First Name | Laurie & Allan |
---|---|
Last Name | Williams/Zabel |
Email Address | williams.zabel@gmail.com |
Affiliation | Private Citizens & Volunteers CCL |
Subject | Comments on Supplement to Scoping Plan - Flaws of Using GHG Offsets |
Comment | AB 32 Supplement to Scoping Plan - Comment submitted July 27, 2011 COMMENT ON SUPPLEMENT TO AB 32 SCOPING PLAN FUNCTIONAL EQUIVALENT DOCUMENT – IMPLEMENTATION OF AB32 Comment by Laurie Williams & Allan Zabel on behalf of ourselves as private citizens, as residents of California and as volunteers, writing on behalf of Citizens Climate Lobby, a non-profit organization based in San Diego, California, asserting that adoption of the proposed greenhouse gas offset program, regulations and protocols is arbitrary and capricious and contrary to the intent and requirements of AB 32, the California’s Global Warming Solutions Act of 2006. The California Air Resources Board (“CARB”) has repeatedly acknowledged that in order to maintain the integrity of the cap-and-trade system, any greenhouse gas offsets must be verifiable, enforceable and “additional” (see Supplement at p. 53, “Offsets must meet rigorous criteria that demonstrate that the emissions reductions are real, permanent, verifiable, enforceable, and quantifiable. To be credited as an offset, the action or project must also be additional to what is required by law or regulation or would otherwise have occurred”). CARB’s staff report on Offsets notes that AB 32 requires these criteria to be met. See, e.g., Staff Report on Compliance Offset Protocols for U.S. Ozone Depleting Substances Projects, dated October 13, 2010 at page 1. As explained in our prior comments, which are hereby incorporated by this reference and provided in full below, these criteria cannot be met with respect to greenhouse gas offsets and are not met by the proposed protocols or regulations. See our comments dated December 13, 2010 regarding the offsets and offset protocols, and our July 30 and August 1, 2008 comments, regarding the disadvantages of a cap-and-trade program, including the damage to such a program's integrity from offsets. In addition to our prior comments, we provide the following additional comments on the Supplement to the Scoping Plan: 1. No Response to Prior Comments: We have not seen any response to our prior December 13, 2010 comment on the fatal flaws of the greenhouse gas offset program and protocols. Nor have we seen a response to our July 30 and August 1, 2008 comments on the flaws of cap-and-trade with offsets as an approach to addressing greenhouse gases. The San Francisco Superior Court decision dated March 18, 2011 (http://op.bna.com/env.nsf/id/smiy-8f6uv7/$File/CARBorder.pdf “Sup. Ct. Decision”) states that CARB is required to respond to comments prior to making a decision. We do not believe it is legal for CARB to move forward with adopting or approving the offset program and/or protocols until our comments have been presented to the Board and responded to in writing. See Sup. Ct. Decision at p. 33, citing Cal. Code Reg. tit. 17, § 60007, subd. (a). Please note, not only did CARB fail to respond in writing to our comments, but CARB also failed to respond in writing to other commenters who described the flaws of offsets and their potential to undermine the integrity of the AB 32 program. 2. Program Violates AB 32’s Requirements: Our conclusion is that the AB 32 requirements for greenhouse gas offsets in AB 32 are not met by the proposed program and protocols. In addition, we describe what we believe to be the unfixable flaws of the offsets approach and conclude that offsets should not be part of the AB 32 program to reduce Greenhouse Gas (“GHG”) emissions. The proposed regulation provides admissions of uncertainty and lack of enforceablility. For instance the statement at page 9: (35) “Business-as-Usual Scenario” means the set of conditions reasonably expected to occur within the offsets project boundary in the absence of the financial incentives provided by offset credits, taking into account all current laws and regulations, as well as current economic and technological trends. “Reasonably expected to occur” in this context is speculative and subjective and cannot be part of an enforceable standard. The proposed regulation states that “additionality” includes: “activities, that result in GHG reductions or GHG removal enhancements, are not required by law, regulation, or any legally binding mandate applicable in the offset project’s jurisdiction, and or any GHG reduction or GHG removal enhancement activities that would not otherwise occur in a conservative business as usual scenario.” (Emphasis added; see http://www.arb.ca.gov/regact/2010/capandtrade10/candtmodreg.pdf at page 170.) The use of the term “conservative” does not make this speculative standard enforceable or verifiable. The net result of these flaws, and the others discussed in our December 13, 2010 comment, will be a system that claims reductions based on activities that have already happened and would have happened without the offset credit program. This in turn will result in false accounting and a failure to correct the incentives that are keeping GHG emissions at dangerous, unsustainable levels, thereby locking in additional climate degradation. 