Tag: Geographic North America

NOTE: This piece originally appeared on the Huffington Post. You can view the original here.

27 June 2014 | If there’s one thing US President Barack Obama understands, it’s the danger of sticker shock.

“People don’t like gas prices going up,” he said on Wednesday. “They don’t like electricity prices going up.”

He was addressing the League of Conservation Voters, and he went on to warn that environmentalists who ignore those rising prices do so at their own peril:

“If we’re blithe about saying [climate change] is the defining issue of our time, but we don’t address people’s legitimate economic concerns, then even if they are concerned about climate change, they may not support efforts to do something about it.”

It’s a point well-taken, and one that’s addressed in one of the longest-running environmental successes in the country, which the President also defended on Wednesday: the Clean Water Act:

“We’ve got to dredge up that old tape of the Cuyahoga River on fire, and the Chicago River, and just remind people that this thing (the Clean Water Act) worked,” he said.

He could have added that “this thing worked” because it doesn’t just keep nasties out of our water. It also provides mechanisms that address exactly the concerns he warned about. Those mechanisms, paradoxically, let land developers disrupt environmentally significant swamps (or “wetlands”) that filter water and regulate floods.

That’s right.

This great success works in part because it lets bad things happen.

But there’s a catch: this degradation can only happen under very limited circumstances and only after a rigorous permitting process. More importantly, it can only happen if the developer compensates by either restoring, creating, or in some cases preserving an endangered wetland area of equal or greater environmental value than what is lost.

This ingenious mechanism, which dates back to the 1970s, has led to the creation of wetland mitigation banks, which are private conservation efforts that proactively restore degraded wetlands in the hope of selling credits to developers down the road. Because mitigation banks tend to be built on land adjacent to intact swamps, they often create more contiguous wetlands that deliver more ecosystem services than the isolated patches of degraded swamp that are destroyed.

This is one of the great unsung successes of the 1970s environmental boom, and it succeeds because it doesn’t let the perfect become the enemy of the good. Something similar is happening under the Endangered Species Act, which allows for development on habitat under very limited circumstances and only if habitat of equal or greater value is restored, created, or preserved.

These things work, and they work so well that the European Union is incorporating similar mechanisms into its environmental strategy.

Similar things worked on acid rain in the 1990s, when the state of California implemented its Regional Clean Air Incentives Market (RECLAIM), which put a cap on the amount of sulphur and nitrogen oxides (SOx and NOx) that industry can pump into the air, then it let the private sector identify the most efficient way of meeting that cap by trading allowances.

Then as now, right wingers went apoplectic – predicting everything from rolling blackouts and soaring energy costs to the end of the coal sector and a nationwide recession. Left wingers had the opposite fear; they believed industry would just “buy its way out” of its clean air obligations, and likened the permits to indulgences.

Both sides were wrong. The program has helped cut acid rain in half since its inception, and at a cost of just $3 billion per year, which is more than 85% lower than industry projections. More importantly, it saved local communities more than $122 billion per year in reduced health costs and cleaner lakes and rivers, according to a study by the Journal of Environmental Management. That’s $40 in savings for every $1 spent – although the EPA prefers the more conservative claim of $30 for every dollar spent.

Either way, the program worked, and it worked because it let government do what government does best, and it let the private sector do what the private sector does best. Specifically, it let government draw a clear and inviolable line above which emissions dare not rise, and it let the private sector find new and innovative ways of staying below that line, with a financial incentive for those who did the best job. All of these programs work because they promote responsible land stewardship in a way that is transparent, efficient, and effective – which is what people concerned about cost really want.

And that brings us to something else the president touched on: education. When he alluded to “that old tape of the Cuyahoga River on fire”, everyone above a certain age knew exactly what he was talking about. Back then, the general public was confronted with very tangible evidence of our environmental challenges. That’s why we were able to implement mechanisms that work.

Climate change isn’t as tangible as a burning river, but that hasn’t stopped 70% of the public from understands that it’s a threat. The challenge now is to make sure people understand just how serious and immediate that threat is so that they can make intelligent and informed decisions about how to proceed – perhaps by pointing out that food is a more fundamental need than even gas and electricity.

That’s because food is where rising temperatures are going to extract their highest toll. The US Climate Assessment made that point quite clearly a few months back, when it warned that that climate change is already disrupting global food supplies. That’s why 16 retired US admirals and generals recently took the unprecedented step of warning that climate change threatens our national security.

And it doesn’t stop with climate change. Our entire green infrastructure is at risk, but most people aren’t even aware that such a thing even exists. They don’t know that wetlands filter water and regulate flooding, or that mangroves protect our coasts and forests clean our air.

These are the functions that keep us alive, and they’re why conservation isn’t something we should do, like trimming the bushes, but rather it’s something we must do – like putting food on the table or shoring up the foundation. That’s literally what it’s about, because when you get down to it, our economy depends on our ecology, since everything we buy, sell, eat, and produce is derived from nature.

This is the reality we must ultimately acknowledge, because although higher energy costs aren’t a foregone conclusion in a carbon-constrained world, they are a distinct possibility. Environmental markets can reduce that likelihood, but they can’t eliminate them.

This article was originally published in the V-Carbon newsletter. Click here to read the original.

26 June 2014 | The data came to life this week at Ecosystem Marketplace’s State of the Voluntary Carbon Market 2014 report presentation in Washington DC, where market participants gathered to discuss trends in voluntary carbon offsetting – and where we go from here.

Though market value fell to $379 million last year, down from $523 million in 2012, a close look at the findings shows that much of the drop is due to shifts in compliance markets that affect voluntary purchasing. An expert panel – including Christian Dannecker of South Pole Group, Brian McFarland of Carbonfund.org and Hans Wegner of the National Geographic Society – also found plenty of silver lining.

