As Congress resumes discussions on energy and climate change legislation this week, the Washington-based BCSE released a paper outlining a set of recommendations for a federal greenhouse gas offset programme focussing on the use of offsets, or credits for emissions reduced outside the electricity and industry sectors.
Some of the 10 greenhouse gas cap-and-trade bills that have been introduced in Congress so far recommend restricting the use of offsets to force emitters to make greenhouse gas reductions on site, rather than paying for projects that cut emissions by growing trees or capturing methane from landfills.
But the BCSE’s executive director Lisa Jacobson said “the act of reducing or avoiding greenhouse gas emissions in one place in order to ‘offset’ emissions occurring somewhere else should be valued as an important design feature of federal climate change legislation.”
The report proposes an offset policy that combines two approaches policymakers have been struggling with in designing US regional carbon trading programmes.
While the UN’s clean development mechanism, a global offset programme for countries that have taken on emissions reduction targets under the Kyoto protocol, evaluates emissions reduction projects on a case-by-case basis, policymakers creating a regional carbon market among 10 northeastern US states found that approach too bureaucratic.
Their programme instead codifies in its charter a set of 5 types of projects from which companies subject to caps may purchase credits to offset emissions.
The BSCE plan suggests a standards-based approach combined with case-by-case review of emissions reduction projects without
pre-approved methodologies.
Pre-approved standards, it argues, cut costs of project approval and provide certainty for buyers and sellers of credits. Allowing for a case-by-case review of projects that have new methods of reducing emissions “promotes technological innovation” and incentivises firms to attempt to reduce carbon emissions in new ways.
The recommendations also call on lawmakers to recognise companies’ purchase of offset credits before emissions caps are even in place. “Many companies are buying offsets voluntarily now in hopes that they will count later under a capped scenario,” said Bjorn Fischer of the carbon asset management firm 3C, which co-authored the BCSE proposal.
The report argues that allowing companies to use early action credits to comply with mandatory emissions restrictions in the future will encourage firms to cut emissions now, rather than waiting until they are forced to do so by law.
“Experience in other countries shows that, by granting credits to early movers that have real value and can be used for compliance or traded, governments can send a signal to companies that they will not be penalised for acting today to reduce their carbon emissions,” said offset project developer Ecosecurities’ Marc Stuart.
The recommendations come at a time when US federal lawmakers are working toward a unified greenhouse gas reduction proposal in Congress, where the next step will involve fashioning the many cap-and-trade models introduced into one bill each in the Senate and the House of Representatives. These will go to a conference committee, which attempts to merge the two into one
Congressional proposal to be sent to the president.
Senators Lieberman and Warner announced last month that they will take the first step in that process by introducing a Senate cap-and-trade bill that combines most of the provisions of other climate legislation before the Senate.
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