This past week, the Energy and Environment Subcommittee of the new US Congress held its first hearing on the use of offsets within a future carbon regime, presumably within the cap and trade variety of such a regime. As anybody should be able to surmise from reading my byline, my past blogs, or doing a quick Google search, this topic has some degree of importance to me—kind of like oxygen is a bit important to me. I am definitely getting to that age where starting a new career would be a pain.
As I’ve written elsewhere, it’s my firm belief that the US holds the future of the CDM—the international offset regime—in the palm of its hand. So last week when we got wind of the E&E hearing, and the fairly negative testimonies that were planned on the subject of the CDM, my team who tracks and works on these things (okay, she’s just a hyper-accomplished whirlwind who SEEMS like a team) sprang into action and in about 24 hours, managed to work together with four major trade associations to write a letter on the benefits of offsets to Congressman Markey, the Chair of the Committee. Don’t get me wrong, there is plenty about the CDM that needs work, and I would suspect that at least a few folks on its Executive Board would get a laugh out of the fact that I am out there loudly defending it to Democrats and Republicans on the Hill. But there’s a difference between standing up for a concept and noting serious concerns about its execution and underlying architecture.
Anyway, the hearing went off and, on the whole, went OK, but a theme emerged that is worth noting. It’s the issue of deforestation, and in particular, international tropical deforestation. Quite quickly, this issue seems to be becoming a focal point of interest for the U.S.—and this is a really good thing. Congress seems to have begun to grasp the notion that smoking the world’s forests at the rate of 36 football fields a minute is a really bad idea. Tropical forests were utterly screwed in Kyoto – enormous amounts of work was done in establishing them as a cost effective carbon mitigation mechanism, and then they were traded away in the negotiations like an old shoe in a game of strip poker. Pedro Moura Costa, my co-founder at EcoSecurities, has been quoted saying that taking tropical forest conservation out of Kyoto was the greatest environmental crime of the 20th century. I don’t disagree. This is the world’s preeminent trove of biological heritage we are talking about—not Russia’s unknowable and absurdly inflated emissions profile circa 1988.
So on the one hand, I’m glad that the U.S. has decided to “invent” the idea of using carbon markets to save the forests (now operating under the new and improved rebranding of REDD—reduced emissions from deforestation and degradation). But I am also increasingly concerned at the virulent (and dare I say, uninformed) opinion swirling through the D.C. corridors that the U.S. should simply abandon the CDM. And most of all, I am concerned about the apparent trend of the CDM being thrown under the proverbial bus in the interests of differentiating international forest carbon markets as somehow better, more untainted, or more of a U.S. invention. Among others, the US diplomat who led our negotiating team at Kyoto a dozen years ago apparently pretty much suggested as much at the hearing, seemingly to a nodding bunch of Congressmen. Apparently there is now a sense that the U.S. can “own” this part of the emission solution (having abdicated our leadership for the last 8 years following the Florida recount).
Excuse me, but I’ve seen this movie. I got into the carbon field some 16 years ago (yes, really) on the back of international tropical forestry deal flows that morphed out of the original debt-for-nature swaps. I BELIEVE in both the intrinsic and carbon value of tropical forests. I’ve had my passport stamped and my malaria prescriptions filled for far off corners of primary woodlands in places like Papua, Brazil, Malaysia, Thailand and Costa Rica. And the ethical concerns and technical questions that drove the stake through the heart of tropical forests in Kyoto negotiations have not gone away a decade of deforestation later. It’s just become 12 years more urgent that we get our act together and find a path to saving these incomparable assets.
At the same time, developing country emissions have also skyrocketed. China’s emissions are more than double what they were in 1997 and other developing countries are following similar trajectories. The CDM is starting to make a dent in that trajectory – China will be the world’s largest wind power generator soon enough – in part thanks to CDM incentives. Every year that we don’t give China and other developing countries some sense of incentive to continue that kind of changeover will result in embedding billions of dollars of long term higher emitting assets into their infrastructure and our atmosphere. Which means that chasing the forests at the expense of the CDM or similar financing mechanisms –even today – also has very severe potential consequences
So, it is imperative that we influence both forests and developing country emissions—a solution set that excludes one or the other and even has a shot at addressing climate change simply does not exist. The simplistic idea that one is good and the other is bad needs to be tossed in the dustbin. For critics to look at certain CDM projects and blithely claim they are not additional while advocating crediting for tens of millions of sequestration tons from standing tropical forests (where the change of an assumed deforestation rate by a single percent could easily mean the difference of hundreds of millions of dollars of value) is the height of hypocrisy. Both are good. Neither will ever be sufficiently precise to satisfy their most vociferous critics. Accepting some imprecision is fine – providing we use policy adaptations to mitigate the potential excesses of both (via discounting and conservative overall benchmarks) and create real processes to do so pro-actively and in response to real data.
Right now, the US alone emits about 7 billion tons of CO2e per year, about the same as China’s and roughly similar to the annual emissions rate from deforestation as well. The Obama proposal of reducing emissions 80% by 2050 would drop US emissions by more than 5 billion tons per year from current numbers. America will then ostensibly operate an economy twice its current size (assuming a 2% annual economic growth rate) on the emissions profile of its current automobile fleet. In those kinds of numbers, there is plenty of justification to load the shotgun with as much silver buckshot as we can lay our hands on to find emissions mitigation and sequestration in every corner we can. Savings us more emissions now to give us greater flexibility in the trajectory in the future can only be a good thing. And both a revamped CDM and a massive global forest protection regime need to be part of that. The US should not trade one for the other when we need both.
Marc Stuart is the Co-Founder and Director of New Business Development for EcoSecurities, a global carbon trading firm. The views expressed are his own and do not necessarily represent the view of EcoSecurities.