As part of a program in California aimed at reducing climate pollution, landowners in the US have received hundreds of millions of dollars for promised carbon dioxide reductions that may not occur.
The state has spent CO2 compensation credits on projects that could overestimate their emissions reduction by 80 million tons of carbon dioxide, one third of the total cuts that the state’s cap and trade program would achieve in the next decade, according to a policy paper to be released by the University of California, Berkeley in the coming days.
The findings raise worrying questions about the effectiveness of the California cap-and-trade program, one of the most controversial tests in the world of such a market-oriented mechanism to combat climate risks. The system was implemented in 2013 and is an important part of the state’s ambitious efforts to reduce greenhouse gas emissions, expected to represent nearly 40% of California’s total spending cuts.
“If the findings are correct, it appears that a substantial part of the cap-and-trade program does not deliver real emission reductions,” said Danny Cullenward, a research assistant at the Carnegie Institution and member of an environmental organization in California. Committee of the Protection Office that analyzes the impact of the cap-and-trade system in an e-mail.
The California offsets program allows timber companies, Native American tribes and other private landowners to sell credits to climate polluters in exchange for growing trees or taking other measures to reduce or absorb greenhouse gas emissions. To date, such forestry projects have received more than 122 million credits, with a value of more than $ 1 billion.
But more than 80% of the credits the California Air Resources Board (ARB) has spent on about three dozen analyzed forestry projects probably do not represent “real emission reductions”, according to the new analysis by Barbara Haya, a researcher with the Center for Environmental Public Policy, which has been researching and worrying about the state’s compensation system for years.
In the context of a cap-and-trade program, the government sets a limit on the total amount of greenhouse gases that industries that fall under the policy can emit, a limit that becomes stricter over time. Companies can buy or sell allowances to emit fixed levels of greenhouse gases, effectively creating a market and price for pollution.
But carbon emitters often also have a second option: buy credits from CO2 compensation projects that claim to reduce greenhouse gas emissions in one of the following ways. Different cap and trade programs have different standards for which types of projects are eligible and for how their impact is measured and verified.
The US Forest Projects protocol of ARB, the subject of the UC Berkeley analysis, accounts for more than 80% of the loans issued so far. It allows forest owners to sell credits if they stop cutting down trees, agree to plant more, or manage forest areas in a way that increases the amount of carbon they store. It is crucial that they can also receive credits for ‘business-as-usual land management’ if their forest already contains more carbon than normal for a certain type and region, provided that they commit themselves to maintaining those levels for the next hundred years .
The main argument for compensation is that they enable the market to find low-cost ways to reduce emissions and to ignore sectors in the cap-and-trade program to also improve their carbon footprint.
But there are major challenges with the correct processing of offsets.
To start with, if a timber company reduces the harvest on one piece of land, but that company or another meets market demand simply by increasing the log-in on another plot, the program has not really achieved a net emission benefit. This is known as “leakage”.
The California protocol assumes a leakage rate of 20%, but Haya’s analysis shows that several previous studies have shown that such rates can reach around 80%. A related but bigger problem is that landowners earn compensation credits “with which California issuers can today emit more than the state’s emission ceiling, in exchange for promises to capture carbon in 100 years”.
That is an obvious problem, since the majority of global emissions reductions must take place over the next three decades to prevent the most serious threats to climate change.
But Haya further claims that many of the promised cuts cannot happen at all. Firstly, it will become increasingly difficult for forests to retain carbon as trees age, climate impacts and forest fires occur. For another, Haya points to a number of complexities within the protocol that suggest that it does not properly take into account the increased log levels that are likely to occur as a result of the program in the coming decades.
A separate problem with offsets is known as ‘additionality’. If the landowner did not intend to actually harvest that plot, the landlord simply asks to be paid to maintain the status quo – in which case there is no real-life impact on emissions.
For the offset system to work, the action or lack of action had to occur because of the program. But it is difficult to accurately assess this because you cannot know for certain the intentions of a person or company.
“From a technical and administrative point of view, creating an effective offset system is extremely difficult because the baseline is so difficult to measure reliably,” said David Victor, energy policy researcher at the University of California, San Diego, who has carefully studied previous systems. e-mail.
“In addition, the policy of offsets is somewhat one-sided,” he added. “There is enormous pressure to generate redundant credits – pressure created by people who want to show that markets are liquid, by project developers who want to maximize credits and by compliance buyers.”
In 2017, Stanford researchers published a paper concluding that the California compensation program contributed to reducing emissions in general, in what was seen as an important approval. The central finding was that approximately 64% of the projects that benefited from “improved forest management” credits “actively applied for or before the start of the project.”
But others found it striking that around a quarter of the projects were owned by non-profit organizations, which raises questions about the level of additional emissions that is likely to be achieved – because, as the study itself points out, such groups are unlikely to be interested in cutting down their forest for profit, and their management practices can already store forest cabbage. “
Haya emphasizes that she does not claim that landowners violate laws. On the contrary, she says, the state has “established rules that invite false crediting,” and “forest owners just play along.”
ARB, for its part, defends the forestry protocol and states that the way in which it takes account of leakage and additionality was based on the best available science.
Rajinder Sahota, the administrative assistant to the board, says the program is designed to create economic incentives for landowners to keep trees intact. She adds that ARB is scheduled to review the forestry protocol later this year through a public trial that will investigate new studies and request input from academic experts, the US Forestry Service and others.