Western Climate Initiative

Currently being designed, anticipated to begin January 2012 (as of 1/2011)

www.westernclimateinitiative.org


Overview
Market Size and Scope
Offset Project Eligibility
Additionality Requirements and Project Methodologies
Project Approval Process

Selected Issues

References


Overview

Type of Standard and Context

The Western Climate Initiative (WCI) is a multi-jurisdictional collaboration that seeks to develop regional strategies to address climate change in North America.  WCI Partners include 11 jurisdictions – Arizona, California, Montana, New Mexico, Oregon, Utah and Washington in the US; and British Columbia, Manitoba, Ontario and Quebec in Canada. Other states and provinces in Canada, Mexico and the US have joined as observers. The program will begin in January 2012 with the jurisdictions that have implemented the program.

On August 22, 2007, consistent with previously established state and provincial goals, the WCI Partners announced its regional goal to collectively reduce emissions to 15% below 2005 levels by 2020.

In July 2010, the WCI Partner jurisdictions released the Design for the WCI Regional Program, which lays the groundwork for a regional cap and trade program and other strategies to meet the regional goals. The design for the WCI cap and trade program defines regulated entities as facilities that exceed the emissions threshold of 25,000 mtCO2e from electricity generation, combustion at industrial and commercial facilities, and industrial process emission sources. From Jan. 1, 2015, the scope of regulated entities under the cap will be extended to include the coverage of emissions from residential, commercial, industrial fuel combustion facilities, as well as transportation fuel combustion from gasoline and diesel. Offsets and allowances from other trading systems will be used as a limited compliance mechanism under the WCI system and may make up no more than 49% of the total emission reductions from 2012-2020. WCI Partner jurisdictions may independently further limit the use of offsets. Final recommendations on offset design were published in July 2010 in the Offset System Essential Elements Final Recommendations Paper.

Standard Authority and Administrative Bodies

WCI Partner jurisdictions have formed seven committees which serve to analyze technical aspects of the regional program design and provide recommendations to its Partners.  The committees are: Reporting Committee, Cap Setting & Allowance Distribution (CSAD) Committee, Markets Committee, Offset Committee, Complementary Policies Committee, Economic Modeling Team, and Electricity Team.  Specific committee roles are summarized in the WCI Work Plan.

Regional Scope

The WCI Partners currently include the 11 jurisdictions in the US and Canada noted above, which encompasses 19% of the population of the US and 79% of the population of Canada.

Recognition of Other Standards/ Linkage with Other Trading Systems

The three regional climate initiatives in North America, RGGI, MGGRA, and WCI have joined in a cooperative effort to share experiences in the design and implementation of regional cap-and-trade programs, inform federal decision making on climate change policy, and explore the potential for further collaboration among the three regional programs in the future. Together, these 23 U.S. States and 4 Canadian Provinces account for approximately one-half of the U.S. population, over one-third of U.S. greenhouse gas emissions, over three-quarters of the Canadian population and one-half of Canadian greenhouse gas emissions. In May 2010, they published a white paper: “Ensuring Offset Quality: Design and Implementation Criteria for a High-Quality Offset Program”

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Market Size and Scope

Tradable Unit and Pricing Information

An offset certificate is defined as:
a type of compliance instrument that is awarded by the program authority in a participating Partner jurisdiction under the Partner jurisdiction’s cap-and-trade program to the sponsor of a GHG emissions offset project, subject to all applicable limitations contained in the program design summary…An offset certificate represents a reduction or removal of one metric ton of carbon dioxide equivalent (tCO2e).  The reduction or removal must meet the recommended essential criteria for reductions and removals ot be real, additional, permanent, and verifiable.  Reductions and removals must also be clearly owned, adhere to recommended protocols, and result from a  project located in a qualifying geographic area (WCI, 2010).

Participants/Buyers

N/A

Current Project Portfolio

N/A

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Offset Project Eligibility

Project Types

The WCI partner’s jurisdictions have identified the following list of project types as a priority for investigation and potential participation in the offset program:

  • Agriculture (soil sequestration and manure management);
  • Forestry (afforestation/reforestation, forest management, forest preservation/conservation, forest products); and
  • Waste management (landfill gas and wastewater management).

WCI Partners have identified and reviewed 31 protocols developed by current offset systems to evaluate opportunities for incorporating existing protocols into a new WCI offset system.  Results of this research were released in April 2010 and are presented in the Review of Existing Offset Protocols Against WCI Offset Criteria.

