Comment Log Display

AB 32 Offsets Challenge – Public Comments on October 18, 2011 
Laurie Williams and Allan Zabel, as individuals and as volunteers
for Citizens Climate Lobby
Summary of Evidence that Proposed Greenhouse Gas Offset Protocols
and Regulations do not meet the AB 32 Integrity Criteria – Overall
Comments - Supplemental
Standards in Protocols and Regulations Do Not Meet Integrity
Criteria:
The proposed Protocols and Regulations would provide offset credits
for projects that are above “common practice” in the relevant
geographic region.  This is contrary to the AB 32 Integrity
Criteria described below. (We incorporate by reference, all of our
prior comments, including our comments submitted on Dec. 13, 2010,
Aug. 10, 2011, and Sept. 27, 2011, October 18, 2011.) 

AB 32 Integrity Criteria:

“(d) Any regulation adopted by the state board pursuant to this
part or Part 5 (commencing with Section 38570) shall ensure all
of the following:
(1) The greenhouse gas emission reductions achieved are real,
permanent, quantifiable, verifiable, and enforceable by the state
board.
(2) For regulations pursuant to Part 5 (commencing with
Section 38570), the reduction is in addition to any greenhouse
gas emission reduction otherwise required by law or regulation,
and any other greenhouse gas emission reduction that otherwise
would occur.

(See AB 32 at Section 38562(d).)

Evidence of Urgency
CARB should give special scrutiny to the integrity of offsets
because of the urgency of taking effective actions to prevent the
very serious impacts that are anticipated from a failure to reduce
emissions.  

NSF Press Release, Methane Releases From Arctic Shelf may be Much
Larger and Faster than Anticipated,  March 2010 - National Science
Foundation Reported that Methane Emissions indicated that the East
Siberian Arctic Shelf has begun leaking large amounts of methane
and that further releases of methane through the shelf could
“trigger abrupt climate warming.”  (Att. 1.)

National Academy of Sciences Report Press Release, May 2010.  Three
reports issued in 2010 indicate that “climate change is already
occurring and poses significant risks.  The reports recommend
“prompt and sustained efforts to promote major technological and
behavioral changes” are needed to avert additional climate impacts.
(Att. 2.)

NY Times. Climate Change Seen as Threat to U.S. Security, by John
Broder, August 2009. “US military and intelligence analysts
anticipate that climate change will contribute to serious security
risks to the United States in the coming decades. (Att. 3.)

Revised MIT Climate Model Sounds Alarm, March 2009.  MIT scientists
found that new information indicated that, without “rapid and
massive action” climate change impacts would be twice as severe as
modeling showed six years prior. (Att. 4.)

NY Times Tree Death, 2011. Experts are seeing extensive tree death
in millions of acres of US Forests as a result of beetle
infestations and drought, due in part to climate change.  The loss
of these trees will make it even more difficult to control global
warming. (Att. 5.)

News Report – Global emissions of greenhouse gas emissions hit
their highest level ever in 2010, May 30, 2011.  Both the chief
economist of the International Energy Agency and the UN Climate
Change Secretariat made statements indicating that it would be
difficult in light of this trend to keep global warming below 2
degrees Centigrade, the target previously set by at the
international climate talks in Cancun last year. (Att. 6) 
EscienceNews.com, Act now to tackle the health and security threat
of climate change, say experts, October 17, 2011.  Health experts,
government officials and scientists at a British Medical Journal
meeting in London warned of “grave and escalating threat to the
health and security of people around the globe and must be tackled
urgently.” (Att. 7)

Evidence of Failure to Meet Integrity Criteria:  
Given the urgency of effective actions to address climate change,
the adoption of a compliance mechanism that lacks integrity poses
huge risks.  Since California’s actions are anticipated to be model
for the nation and the international community, it is extremely
important that regulations and protocols adopted under AB 32 meet
the integrity criteria found in that statute.  As shown in the
attachments incorporated in this comment, prior experiences in
Europe under the European Emissions Trading Scheme (“ETS”) and
Clean Development Mechanism (“CDM”), indicate that it is either
difficult or impossible to assure the integrity of greenhouse gas
offsets and many experts, including those interviewed by the U.S.
Government Accountability Office, believe that it may be impossible
to achieve such integrity, because it is nearly impossible to know
whether the offset projects are “additional” to what would have
happened absent the offset program. 

U.S. Government Accountability Office report:  Climate Change,
Observations on the Potential Role of Carbon Offsets in Climate
Change Legislation, March 2009.  The GAO found that “it is
impossible to know with certainty whether any given [greenhouse gas
offset] project is additional.” (Att. 8.)

European carbon trading faces sharply dropping prices, E&E
Publishing, October 11, 2011.  News report documents that carbon
markets continue to be very volatile. (Att. 9.) 
Proliferation of emissions offsets threatens to depress Europe's
carbon trading, Jan, 17, 2011.  The CDM has approved lots of new
carbon offsets at a time when demand is low, resulting in
additional market uncertainty. (Att.10.)