3. The Proposed Offsets Represent a Substantial Portion of Required Reductions: The Supplement confirms that up to 8 percent of all compliance obligations can be met with offsets. While CARB notes that a reduction is required from projected 2020 emission levels of 507 million metric ton CO2e to 427 million metric ton CO2e emissions, current 2011 levels are not noted, nor is the percentage reduction needed to reach the goal of 1990 levels by 2020. However, the Electric Power Research Institute’s paper “Overview of the California Greenhouse Gas Offsets Program, dated April 2011, states at page 10 states that, if the maximum quantity of offsets is submitted for compliance, offsets could be used to satisfy as much as 85% of required reductions. See http://globalclimate.epri.com/doc/EPRI_Offsets_W10_Background%20Paper_CA%20Offsets_040711_Final2.pdf at p.10. Even if a smaller percentage of compliance obligations are met with offsets, it is clear that offsets are intended to be a substantial portion of required reductions and their failure to represent real, additional, enforceable reductions could be extremely damaging to California’s efforts to address climate change, as well as to the efforts of the many states and countries expected to follow California’s lead. 4. Using Offsets to Keep Costs Low Undermines Incentives for Efficiency, Investment and Individual Decisions that Would Reduce Emissions: The Supplement repeatedly indicates that an important function of offsets is (1) to keep the costs of compliance low (“cost containment mechanisms” see Supplement at p. 52) and (2) to thereby prevent leakage of California’s industry and attendant polluting activities to other jurisdictions, as well as (3) to address other sectors of the economy not subject to the cap. (1) Keeping Costs of Compliance Low: Relying solely on compliance with caps and low cost offsets to reduce emissions, rather than an increase in fossil fuel prices, hurts many of the incentives that would drive the rapid transition to a clean-energy economy that is needed to avert dangerous climate change. For instance, if CARB were to adopt carbon fees that rose predictably, to insure that clean energy would become cost-competitive with fossil fuels within a known time frame, this would create huge incentives for a shift in private investment from fossil fuel energy into clean energy infrastructure and innovation as well as into energy efficiency. Similarly, individuals and businesses would experience a strong incentive to be creative in reducing their carbon footprint. In this respect the cost containment approach of greenhouse gas offsets is not only lacking in integrity but also undermines a critical incentive needed to provide the rapid reductions without which costly and potentially irremediable effects of climate change are likely to become inevitable. (2) Leakage of emissions is a significant concern. As noted in the Scoping Plan, one way to address leakage is “border adjustments,” adding costs to goods that arrive from jurisdictions whose regulations do not have programs to address greenhouse gases and rebating costs to goods that travel from California to other jurisdictions. (See Supplement at p.92.) While such border adjustments can be more easily imposed on international trade, it may be possible to impose such adjustments on interstate commerce as long as the adjustments merely create a level playing field for out-of-state businesses and are not protectionist. However, the potential for leakage to occur is not an excuse for adopting a fatally flawed and unworkable approach, such as cap-and-trade with greenhouse gas offsets. Essentially, CARB fails to acknowledge that higher prices for activities that produce greenhouse gases are an extremely valuable tool for driving greenhouse gas reductions. CARB instead claims that keeping costs low is a higher value, discarding the alternative as politically and legally untenable, rather than analyzing this alternative as required by the Superior Court decision and State law. If carbon fees would be more effective but less implementable in California, CARB should acknowledge this. As noted in our paper, “Keeping Our Eyes on the Wrong Ball” (incorporated by this reference and available at: http://www.carbonfees.org/home/Cap-and-TradeVsCarbonFees.pdf ), carbon fees returned to residents in equal monthly rebates can keep energy affordable while creating strong incentives for investments in clean energy and energy efficiency. (3) Addressing other Sectors: Nor should the need to address other sectors, such as forestry and agriculture, be an excuse for using unverifiable and unenforceable GHG offsets to address our fossil fuel usage. A separate program of regulation and incentives for increased forest cover and better agricultural practices would have greater integrity and make sure we do not confound the accounting necessary to determine whether we are making appropriate reductions in the energy and industrial sectors. PRIOR COMMENTS – INCORPORATED BY REFERENCE AND BELOW: Comment submitted December 13, 2010 and available at: http://www.arb.ca.gov/lispub/comm/bccomdisp.php?listname=capandtrade10&comment_num=878&virt_num=521 COMMENT ON PROPOSED ADOPTION OF A CALIFORNIA CAP ON GREENHOUSE GAS EMISSIONS AND MARKET-BASED COMPLIANCE MECHANISMS REGULATION, INCLUDING COMPLIANCE OFFSET PROTOCOLS – IMPLEMENTATION OF AB32 Comment by Laurie Williams & Allan Zabel on behalf of themselves as private citizens of California and as volunteers, writing on behalf of Citizens Climate Lobby, a non-profit organization located in San Diego, California, asserting that adoption of the proposed offset protocols is arbitrary and capricious and contrary to the intent and requirements of AB 32, the California’s Global Warming Solutions Act of 2006. Overall Point – AB 32 requires that greenhouse gas (“GHG”) offsets be “real, permanent, quantifiable, verifiable, enforceable, and additional.” Adoption of the proposed Offset Protocols by the California Air Resources Board is arbitrary and capricious and should be rejected because the protocols for proposed GHG offsets cannot meet these standards. In addition, to the extent that GHG offsets are not additional, they destroy the integrity of the entire program by allowing additional GHG emissions from the capped sector above the “cap” that will not be offset by additional emission reductions elsewhere. Finally, because California’s program is looked to as a model and proof of concept, adoption of this flawed mechanism would be extremely damaging to national and international efforts to effectively reduce GHG emissions. Adoption of GHG offsets as part of the California program would serve as a template for such programs, encouraging others to pursue this flawed approach to the most urgent problem facing humanity, increasing the chances of catastrophic climate change, and defeating the stated