“The good thing for people like us is that competition is also causing the value and the quality of the offsets to go up,” Wegner, the Chief Sustainability Officer at National Geographic Society, said. Nat Geo has purchased offsets from a reforestation project in Panama as well as REDD (Reducing Emissions from Deforestation and Degradation of forests) projects in Brazil and Tanzania.

Dannecker told the audience that he was encouraged – or at least not discouraged – by the report findings, and optimistic for new business opportunities. “It’s a good time for new players to enter the market because it’s easier to do so given the low prices, he said.

To McFarland, the supply-demand dynamic for REDD projects, in which a record number of tonnes were transacted at lower average pricing, was unsurprising but nevertheless concerning, since the viability of these projects depends on increasing demand. It is encouraging to see forest carbon project issuing offsets on California’s compliance market, and acceptance of international REDD offsets into the program would be an important next step, he said.

Thanks to the many attendees who joined in person and virtually through the webstream, and a special thanks to Hunton & Williams for generously hosting. If you weren’t able to participate or just want to relive the moment, please view the presentation slides and live recording.

In all of the numbers, it’s easy to look past the contributions of each project and the individuals that are making emission reductions happen every day. The Delta Institute provided one example last week with the announcement of the first offset transaction in the Nitrogen Credit Program (NCP). Myron Ortner, owner of a 40-acre farm in Michigan, voluntarily reduced his nitrogen fertilizer usage to become the first recipient of offsets under a methodology developed in partnership with Michigan State University and the Electric Power Research Institute.

Offsets from the program are generated due to the reduction in nitrous oxide caused when excess agricultural fertilizer is broken down in the soil. According to the US Department of Agriculture, more than 74 million acres were planted to corn in the North Central Region last year, representing a significant reduction potential for NCP. The program was recognized for outstanding environmental achievements by American Carbon Registry in March 2014 with an Innovation Award.

Many more groundbreaking stories from the voluntary carbon marketplace are summarized below, so keep reading!

Smile, we’re on camera

You may have noticed the new video feature on Ecosystem Marketplace’s homepage, which so far has featured our “Voices from Cologne” series with interviews with some of the movers and shakers at last month’s Carbon Expo. In case you missed it: Ed Hanrahan, CEO of project developer ClimateCare, commented on corporate demand for carbon offsets, the World Bank’s Alex Kossoy discussed the proliferation of regional programs in China and the United States, and Rick Saines, head of North America Climate Change and Environmental Markets Practice at Baker & McKenzie, argued that a global agreement can provide guidance for individual countries, but domestic policy will ultimately drive action on climate change. More to come.

Every year, Ecosystem Marketplace relies wholly on offset market participants to financially support the State of research. In return, sponsors ($7.5k+) and supporters ($3k) benefit from the report’s growing exposure, early insight into our findings, and opportunities to engage directly with Ecosystem Marketplace in report-related outreach and events. Interested organizations should contact Molly Peters-Stanley.

—The Editors

For comments or questions, please email: [email protected]

