Allowances, Offsets, Trading & Refunds in the ACES Act

The House version of the American Clean Energy and Security Act (ACES Act) of 2009 (H.R. 2454) includes the following provision regarding allowance trading:

SEC. 724. TRADING.

‘(a) Permitted Transactions- Except as otherwise provided in this title, the lawful holder of an emission allowance, compensatory allowance, or offset credit may, without restriction, sell, exchange, transfer, hold for compliance in accordance with section 722, or request that the Administrator retire the emission allowance, compensatory allowance, or offset credit.

‘(b) No Restriction on Transactions- The privilege of purchasing, holding, selling, exchanging, transferring, and requesting retirement of emission allowances, compensatory allowances, or offset credits shall not be restricted to the owners and operators of covered entities, except as otherwise provided in this title.

‘(c) Effectiveness of Allowance Transfers- No transfer of an allowance or offset credit shall be effective for purposes of this title until a certification of the transfer, signed by the designated representative of the transferor, is received and recorded by the Administrator in accordance with regulations promulgated under section 721(h).

‘(d) Allowance Tracking System- The regulations promulgated under section 721(h) shall include a system for issuing, recording, holding, and tracking allowances and offset credits that shall specify all necessary procedures and requirements for an orderly and competitive functioning of the allowance and offset credit markets. Such regulations shall provide for appropriate publication of the information in the system on the Internet.

An EPA "Offsets Integrity Advisory Board will determine what kinds of activities qualify as offsets.

The legislation also establishes an Offsets Integrity Advisory Board:

PART D--OFFSETS

‘SEC. 731. OFFSETS INTEGRITY ADVISORY BOARD.

‘(a) Establishment- Not later than 30 days after the date of enactment of this title, the Administrator shall establish an independent Offsets Integrity Advisory Board. The Advisory Board shall make recommendations to the Administrator for use in promulgating and revising regulations under this part and part E, and for ensuring the overall environmental integrity of the programs established pursuant to those regulations.

‘(b) Membership- The Advisory Board shall be comprised of at least nine members. Each member shall be qualified by education, training, and experience to evaluate scientific and technical information on matters referred to the Board under this section. The Administrator shall appoint
Advisory Board members, including a chair and vice-chair of the Advisory Board. Terms shall be 3 years in length, except for initial terms, which may be up to 5 years in length to allow staggering. Members may be reappointed only once for an additional 3-year term, and such second term may follow directly after a first term.

‘(c) Activities- The Advisory Board established pursuant to subsection (a) shall--

‘(1) provide recommendations, not later than 90 days after the Advisory Board’s establishment
and periodically thereafter, to the Administrator regarding offset project types that should be considered for eligibility under section 733, taking into consideration relevant scientific and other issues, including--

‘(A) the availability of a representative data set for use in developing the activity baseline;

‘(B) the potential for accurate quantification of greenhouse gas reduction, avoidance, or sequestration for an offset project type;

‘(C) the potential level of scientific and measurement uncertainty associated with an offset project type; and

‘(D) any beneficial or adverse environmental, public health, welfare, social, economic, or energy effects associated with an offset project type;

ACES makes provisions for low-income people:

SEC. 432. ENERGY REFUND PROGRAM FOR LOW-INCOME CONSUMERS.

(a) Energy Refund Program-

(1) The Administrator of the Environmental Protection Agency, or the agency designated by the Administrator shall formulate and administer the ‘Energy Refund Program’.

(2) At the request of the State agency, eligible low-income households within the State shall receive a monthly cash energy refund equal to the estimated loss in purchasing power resulting from this Act.

The Center lobbied for passage of ACES in the House and will now take our campaign to the Senate.