Position Paper on Credit for Early Action

ICCP: Position Paper on Credit for Early Action

Overview

        Voluntary efforts to reduce emissions of greenhouse gases prior to the commencement of a mandatory commitment period can slow the rate of growth of emissions and contribute to the longer-term goal of achieving appropriate greenhouse gas concentration levels. In circumstances where there is marginal value in an emission reduction investment, granting credit may provide the incentive for such investments.
        Companies that have already taken action or are contemplating doing so want to ensure that these contributions are not ignored when a mandatory phase of emission reductions begins. Failure to recognize these contributions could unfairly force companies to make reductions through increasingly more costly options. This would have the perverse effect of penalizing those companies who act early, while potentially benefitting competitors who save their least costly reductions to respond to regulatory mandates.
        Industry's aim is to ensure that these early investments that result in emission reductions are recognized and "credited." Such credit could be used to offset future obligations that may arise from any domestic allocation, cap, tax or permit program or sold to parties unable to meet their obligations in a cost-effective manner.
        It should be noted that credit for early action programs could have important linkages to potential domestic or international emissions trading systems and international flexibility mechanisms such as Joint Implementation and the Clean Development Mechanism. For example, a company might earn credits through the Clean Development Mechanism prior to 2008 and want to apply them against domestic obligations. Or a "downstream" company may accrue early credits and not be allocated a budget. It would therefore want the right to trade such credits either domestically or internationally.

ICCP Credit for Early Action Principles

Credit for early action programs will require new statutory authority. Failure to enact a credit program at the Federal level may stop companies from making commitments now and encourages a patchwork of inconsistent Federal, state, and local initiatives.

No limit should be placed on the amount of emissions reductions or enhancement of sinks for which early action credit can be earned.

Credit should be granted for actions resulting in verified emissions reductions or enhancement of sinks that occur between 1990 and the beginning of any official budget commitment period, whether or not such actions were part of a government-sponsored voluntary initiative.

A process should be established to determine and "lock-in" appropriate baselines for emission reduction activities including facility operations, product-based initiatives, and enhancement of sinks. Such a process should be flexible enough to reflect special circumstances, including unique considerations related to reductions already achieved.

Credits granted prior to a first budget commitment period should be available without discount as offsets against any greenhouse gas emission allocation, cap, tax, permit, or other requirement to limit or reduce greenhouse gas emissions that subsequently may be imposed.

Credits granted prior to a first budget commitment period should be usable in any national emission budget that may be subsequently imposed. Credits should remain with the earning entity for use at their discretion.

Emissions reductions or enhancement of sinks produced from participation in the Clean Development Mechanism, Joint Implementation, or a domestic emissions trading program should be eligible for early action credit if they occur prior to a first budget commitment period.

Credits generated from credit for early action programs should be eligible for emissions trading.

Credit accounts should be updated on an annual basis.

Credit programs should be integrated to ensure consistency and to avoid "double counting".

The International Climate Change Partnership (ICCP), organized in 1991, is a global coalition of companies and trade associations from diverse industries committed to constructive and responsible participation in the international policy process concerning global climate change. The ICCP recognizes that the continued growth in emissions of greenhouse gases is an important concern for all nations and that efforts are underway internationally and in national governments to develop policies that address this concern. ICCP also understands the importance of working within the process to achieve important environmental objectives while fostering continued economic development and improvement in living conditions for all.

October, 1998

For more information, please contact: ICCP, 2111 Wilson Blvd., Ste. 850; Arlingon, VA 22201; Telephone: 703-841-0626; FAX: 703-243-2874; e-mail: iccp@alcalde-fay.com