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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1790 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 1790

     To reduce global greenhouse gas emissions resulting from land 
   conversion and deforestation in developing countries, to provide 
 incentives for developing countries to increase forest carbon stocks, 
                        and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 30, 2009

  Mr. Engel introduced the following bill; which was referred to the 
   Committee on Foreign Affairs, and in addition to the Committee on 
Energy and Commerce, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
     To reduce global greenhouse gas emissions resulting from land 
   conversion and deforestation in developing countries, to provide 
 incentives for developing countries to increase forest carbon stocks, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Forest Carbon Emission Reduction 
Act''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) changes in land use patterns and forest sector 
        emissions account for approximately 20 percent of global 
        greenhouse gas emissions;
            (2) land conversion and deforestation are two of the 
        largest sources of greenhouse gas emissions in the developing 
        world, comprising approximately 40 percent of the total 
        greenhouse gas emissions of the developing world;
            (3) with sufficient data, the rates of deforestation and 
        forest degradation and the level of forest carbon stocks can be 
        measured, subject to an acceptable degree of uncertainty;
            (4) encouraging reduced deforestation and reduced forest 
        degradation in foreign countries could--
                    (A) provide critical leverage to encourage 
                voluntary participation by developing countries in 
                emission limitation regimes;
                    (B) facilitate greater overall reductions in 
                greenhouse gas emissions than otherwise would be 
                practicable; and
                    (C) substantially benefit biodiversity, 
                conservation, and indigenous and other forest-dependent 
                people in developing countries;
            (5) in addition to forest carbon activities that can be 
        readily measured, monitored, and verified through national-
        scale programs and projects, there is great value in reducing 
        emissions and sequestering carbon through forest carbon 
        projects in countries that lack the institutional arrangements 
        to support national-scale accounting of forest carbon stocks; 
        and
            (6) providing emission allowances in support of activities 
        in countries that lack fully developed institutions for 
        national-scale accounting could help to build capacity in those 
        countries, increase the sequestration of additional carbon, and 
        increase participation by developing countries in international 
        climate agreements.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Developing countries.--The term ``developing 
        countries'' means countries considered to be `emerging and 
        developing economies' according to the International Monetary 
        Fund's World Economic Outlook Report, April 2008, except the 
        term does not include countries determined by the Secretary to 
        have repeatedly provided support for acts of international 
        terrorism, as designated pursuant to section 6(j) of the Export 
        Administration Act of 1979, section 40 of the Arms Export 
        Control Act, and section 620A of the Foreign Assistance Act of 
        1961.
            (3) International forest carbon activities.--The term 
        ``international forest carbon activities'' means national or 
        subnational activities in developing countries that are 
        directed at--
                    (A) reducing greenhouse gas emissions from 
                deforestation and forest degradation;
                    (B) reducing greenhouse gas emissions from 
                conversion of peatlands; and
                    (C) increasing sequestration of carbon through--
                            (i) restoration of forests;
                            (ii) restoration of degraded land that has 
                        not been forested prior to restoration;
                            (iii) afforestation, using native species 
                        where practicable; and
                            (iv) improved forest management.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of State.

SEC. 4. VOLUNTARY PARTICIPATION IN PROGRAMS.

    (a) Consultation Requirement.--No activity authorized by section 5 
or 6 shall be carried out in a developing country until at least 30 
days after the date on which the Administrator, in consultation with 
the Secretary, completes consultation about the activity with the 
government of that developing country.
    (b) Compliance With Local Laws.--No activity authorized by section 
5 or 6 shall be carried out in a developing country if the activity is 
inconsistent with the laws of that developing country.

SEC. 5. SET-ASIDE OF EMISSION ALLOWANCES TO FOREST CARBON ACTIVITIES IN 
              DEVELOPING COUNTRIES.

