Environmental advocates
released a report today, Stopping Global Warming Begins at Home: The Case Against
the Use of Offsets in a Regional Power Sector Cap-and-Trade Program; which calls
on Northeast officials to stick to their commitment to reduce carbon dioxide
emissions from power plants. The report documents that 50% of the region's electric
sector carbon dioxide emissions come from the 20 dirtiest plants and urges officials
to reject industry proposals to allow plant owners to avoid real emission reductions
by offsetting them with reductions in other sectors and other regions. To ensure
meaningful pollution reductions, advocates called for the region's power plants
to reduce their carbon dioxide emissions by, at least, 10% below current levels
by 2010 and 25% below current levels by 2020.
"We were encouraged
by the Northeast Governors' commitment last year to reduce global warming pollution
from power plants," said Cindy Luppi, Clean Water Action Organizing Director.
"However, doubt will be cast on the commitment unless there is a guarantee
that pollution will be significantly reduced from current levels."
Since the fall of 2003,
at the direction of their Governors, officials in nine Northeast states began
working a proposal to limit carbon dioxide emissions from power plants in the
region, through a process known as the Regional Greenhouse Gas Initiative (www.rggi.org);
with a plan of unveiling a model rule by April of 2005. While energy and environmental
officials from the Northeast States have stated their intention to cap emissions,
they have not committed to any specific target for reductions.
The plant owners and others,
including the nuclear industry, are seeking to allow the reductions at facilities
other than the fossil fuel plants regulated under the program and from activities
beyond the electric industry or outside the region to meet the cap.
"If plant owners and
other interests successfully persuade officials to create loopholes that allow
the region's biggest greenhouse gas emitters off the hook for reducing their
share of global warming emissions, the region's commitment to lead on reducing
global warming from power plants could be meaningless," said Rob Sargent
of the National Association of State PIRG's. "The more complex this rule
becomes, the easier it will be for a variety of corporate interests to game
the process and zero out ultimate benefits to the climate."
The groups are particularly
concerned with the state officials' willingness to considering the industry
"flexibility" proposals because officials had clearly stated that
the first phase of the program would only allow trading with the cap between
power plants and not allow offsets as the following excerpt from the RGGI Goals
and Principles suggests:
The program shall start
simply and develop over time. The initial phase of the cap-and-trade program
will entail the allocation and trading of carbon dioxide allowances to and by
sources in the power sector only. In a subsequent phase of the program, states
and stakeholders will work together to develop reliable protocols for offsets
(i.e., creditable reductions outside the power sector) that may be used to achieve
compliance with the cap.
"By launching the
RGGI process the Governors of the Northeast have embarked on a journey that
may well lead to the first multi-state regulation of greenhouse gas pollution
in the U.S., an immense accomplishment if successful." Noted Seth Kaplan,
Director of the Clean Energy and Climate Change Program at the Conservation
Law Foundation. "However, the Govs need to resist efforts to hijack this
laudable effort by immediately engaging the question of the 'cap' on emissions
each state would see and rejecting the hollow promise of offsets of dubious
quality."
According to the report, the reasons for shunning offsets in the regional cap
and trade program include;
1. Offsets reduce the certainty
of achieving real emission reductions since they are difficult to verify, there
is the potential for the shifting of pollution with no actual reductions and
there is a great risk that emission reductions that would have occurred anyway
are given credit.
2. Offsets reduce the associated
benefits of achieving emission reductions within the region.
a. Requiring that emission reductions be achieved at power plants within the
region (as opposed to through the purchase offsets from elsewhere) would encourage
the renovation, re-powering or closure of some of the region's oldest, dirtiest
and least-efficient power plants.
b. In 2000, approximately half of all carbon dioxide emissions from power plants
in the RGGI region came from just 20 power plants. These plants produced twice
as much carbon dioxide per unit of power produced as the regional average. They
also emitted:
· 38 percent of the region's power-sector emissions of mercury,
· 64 percent of the region's power-sector emissions of acid rain causing
sulfur dioxide, and
· 47 percent of the region's power-sector emissions of smog-forming nitrogen
oxides.
3. A strong regional carbon
cap without offsets could provide further momentum in the region's efforts to
achieve a cleaner, more reliable electric system by making greater use of renewable
energy and improved energy efficiency. One recent estimate by Synapse Energy
Economics found that such an approach - if adopted nationally - would reduce
carbon dioxide emissions while generating $36 billion annually in savings by
2025.
The report makes the following
recommendations:
· The Northeast Governors and their staff involved in the RGGI process
should stick with their originally stated goals and principles by not incorporating
the use of offsets until after the core cap-and-trade program is designed and
the model rule is adopted.
· States should first determine the cap level they can achieve without
the use of offsets. Offsets or other "flexibility" mechanisms should
only be considered if the carbon dioxide cap adopted through the RGGI process
is strong - requiring emission reductions of at least 10 percent below current
levels by 2010 and 25 percent below current levels by 2020.
· Should offsets eventually be included in a later phase of the program,
the Northeast should adopt a conservative approach, requiring that:
o Offsets be generated only within states participating in the cap-and-trade
program. Offsets from outside RGGI will be difficult to enforce and allowing
them will reduce the incentive that other states have to join the program. In
addition, dollars paid by consumers in the RGGI states should go towards emissions
reductions and investments here at home.
o Strong provisions are established to assure that offsets represent real, surplus,
and enforceable emission reductions.
o Nuclear power projects and other environmentally damaging technologies not
be eligible for offsets or otherwise obtain a market advantage for being zero
emitting in any cap-and-trade system.
o Offsets be limited to no more than 5 percent of the total number of emission
allowances issued. This would allow for demonstration of the viability of an
offsets program while limiting the potential damage that a poorly designed program
could inflict.
o The benefits of offsets are shared equally between those covered by the cap
and the environment. For example, a decision to allow 10,000 tons of offsets
should be paired with a reduction in the cap of 5,000 tons.