purpose of AB 32. Under the proposed action, “covered entities can use offset credits to satisfy up to eight percent of the entity’s total compliance obligations.” See Notice of Public Hearing at p. 5. This 8% of the compliance obligation is very significant percentage of the total reductions sought. Fatal Flaws of GHG Offsets - To be credited as an offset, the staff report states that a project “must also be additional to what is required by law or regulation or would otherwise have occurred.” See ARB Staff Report, page 35 of 472. (Emphasis added.) Our analysis focuses primarily on the latter requirement. As demonstrated in our Whistleblower Disclosure (“Williams/Zabel Disclosure”), dated July 22, 2010 (http://www.carbonfees.org/home/Whistleblower_Disclosure_to_Congress_7-21-10.pdf ), GHG offsets of the type that ARB proposed to adopt are fatally flawed and cannot be fixed. There is no reliable way to distinguish offset projects which will occur because of the offset incentive from those which would have happened anyway because of the following four unfixable flaws of GHG Offsets: • Additionality: Whether reductions outside the capped sector are additional is necessarily a hypothetical inquiry and such an inquiry cannot reliably distinguish business-as-usual. Specifically, it is impossible to know what “otherwise would have occurred” and therefore it is not possible to create an offset program that reliably excludes business-as-usual activities from being counted as “additional.” (See U.S. Government Accountability Office discussion below, confirming this conclusion.) • Leakage/Shifting Economic Activity: In some cases, such as in the context of forestry projects, the offsets will fail to appreciably mitigate demand and the polluting activity (such as logging) will simply shift elsewhere; • Perverse Incentives to Increase Emissions and Keep Them Legal: GHG offsets create perverse incentives to keep polluting activities legal and in some cases to increase them, so they can keep being sold as offsets (Note: this dynamic is recognized in the Ozone Depleting Substances (“ODS”) Protocol re: HCFC-22 by-product HFC-23 destruction in the United Nations Clean Development Mechanism (“CDM”), see ODS Protocol at p. 11 of 67); and • Unenforceable: The complexity and subjectivity of offsets renders them impossible to certify, regulate or enforce. As explained in our discussion below of each of the four proposed offset protocols suffers from one or more of these flaws and would result in approval of non-additional projects in violation of AB 32. As a result, it would be arbitrary and capricious to adopt the proposed GHG offset protocols as part of the proposed cap-and-trade program See also, U.S. Government Accountability Office, March 2009 ―Observations on the Potential Role of Carbon Offsets in Climate Change Legislation‖ at p. 12, GAO-09-456T (http://www.gao.gov/new.items/d09456t.pdf). “Because additionality is based on projections of what would have occurred in the absence of the CDM [United Nations Clean Development Mechanism], which are necessarily hypothetical, it is impossible to know with certainty whether any given project is additional.” (Emphasis added.) Keeping Our Eyes on the Wrong Ball - Offsets are described in the Staff Report as a “cost containment mechanism,” which offers additional low-cost emissions-reduction opportunities. See Staff Report at page 14 of 472. However, cost containment interferes with another goal cited in the Staff Report -- to “stimulate investment in clean and efficient technologies.” See Staff Report at page 11 of 472. Keeping the price of fossil fuel emissions lower by allowing offsets delays investment in clean energy technologies and energy efficiency by keeping fossil fuels cost competitive. As a result, such “cost containment” defeats the goal of a rapid transition to clean energy and energy efficiency. See http://www.carbonfees.org/home/Cap-and-TradeVsCarbonFees.pdf Critique of Proposed GHG Offset Protocols for AB 32: The four offset protocols proposed for adoption by the ARB are Livestock Manure (Digester) Projects, U.S. Ozone Depleting Substance Projects, U.S. Forest Projects and Urban Forest Projects. We provide a specific critique of why each of the protocols cannot meet the AB 32 requirements below: (1) Livestock Manure (Digester) Projects The digester performance standard contradicts AB 32 requirement of additionality: As noted above, key element of additionality is that the project is additional to what “would otherwise have occurred.” See ARB Staff Report at p. 35 of 472. a. Significantly Better Than Average: The offset protocol for Livestock Manure Digester Projects fails to meet this standard of additionality by having a performance standard that allows all such digesters to be offsets on the basis that a digester “is significantly better than average.” See Livestock Protocol at p. 9 of 68. Thus, the protocol redefines “what would have occurred otherwise” to include what is already occurring at some facilities. “Data shows that California livestock operations (dairy, in particular) manage waste in a manner primarily in liquid-based systems that are very suitable for digesters. Yet even in these favorable conditions digesters are found on less than 1% of the dairies,” (Id.) (however, the majority of the farms that currently have digesters are significantly larger than the average California dairy.) b. Evidence that Digester Projects Can Be Profitable Without Offset Payments: A December 2009 announcement by the U.S. Department of Agriculture and the U.S. Department of Energy indicates that “Currently, only about 2% of U.S. dairies that are candidates for a profitable digester are using the technology, even though dairy operations with anaerobic digesters routinely generate enough electricity to power 200 homes.” See, http://apps1.eere.energy.gov/news/news_detail.cfm/news_id=15685. The Department of Energy has confirmed that “A biodigester usually requires manure from more than 150 large animals to cost effectively generate electricity. Anaerobic digestion and biogas