Bank of America Merrill Lynch and TerraPass enter into agreement to provide carbon offsets to California Emission Market
Bank of America Merrill Lynch announced a multi-million carbon offset agreement with TerraPass Inc., a US-based company that brings to market verified carbon offsets and manages a portfolio of carbon reduction projects across the country. All of the offsets covered by the agreement are expected to be compliant with the California Air Resources Board’s approved standards.
Already a leading market participant in the carbon markets outside of the US, this transaction will enable Bank of America Merrill Lynch, through its Global Commodities Group, to enter the nascent California market, which is poised to become the second-largest carbon market in the world, following approval from the California Air Resources Board, to create the first multi-sector mandatory emissions trading program in the US. With its first auction scheduled for mid-2012, this program is part of AB32, California’s comprehensive program to reduce carbon emissions.
We intend to build on the innovative transactions we’ve completed in Europe and elsewhere to help US clients hedge their exposure to carbon pricing and source emission reduction offsets as part of an integrated solution. By acting as a first mover in California, we are positioning ourselves as the offset provider of choice for companies that will need to become compliant under these new regulations.—Abyd Karmali, global head of Carbon Markets in the Global Commodities Group at Bank of America Merrill Lynch
Under the agreement, Bank of America Merrill Lynch Global Commodities Group has an option to purchase and bring to market several million tons of ARB-compliant California carbon offsets from TerraPass Inc. through 2020, which will be generated from a pool of agricultural methane projects located throughout the US.
TerraPass has extensive experience working with project developers to create greenhouse gas reduction projects in a variety of industries including farming, landfills and wind power installations. All of the company’s agricultural methane projects use an approved AB32 offset protocol. This is the second long-term transaction that Bank of America Merrill Lynch has entered into with TerraPass Inc.