    (a) Purpose.--The purposes of this section are--
            (1) to facilitate voluntary participation in national-level 
        activities and accounting in the forest sector in developing 
        countries to ensure market readiness for emissions reductions 
        and increased sequestration from international forest carbon 
        activities in developing countries; and
            (2) to facilitate voluntary participation in international 
        forest carbon activities at sub-national levels in developing 
        countries that achieve low-cost emissions reductions or 
        increased sequestration.
    (b) Requirement to Set-Aside Emission Allowances.--To the extent 
emission allowances are established under any provision of law to 
address greenhouse gas emissions, the Administrator shall allocate each 
calendar year, pursuant to subsection (c), a portion of the emission 
allowances to assist developing countries in their efforts to achieve 
emissions reductions or increase sequestration of carbon dioxide from 
international forest carbon activities.
    (c) Allocation.--
            (1) One-percent allocation.--Not later than 330 days before 
        January 1 of each of calendar years 2013 through 2050, the 
        Administrator shall allocate for distribution under this 
        section one percent of the aggregate quantity of emission 
        allowances established for that calendar year.
            (2) Early action.--For each of calendar years 2011 and 
        2012, the Administrator shall allocate for early action 
        distribution not more than 10 percent of the aggregate quantity 
        of emission allowances available for each of calendar years 
        2013 through 2022.
            (3) Carryover.--If the aggregate quantity of emission 
        allowances for a calendar year is not allocated for 
        distribution in the calendar year, the Administrator shall 
        carry over to the next calendar year the remaining emission 
        allowances.
    (d) Ensuring Market Readiness in Developing Countries.--
            (1) Set-aside and auction.--The Administrator shall--
                    (A) set-aside a portion of the allowances to be 
                allocated under subsection (c) for the purpose of 
                ensuring market readiness in developing countries; and
                    (B) auction those allowances, with the proceeds 
                deposited into a market readiness account for 
                distribution as provided in paragraph (2).
            (2) Eligibility for proceeds.--The Administrator shall 
        establish criteria under which developing countries will be 
        eligible to receive amounts from the market readiness account 
        for the purpose of preparing a national forest carbon strategy, 
        including--
                    (A) developing a reliable estimate of the national 
                forest carbon stocks and sources of forest emissions of 
                the developing country;
                    (B) defining the national emission reference 
                baseline for the developing country based on past 
                emission rates;
                    (C) specifying options for reducing emissions; and
                    (D) implementing mechanisms that will support 
                policies, programs, and projects to reduce emissions.
    (e) Incentive Payments for Low-Cost Emission Reductions and 
Sequestration Activities.--
            (1) In general.--The Administrator shall establish criteria 
        under which developing countries will be eligible to receive 
        emission allowances allocated under subsection (c), other than 
        the allowances set-aside under subsection (d), to implement 
        national strategies--
                    (A) to reduce emissions from deforestation and 
                forest degradation;
                    (B) to implement low-cost emission reduction or 
                sequestration projects in the forest sector; and
                    (C) to implement activities with respect to largely 
                intact native forests to guard against deforestation.
            (2) Priority.--Emission allowances under this subsection 
        shall be awarded in a manner that favors--
                    (A) achievement of the greatest quantity of carbon 
                sequestration or emission reductions for the lowest 
                cost;
                    (B) broad geographical distribution of projects; 
                and
                    (C) reduction of international leakage, 
                particularly in developing countries with largely 
                intact native forests.
            (3) Prohibition based on certain criteria.--No emission 
        allowances under this section shall be awarded to countries, or 
        entities for projects in countries, that meet the criteria 
        established to carry out subsection (d), as determined by the 
        Administrator, after the two-year period beginning on the date 
        the Administrator determines that those criteria first apply.
            (4) Prohibitions based on emissions.--
                    (A) Initial threshold.--For any calender year after 
                calendar year 2015 and before calendar year 2021, no 
                allowances shall be awarded with respect to a project 
                or activity in a country that generates greenhouse gas 
                emissions accounting for more than one percent of 
                global greenhouse gas emissions during the preceding 
                calendar year.
                    (B) Subsequent threshold.--For calendar year 2021 
                and any calender year thereafter, no allowances shall 
                be awarded with respect to a project or activity in a 
                country that generates greenhouse gas emissions 
                accounting for more than 0.5 percent of global 
                greenhouse gas emissions during the preceding calendar 
                year.
                    (C) Exception.--Upon a determination by the 
                Administrator that provision of allowances to a project 
                or activity in a country that would otherwise be 
                subject to the exclusions in subparagraph (A) or (B) is 
                in the interest of building needed capacity or reducing 
                international carbon leakage, allowances may be issued 
                to the project or activity subject to other criteria in 
                this subsection.
    (f) Quality and Eligibility Requirements.--Not later than 18 months 
after the date of enactment of this Act, the Administrator, in 
consultation with the Secretary, shall promulgate regulations 
establishing eligibility requirements for the allocation of emission 
allowances under this section for international forest carbon 
activities, recognizing that the purpose of this section is to assist 
forested developing countries in achieving emission reductions or 
increased sequestration of carbon dioxide from international forest 
carbon activities, to ensure market readiness, and to build capacity to 
participate in international forest carbon activities.
    (g) Other Natural Land That Sequesters Carbon.--The Administrator 
may provide emission allowances under this section for a project for 
storage of carbon in other natural land if the Administrator determines 
that--
            (1) the natural land is capable of storing carbon; and
            (2) the project for storage of carbon in the natural land 
        is capable of meeting the eligibility and quality criteria 
        established pursuant to subsection (f).
    (h) Limitation on Double Counting.--Notwithstanding any other 
provision of this Act, activities that receive credit under section 5 
shall not be eligible to receive emission allowances under this 
section.
    (i) Effect on Interaction Between Entities.--Nothing in this 
section supersedes, limits, or otherwise affects any restriction 
imposed by Federal law (including regulations) on any interaction 
between an entity located in the United States and an entity located in 
a foreign country.

SEC. 6. OFFSETS FOR INTERNATIONAL FOREST CARBON ACTIVITIES.

