Friday, May 21, 2010

Western Climate Initiative meets in Seattle; three regional groups announce carbon offset framework

by Janice Adair, special assistant on Climate policy

Washington welcomed its Western Climate Initiative partners to the state this week as the group held a two-day meeting in Seattle. Gov. Chris Gregoire, who helped found the WCI, met with us this morning.

If you haven’t followed the WCI closely, it’s a coalition of state and provincial governments concerned about greenhouse gas emission and climate change and taking actions at the regional level.

It’s one of three regional initiatives that have formed in North America. The others are the Regional Greenhouse Gas Initiative (RGGI) in the Northeast and Mid-Atlantic states and the Midwestern Greenhouse Gas Reduction Accord (the Accord).

Reducing emissions is good for the economy

Government policies that require greenhouse gas reductions have multiple benefits. They help create jobs, improve efficiencies so we spend less on energy, and reduce the impacts of climate change.

Clean energy will drive the new “innovation” economy. The rewards will go to states, nations and businesses that face the realities, and seize the job-creating opportunities, of living and working in a carbon-constrained world.

But we haven’t had a clear federal framework in place, so regional groups like ours are stepping up to take the lead on reducing greenhouse gas emissions and positioning states and provinces for the economy of the future – and the jobs that will come with it.

Leading the change

On May 19, 2010, the three regional initiatives released a paper describing a jointly designed framework for making work a key component of a carbon market.

In a carbon market, large emitters of greenhouse gases (GHG) need a permit for every ton of greenhouse gases they emit. If they emit less than the number of permits – called allowances – they have, they can sell those extra allowances to others who need them. That provides an incentive to industries and utilities to emit less. If they need more allowances than they have, they can buy reductions made by companies that aren’t part of the carbon market. These are called “offsets.”

Most people know “offsets” as a way to make their airplane trips or electricity “carbon neutral” because they buy offset credits to match the GHG emissions associated with those actions. But this kind of voluntary offset isn’t good enough for a regulatory program. And, there are serious questions about the real value of those offset credits. Reliable, high-quality offsets are necessary for companies that need them to take the place of an emission allowance and ensure that money is being well spent.

By agreeing on standards for offsets, the regional initiatives’ work delivers a “guidepost” for the criteria to use in developing high quality offsets. Or as RGGI board chair David Littell has said, “By making offset definitions and criteria uniform, and by potentially accepting offsets issued by other jurisdictions, we will enhance the market for offsets.”

It’s also a blueprint for Congress as it continues to tackle federal climate change legislation.

Taking it national

What’s really exciting as WCI participant is seeing how quickly the three regional initiatives have come to agreement. The three groups started this project just six months ago.

While there are many questions that still must be answered, it’s clear that when people roll up their sleeves to collaborate, it can be done. There is at least one offset project here in Washington, and we hope to have more. And we are working with congressional staff and federal agencies so this model can serve as a framework for a strong national program in the U.S. and Canada.

Even though Congress is once again working on climate change legislation, we’re continuing our work, continuing to lead. We’re moving closer to designing a system that could be implemented across 23 states and four Canadian provinces. That accounts for nearly ½ of the U. S. population and ¾ of the Canadian population and significant portions of both countries’ greenhouse gas emissions.

“By collaborating on this issue, we’re moving close to uniformity across the three regional programs,” said Accord member Doug Scott.

He’s right: With or without national legislation, our uniform approach will have major national impact.

What it means

Q: What’s a carbon offset?
A: Offsets are reductions in greenhouse gases that happen outside of the industries that are required to have permits (or allowances) to emit those gases.

Q: What are the key features in the three-region blueprint for designing an offset program?
A: The three regional climate groups agree that reductions achieved through offset projects must be real, must add value, must be verifiable, must be permanent rather than short-term, and must be enforceable.

Uniform standards gives purchasers of offset great confidence in the value of the offset, and suppliers will find it easier to meet a consistent set of standards.

Q: What makes this multi-region consensus document a big deal?
A: Together, these 3 regional cooperatives represent 23 states, four Canadian provinces, half the U.S. population and three-quarters of the Canadian population. This blueprint is a milestone and it’s a first. Regional leaders in the three North American cooperatives believe this is a good model for Congress to consider when establishing a nationwide offset program as part of comprehensive climate and energy legislation.

Q: What’s in it for businesses and other employers?
A: Offsets reduce the cost of reducing greenhouse gas emissions because sometimes, these reductions are cheaper or faster to achieve than others. It also allows companies that aren’t part of the carbon market to participate, making it more liquid.

Q: What’s in it for consumers and the public?
A: Offset projects can create jobs. And, we all benefit if utilities, manufacturers, and others can minimize costs while maximizing their reductions in greenhouse gas emissions.

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