Voluntary Carbon Score 331,000 for the home team As fíºtbol fans tune in for the World Cup, host country Brazil’s emissions have also been in the spotlight. The International Federation of Association Football (FIFA) will offset 331,000 tCO2e for the World Cup from four projects located in Brazil to cover carbon emissions associated with the travel and accommodation of all staff, officials, teams, volunteers and guests and emissions resulting from venues, stadiums, offices and TV production. The Purus Project, which contributes to the preservation of 36,000 hectares of pristine rain forest from deforestation, is among the projects chosen. Local project developer Mariama Vendramini of Biofí­lica told Ecosystem Marketplace that FIFA’s offsetting commitment represents one of several initiatives that has helped increase domestic interest in forestry offsets– Read the press release – Read more at Ecosystem Marketplace   Winds of change India is one of the top five wind markets in the world with more than 21,000 MW of installed capacity. And as India’s total wind power potential is estimated at about 80 GW, wind energy production in the country has room to grow and then some. These wind projects can sell carbon offsets or renewable energy certificates (RECs), but the markets for both offsets and RECs has been challenging, Dipjay Sanchania of CLP Wind Farms told Ecosystem Marketplace.– Read more at Ecosystem Marketplace   A method to the blackness? The Gold Standard is considering the development of a methodology to allow black carbon emission reductions to earn carbon offsets from appliances such as clean cookstoves. This expanded methodology would be incorporated into an existing methodology covering cookstoves. Challenges faced in establishing the methodology include measurement, quantification, and monitoring; establishing an absolute value for the global warming potential of black carbon; and accounting for the regional nature of black carbon impacts. The Gold Standard is seeking comments from stakeholders on its proposal by July 18.– Read more here   Climate North America Feelin’ blue The Forestland Group and Blue Source announced the issuance of 1.7 million forest carbon offsets for California’s cap-and-trade carbon market. The emissions reductions come from 220,000 acres stretching over seven counties in Michigan’s stunning Upper Peninsula, as part of the Blue Source Bishop Improved Forest Management project. It is the largest project issued offsets by California’s program to date. “We are excited to have completed a project of this scale which we believe provides important proof that commercial timberland operators practicing sustainable forestry can participate and thrive within the California market,” said Roger Williams, President of Blue Source. In a positive sign for the market, the development cycle for California-eligible forest carbon projects is shortening, Williams noted.– Read more here   Time to pull a 360 Democratic state lawmakers and environmentalists from New Jersey say that it is time for the state to act on climate change and rejoin the Regional Greenhouse Gas Initiative (RGGI). The lawmakers point out that New Jersey could likely meet the requirements for the US Environmental Protection Agency’s (EPA) recently proposed rule to limit greenhouse gas (GHG) emissions from power plants through RGGI. Governor Chris Christie pulled New Jersey out of the then 10-state cap-and-trade program in 2011. A state appeals court ruled in March that this move was illegal, but Christie’s administration announced in May it would propose repealing the relevant regulations. The EPA rule is scheduled to be finalized June 2015.– Read more here   Kyoto & Beyond A lost cause International certification firm SGS will no longer audit clean energy projects under the Clean Development Mechanism (CDM), and will surrender accreditation under the program. The company attempted to move its UK-based auditing business to India earlier this year to cut costs, but said those plans are no longer feasible. “SGS’ decision reflects the continuing contraction in the CDM market and its continuing concerns with the costs and risks associated with the CDM accreditation process,” the company said. The announcement comes after Norway-based DNV GL, which had been the largest CDM auditor, said in February it would cease validation and verification of CDM projects.– Read more at Reuters – Read more here   Global Policy Update Hey buddy, can you spare a permit? Shanghai’s first carbon permit auction is scheduled for June 30, when nearly 200 of the city’s largest emitters will need to have permits to cover their 2013 emissions. A shortage of permits on the market has made it difficult for large firms such as Shanghai Electric Power Corp. to comply, so the Shanghai Development and Reform Commission is putting 580,000 more up for sale in a one-off auction. The price floor for the auction will be announced June 27, but an official note indicated it will be no lower than 46 yuan ($7.41) per tonne. The Commission specified that permits at the auction should be used only for compliance, not trading. Shanghai’s is one of five carbon markets in Chinese cities.– Read more here   Lucky number 7? China launched its seventh and final planned pilot carbon market last week in the city of Chongqing along the Yangtze River. The municipal government issued a total of 125 million permits for free to cover the emissions of 242 companies in 2013, though the volume of permits will shrink by 4% per year. At the launch, 16 deals covering 145,000 tonnes were announced, with all permits priced at 30 to 31.5 yuan ($4.83 to $5.07) per tonne. Buyers, however, are not feeling squeezed by the regulation. “No one really needs to buy, and the permits are allocated in accordance with the emissions reported by the company itself so no one will have a shortage,” said one manager, speaking anonymously.– Read more here   The power of resolve The Board of the Consumer Goods Forum, a network of CEOs and senior management from about 400 companies representing combined sales of 2.5 trillion euros (US$3.4 trillion), last week called on the world’s government leaders to secure an ambitious and legally-binding climate change deal. The Board issued two climate change resolutions: one to phase out the powerful GHG hydrofluorocarbon from refrigeration installations by 2015 and another to help achieve zero net deforestation by 2020. The statement specifically called for market-based mechanisms, in particular the United Nations (UN) Reducing Emissions from Deforestation and forest Degradation (REDD+) mechanism, to achieve emissions reductions.– Read more at Digital Journal – Read the resolutions   Carbon Finance Deal or no deal The UN’s Green Climate Fund decided on its rules for raising and spending funds last month, including a 50-50 split between adaptation and mitigation projects. Commitments are expected in the coming months to capitalize the fund at $10 billion or more, but hurdles remain. The European Union can’t give any money until it gets a seat on the board, and the fund cannot be used for extreme events such as Typhoon Haiyan recovery, which fall under ‘loss and damage’ provisions in the UN negotiations. Seeing finance flow is key to an international climate agreement, according to developing countries. “No money, no fund, no deal in Paris,” said Tosi Mpanu-Mpanu, a senior negotiator from the Democratic Republic of Congo.– Read more here   Island ambition Indonesian President Susilo Bambang Yudhoyono committed $20 million to combat climate change and boost the “green economy” in Pacific Island states. The announcement was made during the Pacific Islands Development Forum in Fiji. Indonesia has a target to cut its emissions 26% by 2020, or up to 41% with international support. REDD+ is a major part of its strategy. Indonesia’s REDD+ boss Heru Prasetyo spoke about his efforts to move massive numbers of hectares of palm oil production to degraded lands to keep forests intact in an exclusive interview with Ecosystem Marketplace published last month.– Read more from Australia Network News – Read the interview with Pratseyo   Science & Technology Capturing the lead Graciela Chichilnisky, one of the masterminds behind the idea of an international carbon market and its inclusion in the UN Kyoto Protocol, is now CEO of Global Thermostat. The company is claiming what almost no one else has: that its carbon dioxide (CO2) capture technology is commercially viable and scalable. Its pilot plant in Menlo Park, California uses inputs of air and heat to remove CO2 from the atmosphere as electricity is produced. The captured CO2 could be quantified and sold as carbon offsets, used to produce materials such as cement and plastic, or fed to algae for ethanol production, among other applications. The technology is patent-pending in more than 100 countries.– Read more from Ecopreneurist – Read more about the technology   Mission possible US space research agency NASA (National Aeronautics and Space Administration) will launch the first CO2 monitoring satellite on July 1, from a California air base. It will orbit 438 miles above the Earth and its grading spectrometer will take daily CO2 measurements. “Data from this mission will help scientists reduce uncertainties in forecasts of how much carbon dioxide will be in the atmosphere and improve the accuracy of global climate change predictions,” said Michael Gunson, a scientist at NASA’s Jet Propulsion Laboratory. The $465 million satellite mission is named Orbiting Carbon Observatory-2, OCO-2 for short.– Read more here Air Pollution Specialist – California Air Resources Board Based in Sacramento, California, the Specialist will evaluate and develop tools for analysis and monitoring of the emissions trading program, incentives, voluntary actions, offsets and other approaches to further the goals of the California Global Warming Solutions Act of 2006 (AB 32). An ideal candidate will have demonstrated experience with environmental, energy, or commodities and derivatives markets.– Read more here   Director of the Biodiversity Programme – Institute for Sustainable Development and International Relations (IDDRI) Based in Paris, France, the Director will be in charge of designing, organizing and implementing a renewed intervention strategy and responsible for managing the biodiversity programme team. A successful candidate will have a PhD in a field related to biodiversity and ecosystem management as well as 10 years of professional experience in research and policy-oriented organizations. Fluency in English and French is required.– Read more here   Chief of Party – Chemonics Based in the Dominican Republic, the Chief of Party will provide technical direction and management for a US Agency for International Development (USAID) project addressing investment in climate change adaptation in urban and rural settings, municipal planning, disaster and risk mitigation, and water resource management. An ideal candidate will have prior USAID chief of party experience. Fluency in Spanish and English is required.– Read more here   Global Programmes Manager – The Gold Standard Based in the United Kingdom, the Global Programmes Manager will act as the central point for a range of the Foundation’s technical and project delivery activities. The staffer will be responsible for coordinating, managing and providing technical and administrative support for the Gold Standard’s Technical Advisory Committee. A successful candidate will have demonstrated experience in project management, technical experience and a passion for sustainable development, and demonstrated stakeholder management skills.– Read more here   Program Coordinator – Regional Greenhouse Gas Initiative Based in New York, New York, the Program Coordinator will provide administrative, project management and program coordination support across all program areas. An ideal candidate will have three or more years of experience as a program coordinator in GHG mitigation programs, energy regulation, energy policy, electricity markets or similar subject areas.– Read more here ABOUT THE ECOSYSTEM MARKETPLACE Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact [email protected].

