Senate Climate Bill Keeps the Offset Faucet Wide Open

The leaky offset faucet (http://www.co.carver.mn.us)

Polluters in the US may be able to wait another decade before having to turn the spigot on their emissions faucet.

That's because the current Senate climate bill, the Clean Energy Jobs and American Power Act (a.k.a. Kerry-Boxer bill), retains the House provision that allows the use of up to two billion offsets, a huge threat to the integrity of the cap-and-trade scheme, not to mention the environment and climate-impacted communities. While Senate draft bill makes an effort to fix some of the loopholes around offset integrity left by the Waxman-Markey House bill that was passed in June, it still leaves critics--and the planet--craving for more substantial change.

Most of the offsets quantity provisions in the Kerry-Boxer draft are the same as in the House bill-and so are our concerns. While Waxman-Markey splits the difference between using offsets from domestic versus overseas sources (one billion tonnes each), Kerry-Boxer allows only half a billion international offsets and 1.5 billion domestic. But both bills contain escape clauses for offset buyers if domestic sources can't meet demand--the House allows up to 1.5 billion international under this scenario, and the Senate 1.25 billion.

If all the allowable offsets were to be used, emissions from big US polluters would not drop below 2005 levels until 2026 (in the Waxman-Markey bill, the date is pushed back even further, to 2030, if banking of offsets are taken into account). The 20% reduction from 2005 that is supposed to happen by 2020 would probably not be reached until 2037. The reduction in 2050 would be only 50% rather than the stated 83%.

What's Changed?

The draft House bill put the EPA in charge of regulating offset quality. But in a controversial last-minute compromise to get farm-state votes, the House bill puts the Dept. of Agriculture in charge of most US offsets, leaving EPA with regulatory authority over international offsets. One of the key differences between the Senate draft and the House bill is that the Senate draft does not specify which agency would be in charge of administering and ensuring the integrity of the offset program. According to Victor Flatt of the University of North Carolina School of Law, a leaked 801-page draft of the Senate bill made EPA the program administrator, but this provision was dropped from the proposed bill. Flatt notes, "This might indicate that Senators Boxer and Kerry prefer the EPA as the offsets administrator, but that they are willing to have some ambiguity on the issue if it helps win farm state votes." The draft instead defers to "the President" at every opportunity, which means the administration could delegate rule-making to whichever agency it deems appropriate.

Other key changes:

• The Senate draft strengthens the emissions reduction target to 20% below 2005 levels by 2020. By contrast, the Waxman-Markey House bill would reduce emissions 17% over the same period. However, should the rules for offset integrity be weakly enforced and offsets widely used, the slightly stronger target would make little difference to the climate.
  
• S.1733 establishes an "Office of Offsets Integrity" housed in the Department of Justice. The Office is tasked with investigation and civil enforcement of the offset program (Sec. 743).
• "The President" is instructed to address offset reversals, where the anticipated amount of offsetting fails to occur. Unlike the House bill, reversals are to be avoided and accounted for in all offset categories, not just biological sequestration.

Continuing Concerns Over Quality of Offsets

Allowing the use of two billion tonnes of offsets would allow U.S. polluters to continue emitting above cap levels for decades and undermining incentives to develop and deploy low-carbon technologies here in the U.S. The longer we delay action in the United States, the more difficult and expensive it will be to make future reductions, and the more unlikely we will ever stabilize to 350ppm-the amount experts say would avoid climate chaos.

Below are some of our other remaining concerns:

• Should an agency other the EPA be in charge of regulating offsets, the regulation of offset quality could be serious undermined.
• Science demands at least a 40% reduction in emissions compared to 1990, by 2020. The Senate draft target of 20% below 2005 equals only 7% below 1990.
• The House-passed bill would require emissions from landfills, coal mines and natural gas pipelines to be regulated, but under the Senate draft, these sources can voluntarily capture methane in exchange for offset payments.
• The bill gives generous subsidies to dirty energy sources like nuclear reactors and controversial methods like carbon capture and sequestration.