FIA filed a formal letter of opposition to California SB 1036, which would impede the development of robust and well-regulated voluntary carbon markets (VCMs). The legislation would subject entities that sell, issue, and engage in other activities relating to voluntary carbon offsets to heightened penalties under California law.
In the comment letter, FIA echoed concerns raised by the California Chamber of Commerce and environmental advocacy groups noting that “setting standards that are unique to California are going to effectively quash this market by isolating it from the rest of the marketplace.” California Governor Gavin Newsom vetoed an earlier version of the legislation last year citing similar concerns.
Additionally, the letter notes that the Commodity Futures Trading Commission has exclusive jurisdiction over the trading of futures, swaps, and options, including those linked to voluntary carbon markets. While SB 1036 does not expressly mention the trading of these derivatives, ambiguity in the scope of the law could lead to unnecessary confusion for market participants. FIA therefore urged the California Senate to amend SB 1036 to specifically exclude derivatives on voluntary carbon credits from scope.
UPDATE: FIA is pleased to report that the legislation was removed from the state’s legislative calendar.