Project Locations

The WCI partner’s jurisdictions may approve, certify and issue offset credits for projects located throughout the United States, Canada and Mexico where such projects are subject to comparably rigorous oversight, validation, verification and enforcement as those located within the WCI jurisdictions. They will not accept offset credits for GHG reductions in developed countries (Annex 1 countries in the UNFCCC) for projects that reduce, remove or avoid emissions from sources that within WCI Partner jurisdictions are covered by the cap and trade program. The WCI partner’s jurisdictions may accept offset credits from developing countries through, for example, the Clean Development Mechanism (CDM) of the Kyoto Protocol, and the WCI Partner jurisdictions may establish additional criteria to apply similar rigor to the WCI approved/certified offset projects or other requirements appropriate to enabling the use of these offset credits in the cap and trade program (WCI, 2008).

Project Size

To be determined.

Start Date 

Offset certificates may be awarded for all greenhouse gas reductions or removals from projects occurring on or after January 1, 2007, corresponding with the start of the year in which the original WCI Memorandum of Understanding (MOU) beginning the development of the cap-and-trade program by Partner jurisdictions was signed (WCI, 2010).

Crediting Period

For a non-sequestration offset project, the crediting period is 10 years.  At the end of this period, a project proponent may renew the project subject to the current WCI offset protocol for the project type.  This renewal will include a reevaluation of the project’s additionality, as well as quantification and verification of the reductions.  As such, a project baseline will be reevaluated at every renewal.

For a sequestration project, the crediting period and project renewal requirements are specified by the applicable WCI offset protocol.  An individual crediting period may not exceed 25 years prior to a renewal, and the total crediting period including all renewals may not exceed 100 years.  In order to renew, at a minimum, the project must reevaluate quantification and monitoring methods based on the current WCI offset protocol.  Furthermore, if possible, projects need to reassess additionality and baselines (WCI, 2010).

Co-benefit Objectives and Requirements

While WCI Partners recognize the environmental, social, economic, and health benefits that may arise from an offset project, the offset system will focus on those benefits directly related to mitigating climate change.  Accordingly, a WCI offset project is required only to result in a greenhouse gas emission reduction or removal (WCI, 2010).

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Additionality Requirements and Project Methodologies

Additionality Requirements

Offset certificates are only awarded for the portion of greenhouse gas reductions or removals that would not have occurred under a baseline scenario.

Additionality is assessed in a manner that requires offset projects to be evaluated against a baseline reflecting conservative assumptions that are consistent across all WCI Partner jurisdictions.  These assumptions are described in baseline-setting procedures in WCI offset protocols.  Models or other means of determining a project baseline shall be based on assumptions, methodologies, and values that assure greenhouse gas reductions or removals are not overestimated.

When possible, the baseline shall be set according to a sector- or activity-specific performance standard.  This in turn is set in WCI offset protocols and based on a regional assessment of project performance or common practice.  All baselines are intended to reflect the most stringent regulatory and legal requirements of any WCI Partner jurisdiction.  However, when a baseline built on the most stringent requirement is not deemed practical due to regional differences, WCI Partners may recommend an alternative method.

When setting a baseline using a performance standard is not possible, a project-specific baseline may be used.  This baseline will be set to reflect all binding agreements, and regulatory and legal requirements applicable to the project, and also to ensure that the project exceeds business as usual (WCI, 2010).

Project Methodologies

WCI Partner jurisdictions “shall ensure that net emission reductions or removals are capable of being measured or modeled in a reliable and repeatable manner that includes all relevant sources and sinks.  Quantification methodologies for GHG emissions or emission reductions shall:

  • Be appropriate to the GHG source or sink;
  • Be current at the time of quantification;
  • Consider local conditions, whenever applicable;
  • Account for uncertainty – be calculated in a manner that yields accurate and reproducible results;
  • When uncertainty is above the defined threshold, apply the principle of conservativeness to GHG.

During quantification procedures, project proponents shall convert each type of GHG to metric tons of CO2e.  Additionally, WCI offset protocols shall sue uniform quantification methods whenever feasible” (WCI, 2010).

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Project Approval Process

Validation and Registration

Detailed process design has not been finalized. For WCI offsets, "validation is a required review by an accredited independent third party or the WCI Partner jurisdiction to assess the likely result of reductions or sequestration from a proposed project that would use a WCI offset protocol" (WCI, 2010).

Monitoring, Verification and Certification

Detailed process design has not been finalized. For WCI offsets, "verifiable means that a GHG reduction or removal, or assertion thereof, is well documented and transparent such that it lends itself to an objective review by a qualified verifier. Verifiers for WCI offsets will be independent third parties who have been accredited to a standard acceptable by the WCI Partner jurisdiction in which the project is registered" (WCI, 2010).

Registries and Fees

A WCI registry has not yet been implemented. The WCI Offsets Essential Elements recommends that, "The WCI Partners should establish a registry of offset certificates issued and make the registry publicly available" (WCI, 2010).

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