    (a) Regulations.--Not later than two years after the date of 
enactment of this Act, the Administrator, in consultation with the 
Secretary, shall promulgate regulations (including regulations relating 
to quality and eligibility requirements) for the use of offset 
allowances for international forest carbon activities.
    (b) Quality and Eligibility Requirements.--The regulations 
promulgated pursuant to subsection (a) shall require that, in order to 
be approved for use under this section, offset allowances for an 
international forest carbon activity shall meet such quality and 
eligibility requirements as the Administrator may establish, including 
requirements that--
            (1) the activity shall be designed, carried out, and 
        managed--
                    (A) in accordance with widely-accepted, 
                environmentally sustainable forestry practices;
                    (B) to promote native species and conservation or 
                restoration of native forests, if practicable, and to 
                avoid the introduction of invasive nonnative species;
                    (C) in a manner that is supportive of the 
                internationally-recognized rights of indigenous and 
                other forest-dependent people living in the affected 
                areas; and
                    (D) in a manner that enhances the capability, if 
                consistent with the applicable laws in the country 
                involved, of local communities to exercise prior 
                informed consent regarding projects or other 
                activities, and to prevent the improper taking of 
                property; and
            (2) the emission reductions or sequestrations are real, 
        permanent, additional, verifiable, and enforceable, with 
        reliable measuring and monitoring and appropriate accounting 
        for leakage.
    (c) National Level Activities.--
            (1) In general.--Not later than two years after the date of 
        enactment of this Act, the Administrator, in consultation with 
        the Secretary, shall prepare a list of countries that have--
                    (A) demonstrated the capacity to participate in 
                international forest carbon activities at a national 
                level, including--
                            (i) sufficient historical data on changes 
                        in national forest carbon stocks;
                            (ii) the technical capacity to monitor and 
                        measure forest carbon fluxes with an acceptable 
                        level of uncertainty; and
                            (iii) the institutional capacity to reduce 
                        emissions from deforestation and forest 
                        degradation;
                    (B) capped greenhouse gas emissions or otherwise 
                established a credible national baseline or emission 
                reference baseline;
                    (C) achieved national-level reductions of 
                deforestation and degradation below an historical 
                reference baseline, taking into consideration national 
                circumstances and the average annual deforestation and 
                degradation rates of the country during a period of at 
                least five years;
                    (D) implemented an emission reduction program for 
                the forest sector; and
                    (E) demonstrated those reductions using remote 
                sensing technology, taking into consideration relevant 
                international standards.
            (2) Periodic review of national level reductions in 
        deforestation and forest degradation.--The Administrator, in 
        consultation with the Secretary, shall periodically review and 
        update the list of the names of countries included under 
        paragraph (1).
            (3) Crediting and additionality.--A verified reduction in 
        greenhouse gas emissions from deforestation and forest 
        degradation under a cap or resulting from a nationwide 
        emissions reference scenario described in paragraph (1)(B) 
        shall be--
                    (A) eligible for offset allowances; and
                    (B) considered to satisfy the additionality 
                criterion.
    (d) Subnational Level Activities.--With respect to foreign 
countries other than the foreign countries described in subsection (c), 
the Administrator shall recognize project scale international forest 
carbon activities as eligible for offset allowances, subject to the 
quality criteria for forest carbon activities described in subsection 
(b).
    (e) Other International Forest Carbon Activities.--An international 
forest carbon activity, other than a reduction in deforestation or 
forest degradation, shall be eligible for offset allowances under this 
section, subject to the eligibility requirements and quality criteria 
for forest carbon activities described in subsection (b) or other 
regulations promulgated pursuant to this section.
    (f) Discount.--
            (1) Initial discount.--If, after the date that is 10 years 
        after the date of enactment of this Act, the Administrator 
        determines that a foreign country that, in the aggregate, 
        generates greenhouse gas emissions accounting for more than 0.5 
        percent of global greenhouse gas emissions has not capped those 
        emissions, established an emissions reference scenario based on 
        historical data, or otherwise reduced total forest emissions of 
        that foreign country, the Administrator shall apply a discount 
        to distributions of offset allowances to international forest 
        carbon activities in that country under this section.
            (2) Subsequent termination.--If, after the date that is 15 
        years after the date of enactment of this Act, the 
        Administrator determines that a foreign country that, in the 
        aggregate, generates greenhouse gas emissions accounting for 
        more than 0.5 percent of global greenhouse gas emissions has 
        not capped those emissions, established an emissions reference 
        scenario based on historical data, or otherwise reduced total 
        forest emissions of that foreign country, the Administrator 
        shall cease distributions of offset allowances to international 
        forest carbon activities in that country under this section.
    (g) Facility Certification.--The owner or operator of a covered 
entity that submits an offset allowance generated under this section 
shall certify that the offset allowance has not been retired from use 
in any greenhouse gas emissions registry.
    (h) Maximum Use.--The regulations promulgated pursuant to this 
section shall ensure that offset allowances are not issued for 
sequestration or emission reductions that have been used or will be 
used by any other country for compliance with a domestic or 
international obligation to limit or reduce greenhouse gas emissions.
    (i) Reviews.--Not later than three years after the date of 
enactment of this Act and every five years thereafter, the 
Administrator, in consultation with the Secretary, shall conduct a 
review of the activities undertaken pursuant to this section, including 
the effects of the activities on indigenous and forest-dependent 
peoples residing in affected areas.
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