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International Offsets and U.S. Climate Change Legislation

June 2010

Citation: 40 ELR 10610

Issue: 6

Author: Kyle Danish and Megan Ceronsky

The United States has a complicated relationship with international offsets. During the Kyoto Protocol negotiations, the United States was a forceful advocate for integrating offsets into the international regime--ensuring that market-based mechanisms and an international trade in emission reductions became a part of the Kyoto framework.

Yet, like the Kyoto Protocol, the fate of international offsets in the context of American climate change mitigation efforts rests with the U.S. Congress. There are strong drivers supporting the integration of international offsets into U.S. climate legislation; there are also factions unknowledgeable about and deeply uncomfortable with international offsets.

The outcome of the tug-of-war between international offset advocates and detractors in Congress is not greatly in doubt. Any U.S. climate change legislation is likely to incorporate international offsets because of the dramatic cost savings they promise, and their role in promoting action by other countries. What remains uncertain (beyond the timing of U.S. legislation) are the conditions under which international offsets will be utilized. An international offsets program hamstrung with criteria that are impossible to meet or mechanics that generate high levels of market uncertainty may not differ significantly from a domesticonly offsets program.

Kyle Danish is a partner at Van Ness Feldman and leads the firm's Emissions Trading and Climate Change Practice. Megan Ceronsky is an associate at Van Ness Feldman.

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