Summary

Under the Voluntary Reporting Program, as directed by the Energy Policy Act of 1992, organizations could voluntarily submit information on their efforts to reduce greenhouse gas emissions to the Department of Energy (DOE) and have that information entered into a public database. DOE specifically designed the program to encourage voluntary participation by offering potential participants flexibility in what they reported and how they estimated their emissions reductions. This report answers the following questions: (1) What are some of the basic issues that will have to be addressed by any effort to develop a credit for early action program? (2) How might claims for reductions of greenhouse gas emissions that are reported to the Voluntary Reporting Program fare under a credit for early action program that has less flexible reporting criteria? GAO also discusses other issues about a credit for early action program that may need to be addressed before the program can be finalized.

GAO noted that: (1) it identified four basic issues that will have to be addressed to develop a credit for early action program to reduce greenhouse gas emissions: (a) how emissions reductions should be estimated; (b) how emissions reduction ownership should be determined; (c) whether emissions reduction claims should be reported at the organization, project, or some other level; and (d) how emissions reduction claims should be verified; (2) on the surface, these issues appear straightforward; in fact, they are complicated and will require difficult choices; (3) furthermore, the resolution of these issues will likely influence the design of a credit for early action program; (4) the amount of flexibility such a program would provide on each of these issues would ultimately help to determine the extent of participation and the credit awarded; (5) many of the claims for reducing greenhouse gas emissions that have been submitted to the Voluntary Reporting Program would probably be ineligible for credit under a new program having more restrictive reporting criteria; (6) this is because the voluntary program was designed to encourage wide participation by allowing companies to submit emissions reduction claims under flexible reporting criteria and was not designed to automatically provide credit to participants for emissions reductions; (7) for example, the voluntary program, among other things, allowed companies discretion in determining the basis from which their emissions reductions were estimated and allowed companies to self-certify that their claims were accurate; and (8) according to DOE's Energy Information Administration and other organizations, such as the Edison Electric Institute and the Environmental Defense Fund, a credit for early action program could require more restrictive reporting criteria than the Voluntary Reporting Program to help ensure that emissions reduction claims are real, appropriately reviewed, and verified.