Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Verification of Early Reduction Credits Ned Helme, President Center for Clean Air Policy Pew Center Early Action Conference, Sept 1999 Center for Clean Air Policy September 1999 Overview • Verifying voluntary emissions reductions – Baselines – Actual emissions • Verifying 1605(b) credits • An alternative approach to early crediting Center for Clean Air Policy September 1999 Establishing Baselines • Emissions reductions are measured against a “baseline” or “reference case” – e.g., historic emissions levels • To prevent gaming, legislation should reward credits for company-wide reductions only – thus baselines must be company-wide – Only significant sources/gases need be included Center for Clean Air Policy September 1999 Baselines, II • Companies should submit inventories documenting base year emissions – Like national inventories: Emissions = Fuel consumption x emissions factor – Direct measurement not needed • Key verification issue centers on establishing accurate historic baseline proxy available w/ fuel consumption record Center for Clean Air Policy September 1999 Calculating Actual Emissions • As with baselines, should be calculated on a company-wide basis by multiplying activity data by emissions factors • Both baseline and actual emissions can be converted to emissions/output if necessary more difficult to choose metric w/ nonelectricity sources Center for Clean Air Policy September 1999 Verifying Reductions • Baselines should be certified prior to program inception - voluntary early redux depend fundamentally on this step • Actual emissions should be verified annually – Check math, activity data, emissions factors – Check numbers back to invoices, other records Center for Clean Air Policy September 1999 Private Sector Role in Verifying Reductions • May be useful to require third party verification of credits – Could be done by accounting firms (e.g., Big 6), verification firms (e.g., SGS) – Auditors would have to be certified, follow preestablished guidelines – Third party involvement would allow for more comprehensive auditing (as opposed to sampling a la IRS) Center for Clean Air Policy September 1999 Verifying 1605(b) credits • Will be necessary to separate legitimate reductions from others – Limit credit for single projects if company has not reported on company-wide basis • Process should be transparent, simple to implement – Not case by case analysis by implementing agency - too costly and time-consuming Center for Clean Air Policy September 1999 Verifying 1605(b) credits, II • One alternative: Reward credits to participants that surpass industry benchmarks – e.g., develop industry average for utility heat rate improvements and reward above that – bulk of redux so far are concentrated in certain industries and sectors - would not require that many benchmarks – cap available credits at 1% Center for Clean Air Policy September 1999 Problems with Voluntary Approach • Even rigorous verification will not ensure that credits are “real” if program is not structured properly – Baselines may be set to allow for nonadditional tons – Hard to use rate-based approach in sectors other than power – Participants may shift high-emissions assets elsewhere Center for Clean Air Policy September 1999 An Alternative Approach to Early Crediting • Early mandatory cap-and-trade program with auction (RFF) is preferable alternative • beginning in 2002, set overall cap equal to 1996 annual emissions level, auction permits with point of regulation upstream • allows “escape hatch” where companies can choose to pay $25/ton carbon in lieu of making full reductions Center for Clean Air Policy September 1999 Alternative Approach (cont) • provides greater environmental benefits – no questions about whether redux are real – less prone to gaming - transfer of assets does not avoid regulation or bolster early credit claims – assists in moving economy more smoothly toward Kyoto compliance Center for Clean Air Policy September 1999 Alternative Approach (cont) • simplifies verification problems – no issues regarding historic baseline – upstream so fewer entities to audit Center for Clean Air Policy September 1999 Conclusion • Verification of emissions should be straightforward if company-wide approach to early crediting is taken – Review activity data, verify emissions factors • Even so, the voluntary nature of the program introduces questions about credit quality • A mandatory approach to early crediting would be environmentally superior Center for Clean Air Policy September 1999