Ensuring Greenhouse Gas Offset Quality in the Clean Energy Jobs and American Power Act

S.1733, the Clean Energy Jobs and American Power Act (CEJAPA) also known as the Kerry Boxer bill , provides a number of important provisions that will ensure that offsets used in the U.S. cap-and-trade program represent real, additional, measurable and verified greenhouse gas (GHG) emission reductions.

Offsets are used in lieu of reductions from sectors subject to mandatory emission reduction requirements; thus, offset quality is central to the environmental integrity and credibility of the cap-and-trade program. WRI’s review of the environmental quality criteria in CEJAPA affirms that its provisions will safeguard the environmental intent of the legislation. The CEJAPA lays a strong foundation that should be preserved in any future policy for an offset program that will deliver high quality offset credits. Critical program attributes are described below.

The Clean Energy Jobs and American Power Act:

1. Does not include a list of “per se” eligible offset project types. Per se eligibility lists require the offset program administrator to develop offset crediting methodologies for specified project types, regardless of their demonstrated ability to permanently reduce, avoid or sequester GHG emissions. In order to ensure offset quality, a full scientific review of any potential offset project type is of paramount importance in ensuring that offset projects are able to deliver real emissions reductions. CEJAPA ensures that offset project eligibility determinations are developed through a science-based, publicly-accessible rulemaking process conducted through the appropriate federal agencies with input from scientists and technical experts. (Sec. 733)

2. Establishes clear, consistent, and rigorous definitions of key offset quality criteria. This includes robust provisions to address additionality, leakage, impermanence, and measurement and quantification uncertainty through science-based, standardized, and transparent methodologies. These provisions will help provide assurance that offsets used in the program represent emissions reduction projects and activities that would not have occurred in the absence of the offset market and are measured against consistent criteria and quality definitions. (Sec. 734)

3. 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 proper emissions accounting. These provisions ensure that the emissions reduction targets of the program are met in the event of a sequestration project’s emissions reduction reversal. (Sec. 734)

4. Places liability for intentional reversals with offset project developers and shares responsibility for unintentional reversals. Release of carbon dioxide stored in forests and soils can occur for a wide range of reasons. Reversals are typically classified as intentional (e.g. premature harvest of forests, tilling of fields) and unintentional (e.g. disease outbreak, pest infestation, forest fire). Clear liability for reversals is an integral part of ensuring the environmental effectiveness of the cap and trade program. Assigning complete responsibility for intentional reversals, and partial responsibility for unintentional reversals, provides a strong incentive for offset project developers and implementers to reduce the likelihood that reversals will occur and to take preventative action to avoid unintentional reversals. (Sec. 734)

5. Allows for program transparency, adaptation and flexibility over time. The bill allows for both the addition and removal of eligible offset project types over time, and includes a public petition process as a key component of this process. The bill also calls for regular (every 5 years) review and evaluation of the offset program. These are crucial elements of ensuring emissions reduction or sequestration projects receiving offset credit continue to meet high offset quality standards and that the program is able to adapt to changes in scientific understanding over time. (Sec. 733 and 739)

6. Establishes an Offsets Integrity and Advisory Board and Office of Offsets Integrity. The bill establishes an Offsets Integrity Advisory Board tasked with providing scientific and technical guidance to the offset program administrator as regulations are promulgated. It also establishes a new office of offsets integrity within the Department of Justice to ensure that the offset provisions are enforced and appropriate legal frameworks are in place to administer this unique program. (Sec. 731 and 743)

7. Establishes one verification program for the entire offset system. A robust verification program is a vital element of a credible offset program. Verification entities and protocols certify that emissions reduction projects meet the requirements of the regulatory offset program and establish the quantity of offset credits to be issued from a particular project. Developing multiple verification programs for U.S. compliance offsets could lead to inconsistencies in the U.S. offset market and compromise the quality of the offset credits issued. (Sec. 736)