California’s “lenient leakage accounting” means that emissions reductions from forest offsets may never happen

California’s cap-and-trade scheme has resulted in payments of hundreds of millions of dollars to forest owners. But a recent policy brief by Barbara Haya at the University of California, Berkeley argues that California may have exaggerated the emissions reductions of these forestry projects by as much as 80 million tons of carbon dioxide.

In an article about policy brief, MIT’s Technology Review website notes that,

The findings raise troubling questions about the effectiveness of California’s cap-and-trade program, one of the world’s most high-profile tests of such a market-based mechanism for combating climate risks.

Forestry projects have received more than 122 million carbon credits under California’s forest offset protocol. Forestry projects can sell carbon credits if they stop logging, plant more trees, or manage forest lands to store more carbon.

Even business as usual can be enough to qualify for carbon credits. In a 2017 Fact Sheet about the forest offset protocol, Haya explains that,

California’s forest protocol allows any forest landowner in the United States to sell offset credits if they manage their forestlands to hold more carbon per acre than the baseline, and commit to maintain that carbon for one hundred years. Most projects define the baseline as the average carbon storage for that region and forest type. By definition, half of forest carbon is on lands that already hold more than average carbon. The purpose of the protocol is to encourage landowners to manage their lands to hold more carbon than they otherwise would have. But the protocol also allows forest landowners that were already managing their forestlands sustainably to earn offset credits for doing so without changing their management practice. California does not assess the effect the protocol is having on land management practice compared to how much it is supporting land management that would likely have happened anyway. Instead California assumes that all participating forestlands are sustainably managed because of the incentive from the offset program. As a result, California over-estimates the protocol’s effect on emissions, crediting forestland management that is business-as-usual.

Lenient leakage accounting

In her recent policy brief, Haya analysed 36 forestry projects that account for 80% of total offset credits issued by the California Air Resources Board. She writes that, “82% of these credits likely do not represent true emissions reductions due to the protocol’s use of lenient leakage accounting methods”.

Haya is critical of the accounting of forest offsets in California, not California’s climate change policy in general. In an article about the policy brief on Berkeley News, the university’s website, Haya is quoted praising California’s efforts to reduce greenhouse gas emissions:

“We’re doing a lot of really good things to reduce our emissions, including our renewables portfolio standard, our efficiency standards and our support for electric vehicles. We are a leader in climate change policy in the U.S. and the world, and we’re doing an incredible amount of really good work.”

Haya has long been critical of offsets in California’s cap-and-trade scheme. Back in 2011, she warned that,

“The offsets program is a huge trap door at the bottom of the cap-and-trade program that the entire cap-and-trade program could fall through. If we want to have a cap-and-trade program that’s successful into the future, we can’t have a giant trap door at the bottom.”

Emissions reductions may be non-existent

Haya’s policy brief highlights several problems with accounting for carbon offsets:

• If a company reduces logging in one area of forest but logging increases elsewhere to meet market demand, then there is no reduction in emissions. In terms of carbon released to the atmosphere, it doesn’t matter whether the same company increases logging elsewhere or another company does so. “We don’t stop building homes or making wood furniture,” Haya comments. “Those trees have to be cut down somewhere.” Since forest offsets do precisely nothing to reduce demand for timber products, this “leakage” is inevitable.
• California assumes a 20% leakage rate. In her policy brief, Haya refers to two studies that found leakage rates can reach as much as 80%. “Using an unsupported low rate results in over-crediting,” Haya writes.
• Haya writes that, “most forest offset projects begin in greenhouse gas debt; project landowners generate offset credits that allow emitters in California to emit more than the state’s emissions cap today, in exchange for promises that their lands will continue to increase their storage of carbon over 100 years”. But to address climate breakdown, emissions need to be reduced now, not at some hoped for point several decades in the future.

The Air Resources Board’s initial reaction was to dismiss Haya’s policy brief. Carbon Pulse reported Jason Gray, Chief of Climate Change Programme Evaluation Branch at the ARB, as saying that, “It is an apples-to-oranges comparison. It does not understand how the protocol works.” But California’s legislators have now asked the ARB to carry out an independent review of the forest offset protocol.