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26 June 2014 | WASHINGTON DC | As Chief Sustainability Officer at the National Geographic Society, Hans Wegner uses voluntary carbon markets to offset those emissions the Society cannot eliminate. From his perspective, an oversupply of offsets in 2013 made it possible to choose only the very best offsets – meaning those that not only reduce emissions, but have knock-on “co-benefits” such as conserving habitat for endangered species.

“The good thing for people like us is that competition is also causing the value and the quality of the offsets to go up,” he said on Tuesday, as Ecosystem Marketplace presented findings from its State of the Voluntary Carbon Markets 2014 report at the offices of Hunton & Williams in Washington, DC. “For me, it’s really, really important – because credibility is so important to us as an organization – that we have everything verified, that we’ve purchased offsets of high value that are accounted for.

Now in its eighth year, the report tracks trends in voluntary carbon offsetting and serves as a bellwether for how and why corporations and governments are using market-based mechanisms to address climate change. In 2013, for the first time, pursuit of a climate-driven mission was the second most common buyer motivation, after resale.

“We theorize that this is because the climate surpassed some pretty dangerous thresholds last year,” said Ecosystem Marketplace Director Molly Peters-Stanley. “Based on interviews we’d had with offset suppliers, they say that the companies in the marketplace are more comfortable talking about the real risks that they face from climate change.”

For buyers such as the National Geographic Society, which use carbon offsetting in conjunction with various efforts to reduce fossil fuel, water, and materials use – and as a way to invest in critical landscapes around the world – market dynamics are such that they are getting many more calls from offset suppliers with impressive projects. Since National Geographic has direct control over only 4% of its emissions, the Society is purchasing offsets on behalf of its paper and other suppliers to neutralize its ‘scope 3’ or supply chain emissions. It also sees this as a way to spread the concept of offsetting beyond its doors.

Tonnes in Transition

In a year in which offset supply outstripped demand, suppliers able to demonstrate multiple benefits of their projects in addition to emissions reduction sometimes fared better. Offsets sourced from forestry and land use projects for the first time surpassed renewable energy as the most popular project type, with $126 million flowing to projects that address the drivers of deforestation, plant new forests or improve the management of existing ones. Many of these projects deliver benefits beyond emissions reductions such as protecting biodiversity hot spots, ensuring water quality and employing local people.

“There are good opportunities for those that add value and bring some new ideas to the market,” said Christian Dannecker, Director of Forestry at South Pole Group. “There is growth, but it’s much more diversified into different products and different transaction types than before, it won’t be only VERs (verified emissions reductions).”

The average price for offsets fell to just below the $5 mark in 2013, a dollar down from 2012, according to the State of report. Dannecker noted that the lower prices may have opened up opportunities to new market participants in emerging economies, such as the Colombian buyers they work with. For popular project types such as Verified Carbon Standard REDD and Gold Standard cookstoves and water filters, earlier stage projects fetched higher prices than those already issuing offsets – an important shift from previous years, when early-stage projects were viewed as risky rather than unique.

Compliance Markets Step in…

Buyers spent $379 million on 76 million tonnes worth of carbon offsets in 2013 – equivalent to taking 16 million cars off the road. This represents a sizeable drop in demand from the 101 million tonnes of offsets transacted in 2012, though as Peters-Stanley explained, a few factors are at play behind the scenes.

A look at voluntary offsetting over the years shows that pre-compliance transactions, or those that occur in anticipation of regulation, have played a significant role in past years, especially as buyers geared up for California’s cap-and-trade law and Australia’s carbon pricing mechanism. Pre-compliance activity in both of these markets was minimal in 2013, but for different reasons: In California, the compliance market has taken off, slurping up voluntary activity, whereas Australia’s carbon tax has floundered under political pressure. Also, offsets from Chicago Climate Exchange’s (CCX) legacy registry were traded on only one day in 2013, with small transactions volumes. The CCX was a voluntary but binding market, driven by commitments that were mostly made in pre-2010 anticipation of nationwide cap-and-trade in the U.S.

