Offset Mechanism Design Issues

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Offset MechanismDesign Issues

• Offsets Subcommittee
• Tim Lesiuk, Province of British Columbia
• January 10, 2008
• Portland, Oregon

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Overview

• Offsets Subcommittee
• Mission
• Members
• Work Plan
• Work Plan Comments
• Major Options
• Offset Mechanism
• Location
• Quantitative limits
• Project Types
• Linkages

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Offsets Subcommittee

• Mission
• Members
• Work Plan
• Work Plan Comments

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Mission

• Recommend whether to include a greenhouse gas
  offset mechanism as an element of the Western
  Climate Initiative cap and trade system, and if
  so,
• Recommend design, scope and operation of such a
  mechanism.

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Members


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Workplan

• Task 1 Role of an offset mechanism
• Identified in workplan
• Comments received
• Task 2 Core design elements
• Identified in workplan
• Comments received
• Task 3 Project eligibility and fungibility
• Released prior to workshop
• Comments requested
• Task 4 Mechanism structure and authority
• Pending outcome of Tasks 1, 2, and 3

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Workplan Comments

• Support for offsets as a compliance mechanism
• suggestion of a limited or short-term role
• Broad support for a wide variety of project types
• General interest in limiting transaction costs
• No clear opinion on quantitative limits for
  offsets
• Simple and robust approach to determining real
  and surplus / additional
• Mixed support for offsets from outside the WCI
  jurisdictions
• Suggestions of specific models and resources for
  how WCI could administer an offset mechanism

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Major Options

• Offset Mechanism
• Location
• Quantitative limits
• Project Types
• Linkages

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Offset Mechanism

• Should the WCI allow offsets as a compliance
  mechanism?

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Location

• Should the WCI only allow offsets from projects
  located within the Partners jurisdictions?
• Should the WCI allow offsets from projects
  located outside the Partners jurisdictions?

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Quantitative Limits

• Should there be quantitative limits on the use of
  offsets to meet compliance obligations?

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Project Types

• Should the WCI decide upon an initial list of
  approved project types prior to cap-and-trade
  design?
• Should the WCI allow offsets from sources capped
  and regulated by the cap-and-trade system or from
  indirect emission reductions in sectors covered
  by the cap-and-trade system?

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Linkages

• Should the WCI link directly with other,
  similarly rigorous cap-and-trade programs and
  allow fungibility of allowances among the
  systems?
• Should the WCI allow the use of allowances from
  other, similarly rigorous cap-and-trade programs
  to be used as a compliance mechanism by capped
  sources in the WCI?

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