less. California’s recently announced Nature-Based Climate Solutions Targets explicitly calls for “high-levels of investment from many partners, including…private landowners and managers…development companies…investors and more.”¹ SB1036 would severely hinder the private investment needed to achieve California’s ambitious climate and nature targets.

Anew Climate, alongside other organizations such as the Environmental Defense Fund, Conservation International, and the International Emissions Trading Association (IETA), stand firmly in opposition of SB 1036.

While there are many flaws, there is one detail––notably, the lack of detail––that has united the opposition. The bill is vague and uses open-ended language, which will directly lead to increased uncertainty for all market participants. 

In particular, SB 1036 creates significant uncertainty and confusion about what defines and determines high-quality carbon credits for the entire carbon value chain. This bill intends to use consumer protection laws to define criteria such as “additional”, “quantifiable”, and “real”. These terms are defined specifically within available VCM methodologies that have been peer-reviewed and continue to be advanced over time. Despite SB 1036 leveraging California Cap-and-Trade definitions for these terms, there is insufficient guidance in the bill regarding how to determine if a project or the methodology that it follows meets these vague terms. This leaves the definition of critical market terms open to interpretation and places responsibility for any arbitration of quality to be determined in court.

Further, the legislation does not acknowledge or align with the role of key market participants, nor the globally recognized efforts underway by industry experts and academics who are determining new or enhanced project criteria and requirements to advance market standards, guidelines, and definitions through carbon registries and the ICVCM. The market cannot function in California, or anywhere, without those guidelines being clear, stable, and defensible.

Details matter. The future of the VCM depends on the integrity and quality of carbon credits, determined through scientific rigor, best available technology, and a holistic approach and understanding of the ecosystems, communities, and regional economies within and around each project.  Alignment on quality is what is needed to galvanize the market into a new era of action and impact for our climate.

Let us make sure that every next move is a step forward for climate progress. There is no time to step back.

Additional resources: 

Conservation International Opinion piece 
Politico’s direct link to the EDF and CI Floor Alert - *PoliticoPro subscription required to view.
Politico article on Floor Alert - *PoliticoPro subscription required to view.

¹ https://resources.ca.gov/-/media/CNRA-Website/Files/Initiatives/Expanding-Nature-Based-Solutions/Californias-NBS-Climate-Targets-2024.pdf