“The total drop that we saw in the marketplace last year is not necessarily related to a decrease in purely voluntary demand for offsets,” Peters-Stanley explained. “If we were to attribute a proportion to the actual purely voluntary activity in the marketplace that fell, it would be about 5%, versus the 26% that we have to report as the headline numbers. So it’s important to keep the more technical aspects of our findings in mind.”

…But Also Expand the Pie

The report findings also indicate that compliance markets can actually help to ‘expand the pie’ of demand for the voluntary market. European buyers were again the largest source of voluntary offset demand in 2013 despite the fact that the European Union (EU ETS) already caps the emissions of 11,000 companies. This may be because of what could be called ‘awareness-driven offsetting’: as reducing emissions through carbon investments is normalized under compliance, companies become familiar with the marketplace and also use offsetting as part of their sustainability efforts.

Though the EU ETS, the world’s largest compliance carbon market, excludes offsets from forestry, California’s new cap-and-trade market has welcomed them. The Yurok tribe issued the first compliance offsets under the Californian program in April from an improved forest management project on tribal lands.

“It’s very encouraging to see forest carbon offsets not only accepted in California, but also issued and retired,” said McFarland, who hopes that California’s Air Resources Board – the regulatory body charged with overseeing the cap-and-trade program – will move forward with an announcement to accept REDD (Reducing Emissions from Deforestation and Degradation of forests) offsets from Acre, Brazil and Chiapas, Mexico into the compliance program.

Additional resources

5 June 2014 | Project developer GreenTrees has been riding the rails: partnering with Norfolk Southern – through its Trees and Trains reforestation and carbon sequestration project – to plant six million trees in the Mississippi Delta over five years, generating more than one million tonnes of carbon offsets to help offset the railroad’s emissions and restore habitat along its lines.

But GreenTrees knows these types of reforestation projects have plenty of assets that go beyond carbon and has also been hard at work collecting data to use in establishing baselines that help capture the connection between water and carbon in forestry projects and calculate the additional value that co-benefits bring. Highlighting the additional benefits of reforestation projects is critical in light of the fierce competition in the voluntary carbon offset market in 2013, as buyers had their pick of cheaper offsets from other project types. But there are buyers such as Norfolk Southern out there who are more interested in offset projects that can tell a bigger and better story than just reducing carbon.

Ahead of the June 24  release of Ecosystem Marketplace’s State of the Voluntary Carbon Markets 2014 report (Executive Summary available here), Chandler Van Voorhis, Managing Partner of project developer GreenTrees, told Gloria Gonzalez about the work that forest carbon project developers are and should be doing to promote other attributes of their projects and why they shouldn’t even try to compete on pricing with landfill methane and other types of carbon offsets.

Gloria Gonzalez: What did you see in the voluntary carbon markets in 2013?

Chandler Van Voorhis: I thought it showed a lot of life and was very robust during the first eight months of the year. In the fourth quarter, it got really quiet in the market and it has been quiet. I’m not necessarily sure what to attribute that to. The one thing we did speculate was that there’s been a flood of (landfill) methane credits that have come on the market. I think it’s put a lot of downward price pressure in general in the market. There are those that are trying to hit a (corporate social responsibility) CSR mandate and they don’t care what the credits look like. Then there are those that go above and beyond just buying the credit. Right now, until all this landfill methane kind of works itself out of the system, I think that’s the number one thing we can point to.

To read the rest of this Q&A, please visit the Forest Carbon Portal for free.

Gloria Gonzalez is a Senior Associate in Ecosystem Marketplace’s Carbon Program. She can be reached at [email protected].

3 June 2014 | – California’s cap-and-trade program is facing the first test of the controversial invalidation provisions featured in its carbon offsets program.

The California Air Resources Board (ARB) – the agency tasked with overseeing the state’s cap-and-trade program and its offset component – announced last week that it is reviewing compliance offsets issued for ozone depleting substances (ODS) destruction events that took place at the Clean Harbors Incineration Facility in El Dorado, Arkansas. These substances, which include foam blowing agents and refrigerants, are much more potent than carbon dioxide in terms of their global warming potential, so the ARB has adopted a process to count the greenhouse gas emissions reductions associated with destroying these materials in the United States and allow these reductions to be used for compliance in its program.

These ODS projects may have been conducted while the Arkansas facility was in violation of its operating permit issued under the Resource Conservation and Recovery Act. The 1976 legislation gave the US Environmental Protection Agency the authority to control hazardous waste from “cradle-to-grave” – including generation, transportation, treatment, storage and disposal – and established a framework for the management of non-hazardous solid wastes.

“We are doing a lot of investigation and research trying to help ARB get through this review,” said Jeff Cohen, Senior Vice-President of Science & Policy and Co-Founder of EOS Climate, which develops ODS projects at the Clean Harbors facility.

The regulators are not raising questions about the integrity of the offsets themselves as they believe that these offsets meet ARB’s criteria of being real, quantifiable and verifiable reductions. But the cap-and-trade regulations allow the ARB to review and invalidate any offsets if the projects are determined to be in violation of any local, state or national laws during the period under which the offsets were issued.

“We’re happy the ARB is being diligent about ensuring offsets have integrity,” Cohen said. “We support that and we understand its policy in wanting to review projects that might have some connection to a violation of a federal or state law. We think this is a case that illustrates the importance of having clearly defined criteria on what it means for a facility or a project activity to be in or out of compliance. The unit that is the subject of the review has nothing to do with the incineration or destruction activities. It’s completely peripheral.”

