I 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Forest Carbon Emis5 sion Reduction Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 


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1 (1) changes in land use patterns and forest sec2 tor emissions account for approximately 20 percent 

3 of global greenhouse gas emissions; 

4 (2) land conversion and deforestation are two of 

5 the largest sources of greenhouse gas emissions in 

6 the developing world, comprising approximately 40 

7 percent of the total greenhouse gas emissions of the 

8 developing world; 

9 (3) with sufficient data, the rates of deforest10 ation and forest degradation and the level of forest 

11 carbon stocks can be measured, subject to an accept12 able degree of uncertainty; 

13 (4) encouraging reduced deforestation and re14 duced forest degradation in foreign countries 

15 could— 

16 (A) provide critical leverage to encourage 

17 voluntary participation by developing countries 

18 in emission limitation regimes; 

19 (B) facilitate greater overall reductions in 

20 greenhouse gas emissions than otherwise would 

21 be practicable; and 

22 (C) substantially benefit biodiversity, con23 servation, and indigenous and other forest-de24 pendent people in developing countries; 


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1 (5) in addition to forest carbon activities that 

2 can be readily measured, monitored, and verified 

3 through national-scale programs and projects, there 

4 is great value in reducing emissions and sequestering 

5 carbon through forest carbon projects in countries 

6 that lack the institutional arrangements to support 

7 national-scale accounting of forest carbon stocks; 

8 and 

9 (6) providing emission allowances in support of 

10 activities in countries that lack fully developed insti11 tutions for national-scale accounting could help to 

12 build capacity in those countries, increase the se13 questration of additional carbon, and increase par14 ticipation by developing countries in international 

15 climate agreements. 

16 SEC. 3. DEFINITIONS. 

17 In this Act: 

18 (1) ADMINISTRATOR.—The term ‘‘Adminis19 trator’’ means the Administrator of the Environ20 mental Protection Agency. 

21 (2) DEVELOPING COUNTRIES.—The term ‘‘de22 veloping countries’’ means countries considered to be 

23 ‘emerging and developing economies’ according to 

24 the International Monetary Fund’s World Economic 

25 Outlook Report, April 2008, except the term does 


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1 not include countries determined by the Secretary to 

2 have repeatedly provided support for acts of inter3 national terrorism, as designated pursuant to section 

4 6(j) of the Export Administration Act of 1979, sec5 tion 40 of the Arms Export Control Act, and section 

6 620A of the Foreign Assistance Act of 1961. 

7 (3) INTERNATIONAL FOREST CARBON ACTIVI8 TIES.—The term ‘‘international forest carbon activi9 ties’’ means national or subnational activities in de10 veloping countries that are directed at— 

11 (A) reducing greenhouse gas emissions 

12 from deforestation and forest degradation; 

13 (B) reducing greenhouse gas emissions 

14 from conversion of peatlands; and 

15 (C) increasing sequestration of carbon 

16 through— 

17 (i) restoration of forests; 

18 (ii) restoration of degraded land that 

19 has not been forested prior to restoration; 

20 (iii) afforestation, using native species 

21 where practicable; and 

22 (iv) improved forest management. 

23 (4) SECRETARY.—The term ‘‘Secretary’’ means 

24 the Secretary of State. 


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1 SEC. 4. VOLUNTARY PARTICIPATION IN PROGRAMS. 

2 (a) CONSULTATION REQUIREMENT.—No activity au3 thorized by section 5 or 6 shall be carried out in a devel4 oping country until at least 30 days after the date on 

5 which the Administrator, in consultation with the Sec6 retary, completes consultation about the activity with the 

7 government of that developing country. 

8 (b) COMPLIANCE WITH LOCAL LAWS.—No activity 

9 authorized by section 5 or 6 shall be carried out in a devel10 oping country if the activity is inconsistent with the laws 

11 of that developing country. 

12 SEC. 5. SET-ASIDE OF EMISSION ALLOWANCES TO FOREST 

13 CARBON ACTIVITIES IN DEVELOPING COUN14 TRIES. 

15 (a) PURPOSE.—The purposes of this section are— 

16 (1) to facilitate voluntary participation in na17 tional-level activities and accounting in the forest 

18 sector in developing countries to ensure market 

19 readiness for emissions reductions and increased se20 questration from international forest carbon activi21 ties in developing countries; and 

22 (2) to facilitate voluntary participation in inter23 national forest carbon activities at sub-national lev24 els in developing countries that achieve low-cost 

25 emissions reductions or increased sequestration. 


