With respect to offsets, the Kerry-Boxer bill is a distinct improvement over the ACES [Waxman-Markey]. It allows a relatively strong approach to offset integrity, avoiding negative social or environmental effects, and facilitating possible integration with other systems. It also addresses some issues that will be important to the functioning of a trading market, but still leaves some uncertainties that could cause problems in the market.
One of the weakest features in both the House and Senate climate bills is the large quantity of offsets that polluters are allowed to buy in place of purchasing allowances or reducing their own emissions. I have spent a lot of time talking to leading experts and analyzing the international offset market, which has led me to realize that large-scale, inexpensive international offsets don’t exist nor will they (see “Do the 2 billion offsets allowed in Waxman-Markey gut the emissions targets?“) “” whereas large-scale inexpensive domestic emissions reductions strategies do (see “the 2020 Waxman-Markey target is so damn easy and cheap to meet“).
Moreover, CBO projects that roughly half of the domestic offsets will come from actual reductions in U.S. emissions (in uncapped sectors). As for international offsets, they aren’t as bad as many people think (see “The CDM: Rip-offsets or real reductions?“), they haven’t gutted the Europe’s Kyoto targets under their trading system (see “Europe poised to meet Kyoto target: Does this mean the much-maligned European Trading System is a success?“), and lots of countries want to join the market (see “Japan’s carbon cuts may include offsets“). That said, they need greater supervision (see “UN suspends largest CDM auditor “” Copenhagen needs to clean up the Clean Development Mechanism, Senate should keep House’s tough offset language“).
The good news is that the Senate bill seems like a genuine improvement over the house bill in this key area, according to my guest blogger, Victor B. Flatt, the Taft Distinguished Professor of Environmental Law at the University of North Carolina, Chapel Hill School of Law, and the Distinguished Scholar of Carbon Trading and Carbon Markets, Global Energy Management Institute, University of Houston, Bauer College of Business. His post, “Kerry-Boxer an Improvement over ACES on Offsets,” was first published by the Center for Progressive Reform here.