Cologne, Germany (Platts)--9May2008

A new draft of the leading US climate change bill would allow for greater
use of carbon offsets from the developing world in the form of new energy
projects and forest preservation, a former Senate aide said Thursday.
Speaking at the Carbon Expo meeting in Cologne, Germany, Kenneth
Connolly, vice president of government relations with the Washington-based
lobbying firm ML Strategies and a former chief of staff to the US Senate
Environment and Public Works Committee, said a modified version of the bill by
US Senators Joseph Lieberman, Independent-Connecticut, and John Warner,
Republican-Virginia, has been developed.
The new draft of S. 2191 makes changes to the provisions for the use of
offsets to meet emissions caps, he said, including "a direct 5% connection to
the Clean Development Mechanism...and they have added a 10% requirement for
forestry [credits] too."
Connolly said he has yet to see a copy of the revised measure and could
not provide any more details. Sources close to the issue said Friday
that the revised bill will be made public next week.
The current version of the bill does not allow the use of credits from
the CDM and instead would allow only US domestic offsets to meet up to 15% of
individual compliance targets.
In addition, the current version proposes allowing companies to use
international carbon allowances from non-US greenhouse gas cap-and-trade
schemes, such as the EU Emissions Trading Scheme, to meet up to 15% of their
caps.
According to Joel Bluestein of consultants ICF International, the offset
limits contained in the original bill would allow around 800 million to 1
billion metric tons of offsets and international allowances to be imported
into the US.
Connolly said he does not expect a climate-change bill to pass Congress
this year and described the Senate floor debate scheduled to begin next month
on the Lieberman-Warner bill as a "practice session." The real game, he added,
will come in the next Congress, with a new president in office.
Connolly said he believes that under the most optimistic timeline, the
earliest date for passing a bill would be 2010, though 2011 is more likely.
As a result, a US cap-and-trade program would likely only be implemented
some time after 2012, and most likely 2014, he added.