Environmentalists (Greenpeace and Friends of the Earth staffers in particular) increasingly harbor deep suspicions about the idea of carbon offsets as part of a system of emissions allowance trading. Under such a scheme, an electric utility that burns coal would be required to purchase or otherwise acquire allowances to cover its CO2 emissions. In each year the government would auction off or give away allowances equal to a fixed and declining annual cap. If offsets were allowed, then a utility could substitute offsets for allowances. Offsets would be created by a certified source that carries out some action causing a reduction of atmospheric carbon. Offsets are a potential problem because their creators might get credit for greenhouse gas reductions they don’t really undertake. An example would be a landowner who initially reduced carbon stored in wood fiber through timber harvests but then later gets offset credits for sequestering carbon in newly planted trees. A utility that acquired such offsets and substitutes them for allowances would in effect defeat the goal of a shrinking emissions cap by continuing to emit carbon without in truth offsetting it through real additions to stored carbon.
To the consternation of wary environmentalists, conservation ecologists find the idea of offsets appealing because certain landscapes, such as grasslands and forests, accumulate carbon and offsets would provide landowners a way to earn income for conserving their property instead of exploiting it. For the details of how offsets could help expand grassland and old-growth forest habitats in this country, take a look at the earlier postings "The Ecology of Grass" and "Letting Forests Grow Old". The point is simple—two environmental problems can be killed with one stone through offsets—carbon can be sequestered and natural habitats protected. On top of habitat protection, rural communities would benefit from economic reinvigoration doing the work of carbon sequestration. Converting corn lands to grass, sequestering carbon, and raising grass-fed beef through intensive pasture management would do much to create employment in declining farm communities. Similarly, doing the work of forest restoration needed to let forests grow old and accumulate carbon could create significant amounts of rural employment in timber-dependent communities in the western U.S.
Let me comment on two possible options that could be followed in the cap and trade bill that would go some way toward reconciling environmentalists and ecologists. The first insures a scrupulous external certification for offset projects and the second places offsets outside the existing cap.
The experience with forest certification suggests that a rigorous approach to verifying carbon sequestration is distinctly possible. The Forest Stewardship Council (FSC) was founded in 1994 by a broad array of environmental groups, forest products industry interests, and others for the purpose of improving forest management practices globally and bringing into reality the notion of environmentally sustainable forestry. The FSC pursues this ambitious goal by certifying forests around the world as being managed in an “ecologically, socially, and economically exemplary” fashion. The products of these forests can then by sold as FSC certified to customers who desire environmentally friendly products and are willing to pay for them. The ultimate benefit for forest landowners is the receipt of a price premium for certified harvested wood.
A list of core principles drives the certification process and includes compliance with all valid local laws and international agreements; assurance of clear tenure rights; protection of the rights and interests of local community members, workers, and indigenous peoples; efficient delivery of a wide range of economic, social, and environmental benefits from forests; and the protection and enhancement of biological diversity and ecological functioning in forests. The FSC has developed customized standards that fit local forest conditions around the world, including a set that applies to the old-growth forest of the Pacific Northwest. These particular standards call for not only the protection existing old growth, but its long-term expansion by letting some timber stands age and take on old-growth characteristics. To get certification, a Pacific Northwest forest landowner must keep a specified portion of trees under management in old growth or in stands that will become old growth. The essential idea behind certification is to encourage the human use of forests, but to accomplish such use in a manner that is at once ecologically sustainable and protective of all native forest species. This does not mean that big, old trees would all be put away in a natural museum and never harvested. It simply means that the amount of old-growth in the aggregate will be brought up to a level that will conserve the sum total of forest-based biological riches over the long haul. Big, old trees with their fine grain woods can be harvested, but only if they get replaced by growing other big, old trees.
FSC certification around the world now includes roughly 100 million hectares—an amazing accomplishment in such a short period of time. But clearly more needs to be done. One path to increasing certified forests in the U.S. and elsewhere is to combine the whole certification process with marketable carbon emission allowance trading. FSC-certified forest landowners could sell carbon emission allowances created by simply letting their forests age and accumulated carbon-laden biomass. In order to participate in carbon allowance markets in this fashion, forests would have to be certified by the FSC or other equivalent organizations, and would be monitored not for just forest management practices, but also for carbon accumulation. (In a blog posting, Trevor Herriot suggests a comparable Grassland Stewardship Council for certifying sustainable grassland management, http://trevorherriot.blogspot.com/2009/09/proposal-grassland-stewardship-council.html.)
By all appearances, the American Clean Energy and Security Act (the cap and trade bill passed by the House and now before the Senate) as currently written establishes a thorough review process for insuring the legitimacy of offset credits that can be used in lieu of emission allowances. The standards used in this process will be overseen by an Offsets Integrity Advisory Board. The process requires an accredited third party verification to assure that applicants for offsets have actually sequestered additional carbon equivalents in the amount claimed. Because the greatest opportunities for offsets reside in the world’s forests and because of its extensive experience in forest certification, the Forest Stewardship Council can and should play a major role in the verification of offsets both domestically and internationally. Given the FSC’s stellar reputation, critics would be assured that offsets are real and not faked in any way. The standards established for international deforestation reduction offsets in the cap and trade bill read exactly like those followed by the FSC in its current certification work including the “following of widely accepted, environmentally sustainable forest management practices,” the restoration of “native forest species and ecosystems,” and “due regard to the rights and interests of local communities, indigenous peoples, forest-dependent communities, and vulnerable social groups.” Achieving multiple environmental and social goals at the same time we sequester significant amounts of carbon seems like too good a deal to pass up. The devil is in the details of this approach, but then again he always is no matter what one does.
Another more radical option is to remove offsets from the cap and fund them with allowance auction revenues. The House cap and trade legislation as currently written allows for up to 2 billion tons of carbon equivalent offsets annually to be used instead of government issued allowances to satisfy emission requirements under the cap. As the cap shrinks from its peak of 5.4 billion tons of carbon equivalents in 2016 down to roughly 1 billion tons in 2050 and beyond, offsets will loom larger as a proportion of the cap. Instead of such a heavy dependence on offsets, the legislation could be rewritten so that the cap is fully satisfied by allowances and that a portion of emission allowance auction revenues is allocated to offset purchases, perhaps a fifth. If the existing annual caps in the House bill are retained and legitimate offsets are funded from allowance revenues, the volume of greenhouse gases entering the atmosphere would shrink at a more rapid rate than otherwise while gaining the ecological and social benefits of an offsets program. This approach would also assure attainment of the cap irrespective of the actual performance of offsets projects, alleviating the concerns of wary environmentalists.
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