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1 (b) REQUIREMENT TO SET-ASIDE EMISSION ALLOW2 ANCES.—To the extent emission allowances are estab3 lished under any provision of law to address greenhouse 

4 gas emissions, the Administrator shall allocate each cal5 endar year, pursuant to subsection (c), a portion of the 

6 emission allowances to assist developing countries in their 

7 efforts to achieve emissions reductions or increase seques8 tration of carbon dioxide from international forest carbon 

9 activities. 

10 (c) ALLOCATION.— 

11 (1) ONE-PERCENT ALLOCATION.—Not later 

12 than 330 days before January 1 of each of calendar 

13 years 2013 through 2050, the Administrator shall 

14 allocate for distribution under this section one per15 cent of the aggregate quantity of emission allow16 ances established for that calendar year. 

17 (2) EARLY ACTION.—For each of calendar 

18 years 2011 and 2012, the Administrator shall allo19 cate for early action distribution not more than 10 

20 percent of the aggregate quantity of emission allow21 ances available for each of calendar years 2013 

22 through 2022. 

23 (3) CARRYOVER.—If the aggregate quantity of 

24 emission allowances for a calendar year is not allo25 cated for distribution in the calendar year, the AdVerDate Nov 24 2008 00:18 Apr 01, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1790.IH H1790

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1 ministrator shall carry over to the next calendar 

2 year the remaining emission allowances. 

3 (d) ENSURING MARKET READINESS IN DEVELOPING

4 COUNTRIES.— 

5 (1) SET-ASIDE AND AUCTION.—The Adminis6 trator shall— 

7 (A) set-aside a portion of the allowances to 

8 be allocated under subsection (c) for the pur9 pose of ensuring market readiness in developing 

10 countries; and 

11 (B) auction those allowances, with the pro12 ceeds deposited into a market readiness account 

13 for distribution as provided in paragraph (2). 

14 (2) ELIGIBILITY FOR PROCEEDS.—The Admin15 istrator shall establish criteria under which devel16 oping countries will be eligible to receive amounts 

17 from the market readiness account for the purpose 

18 of preparing a national forest carbon strategy, in19 cluding— 

20 (A) developing a reliable estimate of the 

21 national forest carbon stocks and sources of 

22 forest emissions of the developing country; 

23 (B) defining the national emission ref24 erence baseline for the developing country based 

25 on past emission rates; 


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1 (C) specifying options for reducing emis2 sions; and 

3 (D) implementing mechanisms that will 

4 support policies, programs, and projects to re5 duce emissions. 

6 (e) INCENTIVE PAYMENTS FOR LOW-COST EMISSION

7 REDUCTIONS AND SEQUESTRATION ACTIVITIES.— 

8 (1) IN GENERAL.—The Administrator shall es9 tablish criteria under which developing countries will 

10 be eligible to receive emission allowances allocated 

11 under subsection (c), other than the allowances set12 aside under subsection (d), to implement national 

13 strategies— 

14 (A) to reduce emissions from deforestation 

15 and forest degradation; 

16 (B) to implement low-cost emission reduc17 tion or sequestration projects in the forest sec18 tor; and 

19 (C) to implement activities with respect to 

20 largely intact native forests to guard against 

21 deforestation. 

22 (2) PRIORITY.—Emission allowances under this 

23 subsection shall be awarded in a manner that fa24 vors— 


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1 (A) achievement of the greatest quantity of 

2 carbon sequestration or emission reductions for 

3 the lowest cost; 

4 (B) broad geographical distribution of 

5 projects; and 

6 (C) reduction of international leakage, par7 ticularly in developing countries with largely in8 tact native forests. 

9 (3) PROHIBITION BASED ON CERTAIN CRI10 TERIA.—No emission allowances under this section 

11 shall be awarded to countries, or entities for projects 

12 in countries, that meet the criteria established to 

13 carry out subsection (d), as determined by the Ad14 ministrator, after the two-year period beginning on 

15 the date the Administrator determines that those 

16 criteria first apply. 

17 (4) PROHIBITIONS BASED ON EMISSIONS.— 

18 (A) INITIAL THRESHOLD.—For any cal19 ender year after calendar year 2015 and before 

20 calendar year 2021, no allowances shall be 

21 awarded with respect to a project or activity in 

22 a country that generates greenhouse gas emis23 sions accounting for more than one percent of 

24 global greenhouse gas emissions during the pre25 ceding calendar year. 


