Cap and Clear-Cut – California’s cap-and-trade system as investigated by East Bay Express

Jan 27, 2016

Just earlier this week, the East Bay Express, known for it’s investigative and longform news and feature stories, just released an in depth article covering California’s involvement in REDD.  The Oakland-based weekly newspaper serving the Berkeley, Oakland, and East Bay region of the San Francisco Bay Area, is the first to break a full in-depth story on the  pitfalls of REDD.  

California’s cap-and-trade system, which has been touted as a model for reducing greenhouse gas emissions worldwide, allows timber companies to clear-cut forests.

As reported by Will Parish

Jerry Brown basked in adulation during his whirlwind trip to Paris, and the evening of December 8 figured to offer more of the same. Standing alongside governors of states and provinces from Brazil, Mexico, and Peru, California’s governor planned to tout his state’s leadership role on global climate policy. The event was one of 21 presentations that Brown delivered during a five-day swing through France during the United Nations Framework Convention on Climate Change (COP 21). His busy schedule included a stately private meeting with UN Secretary General Ban Ki Moon and presentations at events organized by the French, German, Chinese, and US governments.

The December 8 event was held at a mid-19th-century-mansion-turned-hotel and was hosted by the Governors’ Climate and Forests Task Force, which is a collaboration of 29 states and provinces in forest-rich countries that are preparing to join a program called Reducing Emissions from Deforestation and Forest Degradation (REDD). Crucially, though, it was Brown’s only Paris presentation to which non-invited members of the public could purchase tickets.

As Brown concluded his remarks, Pennie Opal Plant, an East Bay resident and member of the group Idle No More Solidarity San Francisco Bay, stood up near the front of the room, directly in front of the governor. “Richmond, California says ‘no’ to REDD!” she shouted, ‘”no’ to evicting indigenous people from their forests, and ‘no’ to poisoning my community!”

About thirty people, who had dispersed themselves throughout the room to avoid prior suspicion of coordinated dissent, soon joined in a chant of “No REDD! No REDD!”

Organizers quickly escorted the flustered Brown to a nearby exit. Before disappearing, the governor claimed to agree with the protesters, witnesses said.

Brown and California are widely regarded as global leaders in the fight against climate change in large part because of the state’s cap-and-trade program, which was authorized by the 2006 California Global Warming Solutions Act (Assembly Bill 32). The law caps the total amount of carbon emissions in the state and is designed to reduce emissions by allowing polluters to buy “credits” or “offsets” from carbon-saving projects or to sell credits themselves if they’ve significantly reduced their own emissions. California’s largest polluters — including power plants and refineries, like the Chevron refinery in Richmond — can also invest in carbon-saving projects elsewhere in the United States, or in Québec, on a commodity exchange market. The oil giant Shell, for example, is using forests in Michigan to offset its carbon dioxide (CO2) emissions from its refinery in Martinez.

California’s cap-and-trade program is the first of its kind in the nation. And the state’s leaders are pushing to become the only jurisdiction in the world that also offsets its climate pollution through investments in tropical forest regions in the Southern Hemisphere. The common name for such efforts is REDD. Several industrialized countries, as well as the World Bank and the United Nations, have already invested money in REDD pilot projects.

Proponents say that REDD is urgently needed to prevent the degradation and loss of forests, a problem that accounts for roughly 20 percent of greenhouse gas emissions worldwide — more than the entire global transportation sector and second only to the energy sector.

But critics warn that California’s adoption of REDD would have far-reaching human rights and environmental consequences. Initial investments by the World Bank and United Nations in REDD have already precipitated violent evictions of indigenous people from their forested homelands in the Democratic Republic of the Congo and Kenya — to make way for carbon-saving projects. In fact, countless activists and grassroots organizations regard REDD as a recipe for a global land grab, prompting them to dub it a case of “CO2lonialism.”

Given California’s trailblazing status with regard to climate policy, its adoption of REDD would likely trigger similar policies throughout the globe. “People all over the world are terrified that California will open the floodgates on REDD,” said Ayse Gürsöz, an Oakland resident who was among those who joined in chanting “No REDD!” at Governor Brown in Paris last month. A video producer and volunteer for the Indigenous Environmental Network, Gürsöz has gathered video testimonies in Africa and Peru from indigenous people who oppose California’s program.