production can also reduce overall operating costs where costs are high for sewage, agricultural, or animal waste disposal, and the effluent has economic value. In the United States, the availability of inexpensive fossil fuels has limited the use of digesters solely for biogas production. However, the waste treatment and odor reduction benefits of controlled anaerobic digestion are receiving increasing interest, especially for large-scale livestock operations such as dairies, feedlots, and slaughterhouses.” See, http://www.energysavers.gov/your_workplace/farms_ranches/index.cfm/mytopic=30005. c. Existing Projects: The proposed program appears to allow existing digester projects to count as additional to what “otherwise would have occurred.” The ARB staff report states, “The proposed regulation also includes a process for offset credits from qualified existing offset projects operating under specific offset protocols to be accepted into the compliance offsets program.” See ARB Staff Report at p. 78 of 472. This feature means that existing projects -- project that are currently in progress – can be counted as additional to “would otherwise have occurred.” The net result is a system that allows profitable, existing projects and approaches to methane reduction to be used to allow emissions above the cap in the allegedly “capped” sector. d. Perverse Incentive to Increase Emissions (Digester Offsets May Increase Emissions and Cause Other Environmental Harm): The ARB Livestock Manure Protocol Report notes that “The installation of a BCS [Biogas Control Systems] at an existing livestock operation where the primary manure management system is aerobic (produces little to no methane) may result in an increase of the amount of methane emitted to the atmosphere. Thus, the BCS must digest manure that would primarily be treated in an anaerobic system in the absence of the project in order for the project to meet the definition of an offset project.” See Livestock Report at p. 19 of 68, FN 5. This footnote provides an important admission that proposed Digester Protocol may encourage an increase in emissions as a means to gain offset payments. Specifically, manure could be, and sometimes is, processed in an aerobic environment, producing little to no methane. An example is that manure can provide valuable fertilizer to farming operations and be used instead of petrochemical fertilizers. However, by creating the offset program, ARB may encourage facilities to first switch from an aerobic to an anaerobic process (and hence increasing methane), so that their farm can qualify to participate in obtaining offsets. This decision could also lead to increased use of petrochemicals and other environmental harm. e. Perverse Incentive to Keep Methane Emissions Legal and Prevent Regulatory Evolution: In addition to potentially encouraging a move to anaerobic conditions so that a dairy would qualify for offsets, the Digester Protocol also creates an incentive for additional market participants to oppose regulation that would require either aerobic treatment or an anaerobic digester. As noted with respect to the other Protocols and in the Williams/Zabel Disclosure, normal regulatory evolution would move in the direction of prohibiting activities that are found to be harmful in significant ways that were not previously appreciated or known. In this case, all facilities that engage in anaerobic storage of manure for more than 150 cows could potentially be required to use a biogas control system and destroy or sell the resulting methane for energy. A law that creates an offset market for this activity creates opposition to a comprehensive regulation that would remove this activity from the offset market and deprive these market participants of the related revenue, creating instead an obligation that has associated costs. The heightened opposition to such regulation should be analyzed as part of “what otherwise would occur,” in order to fully consider whether the proposed offset protocol creates truly additional reductions outside the capped sector. f. Summary: In summary, there are five types of evidence that it would be arbitrary and capricious to approve the proposed Digester Protocol for Offsets: (1) the protocol redefines additional as “significantly better than average,” which clearly includes a type of activity that is already occurring (non-additional) without the offset incentive, (2) the protocol allows offsets for activities that would be profitable even without the offset payment, (3) the protocol allows existing projects to create offsets, (4) the protocol creates a perverse incentive for some farms to increate anaerobic manure storage to increase the chance of offset income, and (5) the protocol increases the incentives for those who profit from the offsets to fight new regulation that would require the capture and/or use of the methane produced by livestock, as this would deprive them of offset profits. In light of these five factors, the degree of additionality created by the Protocol is unknowable and unverifiable and thus fails to meet the required standards for AB 32 offsets. (2) U.S. Ozone Depleting Substances (“ODS”) Projects a. Destruction of ODS from Refrigeration Equipment and Foam: The proposed ODS Protocol would grant GHG offsets for projects which collect and destroy ODS from refrigeration equipment containing ODS and from foam which was manufactured using ODS as a blowing agent. Both the ODS refrigerant and the ODS blowing agent must originate from the United States. See ODS Protocol at sections 2.3.1 and 2.3.2 (p. 22 – 23 of 67). The ODS Protocol contains two major flaws. These flaws would allow potential project operators to receive GHG offsets for claimed GHG emission reductions which are not additional. In addition, the ODS Protocol’s reliance on unverifiable assertions and records generated by the offset project operator would create opportunities for fraud which would be extremely difficult or impossible prove once the fraud was completed. b. Unsupported Assumptions: In explaining how the performance