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EPA Offsets Experience and Analysis
Bill Irving
Climate Change Division
U.S. Environmental Protection Agency
April 28, 2009
EPA offsets experience and
activities
•
Program experience
•
Economic analysis
•
Offsets policy, design and implementation
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On-the-ground Experience:
Voluntary programs
• Non-CO2 programs, domestic and international
– AgSTAR, GasSTAR, Coal Mine Methane Outreach
Program, Landfill Methane Outreach Program, M2M
– source-specific experts who identify candidate sites,
conduct feasibility studies, and bring parties together
• Energy efficiency
– Energy STAR
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EPA Policy/Technical Experience
Relevant to Offsets
• Implementing cap and trade programs for
SO2/NOx
• National inventory work
– US inventory
– UNFCCC reporting, reviews
– IPCC methodological development
• Mandatory reporting of GHGs
• Capacity building in developing countries
– particularly for agriculture, land-use change and
forestry
4
Waxman-Markey Draft Domestic
& International Offsets:
Highlights
• Offsets have a strong impact on cost containment
– The capped sector uses all of international offsets allowed in all years of the policy
(1.25 billion tCO2e offsetting 1 billion tCO2e of capped sector emissions annually)
– International offsets produced from REDD, afforestation, and forest management
– The 1 billion tCO2e annual limit on domestic offsets is never reached due to
limited mitigation potential
– Without international offsets, the allowance price would increase 96 percent.
• Reduction in overall potential of domestic forest and agriculture sector
compared to previous results (EPA, 2005)
– Assumes that all offsets are available from start of policy and that no offset
categories are discounted
– Attributed to changes in demand for agricultural commodities, RFS2
requirements, income and population growth, etc.
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GHG Mitigation in Forestry and
Agriculture in Waxman-Markey
Draft
• Mitigation potential still quite large for sector and increasing
with price
– Highest mitigation potential generally from forestry practices
• increases in management intensity and rotation age with higher C prices
leading to more C in the forest and in HWP
• Relatively small potential from other agriculture categories
– There is already a lot of no-till and reduced- till in the baseline
(40+ % and rising over time)
– Rising C prices result in reduction of no-till acres as farmers
convert to forestry
– Use of conventional cropping methods to produce additional
biofuel feedstocks are netting out mitigation by farmers that are
implementing agriculture best management practices
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U.S. Forestry and Agriculture
GHG Offset Potential
1600
Other CH4&N2O
Animal Waste CH4
Soil Sequestration
1400
Afforestation
Forest Management
1200
800
600
400
200
0
2010
.
2020
.
2030
.
2040
.
$30 @ 5%
$15 @ 5%
$5 @ 5%
$1 @ 5%
.
$30 @ 5%
$15 @ 5%
$5 @ 5%
$1 @ 5%
.
$30 @ 5%
$15 @ 5%
$5 @ 5%
$1 @ 5%
.
$30 @ 5%
$15 @ 5%
$5 @ 5%
$1 @ 5%
.
$30 @ 5%
$15 @ 5%
$5 @ 5%
-200
$1 @ 5%
MtCO2e
1000
2050
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General Thoughts on Offsets
• Experience with cap and trade for SO2 and NOx
demonstrates the need to ensure integrity in the cap to
guarantee environmental objectives
• Offsets should be seen in this context, while recognizing
the role they can play in cost containment and leveraging
reductions in sectors outside the cap
• EPA advocated a top-down performance standard
approach for the CDM during early negotiations
• Redirection of efforts after Kyoto
– Development of offsets in context of Climate Leaders program
– Providing policy-neutral technical input to external offsets
programs (e.g., CCAR, WRI etc.)
– Studying implementation of CDM and other programs
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Offsets in USEPA Climate Leaders
Program
• Climate Leaders is an EPA industry/government partnership that
works with companies to develop comprehensive climate change
strategies
– Partner companies (numbering more than 200) commit to
setting aggressive greenhouse gas reduction goals and annually
reporting progress to EPA
• An important objective of the Climate Leaders program is to
focus corporate attention on achieving cost-effective reductions
within the boundary of the organization
• Partners may also use reductions and/or removals that occur
outside of their corporate boundary (i.e., external reductions or
offsets) to help to meet their goals
• EPA’s Climate Change Division has developed offset guidance based
on a top-down performance standard approach to address
additionality and to select and set the baseline
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Offsets Method0logies
• Accounting methodologies:
–
–
–
–
–
–
–
–
–
Commercial boiler
Industrial boiler
Landfill Methane
Anaerobic digesters
Transportation – Bus fleet
Afforestation/Reforestation
End-use of methane
Forest management (in development)
Coal-mine methane (in development)
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Looking Forward
• Continuing to work with Climate Leaders partners
• Continuing to work closely giving technical
guidance to external groups (e.g., CCAR)
• Providing policy-neutral technical assistance to
Congress upon request
• Engaging with stakeholders to understand views on
offsets
• Providing technical support to new EPA leadership
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Resources
• Climate Leaders Offset Methodologies and
Guidance
(www.epa.gov/stateply/resources/optionalmodule.html)
• EPA economic analyses (Waxman-Markey,
Lieberman-Warner, etc.)
(http://www.epa.gov/climatechange/economics/e
conomicanalyses.html)
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