As the American Clean Energy and Security Act makes its way through the House Agriculture and Ways and Means Committees, offsets continue to crop up as a major point of contention. While understanding of offset markets matures, RFF continues to identify and address important economic and logistical issues of concern.
Last month, RFF hosted a joint workshop with the EPA entitled “Modeling the Costs and Volumes of GHG Offsets.” Experts in forest, non-CO2 gas, and agriculture offsets came gathered for a technical discussion about the state of offset modeling and how it can contribute to the design and implementation of offset policy. The presentations from each panel are available here. Some of the major themes highlighted by the panelists include:
Forestry
- Forest offsets show huge potential to sequester carbon and control costs, but there are many challenges to implementation.
- Threats to the integrity of offsets include tracking and measuring emissions leakage, establishing clear additionality, and assuring reliable levels of permanence.
- Heavy use of forest offsets suggest major land use changes both in the U.S. and in other countries, though land conditions could substantially affect the potential for offset usage.
- Contracts may be useful in some situations for dealing with leakage, permanence and other issues, but national standards may be needed in other contexts.
Non-CO2 gases
- Non-CO2 gases are major climate forcings and their mitigation costs are often lower than energy-related CO2.
- The economics of inpidual projects are relatively well-understood, but the sectoral cost curves are less clear.
- More guidance from government is necessary to reduce investment risk and encourage early action on offset opportunities.
Agriculture
- Models indicate that agriculture offsets will not play as big a role domestically as forestry-related offsets, but higher prices will bring more agriculture offsets into the market.
- Agriculture offset opportunities may exist in areas where afforestation or other types of offsets are not realistic.
- Technology may play a key role in providing more offsets.