Yet despite the opposition, California appears poised to adopt REDD. And Brown might do so at a time when many environmentalists have increasingly challenged the climate benefits of the state’s own cap-and-trade program. They note that California’s cap-and-trade system allows large lumber companies to generate and sell carbon credits when they engage in standard logging practices and clear-cut forests. As a result, cap-and-trade in California is proving to be a financial boon for timber corporations that practice many of the same forms of destructive logging that occur in tropical regions of the Global South.

The world’s forests are in deep trouble. Since 1970, the year of the first Earth Day celebration in the United States, more than 1 billion acres of tropical forest have vanished: They’ve been cut or burned, or have died from insects and disease. The amount of forest lost equals an area about half the size of the continental United States. The environmental group Rainforest Action Network estimates that 2.5 acres of forest are cut worldwide every second — equivalent to two and a half football fields — which translates to about 215,000 acres every day, an area larger than New York City.

In the past several years, though, conservation of these forests has gained a fresh impetus as many scientists have begun to view them through a new lens: as global sponges that soak up heat-trapping carbon dioxide molecules emitted from burning coal, oil, and natural gas. Ecologists have started to measure the ability of every major forest in the world to absorb CO2, a process known as sequestration.

They have figured out — with the precise numbers deduced only recently — that forests have been absorbing the equivalent of about one-quarter of the carbon dioxide emitted from burning fossil fuels and other activities. Trees store an amount equal to the emissions from all of the world’s cars and trucks.

The imperative to preserve the world’s forests in order to stave off catastrophic climate change has led to arguments that they be monetized and sold as credits or offsets to greenhouse gas emitters who need them to comply with regulatory limits. And under cap-and-trade programs, such as that in California, owners of forestland, including timber companies, can generate carbon credits after they enlist licensed certifiers who use complex methodologies to tally the volume of carbon dioxide being stored in the trees on their property.

Critics contend that offsets awarded to lumber companies represent a loophole that could undermine greenhouse gas reduction efforts. They say pledges of carbon reductions by timber corporations cannot be considered real, because those companies might have conducted the same amount of logging anyway without the extra money from selling credits. “Poorly measured offsets could lead to an increase in emissions,” said Brian Nowicki of the conservation group Center for Biological Diversity.

Under California’s rules, businesses can offset up to 8 percent of their total emissions through purchasing credits. The number of metric tons of carbon dioxide emissions allowed in the state is capped, and the allowable levels of pollution are steadily reduced, creating an economic incentive for companies to cut emissions. The state’s overall emissions cap declined 2 percent each year from 2012 through 2014. From 2015 to 2020, the cap is dropping by 3 percent per year.

Because companies are required to purchase pollution permits, the state is expected to collect about $5 billion a year in fees by 2020, with the bulk of the money being recycled into clean-energy projects, the construction of housing near mass transit hubs, and building the state’s high-speed rail system.

But, overall, California’s cap-and-trade system has split environmental organizations. Many progressive groups question its effectiveness, while some more moderate ones — including The Nature Conservancy, Pacific Forest Trust, and the Natural Resources Defense Council — have joined state officials and large timber companies in supporting it.

“It’s been a huge success,” said Laurie Wayburn, president of the Pacific Forest Trust, which has been instrumental in developing California’s program. “This really has gone from a what-are-you-smoking kind of reception to every single forest owner who manages their land looking at the protocols as part of a business approach.”

But both the California and European Union cap-and-trade systems have countless critics, perhaps the most famous of whom is Pope Francis, who surprised many observers last year when he took the programs to task in his wide-ranging encyclical on the environment and global warming. “The strategy of buying and selling ‘carbon credits’ can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide,” Francis wrote.

“This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require,” Francis continued. “Rather, it may simply become a ploy [that] permits maintaining the excessive consumption of some countries and sectors.”

The legislative history of California’s cap-and-trade program dates to 2002, when then-state Senator Byron Sher, D-Palo Alto, sponsored Senate Bill 812, which helped create California’s first voluntary carbon market. Jeff Shellito — a former longtime aide to Sher who worked on the bill — made it clear in a recent interview that he thinks the program has become irredeemably corrupted. And he identified the culprits. “The process went off the rails ethically,” he said, “when it allowed corporate timber interests like Sierra Pacific Industries to rewrite the protocols to fit their business models.”

