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Seeing the Forest for the Trees: Sequestration Projects and the Waxman Markey Discussion Draft

Seeing the Forest for the Trees: Sequestration Projects and the Waxman Markey Discussion Draft. Alexia Kelly, Senior Associate akelly@wri.org Climate and Energy Program, World Resources Institute April 28 th , 2009 Washington, DC. High Level Overview.

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Seeing the Forest for the Trees: Sequestration Projects and the Waxman Markey Discussion Draft

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  1. Seeing the Forest for the Trees:Sequestration Projects and the Waxman Markey Discussion Draft Alexia Kelly, Senior Associate akelly@wri.org Climate and Energy Program, World Resources Institute April 28th, 2009 Washington, DC

  2. High Level Overview • There are lots of offsets in the WM DD • Sequestration reductions will play a large role • Several important provisions that impact sequestration projects

  3. The Role of Offsets in Cap-and-Trade Capped and Uncapped Sectors 165 tons Capped and Uncapped Sectors 175 tons 10 tons “offset” Uncapped Sectors 90 tons Uncapped Sectors 100 tons Capped sectors 75 tons Emissions 65 cap Emissions without Offset System Emissions with Offset System

  4. Sequestration Provisions • Project or activity-based offset credits • Sector-based offset credits • Reduced deforestation offsets credited at national level from developing countries • Supplemental ERs through international avoided deforestation fund • 720m by 2020 and 6B by 2025

  5. Project Types • EPA has 2 years to promulgate regulations • Silent on which project types qualify • Except for separate program for developing country reduced deforestation

  6. Additionality and Baseline • To qualify projects must be: • Regulatory surplus • Not commenced prior to Jan. 1, 2009 • Based on an “activity baseline” • To reflect a conservative estimate of business as usual performance or practice

  7. Reversals • Establishes reporting mechanisms • Liability assignment • At least one of the following: • An offset reserve • Insurance • Another mechanism

  8. Reversals Cont. • Liability assignment for project reversals: • Reversals must be addressed by Administrator by removal and cancellation of tons from reserve • PD required to replace cancelled tons from intentional reversals using an equal number of allowances or offsets • PD must replace number of tons that were withheld in offset reserve for specific project in the event of an unintentional reversal

  9. Leakage and Quant. Uncertainty • Calls for standardized methodology to address leakage and quantification uncertainty • To possibly include discounting

  10. Crediting Periods • Established at between 5 and 10 years for non-sequestration • Unspecified for sequestration • Unlimited crediting period renewals possible • As long as continue to meet standards

  11. Verification • Accredited third-party verifiers allowed • Must be accredited under ANSI or ISO 14065

  12. Conclusions • Sequestration reductions will clearly play a role, probably a large one • Things will change considerably between now and final bill passage • So fasten your seatbelts!

  13. Thank you!

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