A Realistic Policy on International Carbon Offsets by Michael Wara
and David Victor, 2008. Researchers find that most of the offsets
approved under the CDM offsets have not been “additional.”  They
conclude that “any offset market of sufficient scale to provide
substantial cost-control for a cap-and-trade program will involve
substantial issuance of credits that do not represent real
emissions. Finally, they determine that the CDM created perverse
incentives that increased emissions. (Att.11.)

California Emissions Plan to Explore the Use of Offsets, by Eli
Kintisch, Science Magazine, July 4, 2008.  Relying on the work of
Michael Wara, David Victor and other experts, the article raises
questions about the integrity and efficiency of carbon offsets as a
mechanism to address climate change.  (Att.12.)

Trading in Fake Carbon Credits: Problems with the Clean Development
Mechanism (CDM) by Friends of the Earth and International Rivers,
2009. Additional research provides examples and reasons that
offsets approved under the CDM are not additional. (Att.13.)

EU Emissions Trading – Failure at the Third Attempt, by Carbon
Trade Watch, April 2011. In a race to the bottom, approximately 80
percent of the carbon offsets approved under the CDM have been
industrial gas projects that could have been achieved much more
cheaply by regulation or direct payment for the expense of
destruction of the gas.  The report notes in the words of EU
Climate Action Commissioner Connie Hedegaard these offsets suffer
from “a total lack of environmental integrity.”  However, they will
remain legal through 2012. (Att.14.)

Carbon Offsetting: An Efficient Way to Reduce Emissions or to Avoid
Reducing Emissions?
An Investigation and Analysis of Offsetting Design and Practice in
India and China, by Barbara Haya, 2010. Ms. Haya found that offset
developers could make it appear that offsets met the profitability
test, the idea that the project would not have been profitable “but
for” the offset credit payment, by “turning the knobs.” (Att. 15 at
p. 51.)  Measuring Emissions Against an Alternative Future:
Fundamental Flaws in the Structure of the Kyoto Protocol’s Clean
Development Mechanism, by Barbara Haya  “Interviewees commonly made
statements such as: CDM revenues are just “cream on the top”;
developers decide to build projects “on their own terms,” not based
on the small and uncertain change in IRR from carbon credit sales;
“any project can be registered under the CDM.” Validators, tasked
with auditing CDM additionality claims, believe that current
additionality testing procedures are subjective and can be
manipulated. One validator described the many “knobs you can turn”
to change the results of the financial analysis. Several validators
suggested ways to lessen the manipulation, but did not believe that
it is possible to prevent it.”  (Att.16 at p. 14)

Cap-and-Trade Market Issues, by the California Legislative
Analyst’s Office (CA LAO), June 29, 2011. The CA LAO sees the
potential for gaming and manipulation in carbon markets, including
the offsets market.  With respect to the “spot” market, the report
notes, “ARB has no experience in regulating such markets, and its
lack of technical expertise and institutional knowledge of such
matters increases the chance that market manipulation could go
undetected, in spite of any monitoring efforts that it puts in
place.”  (Att. 17 at p. 5.)

Subprime Carbon? Re-thinking the World’s Largest New Derivatives
Market, by Michelle Chan, Friends of the Earth March, 2009. 
“Subprime carbon would most likely come from shoddy carbon offset
credits, which could trade alongside emission allowances in carbon
markets.” Ms. Chan finds that the impacts of a lack of integrity in
these markets could be similar to subprime mortgages. (Att. 18.)

Conning the Climate: Inside the Carbon Market Shell Game, by Mark
Schapiro, February, 2010.  “As thousands of reductions are claimed
worldwide, the projects already far outstrip the UN’s ability to
police them.”  Mr. Schapiro’s research indicates that whether a
project is additional is described as a “counterfactual” inquiry. 
He concludes that the carbon markets are “in essence, an elaborate
shell game, a disappearing act that nicely serves the immediate
interests of the world’s governments but fails to meet the
challenges of our looming environmental crisis.” (Att. 19 at pp. 4,
6, 8 and 9.)

Whistleblower Disclosure: Disclosure of Unfixable Flaws of
Greenhouse Gas Offsets in Proposed U.S. Climate Legislation, by
Laurie Williams and Allan Zabel, July 22, 2010. The authors
describe the two tests that have been developed to determine
whether projects are additional (the performance test and the
economic analysis (or but for”) test and why these tests are
incapable of determining whether a particular project is
additional.  The analysis is applied to the U.S. EPA Climate
Leaders protocols, many of which are similar to the California AB
32 proposed offset protocols.  The authors describe the four
unfixable flaws associated with the protocols and the methodologies
for determining the additionality of greenhouse gas offset
projects.  (Att. 20.)