Green-e Marketplace Participants:

CRS would like to draw your attention to recent California legislation regarding the sales and marketing of carbon offsets. California Senate Bill 1762 (Perata) is written to protect consumers of carbon offsets located in the state of California. But SB 1762 also has the potential to negatively impact the market for renewable energy certificates, and potentially green electricity products, within California. This bill was passed in the Senate on May 27, and has been introduced in the Assembly. The bill is likely to pass by the end of this month.

While the voluntary renewable energy market is not the primary target of this bill, it is also not explicitly protected from the potential effects of implementation. Senator Perata's bill (available here), in its current form, limits offsets to those that meet at least one of the following conditions:

1. The offset is approved by the State Air Resources Board
2. The offset complies with the protocols adopted by the California Climate Action Registry
3. The company selling the offset discloses that the offset meets a number of conditions, including that it is verifiable and enforceable by state, regional or local agency within the State of California.

This language is problematic because both the State Air Resources Board and the California Climate Action Registry currently have no protocols for approving renewable energy. Additionally, the language "verifiable and enforceable by a state, regional or local agency within the State of California" is not clearly defined and could be interpreted differently by various parties. The bill in its current form presents a great deal of risk for green energy marketers. Since SB 1762 also allows individuals to file lawsuits against businesses which do not meet the requirements, the bill puts too much risk of frivolous lawsuits on green power suppliers.

As the green power market is not clearly exempt from SB 1762, and the bill presents great risk to marketers, this bill could drastically limit or eliminate the green power market in California. If that happens, businesses and consumers in California would not be able to purchase renewable electricity or RECs or make claims regarding offsetting their emissions from electricity with RECs. CRS staff has been in conversations with parties in both the Assembly and the Senate, and is working with legislators in an attempt to protect the integrity of RECs sold in California, protect the renewable energy market from SB 1762, and allow consumers in California to reduce the greenhouse gas emissions associated with their electricity use with RECs. CRS has made specific language recommendations allowing for certain renewable energy purchases used to offset electricity use to be exempt from regulation under this bill.

If you are purchasing green electricity or RECs within California, are concerned with SB 1762, and wish to make your concerns known, you should contact your local legislator. If you have any further questions, contact CRS at 415-561-2100.

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