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Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
Offsets: Current Issues
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Offsets: Current Issues


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Megan Ceronsky …

Megan Ceronsky
Van Ness Feldman, P.C.

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  • 1. Alliance to Save Energy Brownbag on Offsets March 12, 2010 Offsets: Current Issues Megan Ceronsky Van Ness Feldman, P.C. 1050 Thomas Jefferson Street, NW Seventh Floor Washington, DC 20007 (202) 298-1800
  • 2. Coalition for Emission Reduction Projects (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&E
    • Verdeo Group
  • 3. 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)
  • 4. 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
  • 5. Positive Elements of ACES Provisions on Offsets
    • Well-constructed project approval process
    • Elimination of unnecessary penalty on use of domestic offsets
    • Recognition of early action, need to generate early supply
    • However, significant unfinished business . . .
  • 6. Ceiling Does not Equal Supply
    • Supply 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
  • 7. 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
  • 8. International Offsets
    • Starting 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
  • 9. 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
  • 10. Forestry: Accounting for Reversals
    • Offsets 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
  • 11. Forestry: Accounting for Reversals
    • Agriculture sequestration
      • Required to receive “term offset credits”
      • CERP: Allow project developer to opt for regular credits and offset reserve
      • Stabenow: Gives USDA flexibility
  • 12. Conclusions
    • On offsets, ACES is a good starting point
    • Stabenow is an excellent framework for domestic offsets
    • Unfinished 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
  • 13. Alliance to Save Energy Brownbag on Offsets March 12, 2010 For more information For weekly news and analysis about climate change policy and business developments, go to: Megan Ceronsky 202-298-1874 [email_address]