International Carbon Action Partnership (ICAP): Update California Climate Initiative Dialogue Group March 3, 2008

California Climate Initiative Dialogue Group Page 1 Update on ICAP Membership  International Members: –EU members: European Commission, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, and UK. –WCI members: California, Arizona, Oregon, Washington, New Mexico, Manitoba, and British Columbia –RGGI members: Maine, Maryland, Massachusetts, New Jersey and New York –New Zealand and Norway  Observers: –Open door policy for public authorities/governments considering introducing cap & trade systems as one of the strategies to reduce emissions.

California Climate Initiative Dialogue Group Page 2 Member Commitments –Mandatory cap on GHG emissions. –Cap and trade being pursued as one of the strategies to reduce emissions. –It is understood by all the members that other mechanisms will also be needed. –Desire to link efforts to command the greatest environmental benefit at least cost.

California Climate Initiative Dialogue Group Page 3 ICAP Goals  Opportunity to share best practices and learn from each others’ experiences.  Enhance the design of carbon markets to achieve maximum reductions.  Design and collaboration can prevent leakage.  Ensure that design compatibility issues are recognized at an early stage.

California Climate Initiative Dialogue Group Page 4 Update on Governance  Partners have recently reached consensus on the structure and members of the Steering Committee of  A total of 11 seats distributed among the regions: 5x North America (RGGI,WCI), 5x Europe (EU ETS, including NOR) and 1x Oceania (NZL ETS).  For maximum of 2 years. The seats to rotate within the regions.

California Climate Initiative Dialogue Group Page 5 Steering Committee  The five seats for Europe shall be distributed as follows: –One permanent seat for the EU Commission, –two seats for bigger EU-MS, –two seats for smaller EU-MS including NOR which is not part of the EU but already linked to the EU-ETS.  The five seats for North America shall be distributed as follows: –3 seats for WCI, –2 seats for RGGI with an option to provide a seat to the Midwest States if they would join within the next two years.  The 11th seat shall be taken by NZL for Oceania with the option to rotate with Australia if they would join within the next two years.

California Climate Initiative Dialogue Group Page 6 Steering Committee Region 1/2008 2/2008 1/2009 2/2009 Europe (EU-ETS), permanent member - EU 1 EU-Commission EU-Commission EU- Commission EU-Commission Europe (EU-ETS) bigger EU-MS - EU 2 Germany UK /GER Spain Spain Europe (EU-ETS) bigger EU-MS - EU 3 United Kingdom France France x Europe (EU-ETS) smaller MS + NOR – EU4 Norway Norway x x Europe (EU-ETS) smaller MS + NOR - EU 5 Portugal The Netherlands The Netherlands x North America – NA 1 (RGGI 1) New Jersey New Jersey New Jersey New Jersey North America - NA 2 (RGGI 2) New York New York New York New York North America – NA 3 (WCI 1) British Columbia British Columbia British Columbia British Columbia North America – NA 4 (WCI 2) California California California California North America – NA 5 (WCI 3) Oregon Oregon Oregon Oregon Oceania (NZL-ETS) – OC 1 (NZL 1) New Zealand New Zealand New Zealand New Zealand  The structure will need to be flexible and reviewed at least every 2 years.

California Climate Initiative Dialogue Group Page 7 Appointments  Chair of SC: California  The first meeting of the SC will take place in early March.  Appointed Project Manager: Martin Bergfelder of Germany (funded by Germany)  Appointed Conference Organizer: Chris Dekkers of Netherlands (funded by Netherlands)

California Climate Initiative Dialogue Group Page 8 The 1 st Conference of ICAP: Global Carbon Market Forum  In Brussels on May 19 and 20, 2008 hosted by the EC  Focus: Monitoring, Reporting, Verification, Compliance and Enforcement  Identify the experiences in monitoring, reporting, verification, compliance and enforcement in emissions trading systems in North America, Europe and in other parts of the world  Explore issues relating to linking carbon trading systems and assess potential solutions to overcome linking barriers.  Open to all stakeholders

California Climate Initiative Dialogue Group Page 9 Meeting in NY

California Climate Initiative Dialogue Group Page 10 California ICAP Contact  Margret J. Kim, ARB/CalEPA –Darren Bouton, Gov Office –Eileen Tutt, CalEPA Link: