Testimony of Kenneth A. Colburn, Director
Air Resources Division
New Hampshire Department of Environmental Services
Providence, Rhode Island
June 3, 1999

Thank you, Mr. Chairman. My name is Kenneth A. Colburn, and I am the Director of the Air Resources Division of the New Hampshire Department of Environmental Services (DES). The Department appreciates this opportunity to address the Committee regarding S.547, the Credit for Voluntary Reductions Act of 1999.

In New Hampshire, a state rich in natural resources, our economic livelihood has long been directly and inextricably linked to the health of our natural environment. Whether we hark back to the heyday of the timber and paper industries, or look instead at today's tourism-based economy and high quality of life, this linkage has remained a constant. Two other constants have been our state's traditional frugality; and our stubborn reluctance to control and regulate when equally favorable outcomes can be achieved by properly encouraging voluntary actions. Thus it comes as no surprise that we strongly support S.547, an initiative that shares these values. S.547, the Credit for Voluntary Reductions Act of 1999, would directly benefit both the environment and the economy, and encourage cost-effective solutions on a voluntary basis.

S.547 encourages U.S. entities business, institutions, governments, etc. to pursue actions that will mitigate the threat of global climate change. In doing so, they will provide our nation with other benefits including substantial savings in energy expenditures, reduced air and water pollution, less waste, better natural resource management, and enhanced technological competitiveness. Early voluntary greenhouse gas reduction measures will help to ensure that the legacy we leave our children and grandchildren is not one of myopic selfishness and environmental degradation, but one of sustainable stewardship and respect for our planet. This Act is not about the science of global climate change, nor is it about the Kyoto Protocol. It is not about what level of reductions is necessary, or when they must be accomplished, or what flexible mechanisms should be employed to achieve them. S.547 is about reducing uncertainty for U.S. business and other entities by ensuring that any reductions of greenhouse gas emissions that they voluntarily undertake are appropriately recognized and rewarded.

U.S. business and other entities are not making greenhouse gas reductions largely because of uncertainty about what future regulatory programs may be imposed in an effort to stabilize atmospheric concentrations of carbon dioxide and other greenhouse gases. Many are concerned that, if the example of the federal Clean Air Act Amendments of 1990 hold true, action now will not be appropriately recognized, and will result in increased burdens later. The State of New Hampshire has had direct experience with this dynamic, inasmuch as the closure of the Pease Air Force Base in 1989 was not recognized as emission reductions under the 1990 baseline of the latest Clean Air Act reauthorization. This dynamic applies even if actions now would yield cost savings, because the certain benefits today might be outweighed by the as-yet-unknown costs imposed by the future program. S.547 will encourage reductions of greenhouse gases simply by eliminating the potent disincentive of uncertainty.

How should a credit for early action program be designed? In order to be most effective, a program to encourage early action must be simple, flexible, and applicable to a broad array of emissions sources. At the same time, it needs to reflect sufficient discipline that the integrity of its credits is never in doubt. A few cornerstones are thus essential.

First, all reductions must be strictly quantifiable and subject to third party verification. The integrity of the credits hinges on the processes by which they are quantified.

Second, reductions should not be limited or tied to a particular program, a particular economic sector, or a particular greenhouse gas. Criteria for establishing credible baselines, coupled with appropriate, broadly applicable quantification and verification methodologies, should determine what constitutes a verifiable ton, not what carbon source the reduction came from. In the end, all verified tons no matter what their source or how they were reduced are equal in the eyes of the atmosphere.

Some have also suggested that only certain emission reductions should count, based, for example, on whether they reflect genuine environmental intent. I would suggest that this approach unconscionably cripples the vital linkage between economic and environmental well being that we cherish and seek to encourage. We should be less concerned with motives, and more concerned with establishing simple, workable, and effective quantification and verification protocols.

Third, just as there is a variety of ways to reduce greenhouse gas emissions, a variety of yardsticks for measuring such reductions may be necessary. Entities should certainly receive credit for absolute emission reductions below a historical baseline. In other circumstances, however, percentage reductions from a defined baseline may be appropriate, or credit for achieving very-low-emission performance standards. Reductions provided by a manufacturer's products (e.g., lower emission vehicles) might also be creditable, although we would need to ensure that they are not double-counted by purchasers.

Fourth, great care should be taken in placing a limit or cap on the number of credits available under an early reduction program. Though some upper bound may ultimately be necessary, it must be balanced against the fact that such limits could reduce the incentive for entities to participate.

Who should participate? The early credit incentives should apply across the broadest possible array of participants. In addition to the traditional industrial and electricity sectors, for example, other sectors and entities should be allowed and encouraged to participate, including transportation, residential, commercial and agriculture. Further, the program should include both carbon sinks and sources, inasmuch as carbon sequestration may provide significant opportunities for agricultural and forest products participants such as those operating in the Northern Forest Lands.

In what may be a relatively unusual suggestion, I would recommend that states and municipalities also be allowed to participate in an early emission credit program, both because they generate emissions themselves, but also because they are often left to implement whatever it is the federal government has decided. Great uncertainty prevails here as well. In the case of the Acid Rain program, the federal government dealt directly with emission sources. In EPA's proposed NOx Transport SIP call, states were assigned emission budgets, and thus had a say in how allocations were made within their borders.

In an effort to reduce such uncertainty for New Hampshire entities, including the State itself, we have introduced state legislation to create a state "registry" of voluntary greenhouse gas reductions. By having the State of New Hampshire stand with them under some potential future regulatory reduction requirements, this bill would protect New Hampshire companies and other entities by reducing the risk that they might not receive appropriate credit for greenhouse gas emission reduction activities they already undertook. This measure has received bi-partisan support in the New Hampshire Legislature, and has been strongly supported by the state's business community. To date, the bill has passed the State Senate and has been recommended to the full House by the relevant policy committee.

Similarly, municipalities should be able to receive credit for verifiable greenhouse gas reductions. The International Council for Local Environmental Initiatives (ICLEI), for example, working with 61 (1998 figure) U.S. towns and cities, has reduced greenhouse gas emissions by 5.4 million tons per year. In achieving these reductions, incidentally, these ICLEI communities have saved $27.5 million in energy and fuel costs, and also reduced 7,000 tons of criteria pollutants. If all verifiable tons are equal, then these towns and cities should also be credited appropriately. As this example shows, states and locals have substantial experience and knowledge infrastructure in achieving cost-saving emissions reductions. I urge you to tap into that experience in developing S.547.

In conclusion, S. 547, the Credit for Voluntary Reductions Act of 1999 is a crucial measure to remove existing disincentives to early, constructive environmental action. By providing legal guarantees that responsible early actors will receive appropriate credit, it will spur entities to voluntarily undertake cost-effective, multiply-beneficial strategies that include greenhouse gas reductions. We thus believe that establishing such an early reduction credit system at this time is in New Hampshire's best interest, the nation's best interest, and future generations' best interest, and we urge you to move forward with it aggressively.

Thank you for the opportunity to assist in the creation of a sound, responsible, early emission credit program. I hope you will continue to call on the considerable expertise of state and local governments in developing this ground-breaking initiative.