Some Basic Issues in Developing a Credit for Early Action Program

Efforts to develop a credit for early action program to reduce greenhouse gas emissions involve consideration of many issues before such a program could be implemented. We identified four issues, stated here as questions, that will have to be addressed in developing a credit for early action program. (2) How should emissions reduction ownership be determined? While these issues appear straightforward, in fact, they are complicated and will require difficult choices. DOE’s Energy Information Administration and the Environmental Defense Fund have pointed out that determining ownership and reporting responsibility would influence the size and scope of a credit for early action program. What Is the Reporting Level for an Emissions Reduction? Many Claims for Reductions Reported to the Voluntary Reporting Program Would Probably Be Ineligible for Credit Under a Program With More Restrictive Criteria

Many of the claims for reductions of greenhouse gas emissions submitted to the Voluntary Reporting Program would probably be ineligible for credit depending on the restrictive nature of the crediting mechanism. While the voluntary program was designed to encourage wide participation by allowing companies to submit emissions reduction claims under flexible alternative reporting criteria, it was not designed to automatically provide emissions credits to participants. A program to grant credits for early actions taken to reduce greenhouse gas emissions would probably require more restrictive reporting criteria to help ensure that the reductions claimed are real, not being double reported by others, and accurately determined. According to information from DOE’s Energy Information Administration, the issues of (1) how emissions reductions should be estimated and (2) whether the emissions reduction claims should be reported at the organization, project, or some other level illustrate why many reported claims would probably be ineligible for credit. How Emissions Reduction Claims That Are Reported to the Voluntary Reporting Program May Be Considered Under More Restrictive Reporting Criteria

The following examples of actual claims of greenhouse gas emissions reductions that companies have reported to the Voluntary Reporting Program serve to (1) further illustrate the four basic issues that will likely need to be addressed in designing a credit for early action program and (2) show how such claims may be evaluated if more restrictive reporting criteria were established.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the Department of Energy's (DOE) proposal to develop a credit for an early action program promoting environmental cleanups, focusing on: (1) some of the basic issues that have to be addressed by any effort to develop a credit for early action program; and (2) how claims for reductions of greenhouse gas emissions that are reported to the Voluntary Reporting Program might fare under a credit for early action program that has less flexible reporting criteria.

What GAO Found

GAO noted that: (1) it identified four basic issues that will have to be addressed to develop a credit for early action program to reduce greenhouse gas emissions: (a) how emissions reductions should be estimated; (b) how emissions reduction ownership should be determined; (c) whether emissions reduction claims should be reported at the organization, project, or some other level; and (d) how emissions reduction claims should be verified; (2) on the surface, these issues appear straightforward; in fact, they are complicated and will require difficult choices; (3) furthermore, the resolution of these issues will likely influence the design of a credit for early action program; (4) the amount of flexibility such a program would provide on each of these issues would ultimately help to determine the extent of participation and the credit awarded; (5) many of the claims for reducing greenhouse gas emissions that have been submitted to the Voluntary Reporting Program would probably be ineligible for credit under a new program having more restrictive reporting criteria; (6) this is because the voluntary program was designed to encourage wide participation by allowing companies to submit emissions reduction claims under flexible reporting criteria and was not designed to automatically provide credit to participants for emissions reductions; (7) for example, the voluntary program, among other things, allowed companies discretion in determining the basis from which their emissions reductions were estimated and allowed companies to self-certify that their claims were accurate; and (8) according to DOE's Energy Information Administration and other organizations, such as the Edison Electric Institute and the Environmental Defense Fund, a credit for early action program could require more restrictive reporting criteria than the Voluntary Reporting Program to help ensure that emissions reduction claims are real, appropriately reviewed, and verified.