SB 812 was originally sponsored by Pacific Forest Trust, and it expanded the responsibilities of the California Climate Action Registry, a Los Angeles-based nonprofit. SB 812 directed the registry, which was created two years earlier by the state legislature, to adopt procedures for monitoring, calculating, and certifying CO2 emissions resulting from the conservation of California’s native forests. The registry’s rules were designed to reward individuals and companies doing the most to protect California’s forests. Specifically, they forbade clear-cutting of forests included in carbon-sequestration projects and required offset-project developers to establish forest conservation easements that restricted logging and did not allow the forest to be converted to other land uses.

Four years later, the legislature passed AB 32, thereby established a mandatory carbon trading market. And the state’s powerful timber industry — particularly, Sierra Pacific Industries (SPI), a corporate behemoth based in Redding — was determined to modify the registry’s rules. Of the roughly 4.5 million acres of California land zoned for timber production, SPI owns about one-third, making it, by far, the state’s largest private landowner. The main architect of the company’s success is Archie Aldis “Red” Emmerson, who, according to Forbes, is worth $3.6 billion.

While clear-cutting in national forests was phased out in the late Nineties (except for so-called “salvage logging” following fires), SPI still depends heavily on this method of denuding its own forestland. Between 1999 and 2006, SPI received approval from the California Department of Fire and Forestry Protection (Cal Fire) to clear-cut roughly 239,300 acres of forest in the Sierra, Klamath, and Coast mountain ranges, according to a study by the environmental group Forest Ethics. Since then, SPI has continued a similar rate of clear-cutting. Other large timber firms, such as Seattle-based Green Diamond Resources Company, which owns more than 400,000 acres of mainly redwood and Douglas fir forestland in Humboldt, Del Norte, and Trinity counties, also rely heavily on clear-cutting.

Under intense pressure from the timber lobby, the California Air Resources Board in 2009 jettisoned the registry’s forestry protocols, which had stemmed from Sher’s 2002 legislation. CARB then rubber-stamped a new set of protocols that had been developed by a new “stakeholders” group. This 27-member group included a who’s who of timber company managers and foresters, staff members of large conservation organizations, academics, and government representatives. Among them was an SPI forester named Ed Murphy.

In October 2009, Nowicki of the Center for Biological Diversity, logged onto CAR’s website from his Sacramento office. He said that according to the “Properties” function in the PDF that he downloaded, the final person to edit the state’s new forest protocols before CAR posted them online was Ed Murphy.
The state’s cap-and-trade program gives timber coompanies “credits” for clear-cutting.
The new protocols, which CARB adopted in 2010, lifted the requirement to place forestland in conservation easements in exchange for assigning them carbon credits, in favor of a practice called “improved forest management,” which essentially permits traditional logging under the standards established in 1973 by the California Forest Practice Act. The new protocols also allowed timber operators to generate carbon credits when they clear-cut a forest, so long as the cut is no larger than forty acres in size.

University of Oregon forestry professor Mark Harmon was among the many critics of CARB’s new protocols. A member of the US Environmental Protection Agency’s Biogenics Carbon Emissions Panel, which is reviewing the EPA’s accounting framework for CO2 emissions from biologically based materials, including forests and soil, Harmon is regarded as a leading expert on the dynamics of carbon storage and sequestration. “I have to say I was a bit shocked by what they were proposing,” Harmon recalled in a recent interview. “Frankly, it didn’t make scientific sense. Timber harvest, clear-cutting in particular, removes more carbon from the forest than any other disturbance, including fire. The result is that harvesting forests generally reduces carbon stores and results in a net release of carbon to the atmosphere. So, if the goal was to increase carbon storage in US forests, the California program totally missed the mark.”

But proponents of the revised protocols staunchly defend them. They note that timber companies must replant the areas they clear-cut in order to generate carbon credits, and that the projects must demonstrate that they are meeting carbon storage targets over a one-hundred-year span.

However, critics note that clear-cutting produces serious environmental problems. It eliminates canopy cover, thereby warming the soil surface and increasing the rate at which logging debris and tree roots decompose, resulting in a dramatic increase in carbon emissions. They also argue that, rather than reducing fossil fuel emissions at the source — like at refineries and power plants — cap-and-trade provides extra income for business-as-usual timber operations.

“As it’s set up, [California’s cap-and-trade] program allows timber companies to get millions of dollars in carbon credits for the sorts of logging they are already doing,” Nowicki noted.

