NESCAUM Greenhouse Gas Early Action Demonstration Project and the Northeast: Leading the Way on Climate Change

Brian Jones

In the early 1990s, the Northeast States for Coordinated Air Use Management (NESCAUM) initiated a multi-stakeholder project to demonstrate how nitrogen oxides (NOx) emission reductions made beyond regulatory limits could be used as the basis for an "open market" trading system. The resulting NOx emission reduction evaluation criteria and policy recommendations provided instrumental guidance to the subsequent development of state trading programs in the Northeast and beyond.

For those who are not familiar with NESCAUM, it is the first association organized for the purpose of providing technical assistance and policy guidance on a regional basis to state air pollution control agencies. NESCAUM was established in 1967 as an association of the six New England states, but expanded to include New York and New Jersey in the 1970s.

Following the successful conclusion of the NOx project, NESCAUM assembled a stakeholder group consisting of state representatives, industry and non-profit environmental organizations to discuss a similar approach for reducing greenhouse gas (GHG) emissions. The result, NESCAUM's Greenhouse Gas Early Action Demonstration Project (Demo Project) is a public/private collaborative developed to provide a forum for exploring the major issues surrounding voluntary early action to reduce GHG emissions. Towards this goal, participants have spent the last four years addressing and advancing the two primary Demo Project objectives, 1) public education and outreach, and 2) building consensus on broader policy issues, particularly issues that use emissions trading to promote emission reductions.

Phase I of the Demo Project focused on developing emission reduction project evaluation criteria and then using case studies as way to 1) test the criteria, 2) identify and address difficult technical and policy issues, and 3) provide templates for others to quantify their actions. Phase II of the Demo Project continued case study development, while focusing much of its efforts on addressing the numerous policy and design questions surrounding the development of state and regional GHG registries. Out of this, participants identified a need for more in-depth guidance on project-based reporting.

Unlike NOx, however, GHGs were not regulated at the Demo Project's inception. This made it difficult to develop guidelines and evaluate projects for potential emissions credit, since stakeholders did not have a clear idea of who would be regulated and how emission credits might be used. Because of this, many Demo Project stakeholders, including state representatives, expressed concern that promoting the criteria or specific case studies for emissions trading was premature.

This context has changed over the last year as several Northeast states have taken concrete action on reducing GHG emissions, laying a foundation for possible GHG trading. In support of Northeast states looking to develop their own GHG action programs, Phase II of the Demo Project worked to support changes in the policy landscape that would encourage emissions reductions and lay the foundation for emissions trading at the state and regional level.

With the assistance of work conducted in Phase II of the Demo Project, several Northeast states have either adopted or are considering voluntary GHG "early action" registries. Moreover, the New England governors and eastern Canadian premiers recently adopted an action plan that calls for the exploration of a GHG registry and trading program. (The Conference of New England Governors and Eastern Canadian Premiers has adopted a Climate Change Action Plan that calls for short-term, mid-term, and long-term GHG emission reduction targets for the region. Members of the group include Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, Quebec, Newfoundland, New Brunswick, Nova Scotia and Prince Edward Island.)

Though it is in the early planning stages, this effort has already benefitted from Phase II of the Demo Project, which focused largely on issues regarding GHG registry design. In addition, trading-friendly regulation has emerged, with Massachusetts's and New Hampshire's adoption of multi-pollutant control programs for existing coal-fired power plants that include limits on carbon dioxide (CO2). Both regulatory programs allow for emissions offsets and trading. Furthermore, the governor-appointed New York State GHG Task Force will be providing policy recommendations to reduce GHG emissions. Possible recommendations include a statewide emission reduction goal coupled with a CO2 cap and trade program for the electric generating sector.

These new state and regional initiatives share common needs. Chief among them are the development of:

• standardized guidance for evaluating and potentially crediting GHG emission reduction and sequestration projects; and
• comparable emission reduction registry systems

Building on the successes of the Demo Project, NESCAUM is currently exploring project ideas that will address these needs from a multi-stakeholder perspective. In addition to providing support for and coordinating policy initiatives among the Northeast states, future NESCAUM work may also focus on technical project evaluation issues through case study development. This would include refining project evaluation criteria (e.g., additionality, leakage, and monitoring and verification), providing project specific technical guidance for quantifying emission baselines and reductions, and identifying and discussing major policy issues (e.g., liability, geographic boundaries and project eligibility).

Over the past four years, the NESCAUM Early Action Demonstration Project provided a unique forum for state representatives, industry and non-profit environmental organizations to discuss the various technical and policy approaches for reducing GHG emissions. The project has successfully balanced the viewpoints of the stakeholder groups, thereby making considerable headway in the often contentious GHG policy debate. NESCAUM hopes to continue and extend the successful model of projects like the Demo Project as a way to support, coordinate, and strengthen the Northeast states' resolve to positively address climate change through broadly supported policy initiatives.

Brian Jones (bjones@mjbradley.com) is a policy analyst with M.J. Bradley & Associates, Inc., a strategic environmental consulting firm located in Concord, Massachusetts. He is the technical project manager for the NESCAUM Early Action Demonstration Project.