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Comment 32 for Comment on the potential for international, sector-based offset credits in the Cap-and-Trade Program (sectorbased2015-ws) - 1st Workshop.


First Name: Kathleen
Last Name: McAfee
Email Address: kmcafee@sfsu.edu
Affiliation: San Francisco State University

Subject: REDD+ offsets for AB32? Losing the Forest for the Trees
Comment:
The present discussion about increasing the supply of offsets
distracts from the purpose and could undermine the effectiveness of
AB32. The ARB White Paper and the October 28 workshop presentations
emphasize a goal of reducing compliance costs, seemingly losing
sight of the purpose of AB32: to reduce greenhouse-gas emissions in
California. 

There is already an ample supply of existing and potential offsets
in California, not to mention the US and Quebec, despite the
frequent, predictable claims by emitting entities and industry
lobbyists that a shortage is just around the corner. Oversupply
means low prices, of course. Prices of allowances are already too
low to stimulate emissions reductions on the scale necessary to
spur a transition to a very-low-carbon economy in California that
can serve as a model for the rest of the United States and the
world.

As the ARB knows, the worldÕs main cap-and-trade scheme, the EU
Emissions Trading System, has been plagued by low prices and
oversupply of allowances from its beginning, largely as a result of
allowance giveaways, lobbying by covered industries and deceptive
accounting of past emissions by the latter, as well as outright
fraud and allowance thefts. In the past year the ETS and the EU
government have rewritten the ETS rules in a desperate effort to
shrink the surplus of more than 2 billion EUAs, even as it is
acknowledged that the hoped-for reduction in excess allowances will
not be sufficient to achieve EuropeÕs GHG reduction target. In
short, the ETS is discredited as an effective emissions-reductions
strategy. AB32 is not the ETS and ARB staff say they have learned
from ETS failures, but adding a whole new category offsets to
CaliforniaÕs program would ignores the ETSÕs most important
lesson.

Internationally, the supply of forest carbon offsets, including
those developed for the Clean Development Mechanism (CDM), for
voluntary carbon markets (VCM), and for compliance markets that
have yet to arise, already dwarfs effective demand to such a degree
that offset prices remain abysmally low worldwide. This fact is
well known. For example, the Director of Markets and External
Affairs for Forest Carbon Group AG, observes that the forest-carbon
finance industry faces Òan oversupply of projects and credits,
falling credit prices, and no political signal in sight which could
boost companiesÕ or countriesÕ demand.Ó (source: Ecosystem
Marketplace) 

Moreover, more than a decadeÕs experience with the forest-carbon
offsetting linked to the models for REDD+: the CDM and payment for
environmental services (PES) schemes, as well as to VCM offsetting
and existing proto-REDD projects, has demonstrated that is
practically impossible to ensure that putatively GHG-reducing
activities at diverse and distant sites result in actual emissions
avoidance or reductions. It is even harder to guarantee that they
meet the criteria of additionality, enforceability, and social
benefits required, for good reason, under AB32. 

If REDD+ credits are added to the AB32 pool of offsets, the
resulting slight increase in demand would have little effect on
rock-bottom forest-carbon offset prices. Instead, adding REDD+ to
AB32 would lend undeserved credence to a dubious category of
forest-linked global warming ÔsolutionsÕ that has already morphed
far beyond any feasible regulatory oversight and that does nothing
in itself to reduce net GHG emissions. No matter how we phrase it,
offsets are, after all, a form of permits to pollute.

Surprisingly, both the ROW report and the ARB White Paper overlook
a substantial body of literature, including work by scholars in
California, that illustrates the pitfalls and failures of
forest-based offsetting in the global South. Even the Center for
International Forestry Research (CIFOR), a preeminent global forest
research agency that was once very optimistic about REDD, now
reports that its Ôhoneymoon with REDDÕ is over. Many of its reports
express serious doubts about whether REDD+ can be salvaged as an
effective climate-mitigation strategy. 

Numerous scientific studies have documented the near-impossibility
of monitoring and preventing ÔleakageÕ when forest felling for
timber, agriculture, mining, and ranching shifts from the targeted
project area to a neighboring village, valley, or island, or to
another jurisdiction. ÔPermanenceÕ is even harder to ascertain,
much less guarantee. ÔPerverse incentivesÕ and opportunities for
rent seeking abound: landowner and states exaggerate their past
deforestation or their future deforestation intentions in order to
gain more certified credits to sell; consultants and credit brokers
cherry-pick data to demonstrate project success, etc. Moral hazards
arise in the context of the conflicting priorities of officials,
NGOs, or consultants in charge of monitoring, enforcing, or
certifying compliance with project requirements, on the one hand,
and ecosystem services buyers or project sponsors, on the other
hand. Furthermore, the introduction of monetary payments for
conservation has been shown to undermine local traditions that
value and manage nature, Ôcrowding outÕ non-monetary incentives
that commonly have supported sustainable resource management by
local and indigenous communities. 

The ROW authors imagine Ð way too optimistically, in my view Ð that
under a jurisdictional model, NGOs, private investors, and public
authorities in Acre and at the federal level in Brazil (and Mexico,
etc.) will manage to overcome these multiple obstacles to achieving
net forest-conservation gains without significant social damages.
But straightforward analysis shows that economic efficiency in the
generation and allocation or conservation funds under PES or REDD+
means that such programs cannot tackle the primary causes of forest
loss in places such as Brazil and Mexico. One reason is that the
cost of Ôbuying offÕ potential investors in deforestation for
mines, ranches, pulpwood monocultures, soy and biofuel plantations,
golf courses, resorts, etc., is far too expensive compared to
payments to less wealthy and poor landholders whose activities do
far less damage to forests.

