Harmonisation of LULUCF and American Clean Energy and Security Act

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer- client relationship. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

Print Friendly, PDF & Email

Date produced: 06/11/2009

1. What sentence(s) could be added to the US bill to make the US bill consistent with the rules under the KP? (ideally with only very minor changes)

2. What exception could be added for the US to the international language to accommodate the US approach to LULUCF?

Question 1

Response 1:

This addresses the issue of what specific language could be inserted into the draft American Clean Energy and Security Act 2009 (ACESA) to bring the US bill into line with the Kyoto Protocol, or another international agreement, governing emissions reductions and accounting of sources and sinks.

In light of your request that any alterations be limited to minor changes, we would recommend focusing on ‘‘SEC. 766:  UNITED STATES NEGOTIATING OBJECTIVES WITH RESPECT TO MULTILATERAL ENVIRONMENTAL NEGOTIATIONS.”  As Article 7 of the Kyoto Protocol does not account for such sources and sinks other than in certain tribal and State determinations of emissions accounting, the language proposed to be added to Section 766 should be broad enough to allow ACESA to account for the ratification of any new international agreements.

Specifically, we recommend adding a Sub-Section to Section 766 as follows:

Sec. 766

(b)  SINKS AND SOURCES. – In the event the United States ratifies an international agreement governing the reduction of global greenhouse gas emissions, the United States shall account for greenhouse gas emissions by sources and removals by sinks resulting from direct human-induced land-use change and forestry activity (limited to afforestation, reforestation and deforestation) in a manner consistent with such international agreement.  The Administrator shall adopt rules and procedures as appropriate to implement such changes and unilaterally make any further changes to Title VII as may be ancillary to such adoption.”

Response 2

This response analyses the ACESA as it currently stands and compares it to the LULUCF provisions in the Kyoto Protocol.

One aspect of this issue is how to harmonise an international regime which regulates nation states with the domestic US legislation which is focused on regulating individual emitters.  For an example of how this might work, we looked at how LULUCF is addressed in the UK, and found that it’s akin to the NEPA (National Environmental Policy Act) process in the US that requires projects, but only those using federal funds, to conduct an environmental impact statement assessing the potential impact that the project might have on the environment.  In the UK, projects must assess LULUCF impacts before getting a permit from the government to proceed.

Introducing such a process into the US climate change legislation would be a difficult task, likely requiring a new title in the bills.  That being said, this might be preferable to the direct regulation of emissions generated or sinks lost from LULUCF projects, which is discussed further below.

The Kyoto Protocol requires that Annex I Parties, in meeting their emission reduction commitments under Article 3, implement policies and measures to protect and enhance sinks and reservoirs of greenhouse gases (GHGs) and promote sustainable forest management, afforestation and reforestation and sustainable forms of agriculture.

We think the House climate bill (ACESA) does promote the protection of sinks and sustainable forest management, afforestation and reforestation though the establishment of the offset credit program that specifically provides in Title V for offset credits for a variety of LULUCF projects.

In fact, with respect to offsets, we think Kyoto and ACESA generally are in harmony:  you can generate offsets under both programs for certain LULUCF projects.

Moreover, looking at the Marrakesh Accords, it appears that ACESA actually allows for more LULUCF projects to qualify for credits than Marrakesh allows under the CDM. On Thursday 5 November, in fact, Senate Democrats introduced language that would add additional LULUCF projects to the list of those approved for offset credits.  So, if anything, ACESA goes further than the international programs re: offsets.

Kyoto regulates LULUCF in more than just the offset provisions, however, and this is where we think that it will be difficult to harmonize the US legislation with the international programs. (Ed: though see language suggested in response 1 giving the Administrator the authority to adopt rules and procedures in relation to accounting for GHG emissions by sources and removals by sinks as appropriate to implement changes and unilaterally make any further changes to Title VII as may be ancillary to such adoption.)

