New Report Presents Options For Designing An Economically Viable, Environmentally Sound U.S. Greenhouse Gas Offsets Policy

May 15, 2008

Contact: Lydia Olander, (919) 613-8713 or lydia.olander@duke.edu

DURHAM, N.C. – As the U.S. Senate prepares to debate the Lieberman-Warner “America’s Climate Security Act,” a new report from the Nicholas Institute for Environmental Policy Solutions at Duke University offers a practical option for designing a nationwide greenhouse gas (GHG) offsets policy that meets environmental goals without creating a process so onerous it discourages participation.

The report was written by Lydia Olander, senior associate director for ecosystem services at the Nicholas Institute.

It presents an example architecture for a legislative provision that encourages “uncapped” domestic and international emissions reductions and sequestration among entities that fall outside the legislation’s mandatory cap, with enough rigor and transparency to meet environmental goals. 

“Designing a voluntary GHG offsets program that creates a tradable commodity that can be used to meet compliance obligations is one of the most complex parts of a climate change policy,” Olander explains. “To be successful, the program will require the government to develop strict scientific standards that can be used to distinguish those projects with real mitigation benefits, and measure and verify those benefits. It also will require clear standards to establish a safe investment environment, and sound approaches for addressing leakage and permanence. The framework proposed in our report addresses these challenges.”

Olander wrote the report with input from a working group of economists, scientists, lawyers, traders and policy analysts at more than two dozen stakeholder organizations.

The architecture they present can be applied to any mandatory “cap and trade” policy that allows uncapped GHG mitigation – i.e., reductions in sectors of the economy that are not covered by the cap – to be used as offsets for emissions obligations of capped sectors. For the purposes of the report, however, it is discussed in the context of America’s Climate Security Act of 2007 (S. 2191 Lieberman-Warner), which passed out of the Senate Committee of Environment and Public Works last December and will be debated by the full Senate this summer.

The report includes discussion of additional policy elements to:

• reduce the costs of a mandatory GHG program by increasing the flexibility of compliance;
• encourage innovation and accelerated development of new GHG reduction technologies and methods in uncapped sectors;
• ensure a dynamic program that ties incentives to real reductions so that the program does not become an entitlement; and
• align GHG programs with other environmental objectives.

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NOTE TO MEDIA: For help reaching Olander, contact Eric Roston at eric.roston@duke.edu or (202) 797-6500, or Tim Lucas at tdlucas@duke.edu or (919) 613-8084.