Inclusion of early action offsets in HB-2020 will help promote carbon offset project development
Earlier this week, amendments to the proposed Oregon Cap and Trade bill, HB 2020, were released that include the addition of early action carbon offsets. Of major importance for carbon offset project developers and managers, the amendment calls for the adoption of a process to issue early action offset credits for offsets that are generated once the bill is enacted through January 1, 2021. Allowing early action credits is imperative for ensuring early adopters are not excluded from entering the compliance market. The benefit for early adopters is being able to access the higher price per offset that comes from a compliance market as opposed to a voluntary market. Perhaps more importantly, early action provides an incentive for projects to be implemented today as opposed to waiting for the compliance market to start. This leads to emission reductions or avoided emissions that will benefit the atmosphere now. There are a variety of carbon offset projects already implemented in Oregon that could transition from the voluntary to compliance market. While specific protocols have yet to be developed, and released for quantifying the greenhouse gas reductions from carbon offset projects, forestry and grassland projects are expected to be included.
As currently written, only offsets that are generated once the bill is passed will be allowed to enter the compliance market. However, carbon accounting generates credits on a yearly basis. If the bill is passed in June, it will be difficult to differentiate between which credits were generated pre-passage and post passage in the same vintage. The early action section of the bill should be adjusted to allow all offsets from 2019 vintage in the Oregon compliance market.
An assurance of higher offset prices through the compliance market will help make projects more financially viable and increase the rate of carbon project adoption. Early action offsets will help ensure that carbon projects are brought to fruition rapidly, bringing financial and environmental benefits to landowners and all Oregonians.