Under Kyoto, Annex I Parties must report emissions by sources and removals by sinks of GHGs resulting from LULUCF activities and count such activities towards the measurement of total GHG emissions.  Such a requirement is not included in ACESA.  In fact, Section 501 of the bill specifically carves out the agriculture and forestry sectors from those industries to be regulated under the cap-and-trade provisions.

If you wanted to amend ACESA to specifically include these sectors under the cap, this is where you would start.  There are a few other provisions of the bill that would need to be modified to regulate LULUCF under the cap, but in general it would be fairly easy to do.

That said, politically, we think it would be nearly impossible.  The agriculture and forestry industries are very powerful and nearly derailed ACESA in the House just over issues with offsets.  We think that bringing agriculture under the cap would 1) never happen, or 2) if it did, end any chances of passing ACESA.  Even adding a provision that would require reporting of LULUCF activities would be politically difficult, due to the perception that it would lead to regulation.

If you would like us to document which sections would need to change to capture LULUCF under the ACESA cap, let us know and we will mark-up the bill. Please note that this will take a fair bit of time given its length.

Response 3

Please note that this advice has been produced by an Australian lawyer.

The ACESA does not expressly address the US’s obligation to prepare its national communications to the UNFCCC or otherwise prepare national inventories.  Instead, it focuses on domestic GHG reporting obligations by covered US entities.

As such, there is no immediately obvious place to introduce a reference to maintaining a national inventory for the purposes of the UNFCCC and clarifying whether that national inventory includes human-induced LULUCF activities.  Introducing this concept to the ACESA would require quite substantial redrafting. It is not clear whether any other US legislation, for example the Clean Air Act, governs the preparation of the US’s national communication – this may need to be clarified with a US lawyer.

In terms of consistency between the LULUCF sectors in which offsets may be created under the ACESA and those the US elects to account for, the ACESA is non-prescriptive, instead leaving it to the Administration to determine eligibility based upon recommendations from the Advisory Board.

You could perhaps propose adding to the final sentence of sec.733(a)(1) “Domestic offsets from land use, land use change and forestry projects shall only be eligible to generate offset credits if the projects are in a sector that Administration has elected to account for under the [UNFCCC and any Implementing Agreement to which the United States is a Party].”

To address consistent baselines sect.734(a)(2) could be amended by adding the following words at the end of that sub-section:

“The Administration shall ensure that activity baselines [are consistent with] [have regard to] any relevant baselines adopted by the Parties to the [UNFCCC and any Implementing Agreement to which the United States is a Party].”

Question 2

Response 1

Any alteration to current international agreements would require the United States to be treated as an exception to the agreement, which would likely face extensive resistance.  For example, such a system would require a new category under the Kyoto Protocol designating the United States as an exceptional subset Annex 1 country, allowing it to opt out of accounting for sinks. (Ed: for proposals to amend the LCA text, please see response 3 below).

Response 2

Upon reviewing the AWG-LCA negotiating text we were unable to find language specific to the US meaning any reference to the US in relation to LULUCF would require a further proposal to amend the negotiating text.

Looking at the proposed new subsection on LULUCF, found on page 75 of the text (15 September 2009), which appears generally to restate the LULUCF provisions in Kyoto, we think we run into the same problems described above.  The US system simply would not cover LULUCF under its cap.  We are not familiar enough with the 1(b) provisions of the Bali Action Plan to determine whether the US position (cap not covering LULUCF, but promotion of responsible LULUCF through offset provisions) would allow it to participate in an international program that contains the proposed LULUCF language.  To us, there appears to be a conflict, but we know the Bali Action Plan allows for variation among the national policies, so the conflict may not be terminal.

Response 3

Non-paper 25 in the AWG-LCA stream already includes language that addresses electing to report on various LULUCF activities.  The text proposed at paragraphs 35-41 effectively replicate the provisions in Articles 3.3 and 3.4 of the Kyoto Protocol.  The only exception is that para 37 does not expressly refer to agricultural soils.  If you do not think this adequately addresses your concern that the US follow comparable rules to the KP in respect of Arts 3.3 and 3.4 let us know what additional information you would like include.