standard of destruction of ODS pursuant to the Protocol would be additional, the Staff Report claims, without providing any supporting citation or materials, that “Data shows that less than 1.5% of recoverable US sourced ODS are destroyed upon end-of-life of the [refrigeration] equipment or [foam] material. This indicates that collecting and destroying the ODS is above and beyond common practice and therefore destruction meets the performance standard.” Staff Report, page 6. In addition, the ODS Protocol assumes that all ODS recovered from refrigeration equipment is reclaimed for further use. ODS Protocol at sections 2.3.1 and 5.1.1. c. Destruction of ODS during Business-As-Usual: The combination of these assumptions is important for claiming that all ODS destroyed pursuant to the Protocol are additional for purposes of generating offsets. If ODS removed from refrigeration equipment is not always reclaimed and reused, but for technical and/or financial reasons is sometimes destroyed, the destruction of this ODS would not be additional because it would occur in the course of business-as-usual. d. Barriers to Reclaiming and Reuse - Title VI of the Clean Air Act: In fact, not all ODS recovered from refrigeration equipment is reclaimed and reused. To be used as reclaimed refrigerant, ODS must meet established specifications under Title VI of the Clean Air Act. To be economically viable as reclaimed refrigerant, ODS removed from refrigeration equipment must not be mixed with other types of ODS and must not be heavily contaminated with oils and other impurities. Either of these problems will most often make the cost of bringing the ODS up to Clean Air Act specification prohibitively expensive. These problems regularly occur and a significant amount of ODS removed from refrigeration equipment is destroyed rather than being reclaimed and reused. The ODS Protocol would allow the generation of GHG offsets from this destruction. e. Barriers to Verification: The ODS Protocol contains two glaring enforcement weaknesses. First, as stated above the ODS Protocol requires that both the ODS refrigerant and the ODS blowing agent destroyed in a project must originate from the United States. This requirement is not practically enforceable. Once the foam or refrigerant is destroyed, it will be virtually impossible for an enforcement inspector to verify or challenge the paper records kept by the project operator. Second, this hopelessly flawed reliance on paper records generated by the self-interested project operator is a hallmark of the entire verification “methodologies” in the ODS Protocol. The temptations for a project operator to exaggerate or outright fabricate records will be enormous. If GHG offset prices come close to the offset prices in the European GHG trading program, destruction of a single pound of GHG could be worth nearly $100. Again, once all the real evidence is gone, e.g., the foam and refrigeration unit are in the landfill and the ODS has allegedly been destroyed, there is little, if any, hope of proving the fraud. f. Emissions Above the Cap: As with the Digester protocol above, the net result of the unverifiable and non-additional offsets that can be created under this protocol is a system that would allow emissions above the cap in the capped sectors. g. Perverse Incentive to Keep Landfill Disposal of Foam Containing ODS Legal: Allowing offsets for ODS destruction from foam may also create additional barriers to passage of appropriate regulations that would require ODS destruction before foam containing these substances could be brought to a landfill. Once an offset activity is profitable, those who are profiting will provide additional resistance to the passage of legislation and/or regulations that could provide an across the board, rather than piecemeal solution. In this sense, the proposed offsets do not meet the standard of additional reductions beyond what would have occurred otherwise. (3) U.S. Forest Projects a. Reforestation, Improved Forest Management and Avoided Conversion: The proposed U.S. Forest Protocol would grant GHG offsets for three types of projects – reforestation, improved forest management, and avoided conversion. This Protocol contains a plethora of very serious flaws. The most serious of these flaws concern the determination of whether any given forest project is additional, i.e., whether the project would have occurred in the course of business-as-usual. For each type of forestry project, the U.S. Forest Protocol established a performance test. If the project meets the applicable performance standard, the project is deemed to be additional. U.S. Forest Protocol at section 3.1.2. (p. 34 of 131.) b. Performance Standard Approach to Additionality and Business-As-Usual : We have set forth an analysis concerning the common failures of a performance standard approach to determining additionality in the Williams/Zabel Disclosure at pp. 9-11. As detailed below, the U.S. Forest Project Protocol includes a number of these failures that result in include projects which would have occurred in the course of business-as-usual. This is because performance standards of this type are, by their very nature, almost always comparisons to projects which have actually occurred. In a market economy, the most advanced methods quite often give the business using them a competitive advantage. This is why these advanced pieces of equipment and methods are most often “significantly better than average” and “better than common practice.” In a market economy, they are the result of business-as-usual. It violates AB 32’s requirement of additionality to grant offsets to such projects. c. Improved Forest Management and the “Common Practice” Performance Standard: The U.S. Forest Protocol for improved forest management projects contains several different performance standard flaws. It relies on calculations that involve mind-numbing complexity and a series of subjective and unenforceable judgment calls. This protocol also relies heavily on “common practice” as its benchmark for additionality. The entire demonstration