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Megan CeronskyVan Ness Feldman, P.C.http://ase.org/eenoon
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Alliance to Save EnergyBrownbag on OffsetsMarch 12, 2010
Megan CeronskyVan Ness Feldman, P.C.
Offsets: Current Issues
1050 Thomas Jefferson Street, NWSeventh FloorWashington, DC 20007(202) 298-1800
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Coalition for Emission ReductionProjects (CERP) Alpha Natural Resources American Electric Power Blue Source Camco C-Quest Capital C-Trade Deutsche Bank Dominion DTE Energy Duke Energy EcoSecurities
Element Markets El Paso Corporation Environmental Credit Corp Equator LLC John Deere Leaf Clean Energy Company Macquarie Bank Natsource Noble Carbon Credits PG&EVerdeo Group
Offsets in U.S. climate legislation In Lieberman-Warner, Dingell-Boucher,
Waxman-Markey, Kerry-Boxer efficiency; cost savings EPA: without international offsets, allowance
prices in Waxman-Markey increase 89% CBO: offsets in Waxman-Markey save ~
70%/year
Stabenow (S. 2729) Cantwell-Collins (S. 2877)
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Key Offsets Provisions in ACES 2 billion ton ceiling on use of offset credits
Translates into per-entity limit Split between domestic and international Ability to use up to 1.5 billion tons of international credits
Banking permitted Early offset supply Domestic
Overlapping authority of EPA and USDA
International Emphasizes shift to sectoral crediting Provisions for international forestry
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Positive Elements of ACES Provisions on OffsetsWell-constructed project approval
processElimination of unnecessary penalty on
use of domestic offsetsRecognition of early action, need to
generate early supplyHowever, significant unfinished
business . . .
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Ceiling Does not Equal SupplySupply constraints
EPA: Domestic offsets will not exceed 200 million tons until after 2020
Total CDM credits issued to date: 310 million Uncertainties about international forestry
Government requirement to acquire “supplemental reductions”
CERP: Avoid unnecessary policy barriers to supply
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Early Offset Supply (Sec. 740) ACES credits early projects only for reductions
starting in 2009-2012 Period is too short to encourage investment CERP: Provide 5-10 year crediting period Stabenow: Crediting period starting as early as 2001;
includes provisions for REDD early offsets
ACES provides a long list of project types that agency should “consider” making eligible More certainty needed about what will count CERP: Provide an initial eligible list, and a 1 year deadline
for promulgating methodologies Stabenow: List of eligible projects
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International OffsetsStarting in 2018, 5:4 penalty on use of
credits CERP: Remove penalty
Requirement for bilateral agreement with each country supplying credits CERP: Remove requirement for credits issued by
international body under UN
Unclear whether JI credits can be used CERP: Allow use of JI credits
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International Offsets, cont.Phase-out of CDM credits from “identified
sectors” by 2016 Sectoral crediting systems will not be established
by 2016 CERP: Extend phase-out to 2020
International forestry Rapid phase-out of projects in favor of national
baselines CERP: Extend period for project-based crediting Stabenow: Crediting period starting as early as
2001
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Forestry: Accounting for ReversalsOffsets Reserve
Establishes insurance system for forestry projects
In event of reversal, credits cancelled in reserve
For unintentional reversal, ACES still requires compensation to reserve CERP: Eliminate requirement Stabenow: Eliminates requirement
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Forestry: Accounting for ReversalsAgriculture sequestration
Required to receive “term offset credits” CERP: Allow project developer to opt for regular
credits and offset reserve Stabenow: Gives USDA flexibility
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ConclusionsOn offsets, ACES is a good starting pointStabenow is an excellent framework for
domestic offsetsUnfinished business … passing a climate bill
Integrate Stabenow bill into Senate legislation Remove unnecessary constraints on supply; ensure
that program rules for international offsets can work Continue to educate policy-makers, general public
about offsets (especially international offsets) & the real-life benefits of market mechanisms
For more information
For weekly news and analysis about climate change policy and business developments, go to:
www.vnf.com/news-signup.html
Megan [email protected]
Alliance to Save Energy Brownbag on OffsetsMarch 12, 2010