Many of the covered entities under California’s cap-and-trade program have unveiled a new agreement that would standardize secondary trades of carbon allowances and offsets in the cap-and-trade market. The agreement was developed by the International Emissions Trading Association (IETA) and incorporates ideas and expertise from some of the largest firms operating under the California carbon market. The “California Emissions Trading Master Agreement” (CETMA) deals “with a number of secondary market trading issues specific to California’s unique AB32 compliance market, including offset invalidation, holding limits, registry and tracking system mechanics, and the buyer liability provisions under the California rules,” according to an IETA press release. Under the “buyer liability” provision in the contract, the burden on replacing credits in the event of a project being invalidated would now fall on the seller instead of the buyer. The agreement also comes at an opportune time as California officials have recently begun approving offset projects. The agreement as a whole is a tool that should enhance market liquidity.