Carbon offsets

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Out On a Limb

PG&E green program helps preserve forests already saved by state taxpayers

By Susanne Rust
California Watch

California’s largest utility company promises its customers green salvation through its ClimateSmart program.

For every bit of energy a PG&E ratepayer uses – turning on a vacuum cleaner, powering up a computer or heating up an oven – a little part of a tree or forest is saved to erase the carbon sins of the customer. The voluntary program costs ratepayers an average of $60 a year.

But the company isn’t telling its customers one crucial fact: Those forests were purchased years ago by a Virginia-based conservation group that used nearly $50 million in loans and grants from California taxpayers. That group, The Conservation Fund, then sold PG&E carbon credits on the land it had already purchased for preservation and selective logging.

Thousands of PG&E customers are effectively paying twice for the same Mendocino County forests. Continue reading

State Senators Hear Cap-and-Trade Caveats

Craig Miller

Photo: Craig Miller

The dark underbelly of cap-and-trade was somewhat exposed in a four-hour hearing today before the Senate’s Select Committee on Climate Change and AB-32 Implementation. AB-32, of course, is shorthand for California’s Global Warming Solutions Act of 2006, which mandates a carbon trading program be in place by 2012.

Here’s my “highlights reel” from the panel of experts who testified, in order of appearance:

Mary Nichols, Chair, California Air Resources Board

- On carbon pricing: “There is no approach that does not involve administrative costs & headaches” but cap-and-trade “seems like a pretty good mix” of certainty provided by an enforced cap and market flexibility (versus an outright carbon tax of some sort).

- On California going “solo” with carbon trading (i.e. without the other states and provinces currently signed to the Western Carbon Initiative): The larger the territory, the more potential for “bad actors” but the greater the potential for meaningful savings & benefits to the economy.

Michael Wara, Stanford Law Professor

- On carbon offsets: “…difficult to administer;” to ensure real reductions, changes in behavior, has proven to be “a significant and ongoing challenge, in practice.”

- California appears to be “opting for prudent limits” on allowable offsets, at an anticipated 4%, versus more than 30% in the Waxman-Markey bill that has cleared the US House of Representatives.

- “Very few [offset] programs have been run without controversy.”

Ken Alex, California Attorney General’s Office

- On enforcement: “Every system has cheaters, especially where billions of dollars are involved.”

- Cap-and-trade provides “a permanent incentive for cheaters.” Unassailable data is essential for regulators.

- Regulators “must have sufficient authority” to assess meaningful penalties. Alex, who was involved in sorting out the state’s energy crisis of 2000-2001, recalled that “million-dollar penalties were irrelevant.”

Dallas Butraw, Economist, Resources for the Future

- Warned against a “phone book-sized” regulation.

- Cost of carbon emissions permits will be passed along to consumers but could be offset by tax breaks or a dividend system similar to what oil & gas companies pay to residents of Alaska.

David Harrison, Economist, NERA Economic Consulting

- On lessons from Europe: Despite a rocky start for the EU’s “pilot” program, the system for carbon trading in 27 countries has “evolved over time” to become “very successful.”

- The EU experience “really does show that cap & trade works. Emissions have been reduced.”

- There is “no silver bullet” for determining allocations; that in Europe has been a “messy” and “contentious” process.

- In spite of it all, the EU experience demonstrates that cap-and-trade is “not perfect but it really is better than the alternatives,” and provides a good laboratory for California.

The committee, chaired by Fran Pavley (D-L.A.), also heard from several business and environmental groups. At one point a speaker from the Natural Resources Defense Council (NRDC) argued briefly with a utility representative about whether electric rates are actually higher or lower in California, compared to the nation as a whole (apparent compromise: rates may be higher but average bills are lower).

Utilities complained that the system, as proposed, forces power companies to bear the brunt of the burden. Business interests warned that unbridled implementation of AB-32 “could add to an already alarming increase in job losses,” claimed that the state has no authority to hold carbon permit auctions under AB-32, and asked for initial permits to be given away to industry. Environmentalists asked for the opposite, urging that 100% of initial permits be auctioned off, i.e. that emitters be made to pay for them.

Numerous speakers expressed nervousness over validity of carbon offset programs. Regarding the various schemes for carbon storage in forests or soil, Assemblyman Jared Huffman (D-San Rafael) said “This one makes my head hurt.” There’ll be a lot of Excedrin passed around before this is through.

Carbon Offsets in the Air

Friday on The California Report’s weekly magazine, Rori Gallagher reports on ways to assuage your carbon guilt with a quick stop at an airport kiosk.

By Rori Gallagher

Reed Galin

Photo: Reed Galin

I first got the idea to do a story on carbon offsets back in December, when San Francisco International Airport announced it was partnering with a private company called 3Degrees to install carbon offset kiosks.

Originally, the kiosks were supposed to be installed sometime “in the spring.” But there seems to be a delay with the contract negotiations. I kept checking in with 3Degrees about a launch date. At first they were saying Earth Day–then it was pushed to May, and now “by the end of June.”

But there are already other options out there. I found that Virgin America, the only major airline based in California, was the first to offer carbon offsets in the sky. Other airlines do offer customers the chance to purchase offsets but Virgin allows you to do it during the flight through the in-flight entertainment system.

Carbon offsets are supposed to stop carbon emissions that would have otherwise taken place. That’s really difficult to substantiate. Projects like wind farms for example, certainly seem good for the environment but likely most of them would be built anyway and produce power without this type of third-party incentive.

Virgin’s program managers say they stringently vetted carbon offset programs, and that theirs are among the most credible out there. But as I point out in my radio story, there is very little regulation of the voluntary carbon offset industry and it’s difficult to know if they’ll do what they say they will.

There are some independent efforts to separate the sheep from the goats, for example the Natural Resources Defense Council has produced a buyer’s guide for carbon offsets.

Trucks line up at an IdleAire terminal, which provides "carbon offsets" for airlines. Photo: Rori Gallagher

Trucks line up at an IdleAire terminal, which provides "carbon offsets" for airlines. Photo: Rori Gallagher