Letter on Voluntary Reporting Comments

I am writing on behalf of the Competitive Enterprise Institute (CEI), a non-profit free-market public policy group based in Washington, D.C. This letter responds to the Department of Energy’s “request for comment” on the Voluntary Reporting of Greenhouse Gases Program, established under section 1605(b) of the 1992 Energy Policy Act.

On February 14, 2002, President Bush directed the Secretary of Energy, in consultation with other department and agency heads, to propose improvements in the 1605(b) program to enhance its “accuracy, reliability, and verifiability.” The President also directed the Secretary to recommend reforms “to ensure that businesses and individuals that register reductions are not penalized under a future climate policy, and to give transferable credits to companies that can show real emission reductions.”

Although the Department’s Federal Register notice devotes only one paragraph to the topic, the crediting scheme is the key driver of the President’s proposal. It is only when voluntary reductions generate credits that potentially confer competitive advantage on some firms at the expense of others that it becomes urgent to agree upon accounting details. The perceived need for greater “accuracy, reliability, and verifiability” derives solely from the President’s directive to transform the 1605(b) reporting program into a crediting program.

Almost four years to the day before the President announced his proposal, the Natural Resources Defense Council (NRDC) clarified the underlying logic: “Flexible reporting guidelines may have been appropriate to encourage reporting actions under the various voluntary programs that do not award credits, but are not acceptable as the basis for awarding real credits.”

The President should reconsider this proposal. A crediting program would energize and expand the “greenhouse lobby” – the coalition of politicians, advocacy groups, and companies supporting the Kyoto Protocol and kindred energy rationing policies.