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May 12, 2010 by Victor Flatt

Kerry-Lieberman Creates Some Added Certainty on Offsets

The Kerry-Lieberman bill's provisions on offsets are largely similar to those in the Waxman-Markey and Kerry-Boxer bill, but include a number of changes that make more specific policy choices in the use of offsets.

First, the proposal enumerates a specific lengthy list of eligible offset categories (whereas Waxman-Markey didn't list specific categories, instead giving instruction for a regulatory decision). This change  might assist in providing market liquidity. In terms of offset regulation, there seems to be a complex dance between the EPA and the USDA, which requires consultations between the two in most cases for offset designation and removal.  The USDA is given the primary role over agricultural and forest offset approval while the EPA has a similar role over other offsets; as I've written before, this could be potentially problematic if the USDA is not up to the regulatory task.

Environmental consideration of offsets is still present for sequestration projects, particularly to protect habitat and native species (proposed new CAA 735(h)), and general environmental considerations may even be stronger. For instance, as in both Waxman Markey and Boxer-Kerry, Kerry-Lieberman would create an advisory committee that proposes offsets and offset rules to the regulator.  But in …

May 12, 2010 by Victor Flatt
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While Kerry and Lieberman (and before two weeks ago, Graham) have tried to pitch the proposed new Senate climate and energy draft legislation as a “game-changer” the truth is that, aside from the stronger preemption language limiting the states, its effect is not terribly different from what has come before. Sure, there are sweeteners for the conservascenti, such as enhanced loan guarantees and permit streamlining for nuclear energy, continued support for carbon capture and sequestration, removal of a natural gas “penalty,” and ostensibly an opening up of now closed offshore oil areas. But whether this would be different than what would have happened by adoption of the ACES bill is questionable.

ACES also allowed the coal industry to continue with the help of monetary support of carbon capture and sequestration. As for increased offshore oil drilling, even with revenue sharing, opening new areas is going to be …

May 4, 2010 by Victor Flatt
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Monday April 26 was supposed to be the day that the much anticipated Kerry-Graham-Lieberman climate change bill was to be proposed in the Senate. Hopes had gone up that there could be a legislative solution to putting a price on carbon. The carbon markets themselves had responded, pushing up the price of allocations on RGGI in the hopes that these would be allowed to qualify for the expected federal cap and trade. Then over the preceding weekend, it fell apart. Senator Graham criticized the call from Majority Leader Reid to also take up a comprehensive immigration reform bill, claiming that it was driven by Senator Reid’s own political needs to increase his chances of retaining his Nevada Senate seat.

There is no doubt that this played an important piece in the very difficult political dance that has surrounded the emergence of the KGL plan. Senator Graham …

April 23, 2010 by Victor Flatt
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On Monday, the Environmental Defense Fund announced that it had reached a settlement with Tenaska Inc. to withdraw opposition to that company’s proposed “Trailblazer Energy Center,” a 600 megawatt coal fired power plant in West Texas. In return for dropping its objections, the EDF signed an agreement with Tenaska that the company will sequester 85% of the CO2 it produces, selling much of the gas to companies who will use it for enhanced oil recovery (EOR) in the West Texas Permian Basin oil field.

The agreement is stunning on many levels. Trailblazer is the first large-scale proposal (and presumably will be the first operational coal fired power plant) to sequester significant amounts of the CO2 it produces. It is also the first large-scale use of enhanced oil recovery as a market for captured CO2. Last, it firmly and finally illustrates the reality of the fate of …

Feb. 12, 2010 by Victor Flatt
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The concept of cap and trade took another hit recently with disclosures that hackers had been able to get into the accounts of several holders of carbon emissions allowances in Europe and steal some of the account balance. This, along with the continued snowstorm in Washington, D.C. seems to fill those opposing a federal comprehensive cap and trade plan with glee.