Sierra Pacific Industries has already developed more than 20 projects involving more than 200,000 acres of forestland. The projects have been approved for carbon offsets on the state’s voluntary market, and two of them are on the verge of generating offsets to be traded as part of California’s cap-and-trade program. They are the Buck Mountain Forest Improvement Project, which encompasses 12,487 acres in Siskiyou County, and the Sacramento River Canyon Forest Improvement Project, which covers 16,491 acres nearby. CARB staffers are currently performing spot checks on each property in advance of approving SPI’s sale of offsets.

In an interview, Mark Pawlicki, director of Corporate Affairs and Sustainability at Sierra Pacific Industries, said he was unable to say how much these projects are worth. But Pawlicki argued that the projects show that his company is a key player in preventing climate change, and that its practices represent an optimal way to sequester greenhouse gases. “We think that forestry has a great story to the tell, and that the more forests we grow, and continue to keep in a healthy state, the better off the air is,” he said. “We can continue to harvest as long as we grow at least the volume we sell in the carbon market, and as long as we maintain that level of carbon storage for one hundred years. And we’re doing that.”

The forestry protocols stakeholders group included three members of Pacific Forest Trust. The organization’s president, Wayburn, also defended the effectiveness of the protocols, in spite of the inclusion of timber industry-friendly provisions. If environmentalists want to change logging practices, she said, they should focus on the existing laws related to forest management. She noted that CARB essentially adopted the logging practices established in the 1973 Forest Practice Act, and deemed them helpful in the fight against climate change. “If your goal is to change forest practices, you should focus on changing the Forest Practice Act,” she said. “That’s the law that governs logging in the state.”

CARB’s controversial protocols also made California the first place in the world to assign carbon credits to wood products, such as decking. In an interview, CARB spokesperson Dave Clegern defended the inclusion of wood products in the agency’s accounting. “The main point to keep in mind with carbon in wood products is that the carbon must stay in place for at least one hundred years,” he said. “So we’re talking about wood used in large items intended to be permanent, like homes.”

But professor Harmon’s research raises doubt about this aspect of CARB’S program as well. In a 1994 study of carbon storage in wood products using historical data and modeling in the states of Washington and Oregon, Harmon and two colleagues found that only 23 percent of carbon in wood products remained sequestered from 1902 to 1992. Most of the rest had been disposed of and is decomposing in landfills.

Although much of the global zeal to protect forests focuses on tropical regions of the Global South, recent scientific studies have turned conventional wisdom on its head. An analysis of NASA satellite imagery, for example, found that forest disturbance from logging in the southern United States is actually four times greater than that in the South American rainforests on a per-acre basis.

Moreover, before the advent of modern logging, Northern California and the Pacific Northwest housed an “unprecedented carbon budget,” according to Jerry Franklin, a University of Washington professor of ecosystem analysis who is known as “the father of old-growth research.” As Franklin explained at a conference sponsored by Pacific Forest Trust in Arcata in August 2014, the conifer-dominated Pacific temperate rainforest, which runs from Prince William Sound in Alaska through the British Columbia coast to California’s Central Coast, contains the largest mass of living and decaying material of any ecosystem in the world. Redwood forests, he noted, exceed the capacity of any on Earth to store carbon “by a factor of three or four.” The mixed Douglas fir and hardwood forests that grow adjacent to the redwoods, as well as the montane-mixed conifer ecosystems of the Cascades and Sierra mountain ranges (where Sierra Pacific Industries conducts its clear-cuts), among other forests of the so-called “Pacific Slopes,” also play a notable role in regulating atmospheric carbon.

But while much global attention has focused on emissions caused by deforestation in the Global South, the United States has broadly failed to prevent degradation of its own forests in the name of fighting climate change. For example, the US Department of Agriculture has determined that the Tongass National Forest in southwestern Alaska — the world’s largest continuous stretch of temperate rainforest — accounts for 8 percent of all forest carbon stored in the United States. But a plan approved by the Obama administration will allow an estimated 676,000 board-feet of old-growth in the forest, or about 27,000 acres, to be logged in the next ten years. The administration has promised to transition away from old-growth logging after that, but the phase-out won’t be complete for another fifteen years.
Last month, John Talberth of the Center for Sustainable Economy in Oregon, conducted a climate assessment of Oregon’s forestry practices and determined that logging and clear-cutting were emitting roughly the same amount of greenhouse gases as those produced each year by 2 million vehicles, or seven coal-fired power plants. That makes forestry one of the biggest polluters in the state. Yet Oregon — like other US states — has failed to account for these emissions in its climate mitigation planning.