of additionality is based upon “estimating baseline onsite carbon stocks” and comparing this to “common practice” on “similar lands” in the area of the project. U.S. Forest Protocol at section 6.2.1. (p. 64 of 131.) Since it is impossible to have an objective determination of whether forest management projects are beyond what would otherwise have occurred under this protocol, the offset performance standard clearly fails to satisfy AB 32’s requirements that offsets be “real, permanent, quantifiable, verifiable, enforceable, and additional.” d. Reforestation - “Less Than 10% Tree Canopy Cover” Performance Standards: For reforestation projects, the U.S. Forest Protocol allows two possible performance standards, either of which could lead to the approval of offsets. One of the standards is the there is currently less than 10% tree canopy cover. In this case, the protocol merely states that projects which occur on land that has had less than 10 percent tree canopy cover for the last 10 years are automatically additional. No analysis, data, or rationale is presented for this determination. e. Reforestation - Areas with “Significant Disturbance” - Alternative Performance Standards- “Economic Cost Scenario” or “Historical Not Engaged In or Allowed Timber Harvesting”: For reforestation projects which occur on land which has undergone a “Significant Disturbance” (e.g., fire) projects are additional if they either meet one of two performance standard. For the economic cost scenario (set forth in a two page appendix to the Protocol) or if the “Forest Owner has not historically engaged in or allowed timber harvesting.” U.S. Forest Protocol at section 3.1.2.1. The economic cost scenario approach to additionality appears to very heavily rely on data which either does not yet exist or have not been made public. Twice this part of the Protocol states that certain economic information and assumptions can be found in “the lookup table in the Forest Offset Protocol Resources section of ARB’s website.” U.S. Forest Protocol, Appendix E, p. 103. We were unable to locate this section of ARB’s website. In addition, the second test for additionality contains no explanation or number of years which constitute “historically engaged in or allowed timber harvesting.” It is suggested, by example, that this qualification would apply to municipal or state parks, but this is made clear or exclusive in the Protocol. U.S. Forest Protocol at section 3.1.2.1. This completely subjective “standard” is neither rational nor enforceable. f. Avoided Conversion Projects – Shifting Economic Activity: Finally, for avoided conversion projects (e.g., conversion of forest to commercial, residential or agricultural land), the U.S. Forest Protocol relies very heavily on appraisals of land value in the various land use scenarios. U.S. Forest Protocol at section 3.1.2.3. This approach has two basic problems. First, leaving a forest uncut and unconverted to another use does not necessarily result in fewer GHGs. Forest products exist in a world market. The largest supplier to the U.S. of softwood (used, for example, in building homes), is Canada. If U.S. demand for softwood is not diminished, the forest preserved in the U.S. will almost certainly result in additional timber harvesting in Canada or some other country. This will result in no net decrease in GHGs. In fact, it would like result in a slight increase represented by the fuel it takes to import the timber products. Second, appraising land value is hardly an exact science. Anyone aware of the mortgage meltdown should be aware that appraisals can be manipulated, fabricated, and, essentially, purchased by a self-interested party. Having a “qualified” appraiser, as required by the Protocol, hardly addresses this problem. (4) Urban Forest Projects a. Tree Planting and Maintenance: The proposed Urban Forest Protocol would grant GHG offsets for tree-planting and maintenance programs carried out by municipalities, educational institutions, and utilities. This Protocol is the most benign, and probably the most well-intentioned, of the proposed offset protocols. However, even the Urban Forest Protocol contains one serious flaw. b. Net Tree Gain: The Urban Forest Protocol assumes that any “Net Tree Gain” represents an additional reduction in GHGs. While any Net Tree Gain is a happy thing for the environment, people, and the livability of our communities, these gains do occur in the course of business-as-usual. A case in point is the urban forest project carried out by San Francisco’s Department of the Environment. In its September 2009 Annual Report to the Mayor and Board of Supervisors, San Francisco’s Urban Forestry Council noted that a five-year plan, initiated in 2004, had resulted in the planting and maintenance of 26,408 trees. This occurred well before the incentives of GHG offsets. See Annual Report, September 2009, http://www.sfenvironment.org/downloads/library/sfe_urban_forest_annual_report_2009.pdf. c. Emissions Above the Cap: Ultimately, for an offset protocol to have integrity, the results of all offset projects must be the result of the financial incentive. It this is not the case, the financial gain for the “would-have-happened-anyway” project is merely a gratuitous reward. While cities and other institutions would appreciate the extra revenue for planting and maintaining trees they would have planted and maintained anyway, the problem is that all non-additional GHG offset will inexcusably undercut the goal of the associated environmental program, reducing emissions. Any such non-additional offsets, will result in allowing additional unjustified emissions above the cap in the capped sectors. CONCLUSION It is critically important for ARB to resist the temptation to make offsets part of California’s cap-and-trade program. Given that rapid transition to cleaner energy and energy efficiency is critical to avoiding global climate disruption, California cannot afford to endorse a program that would allow increases in emissions in the capped sector above the cap to be “offset” by unverifiable reductions that overlap with business-as-usual. A system that allows such offsets will encourage other jurisdictions to follow suit and create a system that locks in climate degradation and the attendant harsh consequences. While these offset protocols are supported by interests that would like to profit from the protocols and by continued emissions in the capped sectors, they would create a huge loophole of non-additional offsets and would delay effective action in ways that are likely to be tragic for today’s young people and for future generations. While we agree that it would be positive for California to create incentives for a net increase in additional forest cover, more reliable capture and destruction or recycling of ozone depleting substances, and reductions in livestock methane emissions, we do not believe that GHG offsets are a reliable way to accomplish these goals. As demonstrated above, the proposed offset protocols are an inappropriate mechanism for seeking these improvements because it there are numerous barriers to reliably verifying that any given project is additional. As a result, it is arbitrary and capricious and inappropriate for the Air Resources Board to approve the proposed GHG offset protocols. Comment 42 for Design Comments for the GHG Scoping Plan (sp-design-ws) - 1st Workshop (http://www.arb.ca.gov/lispub/comm2/bccommprt.php?listname=sp-design-ws at page 53 of 177) First Name: Laurie Last Name: Williams Email Address: williams.zabel@gmail.com Affiliation: www.carbonfees.org Subject: Carbon Fees not cap-and-trade; also Request for Extension Comment: My husband, Allan Zabel and I have written 2 pieces regarding this issue. Please consider our explanations of why carbon fees are the more efficient and effective market mechanism in the 2 pieces below (1)our website at www.carbonfees.org, and (2) our July 11th editorial, imported below. In summary, we believe that cap-and-trade is a flawed strategy for addressing climate change. The Acid Rain experience does not prove that cap-and-trade is applicable to climate change. The two situations are completely distinguishable. With climate change we face the need for massive new infrastructure and innovation (as opposed to Acid Rain, where an easy fuel switch was available); we also have a lack the comprehensive accurate monitoring of greenhouse gases that was available for the contaminants of concern in Acid Rain. Finally Acid Rain did not allow outside offsets. All of this makes the applicability of the Acid Rain experience to climate change a myth. Also attached as a PDF please find a visual explanation of how carbon fees work, and a request for additional public education and an extension of the comment period on this issue. 1. Please see our May 4th, 2008 Open Letter to Congress at www.carbonfees.org. While this is not aimed at California and the AB 32 process, the same arguments apply. This website also provides additional information on our credentials as public sector environmental enforcement attorneys and references for the arguments that we make. 2. Please also consider the arguments in the following piece: Cap & Trade - Misplaced Confidence (published in California Energy Circuit on July 11, 2008) which addresses AB 32 and the upcoming decision by the California Air Resources Board. By Laurie Williams & Allan Zabel As poles and glaciers melt, permafrost thaws and oceans acidify from our ever-increasing greenhouse gas emissions, the question of whether a carbon cap-and-trade program or carbon fees would provide swifter, more equitable and certain emissions reductions is increasingly urgent. Based on our experience as environmental enforcers (including Allan’s experience with cap-and-trade programs), we believe that the California Air Resource Board’s confidence in cap-and-trade is misplaced and that carbon fees provide the more effective and efficient path to the goals of AB 32, California’s landmark climate protection law. As long expected, California’s recently released AB 32 Draft Scoping Plan relies heavily on “cap-and-trade” to reduce the state’s significant contributions to global greenhouse gas emissions. The draft minimizes the value of a system of “carbon fees.” The Air Resources Board justifies its preference by calling cap-and-trade a more certain route to meeting AB 32’s requirement to reduce California’s emissions 30 percent below “business as usual” by 2020. However, cap-and-trade has serious downsides. Unless all cap-and-trade elements, including offsets, are limited to systems with accurate emissions measurement, the cap on total emissions will likely be inflated and claimed reductions exaggerated. While the emissions of large electrical generating facilities with continuous emission monitoring systems can be accurately tracked, many other sources of emissions and offsets cannot be as closely monitored. If these less-accurately-measured sources participate, the integrity of the cap-and-trade program will be undermined, as will the certainty in reductions that CARB seeks. In addition, even if the market is limited to facilities with continuous emission monitors, this will create artificial scarcity that is likely to result in disruptions and unfairness, as initial and future allocations of the right to emit are distributed and traded. A preview of such disruptions was provided by the manipulations that created the California energy crisis early in this decade. This potential was also demonstrated in a recent simulation at the University of California at Berkeley’s Haas School of Business, in which students gamed a carbon-trading market for individual gain, leading to scarcity and high prices. This potential for market manipulation could contribute to undesirable price volatility. The resulting lack of price predictability in a cap-and-trade system (specifically, the lack of certainty that the price of energy from fossil fuels will exceed the price of green energy) reduces the incentive for the substantial investments in the new infrastructure and innovation necessary to provide alternative energy at affordable