While the issue of record setting snows in D.C. should be addressed with basic scientific education (trends and averages are not the same as one time events; snow often results from warmer temperatures, etc…) the issue of possible fraud in carbon trading systems deserves examination to see if there is such a systemic problem with cap and trade that it is more subject to fraud and manipulation than other markets.

The short answer to this question is “no.” The fraud perpetrated on the E …

Jan. 25, 2010 by Victor Flatt
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The Supreme Court’s decision in Citizens United was not entirely unexpected, but it is appropriately seen as a breathtaking change in the way elections work in this country. The Supreme Court struck down federal campaign finance rules that limit corporate (and general organizational) spending on campaign finance ads to help or defeat candidates.

What can we expect now? One need look no further than Texas, which has no campaign restrictions in any statewide races. In Texas, large corporations and individuals have given millions of dollars to candidates and ads supporting them in one election cycle.

While this can be hugely influential on state legislation, at least legislation remains ostensibly open and in the public eye. Texas does have laws that may be seen as more favorable to corporations (such as low limits on medical malpractice compensation and a conservative tax structure), but all in all, the …

Dec. 17, 2009 by Victor Flatt
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As we move into the last days of climate negotiations in Copenhagen, the chances of securing a binding agreement of all countries continues to look less and less likely. The primary culprit, according to the New York Times, is the G77, a group of 130 developing countries that have negotiated as a block since arriving. But as the Times notes, since they have very different needs and incomes, the main thing they have in common is their ability to rail against the rich developed world and hold up negotiations. Indeed, it seems that the main impediment to progress (at least from the perspective of the organizers) has been the continued focus on process rather than substance.

As any progressive knows, the G77 countries certainly have a lot to rail against, in terms of unfairness in many arenas, including climate change. Unfortunately, being right doesn’t always mean …

Dec. 16, 2009 by Victor Flatt
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There are two separate meetings going on here in Copenhagen, really. The one that everyone is focused on is the official negotiations between the countries to reach a new binding agreement on climate change (or extend Kyoto in some form). The other “meeting” is the interaction of the observer organizations inside and outside of the side event meetings and their informal reports to the official delegations. This second “meeting” is more amorphous, and more subject to chaos (the security clearance for credentialed observers has required more than seven hours of waiting in the cold and this morning (Wednesday) was suspended indefinitely). Nevertheless, it appears to me that there is some significant progress being made.

While here, I've focused on the intersecting issues of the carbon market, offsets and adaptation assistance to affected countries. From the official reports, it appears that little has happened in these areas …

Dec. 7, 2009 by Victor Flatt
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Today, the 15th Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) opens in Copenhagen. I will be a credentialed observer from non-governmental academic and research organizations including the Center for Progressive Reform and the Center for Law, Environment, Adaptation, and Resources (CLEAR) at the University of North Carolina School of Law.

In this space I have particularly focused on the carbon trading market and the use of offsets in the context of domestic legislation; in Copenhagen, I will continue to focus on the implications of any decisions regarding offsets and the carbon market, and whether or not this will in turn affect the U.S. debate and legislation. Because offsets raise concerns of co-harms and benefits, and because much of this harm or benefit will occur in the developed world I will be examining issues concerning adaptation as well …

Sept. 30, 2009 by Victor Flatt
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This post is first in a series from CPR Member Scholars examining different aspects of the Boxer-Kerry bill on climate change, which was released today.

With respect to offsets, the Boxer-Kerry bill is a distinct improvement over the ACES. It allows a relatively strong approach to offset integrity, avoiding negative social or environmental effects, and facilitating possible integration with other systems. It also addresses some issues that will be important to the functioning of a trading market, but still leaves some uncertainties that could cause problems in the market.

Probably the most important difference between the bills is that the Boxer-Kerry bill does not specify which agency would be in charge of administering and ensuring the integrity of any offset program. In the House bill, a last minute compromise switched all of the administration of biological sequestration offsets to the USDA from the EPA, a change widely …

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