California’s cap-and-trade regulations include so-called buyers’ liability provisions that allow the regulators to invalidate offsets found to be faulty or fraudulent and require regulated entities to surrender replacement offsets for compliance. These controversial rules are often blamed for a lack of liquidity in the California offset market.

“I don’t expect any credits to be invalidated as a result of this review, but in the meantime it is potentially two months of disrupted operations, which can damage confidence in how this program is being implemented,” Cohen said.

It is unclear exactly how many projects conducted at the Clean Harbors facility or offsets generated by these projects are affected by the review. The ARB and Clean Harbors have not yet responded to requests for comment.

None of the compliance offsets currently under review have been used for compliance in the cap-and-trade program. But until the review is complete, the ARB has blocked transfers of the offsets on its system and the Climate Action Reserve (CAR) has strongly advised parties not to engage in any transactions of offsets generated by projects that took place at the facility. Both CAR and the American Carbon Registry – organizations that develop methods (or “protocols”) to account for carbon mitigation – posted notices about the ARB review on their websites.

The review could have far-reaching implications beyond ODS projects, Cohen observed. For example, the ARB in April approved a new protocol that would generate compliance-grade carbon offsets from coal mine methane projects, which also have state and federal permitting compliance requirements.

Organizations holding the affected offsets have been notified and have 25 calendar days to provide information to the ARB, which then has 30 days from the day that all information is submitted to make a final determination on whether there was a violation and if it was meaningful enough to warrant invalidation of the offsets. If the offsets are found to be compliant, then they will once again be eligible for transfer in the ARB’s registry.

EOS, which has transacted about four million tonnes of offsets for California’s compliance market, is planning to submit information to the ARB and is hoping other affected parties will do the same in pursuit of a quick and definitive resolution, Cohen said.

A Risky Proposition

“It’s a very important development in the offset market and it very clearly demonstrates the ARB is taking its authority to invalidate offsets quite seriously and will use it when appropriate,” said Julian Richardson, CEO of Parhelion Underwriting, a specialty insurer focusing on the climate finance sector that has developed a policy to cover the invalidation risk. “In this instance, we don’t know the full details. Certainly the potential impact is that if all of these offsets are invalidated, that’s a very serious issue.”

Since the news broke, Parhelion has received inquiries about its insurance policy and is still able and willing to cover the invalidation risk for California-bound projects, except for the actual offsets that have been frozen, he said.

“We always knew what would trigger a review, but what concerns me is why this was not picked up previously by any of the verifiers of the projects,” Richardson said. “There’s clearly a gap in the verification process. It should have identified that Clean Harbors was in this process with the EPA.”

3 June 2014 | In the shadow of political uncertainty and Congressional inaction, US President Barack Obama has not been shy about his using his executive authority to support projects that reduce emissions from deforestation and forest degradation (REDD+). His administration has pledged $1 billion to REDD+ efforts in recognition of the fact that as much as 80% of greenhouse gas (GHG) emissions come from the land use sector in some developing countries.

The US Agency for International Development (USAID) kicked these efforts up a notch with last week’s announcement that it will offer a new-risk sharing loan guarantee to enable the Althelia Climate Fund to lend up to $133.8 million in commercial financing for forest conservation and sustainable land use projects in developing countries. The Althelia guarantee is the first of what the agency hopes will be similar transactions with other partners.

But the Obama administration, through USAID, had already invested time and resources in supporting REDD+ projects. The agency previously developed the BioREDD+ program in Colombia, which started in 2011 and will run through 2014. Through the program, $27.8 million will be invested in biodiversity, REDD, and climate change adaptation, with eight REDD+ projects totaling more than 700,000 hectares being developed in the Colombian Pacific Coast to be validated under the Verified Carbon Standard and the Climate, Community and Biodiversity Alliance.

These REDD+ projects have emission reduction potential of more than two million metric tonnes of carbon dioxide per year from avoided deforestation and degradation, as well as regeneration of forests, according to USAID. They also offer biodiversity benefits via protection of the Chocí³ Biogeographic Region – one of the world’s 10 “biodiversity hotspots.” The region is home to 9,000 species of vascular plants, 200 mammals, 600 birds, 100 reptiles, and 120 amphibians – many of which are endemic to Colombia – and the REDD+ investments will support the protection of species listed by the International Union for Conservation of Nature as endangered.

To read the rest of this story, please visit the Forest Carbon Portal for free.

NOTE: This piece originally appeared on the Huffington Post. You can view the original here.

27 June 2014 | If there’s one thing US President Barack Obama understands, it’s the danger of sticker shock.

“People don’t like gas prices going up,” he said on Wednesday. “They don’t like electricity prices going up.”

He was addressing the League of Conservation Voters, and he went on to warn that environmentalists who ignore those rising prices do so at their own peril:

“If we’re blithe about saying [climate change] is the defining issue of our time, but we don’t address people’s legitimate economic concerns, then even if they are concerned about climate change, they may not support efforts to do something about it.”

It’s a point well-taken, and one that’s addressed in one of the longest-running environmental successes in the country, which the President also defended on Wednesday: the Clean Water Act:

“We’ve got to dredge up that old tape of the Cuyahoga River on fire, and the Chicago River, and just remind people that this thing (the Clean Water Act) worked,” he said.

He could have added that “this thing worked” because it doesn’t just keep nasties out of our water. It also provides mechanisms that address exactly the concerns he warned about. Those mechanisms, paradoxically, let land developers disrupt environmentally significant swamps (or “wetlands”) that filter water and regulate floods.

That’s right.

This great success works in part because it lets bad things happen.

But there’s a catch: this degradation can only happen under very limited circumstances and only after a rigorous permitting process. More importantly, it can only happen if the developer compensates by either restoring, creating, or in some cases preserving an endangered wetland area of equal or greater environmental value than what is lost.