REDD+-type projects, unable to address the main drivers of
deforestation, instead are distracting public and private resources
and attention away from tackling the root causes of forest loss.
Proto-REDD+ projects are being touted by governments from Mexico to
Madagascar to Papua New Guinea and Indonesia to demonstrate their
climate-mitigation contributions. Closer inspections reveal that
such conservation claims often serve as a cover for
forest-destroying business as usual. This is doubly dangerous at a
time of commodity price booms and ÔreprimarizationÕ of the
economies of formerly-colonized world regions: accelerating
extractivism propelled by soaring investment from Chinese and other
sources in Latin America, especially, as well as in Africa and
parts of Southeast Asia. 

Nevertheless, the ROW report and the ARB White Paper portray REDD+
projects and jurisdictional programs as a boon to rural development
and the poor. This is misleading. Targeting the poor to receive
REDD+ payments is labor-intensive and costly, making this approach
uncompetitive in market-oriented conservation strategies. Even the
World Bank, a major early supporter and current sponsor of REDD,
has warned that prioritizing the poor as recipients of payments for
carbon sequestrations and other ecosystem services will undermine
the efficiency and effectively of such programs. 

It is true that some communities targeted for PES and pro-REDD
projects have obtained short-term cash payments, other modest
material benefits, and technical assistance from such projects. But
other communities have become worse off, as I note below. If
indigenous, peasant, and other low-cash-income landusers are to be
compensated for their contributions for forest and biodiversity
conservation Ð as they should be Ð there are better, more direct
ways to do this. When compensation for sustainable practices
depends for finance on markets in offsets, the greater part of the
already-modest revenues are taken by the long chain of public and
for-profit actors involved project development, capacity-building,
monitoring, verification, and certification, with little left for
the poor. 

Literature on PES and more recently on REDD+ has documented real
damages to indigenous and other local communities from these
programs. In the context of increased financialization of the
global economy and rising prices of food, fiber, and mineral
commodities, forests and wetlands are being reconceptualized as
carbon sinks and peasant farm lands repurposed as biofuel and
export-crop plantations. Along with anticipation of profits from
carbon-market investments, this has accelerated the processes of
land grabbing Ð illegal or unjust acquisition of land by the
economically powerful Ð and green grabbing: expulsions of forest
dwellers and small-scale farmers for ostensible environmental
goals. Even where land users are not evicted, they often face
reduced access to sites of cultural significance, passageways, and
sources of food, forage, medicines, and shelter materials.

Projects carried out under the rubric of PES and REDD+ are already
contributing to this trend, as I and others have discussed and
documented in peered-reviewed publications. This, of course, is
what REDD+ ÔsafeguardsÕ are meant to address. But the problems that
generate a need for safeguards are built into the conceptualization
and structure of forest-carbon offset trading from the outside.

Finally, it would behoove the ARB to beware the influence of the
REDD+ ÔindustryÕ itself. Undoubtedly, most of the people working on
REDD+ in NGOS, government agencies in California and abroad,
academia, the Governors Climate Task Force, and the myriad
consulting firms are motivated by the goal of averting catastrophic
global warming. This is probably also one motivation of people and
firms in the growing army of for-profit carbon-credit project
developers, certifiers, bankers, and brokers, and speculators. But
other motives, especially profit and career growth, and the
satisfaction of working on the technical aspects of the climate
challenge, are also at work. Institutions and individuals such as
these often develop momentum and growth ambitions only partly
related, if at all, to the goal of slowing global warming. REDD+
could become self-perpetuating regardless of it actual outcomes.

The carbon-credit finance industry, through bodies such as the
International Emissions Trading Association (IETA), is lobbying
hard for broad expansion of offsetting ÔopportunitiesÕ by means of
globally fungible forest and industrial offset credits that could
be traded and substituted across jurisdictions worldwide. This
would create more, and more lucrative work for offset-industry
traders, bankers, brokers, project developers, certifiers, and
other consultants. But it would also greatly expand the options for
emitting entities worldwide to delay and avoid the actions that
they must be required to take for the sake of the planet and our
inheritors. 

And, because offset prices are so much cheaper in places where
land, resources, and incomes are lower and where Ð from a global
market standpoint, lives are worth less Ð allowing more offsetting
in the global South would further shift the burden of coping with
climate change onto the people and places least able to bear it.
Although this is not what AB 32 supporters and staff intend,
endorsement of tropical forest offsets by California would
encourage this dangerous trend. The greatest strength of AB32 is
its regulation-centered approach. It is it not primarily reliant on
the shell games of cap-and-trade and offsetting, which merely shift
the damages of GHG emission from one landscape and one group of
people to another without achieving net emission reductions. LetÕs
keep it that way.

Kathleen McAfee
Associate Professor
San Francisco State University

Attachment: www.arb.ca.gov/lists/com-attach/32-sectorbased2015-ws-UTJQOVQ4VWsFZlU7.docx

Original File Name: comments on REDD+ AB32 11 16 15.docx

Date and Time Comment Was Submitted: 2015-11-16 16:29:50



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