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1 (B) SUBSEQUENT THRESHOLD.—For cal2 endar year 2021 and any calender year there3 after, no allowances shall be awarded with re4 spect to a project or activity in a country that 

5 generates greenhouse gas emissions accounting 

6 for more than 0.5 percent of global greenhouse 

7 gas emissions during the preceding calendar 

8 year. 

9 (C) EXCEPTION.—Upon a determination 

10 by the Administrator that provision of allow11 ances to a project or activity in a country that 

12 would otherwise be subject to the exclusions in 

13 subparagraph (A) or (B) is in the interest of 

14 building needed capacity or reducing inter15 national carbon leakage, allowances may be 

16 issued to the project or activity subject to other 

17 criteria in this subsection. 

18 (f) QUALITY AND ELIGIBILITY REQUIREMENTS.— 

19 Not later than 18 months after the date of enactment of 

20 this Act, the Administrator, in consultation with the Sec21 retary, shall promulgate regulations establishing eligibility 

22 requirements for the allocation of emission allowances 

23 under this section for international forest carbon activi24 ties, recognizing that the purpose of this section is to as25 sist forested developing countries in achieving emission reVerDate Nov 24 2008 00:18 Apr 01, 2009 Jkt 079200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1790.IH H1790

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1 ductions or increased sequestration of carbon dioxide from 

2 international forest carbon activities, to ensure market 

3 readiness, and to build capacity to participate in inter4 national forest carbon activities. 

5 (g) OTHER NATURAL LAND THAT SEQUESTERS CAR6 BON.—The Administrator may provide emission allow7 ances under this section for a project for storage of carbon 

8 in other natural land if the Administrator determines 

9 that— 

10 (1) the natural land is capable of storing car11 bon; and 

12 (2) the project for storage of carbon in the nat13 ural land is capable of meeting the eligibility and 

14 quality criteria established pursuant to subsection 

15 (f). 

16 (h) LIMITATION ON DOUBLE COUNTING.—Notwith17 standing any other provision of this Act, activities that 

18 receive credit under section 5 shall not be eligible to re19 ceive emission allowances under this section. 

20 (i) EFFECT ON INTERACTION BETWEEN ENTI21 TIES.—Nothing in this section supersedes, limits, or other22 wise affects any restriction imposed by Federal law (in23 cluding regulations) on any interaction between an entity 

24 located in the United States and an entity located in a 

25 foreign country. 


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1 SEC. 6. OFFSETS FOR INTERNATIONAL FOREST CARBON 

2 ACTIVITIES. 

3 (a) REGULATIONS.—Not later than two years after 

4 the date of enactment of this Act, the Administrator, in 

5 consultation with the Secretary, shall promulgate regula6 tions (including regulations relating to quality and eligi7 bility requirements) for the use of offset allowances for 

8 international forest carbon activities. 

9 (b) QUALITY AND ELIGIBILITY REQUIREMENTS.— 

10 The regulations promulgated pursuant to subsection (a) 

11 shall require that, in order to be approved for use under 

12 this section, offset allowances for an international forest 

13 carbon activity shall meet such quality and eligibility re14 quirements as the Administrator may establish, including 

15 requirements that— 

16 (1) the activity shall be designed, carried out, 

17 and managed— 

18 (A) in accordance with widely-accepted, en19 vironmentally sustainable forestry practices; 

20 (B) to promote native species and con21 servation or restoration of native forests, if 

22 practicable, and to avoid the introduction of 

23 invasive nonnative species; 

24 (C) in a manner that is supportive of the 

25 internationally-recognized rights of indigenous 


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1 and other forest-dependent people living in the 

2 affected areas; and 

3 (D) in a manner that enhances the capa4 bility, if consistent with the applicable laws in 

5 the country involved, of local communities to 

6 exercise prior informed consent regarding 

7 projects or other activities, and to prevent the 

8 improper taking of property; and 

9 (2) the emission reductions or sequestrations 

10 are real, permanent, additional, verifiable, and en11 forceable, with reliable measuring and monitoring 

12 and appropriate accounting for leakage. 