This ingenious mechanism, which dates back to the 1970s, has led to the creation of wetland mitigation banks, which are private conservation efforts that proactively restore degraded wetlands in the hope of selling credits to developers down the road. Because mitigation banks tend to be built on land adjacent to intact swamps, they often create more contiguous wetlands that deliver more ecosystem services than the isolated patches of degraded swamp that are destroyed.

This is one of the great unsung successes of the 1970s environmental boom, and it succeeds because it doesn’t let the perfect become the enemy of the good. Something similar is happening under the Endangered Species Act, which allows for development on habitat under very limited circumstances and only if habitat of equal or greater value is restored, created, or preserved.

These things work, and they work so well that the European Union is incorporating similar mechanisms into its environmental strategy.

Similar things worked on acid rain in the 1990s, when the state of California implemented its Regional Clean Air Incentives Market (RECLAIM), which put a cap on the amount of sulphur and nitrogen oxides (SOx and NOx) that industry can pump into the air, then it let the private sector identify the most efficient way of meeting that cap by trading allowances.

Then as now, right wingers went apoplectic – predicting everything from rolling blackouts and soaring energy costs to the end of the coal sector and a nationwide recession. Left wingers had the opposite fear; they believed industry would just “buy its way out” of its clean air obligations, and likened the permits to indulgences.

Both sides were wrong. The program has helped cut acid rain in half since its inception, and at a cost of just $3 billion per year, which is more than 85% lower than industry projections. More importantly, it saved local communities more than $122 billion per year in reduced health costs and cleaner lakes and rivers, according to a study by the Journal of Environmental Management. That’s $40 in savings for every $1 spent – although the EPA prefers the more conservative claim of $30 for every dollar spent.

Either way, the program worked, and it worked because it let government do what government does best, and it let the private sector do what the private sector does best. Specifically, it let government draw a clear and inviolable line above which emissions dare not rise, and it let the private sector find new and innovative ways of staying below that line, with a financial incentive for those who did the best job. All of these programs work because they promote responsible land stewardship in a way that is transparent, efficient, and effective – which is what people concerned about cost really want.

And that brings us to something else the president touched on: education. When he alluded to “that old tape of the Cuyahoga River on fire”, everyone above a certain age knew exactly what he was talking about. Back then, the general public was confronted with very tangible evidence of our environmental challenges. That’s why we were able to implement mechanisms that work.

Climate change isn’t as tangible as a burning river, but that hasn’t stopped 70% of the public from understands that it’s a threat. The challenge now is to make sure people understand just how serious and immediate that threat is so that they can make intelligent and informed decisions about how to proceed – perhaps by pointing out that food is a more fundamental need than even gas and electricity.

That’s because food is where rising temperatures are going to extract their highest toll. The US Climate Assessment made that point quite clearly a few months back, when it warned that that climate change is already disrupting global food supplies. That’s why 16 retired US admirals and generals recently took the unprecedented step of warning that climate change threatens our national security.

And it doesn’t stop with climate change. Our entire green infrastructure is at risk, but most people aren’t even aware that such a thing even exists. They don’t know that wetlands filter water and regulate flooding, or that mangroves protect our coasts and forests clean our air.

These are the functions that keep us alive, and they’re why conservation isn’t something we should do, like trimming the bushes, but rather it’s something we must do – like putting food on the table or shoring up the foundation. That’s literally what it’s about, because when you get down to it, our economy depends on our ecology, since everything we buy, sell, eat, and produce is derived from nature.

This is the reality we must ultimately acknowledge, because although higher energy costs aren’t a foregone conclusion in a carbon-constrained world, they are a distinct possibility. Environmental markets can reduce that likelihood, but they can’t eliminate them.

2 June 2014 | For years, California and nine Northeastern states in the US remained committed to implementing and operating cap-and-trade programs aimed at reducing carbon emissions even in the face of significant political pushback against the use of market-based programs. Those states are in line to reap major rewards for their actions as a federal regulatory proposal to reduce carbon pollution makes plenty of room for cap-and-trade programs. However, they must be able to show they can hit the federal program’s targets without the use of offsets generated by tree planting and other types of projects.

On Monday, the US Environmental Protection Agency (EPA) officially released its response to President Barack Obama’s 2013 edict directing the agency to develop rules to reduce carbon pollution from the US power sector. The proposal aims to lower carbon pollution from existing power plants by 30% from 2005 levels by 2030, sets state-specific goals to lower carbon pollution from existing power plants and issues guidelines to help the states develop plans for meeting the goals. The proposal was developed under Section 111(d) of the Clean Air Act, which directs the EPA to set goals and allow states to submit plans to achieve those goals.

“It’s the biggest step the Obama administration can take to get significant reductions in the remainder of his term,” said Peter Shattuck, director of market initiatives for NGO Environment Northeast.

The EPA heeded calls to give states as much room as possible to comply with the regulations, as the guidance includes a number of compliance options, including market-based programs to reduce carbon, investments in existing or new energy efficiency programs or expansion of renewable energy initiatives. States can even implement a carbon tax if they choose, as the EPA is not putting many limitations on the measures that states can use as long as these measures help them meet the reduction goals within the power sector, a senior agency official said.

“It’s clear the agency has taken to heart what it’s heard from states and utilities, and is trying to offer considerable flexibility so they can figure out their own best way to meet the standard,” said Eileen Claussen, President, Center for Climate and Energy Solutions. “What’s especially important is that the rule would allow states to build on the existing cap-and-trade programs in California and the Northeast and allow other market-based approaches. Letting states use carbon pricing is the best way to cut emissions cost effectively.”

