Carbon Offsets and the Emerging Climate Coalition

9 July 2009

Bryan K. Mignone

Brookings Institution (Washington, D.C.)—Bryan K. Mignone of the Brookings Institution advocates for “…a well-designed policy toward offsets…” in the Waxman-Markey bill, the American Clean Energy and Security Act, as the legislation moves forward through the Senate.

Such policy, he explains

“…could simultaneously enhance three key objectives: It could widen political support for cap-and-trade; it could lower overall costs of the program; and it could implicitly authorize a sensible amount of regulatory discretion. Most importantly, it would do all of these things while preserving and even enhancing the environmental integrity of the policy.”

Mignone suggests that proponents of the Waxman-Markey bill learn from the battle to pass the bill in the House . He points out the importance of getting votes from the farm states. The carbon offset aspect of the cap and trade piece of the Waxman-Markey bill is important to the farm-states.

Mignone recognizes an “unofficial coalition” which includes the farm-states, regulated industry, carbon traders, and environmentalists.

…farm-state concerns largely boil down to concerns about the treatment of carbon offsets, credits that could be awarded for activities outside of capped sectors, like sequestration of carbon in managed forests or in agricultural soils. Such credits could potentially provide a steady stream of revenue back to regions of the country that have historically been slower to warm to the idea of cap-and-trade.”

Those in support of expanding offsets also includes industry which believes that offsets could reduce the cost of complying with regulation.

Mignone advises that there are two important aspects to a successful carbon offsetting program.

“First, it would grant EPA, in conjunction with other appropriate agencies, like USDA, the authority to develop a comprehensive rulemaking to govern the certification of “high-quality” offsets. These projects would meet well-defined criteria for permanency (the length of time a project would be required to sequester carbon); additionality (protocols that ensure that the activities in question reduce emissions below the anticipated baseline); and verification (physical validation of the first two criteria). Projects certified under such rules, however great or small the actual number, could then generate credits functionally identical to emissions allowances.”

The second aspect would be dealing with what is likely to be the large group of offsetting projects that do not meet the stringent requirements outlined above.

Source: http://www.brookings.edu/opinions/2009/0709_climate_change_mignone.aspx (Reliability 8 )