By Chris Lang
“Offsets are an imaginary commodity created by deducting what you hope happens from what you guess would have happened.” That’s Dan Welch writing in the magazine Ethical Consumer in 2007.
Jerome Whitington put it in a slightly different way at the American Association of Anthropology conference in Denver in 2015.
“It is possible to buy and sell atmospheric carbon!” he said. He followed this with two questions: “How is it that an institutional and informational assemblage can claim the ability to quantify and trade in an ethereal, gaseous atmospheric chemistry? What is actually being traded?”
In a recent paper in Climatic Change Lauren Gifford of the University of Colorado, Boulder, writes that,
Whitington went on to say that carbon has come to function as a metric of the human, providing a common, partially standardized measure of human activities and their relevance to the planetary atmosphere. Forests, with their ability to naturally sequester carbon and act as sinks to effectively “hold” rogue carbon, have emerged as popular spaces for this quantification of ethereal atmospheric chemistry. There is a governance narrative that policy can somehow “know” a forest well enough to translate it into policy and value through systematic processes of measuring, quantifying, developing data infrastructure, verifying and insuring uncertainty. Markets for carbon require such intensive processes and procedures to operate because, as Lovell wrote, “You can’t value what you can’t measure.”
In her paper, Gifford takes a close look at professional forest carbon accounting, focussing on three “points of engagement”:
- baseline determinations,
- the calculation of additionality, and
- the role of uncertainty.
These three points are used to show “how processes framed as technical are often spaces where uneven social and political interests are manipulated or obscured and contribute to varying environmental and conservation outcomes”.
Gifford’s data comes from several forest carbon offset projects, mainly in the Peruvian Amazon and the state of Maine in the USA. Gifford uses empirical data to “open the black box” of carbon accounting. She writes that “processes deemed technical or ‘outside the domain of politics’ are, in fact, deeply political, or the result of a series of uneven social and power relations”.
She notes that carbon markets have been compared to Rube Goldberg machines, reliant on a series of complex steps to achieve something that could be achieved by far simpler, non-market means.
Gifford writes that,
By any nature, measurement of forest growth and carbon storage is subjective, flexible, and often significantly over, or under, estimated. And the concepts used to determine measurement, like “baselines” and “additionality,” are deeply subjective and remain open to interpretation. Generally, forest accounting practices are mutually agreed upon among stakeholders, but the tools and processes used remain subjective.
She quotes from a 2012 article, in which Michael Gillenwater, head of the Greenhouse Gas Management Institute admits that there are problems:
“No wonder people are skeptical about offsets. If you look at the climate community’s own words on the subject, we don’t appear to have a handle on a concept we have championed as integral to the policies we have created. Language on additionality and baselines is vague, inconsistent, or both. No two authors seem to define these concepts in the same way without falling back on some platitude like ‘business as usual’”
There are several verification and certification organisations, allowing project developers to pick and choose which system they prefer. “If you are implementing a specific project and looking for a protocol, then go to one of the GHG offset programs directly, and choose one that best suits your needs,” a source told Gifford.
And Gifford writes that a carbon accountant told her, “Which standards project developers choose (to follow) depends on what markets they are looking to engage with, and who has a protocol matching their project idea.”
Gifford describes a baseline as follows:
To determine a change in carbon sequestration, offset project administrators must first define a baseline scenario, outlining what would happen to a forest in the absence of carbon project intervention. This baseline is the point from which all changes in carbon storage are accounted and deemed “additional.”
And she highlights the obvious problem: “The more deforestation project managers anticipate, the more carbon credits they generate.” A 2016 paper in the International Forestry Review looked at baselines in the Mai Ndombe REDD project in the Democratic Republic of Congo, and the Corridor Ankeniheny-Zahamena REDD project in Madagascar. The authors conclude that “the baseline scenarios in REDD+ projects amount to untestable guesses”.
Gifford notes that,
The entire process of defining a baseline entails multiple hypotheticals, put in contrast to one another, to determine a baseline that will demonstrate additionality. By its very nature, this process creates spaces of contention, relying on assumptions and estimations of models to assume how a conservation project would behave without the influence of climate mitigation capital.
Additionality is “fundamental to the very definition of an offset”, Gifford writes. “Additionality is where development or conservation projects – backed by climate finance capital – outperform their pre-determined baseline, or how it would have performed without the injection of climate finance.”
But there is no agreement on how to prove additionality. One carbon project manager told Gifford, “I don’t think anyone involved in this project would say climate change is their primary motivation.” Another said that his organisation was “not driven by some great fire in the belly to reduce carbon emissions”.
Gifford writes that,
When REDD and forest carbon offsetting were introduced officially in 2007, they included a specific clause that forests must be at risk for deforestation to prove additionality, which in REDD+ comes from avoided deforestation. This led to significant instances of fraud in baseline determinations, including project managers identifying questionable threats to forests, some which spurred increased deforestation. And the entire REDD+ mechanism was quickly critiqued as a colonial governance regime framed as climate change mitigation that marginalized, fetishized, and disenfranchised local and indigenous forest-dependent communities.
Uncertainty and insurance
In any forest project, there is a risk that the forest will be destroyed or damaged, for example through wildfire, pests, logging, or mining. This risk is uncertain and to address the risk project developers make payments into a risk pool of about 10% of the investment. This buffer pool holds a portion of the project’s credits to be used if part of the forest is destroyed.
Private insurance options also exist, “which allow developers to pay for insurance with cash, and not hold a portion of their credits in escrow until they are retired in 20–30 years”, Gifford writes. “If an insurance policy is tapped because of forest loss, part of the return includes the validation of the carbon credits despite the loss of the physical sequestration.”
Gifford writes that such insurance is fine as a way of protecting capital, but it does nothing to help address the climate crisis:
In the case of compliance carbon markets, insurance is mandatory. For most projects, and for every forest carbon project tied to the California market, developers pay into a compulsory insurance pool that covers loss of carbon should the trees be lost to a weather incident, insect infestation, or other natural hazard. If there is a fire or pest infestation and forest cover is lost, the carbon is released into the atmosphere, yet the carbon offset purchaser still receives credits toward their administratively carbon budget. But the key is that this design – this insurance policy – provides indemnity for the financial investment, for the capital investment, but not the physical trees, or the sequestered carbon. It is indemnity for the capital, but not the atmosphere.