GAO Report on Voluntary Emission Crediting

by William Yeatman on January 1, 1999

in Politics

A new attempt to implement the Kyoto Protocol without Senate ratification is underway. A bill introduced by Senators John Chafee, Connie Mack and Joseph Lieberman, would give early credit to U.S. industries for reductions in carbon dioxide emissions. These credits, in theory, could be applied to reductions that would be required under the Kyoto Protocol. The Government Accounting Office has determined that there would be several difficulties to overcome:

  • “how to determine what qualifies as a creditable reduction of emissions;

  • determining who owns the emissions reductions;

  • whether emission reductions should be reported at the organization, project, or another level; and

  • how claims of emission reductions should be verified.”

These issues, the GAO report said, “are complicated and will require difficult choices” (BNA Daily Environment Report, December 22, 1998).

The bill, S.2617 “Credit for Voluntary Early Action Act,” is rapidly gaining support from the business community as a means to lessen the pain of emissions reductions in the event of ratification. What many have seemed to miss or ignore is that such a bill would give the Environmental Protection Agency (EPA) all the tools necessary to begin implementation of the Kyoto Protocol without ratification and would repudiate the Byrd/Hagel resolution. The bill would put into place all of the necessary monitoring, measuring and enforcement tools necessary to implement Kyoto.

The EPA, for example, has various permitting schemes and enforcement efforts that give it leverage. EPA gets to negotiate credits arrangements with companies. So a company seeking permit approval under Title V of the Clean Air Act, or a company seeking to negotiate a settlement in an enforcement case, may experience EPA pressure to pursue credits as a tacit condition for permit approval.

Another problem with the bill is that there is no provision for early credits under the Kyoto Protocol. Thus, all early credits granted by the federal government would be subtracted from the U.S. target. This means that any reduction in one firms emission reduction requirement would increase anothers reduction requirements, turning the program into a huge rent-seeking boondoggle. Furthermore, the bill assumes the existence of emissions trading under the Kyoto Protocol, even though negotiations on emissions trading are at a standstill. If no emissions trading system materializes then credits for early action will be worthless.

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