Washington (Platts)--19Nov2008

The governors of California, Illinois and Wisconsin as well as six
governors from Brazil and Indonesia late Tuesday signed a memorandum of
understanding to coordinate the creation of carbon offsets related to saving
tropical forests and then use them in US cap-and-trade schemes.

"Tropical deforestation accounts for 20% of all human-caused carbon
emissions in the world, and the governors signing these MOUs with us manage
more than 60% of the world's tropical forest lands," California Governor
Arnold Schwarzenegger said as the MOU was unveiled at the Governors' Global
Climate Summit in Los Angeles.

Wisconsin Governor Jim Doyle and Illinois Governor Rod Blagojevich are
signatories to the Midwestern Greenhouse Gas Accord, a carbon cap-and-trade
program involving six Midwestern US states and one Canadian province.

Schwarzenegger led the Western Climate Initiative, a regional
cap-and-trade program involving seven western states and four Canadian
provinces. Schwarzenegger also pushed for California to enact its own carbon
trading program under a 2006 bill (AB 32).

Under the MOU, the governors will develop "rules to ensure that
forest-sector emissions reductions and sequestrations, from activities
undertaken at the sub-national level, will be real, measurable, verifiable and
permanent, and capable of being recognized in [the] compliance mechanisms of
each party's state, provincial, regional, national or international programs
such as [AB 32], Midwestern Greenhouse Gas Accord, Western Climate Initiative,
Regional Greenhouse Gas Initiative, or other initiatives."

A joint action plan will be completed by early 2009 to outline progress
in preparation for discussion at the Copenhagen talks for a post-2012 Kyoto
Protocol agreement, the MOU said.

The non-US signatories are Governor Antonio Waldez Goes da Silva, Amapa,
Brazil; Governor Eduardo Braga, Amazonas, Brazil; Governor Blario Maggi, Mato
Grosso, Brazil; Governor Ana Jula de Vasconcelos Carepa, Para, Brazil;
Governor Yusof Irwandi, Aceh, Indonesia; and Governor Barnamas Suebu, Papua,
Indonesia.