Offset Quality and the American Clean Energy and Security Act of 2009

The American Clean Energy and Security Act of 2009 (ACESA) provides a number of important provisions that will ensure that offsets used in the program represent real, additional, measurable and verified emission reductions. This document provides a brief overview of the most important of these. Offsets are used in lieu of reductions from sectors subject to mandatory emission reduction requirements, thus offset quality is of vital importance to the environmental integrity and credibility of a greenhouse gas reduction program. The ACESA lays a strong foundation for an offset program that will deliver high quality offset credits. Ensuring the integrity and quality of offset credits used in the system is crucial to the accomplishment of our domestic and global emission reduction goals.

The American Clean Energy and Security Act of 2009:

• Establishes clear definitions of key quality criteria. This includes robust provisions to address additionality, leakage, impermanence, and uncertainty through standardized, transparent methodologies. These provisions will help provide assurance that offsets used in the program represent emission reduction projects that would not have happened in the absence of the offset market. (Sec. 734)
• Keeps technical decisions with the Administrator. This includes the identification of eligible offset project types and the development of qualification and quantification methodologies and protocols. These provisions ensure that these critical design elements are crafted through a publicly-accessible rulemaking process guided by the U.S. Environmental Protection Agency (EPA) with input from scientists and technical experts. (Sec. 733)
• Allows for program adaptation and flexibility over time. The bill allows for both the addition and removal of eligible offset project types over time. This is an important element of ensuring emission reduction or sequestration projects receiving offset credit are generating real, additional reductions of greenhouse gases beyond what otherwise would have occurred. The bill also calls for regular review and evaluation of the offset program. (Sec. 733 and 734)
• Includes strong provisions to ensure offset credits sourced from sequestration projects deliver permanent reductions. The bill provides stringent provisions that include buffer accounts, discounting, clear assignment of liability and insurance mechanisms to ensure that emission are properly accounted for in the event of a sequestration project emission reduction reversal. (Sec. 734)
• Establishes an Offsets Integrity and Advisory Board. The bill establishes an Offsets Integrity and Advisory Board tasked with providing scientific and technical guidance to EPA as it promulgates regulations and administers the program. Comprised largely of scientists, the Board will be an important resource of scientific and technical information for EPA. (Sec. 731)
• Provides multiple mechanisms for engaging the international community through offsets. The bill allows EPA to employ both the approval of offset credits from international programs, as well as sector-based crediting mechanisms. Access to international offsets will be important to the U.S. to ensure both supply and liquidity of offsets in the system, particularly in the early years of the program. Allowing EPA the flexibility to implement circumstance-appropriate offset crediting mechanisms and approval processes will ensure the offset program has the flexibility to function effectively, while delivering real, verified and additional emission reductions. (Sec. 742)