prices. The history of cap-and-trade demonstrates the limitations of the state’s proposal. The so-called “cap-and-trade” of the federal acid rain program in no way resembles the complex challenge we face in reducing greenhouse gases. Under the program, all facilities had monitors, so the system had the integrity of accurate measurement. There was relatively little trading, particularly outside of any given corporation and its subsidiaries. Trading in the acid rain program primarily meant that some corporations complied with the gradual reductions in total sulfur emissions by averaging among several of their facilities. In addition, there was no significant need for investments in new technologies or innovation in order to reduce sulfur. All that was needed--and what happened--was a “fuel switch” from high-sulfur coal, to the low-sulfur coal found in Wyoming’s Powder River Basin. In contrast, another cap-and-trade program failed spectacularly in Los Angeles. Known as RECLAIM (the Regional Clean Air Incentives Market), it was aimed at reducing ground level ozone. In RECLAIM, despite the presence of monitors, an inflated cap delayed most emission reductions for over seven years. At the end of that time, the market collapsed and the necessary control technology was required by regulation. Similarly, attempts to design an effective carbon cap-and-trade system have failed under the Kyoto Protocol--a 1997 international accord to cut greenhouse gas emissions which the U.S. never ratified. Utilities and other sources have underreported their emissions, purchased flawed offsets, driven up prices, reaped billions in undeserved profits and generally failed to produce promised emission reductions. Despite cap-and-trade’s enormous disadvantages, it is ardently supported by two disparate groups. This first consists of those who stand to profit, whether from trading, certifying offsets and/or delaying the phase-out of fossil fuels. The second includes those who truly want rapid reductions, but believe that the greater efficiency and transparency of carbon fees is politically unattainable and/or fail to understand that the vulnerabilities of cap-and-trade to manipulation and fraud will make the “cap” illusory. The advantages of carbon fees, in contrast, include simplicity and transparency. For instance, the U.S. Congressional Budget Office stated in its February 2008 report: “A tax on emissions would be the most efficient incentive-based option for reducing emissions and could be relatively easy to implement.” These advantages include that it is much easier to effectively trace and impose a fee on all fossil fuels at the point of importation or extraction than it is to accurately measure all greenhouse gas emissions. By phasing in gradually increasing carbon fees that would go up each year until the price of energy made from fossil fuels exceeds the price of clean technologies, carbon fees would create the certainty needed to spur investment in post-fossil fuel energy sources. A per-capita rebate of these carbon fees to all California taxpayers would cushion the impact of higher energy prices, particularly for low and middle income taxpayers, during the transition to the post-fossil fuel economy. The relative certainty provided by escalating carbon fees and the investments they would foster are likely to catapult California and the nation into a leadership position in green technology and set a roadmap for the rest of the world on how to move beyond the ineffective policy of cap-and-trade. As CBO acknowledges, the main barrier to the carbon fees approach is a lack of political acceptability. It in turn is based on a lack of public education about why carbon fees (and a ban on new coal-fired power plants without sequestration) are our best hope to save our way of life and leave a habitable biosphere to the next generation. By selecting carbon fees to meet AB 32’s goal, California could lead the nation in effectively and efficiently addressing climate change. While CARB’s draft scoping plan attempts to support its preference for cap-and-trade by indicating that it would fit well with expected cap-and-trade programs by the Western Climate Initiative and the federal government, this justification is unworthy of California’s proud tradition of environmental leadership. Only if we discuss the urgency of the problem and the most effective solution with friends, families, neighbors and colleagues, and ask them to join us in calling and writing our representatives, can we jump-start the huge outpouring of public participation necessary to make carbon fees the acceptable as well as the wise choice. --Laurie Williams and Allan Zabel of www.carbonfees.org wrote this editorial as citizens and parents. In May, the two lawyers issued an open letter to Congress urging lawmakers to put their efforts into setting carbon fees in place of a carbon cap-and-trade program. For details about their professional experience and carbon fees approach, see their website. 3. Attached please find a visual providing a chart to demonstrates how the certainty that green energy will become less expensive than fossil fuel energy would affect investment and affordability. Cap-and-trade cannot deliver this same price certainty and hence will not be as effective in moving us to a post-fossil fuel economy. 4. REQUEST FOR EXTENSION: We believe that an additional period of public education should occur on the issue of carbon fees vs. cap-and-trade, and that there should be an additional comment period on this issue prior to a final decision. Attachment: www.arb.ca.gov/lists/sp-design-ws/45-why_carbon_fees_work_7-28-08.pdf Original File Name: Why Carbon Fees Work 7-28-08.pdf Date and Time Comment Was Submitted: 2008-07-30 22:56:07 |
Attachment | www.arb.ca.gov/lists/ceqa-sp11/75-lw___az_comment_re_ab_32_supplement___offsets_7-27-11v4.doc |
Original File Name | LW & AZ Comment re AB 32 Supplement & Offsets 7-27-11v4.doc |
Date and Time Comment Was Submitted | 2011-07-27 22:52:38 |
If you have any questions or comments please contact Clerk of the Board at (916) 322-5594.