London, 12 May 2010

According to a draft summary seen by Point Carbon News, the bill will provide a list of categories for eligible international offsets including sector-based and avoided deforestation credits, as well as “credits issued by an international body”. The 21-page section-by-section summary of the American Power Act does not contain details on the bill’s key provisions, such as the amount of offsets emitters can use for compliance.

But the full text is expected to be released tomorrow afternoon, when bill authors Senators John Kerry and Joe Lieberman hold a press conference to unveil it.

Integrity

The draft says the Environmental Protection Agency ( EPA) administrator will consult with an independent “offsets integrity advisory committee” that will advise him/her on offset project eligibility.

The administrator will also consult with the secretary of state and the head of the US Agency for International Development on establishing the programme.

With advice from the integrity committee, the administrator would establish standardised project methodologies, as well as requirements regarding reduction reversals and crediting periods, according to the draft.

The bill also addresses procedures for project approvals, and directs the administrator to establish requirements for the verification of offset project performance.

Multi-billion Dollar

Domestic offsets are also a key feature of the Kerry-Lieberman bill, according to a four-page introductory document accompanying the summary.

It says US farmers are exempt from carbon caps and will be able to participate in a domestic carbon offset market, which would create a “multi-billion dollar revenue stream”.

Unlike the international offsets programme, the US Department of Agriculture would take the lead on implementing and creating the market – not the EPA.

The section-by-section summary lists several offset project types that would be eligible under the programme:

• Fugitive methane capture from coal mines, landfills and oil and gas distribution facilities;
• Agricultural, grassland and rangeland sequestration and management practices;
• Changes in carbon stocks attributed to land use change and forestry activities.

It also says that in order to ensure that there is an adequate supply of offset credits in the early years of the programme, credits will be issued for offsets from programmes that “meet specified criteria”.

The summary does not identify which programmes will be able to provide the early action credits, however.

The bill calls for random audits of offset projects, offset credits and practices of third-party verifiers to be conducted by an “appropriate official” or state governments.

Stabenow Bill

Sources engaged in bill negotiations have said the bill’s offsets title borrows heavily from a bill floated last year by Democratic Senator Debbie Stabenow known as the Clean Energy Partnership Act (Cepa).

Cepa establishes rules for the creation of an agricultural and forestry offset programme in the US, and also contains guidelines for credits from reduced emissions from deforestation and forest degradation (Redd) projects in developing countries.

That bill had the backing of industry groups, fence-sitting senators and both major farmers’ lobbies.

Ends --

By Valerie Volcovici, Point Carbon - for Commodities Now.

www.pointcarbon.com