Officials for the Regional Greenhouse Gas Initiative (RGGI), the carbon trading program covering power plants located in nine Northeastern states, have been publicly lobbying for their program to be included as a potential compliance mechanism in the federal rules and that effort appears to have paid off. The EPA explicitly mentioned that the emissions reductions generated by RGGI and California’s cap-and-trade programs would be approved under EPA’s guidelines. The RGGI states applauded EPA’s recognition of regional market-based programs. They also argued that RGGI is a proven, extremely cost-effective model that provides economic benefits and ensures that emissions decrease across the region.

“It would have been unthinkable for EPA not to have included existing cap-and-trade programs,” said William Shobe, an economist and professor at the University of Virginia who helped design the original RGGI program. “RGGI has a plan in place for doing more than required” by the EPA.

In the US Northeast, nine states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont – have entered RGGI’s second compliance phase. The regional cap-and-trade system originally had 10 members at the start of the program, but New Jersey withdrew at the end of the first compliance period in December 2011.

California’s cap-and-trade program is a key element of the state’s plan to comply with its ambitious pledge to reduce its greenhouse gas (GHG) emissions to 1990 levels by 2020, a goal outlined by the state’s Global Warming Solutions Act of 2006 (AB 32). Unlike RGGI, the California program seeks to cap GHG emissions from all major industries, representing about 85% of the state’s emissions. California also has what some observers called the most aggressive renewable energy portfolio standard in the US, with a requirement that 33% of all electricity sold in the state come from renewable sources by 2020.

“California is proof positive that states can fashion creative policies that improve their environmental and economic bottom line, and that’s exactly what will be needed to make EPA’s Clean Power Plan a durable and resounding success,” said Derek Walker, Associate Vice President of the US Climate and Energy Program for Environmental Defense Fund.

Jumping on the bandwagon

There has been rampant speculation that other states will join forces with California or the RGGI states if those programs were deemed eligible for compliance with the EPA’s proposal.

“If states don’t want to go it alone, they can join up with a multi-state, market-based program or make new ones,” said EPA administrator Gina McCarthy. “More players mean more flexibility and lower costs.”

Market observers generally reported seeing major potential for more states to follow the lead of these two programs by implementing their own trading programs or joining forces with California or RGGI.

“We fully expect this will provide impetus to many states to consider cap and trade and other market-based tools and could spur a broadening carbon market throughout the country,” said Gary Gero, president of the Climate Action Reserve.

“I don’t think we’re going to see it right away, but there are encouraging signs,” Shattuck said, adding that one such positive sign is that the EPA proposal allows states to retain the rights over the allocation of allowances and any revenues generated by the sale of such allowances within their trading programs.

Cap and trade is also already a very familiar concept in the power sector, which has previously had to comply with trading programs covering other pollutants such as sulfur dioxide and nitrogen oxides and has been trading allowances under such programs for many years.

“That’s one reason the power sector might be more receptive to this than the political rhetoric might suggest,” he said.

Programs covering multiple emitting sectors, as California’s program will starting in 2015 when transport fuels are phased into the program, could be approved as long as they achieve the specific targets for electric generating units set for each state, according to the EPA proposal.

Offsets on the outside looking in

However, the language of the draft EPA proposal rules out the possibility of using carbon offsets as a compliance mechanism in the proposed regulation. Carbon offsets could continue to exist within state and regional programs, as they do in California and RGGI, and continue to be used to meet state obligations. But states would not be able to count the emission reductions generated by these projects toward the reductions required by EPA in the power sector.

“At this point, I don’t see carbon offsets as a compliance mechanism,” Walker said.

The exclusion of offsets as a compliance mechanism is unsurprising, given that the Natural Resources Defense Council, in discussing potential compliance options, specifically stated that offsets were not an option. Previous analysis indicated that the language of Section 111(d) would not leave room for measures that do not have a direct impact on the emissions from covered generating units, although carbon market observers were waiting for final word from the EPA on this point.

“I see that as a conservative choice on EPA’s part,” Shobe said. “It doesn’t want to have the whole program overturned by going out on a limb and allowing offsets in the program.”

Allowance prices in the RGGI program have been too low to spur development of carbon offsets, but the program does allow afforestation, improved forest management, avoided conversion and reforestation projects. The RGGI program also allows for offsets from four other project types: landfill methane capture and destruction, sulfur hexafluoride reduction in the electricity sector, avoided agricultural methane emissions, and energy-efficient building projects. Given this lack of activity, the inability to use offsets to fulfill EPA’s proposed requirements may not be a critical issue for the RGGI program, experts said.

California’s carbon offset program is much more active, with the California Air Resources Board issuing nearly 8.8 million offsets to date under its forestry, livestock and US ozone-depleting substances protocols. The program also allows for urban forestry projects although activity under that protocol has been virtually non-existent while coal mine methane projects were just added to the program in April. And state regulators have pledged to consider adding sector-based international REDD+ (Reduced emissions from deforestation and forest degradation) offsets to the program.

The EPA proposal “is obviously giving a boost to California and RGGI and potentially other regional or state systems because it is a method by which they can proceed without raising taxes,” said Eric Bettelheim, Board Member and Founder of The Floresta Group. “The question is where does that leave offsets or REDD.   I don’t see where the states can take credit for non-state or non-system offsets because the overall requirement is to bring emissions down within the state. So the role of offsets will necessarily be limited, and the role for international offsets even more so.”

The EPA is seeking comments on the rule proposed Monday and the final version will likely see changes. There is no legal deadline for finalizing the regulation, but President Obama has directed that the rule be completed by June 2015 before he leaves office.

Steve Zwick contributed to this story.

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