13 (c) NATIONAL LEVEL ACTIVITIES.— 

14 (1) IN GENERAL.—Not later than two years 

15 after the date of enactment of this Act, the Adminis16 trator, in consultation with the Secretary, shall pre17 pare a list of countries that have— 

18 (A) demonstrated the capacity to partici19 pate in international forest carbon activities at 

20 a national level, including— 

21 (i) sufficient historical data on 

22 changes in national forest carbon stocks; 

23 (ii) the technical capacity to monitor 

24 and measure forest carbon fluxes with an 

25 acceptable level of uncertainty; and 


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1 (iii) the institutional capacity to re2 duce emissions from deforestation and for3 est degradation; 

4 (B) capped greenhouse gas emissions or 

5 otherwise established a credible national base6 line or emission reference baseline; 

7 (C) achieved national-level reductions of 

8 deforestation and degradation below an histor9 ical reference baseline, taking into consideration 

10 national circumstances and the average annual 

11 deforestation and degradation rates of the coun12 try during a period of at least five years; 

13 (D) implemented an emission reduction 

14 program for the forest sector; and 

15 (E) demonstrated those reductions using 

16 remote sensing technology, taking into consider17 ation relevant international standards. 

18 (2) PERIODIC REVIEW OF NATIONAL LEVEL RE19 DUCTIONS IN DEFORESTATION AND FOREST DEG20 RADATION.—The Administrator, in consultation with 

21 the Secretary, shall periodically review and update 

22 the list of the names of countries included under 

23 paragraph (1). 

24 (3) CREDITING AND ADDITIONALITY.—A 

25 verified reduction in greenhouse gas emissions from 


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1 deforestation and forest degradation under a cap or 

2 resulting from a nationwide emissions reference sce3 nario described in paragraph (1)(B) shall be— 

4 (A) eligible for offset allowances; and 

5 (B) considered to satisfy the additionality 

6 criterion. 

7 (d) SUBNATIONAL LEVEL ACTIVITIES.—With respect 

8 to foreign countries other than the foreign countries de9 scribed in subsection (c), the Administrator shall recognize 

10 project scale international forest carbon activities as eligi11 ble for offset allowances, subject to the quality criteria for 

12 forest carbon activities described in subsection (b). 

13 (e) OTHER INTERNATIONAL FOREST CARBON AC14 TIVITIES.—An international forest carbon activity, other 

15 than a reduction in deforestation or forest degradation, 

16 shall be eligible for offset allowances under this section, 

17 subject to the eligibility requirements and quality criteria 

18 for forest carbon activities described in subsection (b) or 

19 other regulations promulgated pursuant to this section. 

20 (f) DISCOUNT.— 

21 (1) INITIAL DISCOUNT.—If, after the date that 

22 is 10 years after the date of enactment of this Act, 

23 the Administrator determines that a foreign country 

24 that, in the aggregate, generates greenhouse gas 

25 emissions accounting for more than 0.5 percent of 


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1 global greenhouse gas emissions has not capped 

2 those emissions, established an emissions reference 

3 scenario based on historical data, or otherwise re4 duced total forest emissions of that foreign country, 

5 the Administrator shall apply a discount to distribu6 tions of offset allowances to international forest car7 bon activities in that country under this section. 

8 (2) SUBSEQUENT TERMINATION.—If, after the 

9 date that is 15 years after the date of enactment of 

10 this Act, the Administrator determines that a for11 eign country that, in the aggregate, generates green12 house gas emissions accounting for more than 0.5 

13 percent of global greenhouse gas emissions has not 

14 capped those emissions, established an emissions ref15 erence scenario based on historical data, or other16 wise reduced total forest emissions of that foreign 

17 country, the Administrator shall cease distributions 

18 of offset allowances to international forest carbon 

19 activities in that country under this section. 

20 (g) FACILITY CERTIFICATION.—The owner or oper21 ator of a covered entity that submits an offset allowance 

22 generated under this section shall certify that the offset 

23 allowance has not been retired from use in any greenhouse 

24 gas emissions registry. 


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1 (h) MAXIMUM USE.—The regulations promulgated 

2 pursuant to this section shall ensure that offset allowances 

3 are not issued for sequestration or emission reductions 

4 that have been used or will be used by any other country 

5 for compliance with a domestic or international obligation 

6 to limit or reduce greenhouse gas emissions. 

7 (i) REVIEWS.—Not later than three years after the 

8 date of enactment of this Act and every five years there9 after, the Administrator, in consultation with the Sec10 retary, shall conduct a review of the activities undertaken 

11 pursuant to this section, including the effects of the activi12 ties on indigenous and forest-dependent peoples residing 

13 in affected areas. 

Æ 


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