“Oregon has not done proper accounting,” said Dominick DellaSala, president and chief scientist of the Geos Institute in Ashland, Oregon, one of the sponsors of the climate assessment, in an interview. “They’ve been unquestioningly accepting what the timber industry is saying, which is, ‘We’re a net sink for carbon.'” DellaSala was referring to the fact that the industry maintains that it sequesters more carbon than it emits.

California Air Resources Board chairperson Mary Nichols has defended the cap-and-trade protocols by arguing that rules established by the 1973 Forest Practice Act are the most stringent in the world. But environmentalists say the protections that the rules afford are limited, as witnessed by the ongoing degradation of the state’s forests since the state adopted the rules. One of the most rapid depletions of California’s remaining redwood forests occurred in the 1980s and ’90s, when companies such as MAXXAM, Louisiana-Pacific, and Georgia-Pacific (which is now owned by the right-wing Koch brothers) logged the majority of the remaining mature redwood forests.

Even in the Nineties, the main political bulwark against the adoption of stronger forest protections was Sierra Pacific Industries. Former Cal Fire director Richard Wilson called SPI’s Red Emerson “a genius at generating profitable lumber from a mill.” But Wilson said his efforts in the Nineties to reform California forestry practices to be more sustainable failed due to SPI’s opposition.

“The whole [California] Board of Forestry was sort of an SPI cabal,” Wilson recalled. “Forest practices were not going to see much change in California, and that’s mainly because of the relationship between Sierra Pacific, [then-Governor] Pete [Wilson], and the Board of Forestry.”

SPI has also had close ties with the administrations of Gray Davis, Arnold Schwarzenegger, and Jerry Brown. According to data from the California Secretary of State’s Office, the company donated $115,000 to the 2012 campaign for Proposition 30, Brown’s tax measure. This contribution has raised eyebrows among environmentalists, particularly in light of the Associated Press’ revelation last year that Brown had fired two state regulators who stood in the way of expedited oil leases in Southern California, after which he received a $500,000 donation toward the same campaign from the company that stood to benefit the most from the firings — Occidental Petroleum.

According to critics, timber industry influence has long caused the agency that regulates timber harvesting, Cal Fire, to be an industry captive. Correspondence between Cal Fire staffers and Sierra Pacific Industries personnel, obtained via the California Public Records Act, strongly supports this view.

For example, in an April 26, 2013 document, Cal Fire’s Deputy Director of Resource Management, Duane Shintaku, who oversees the state’s timber harvest review process, coached a staffer on how to rebuff concerns that the California Department of Fish and Wildlife had raised about the detrimental impacts of SPI’s herbicide spraying and clear-cutting on the gene pool of a protected plant species — the Klamath Manzanita.

“The governor is the one who could force immediate change at Cal Fire,” said a Cal Fire staffer who spoke on the condition of anonymity. “But his integrity is in question.”

Another revealing incident took place in 2014, after a California Air Resources Board staffer issued a proposal that sought to tighten restrictions on clear-cutting as a feature of carbon offsets projects. At the December 2014 Board of Forestry meeting, Executive Officer George Gentry sought permission to send CARB a letter on the board’s behalf. The board approved, directing him to ask CARB formally for clarifications about its intentions.

Yet in his actual December 15, 2014 letter, Gentry went beyond seeking clarification and instead actively backed the timber industry’s position, complaining that “recently proposed changes … may have the unintended consequences of preventing participation of over half of the private timberland base in California. The proposed changes may also conflict with the Forest Practice Rules of this [s]tate … the BOF has unanimously asked me to forward this concern to you.”

In a classic case of revolving-door politics, Gentry soon thereafter left the Board of Forestry to take a position as the vice president of Regulatory Affairs at the California timber industry’s main lobbying organization, the California Forestry Association. CARB later backed away from the proposal to curb clear-cutting, with the staffer involved saying her original proposal was misconstrued.
As opponents of REDD and California forest protection activists alike regularly note, a forest is not just composed of inert stocks of carbon. Logging, the use of heavy equipment, and the spraying of herbicide before and after logging to kill native vegetation all can take a profound toll on soil and wildlife. Historically, logging has caused enormous quantities of soil erosion that discharge sediment into streams. Sedimentation results in flooding, landslides, diminished water quality, and scoured and destabilized streambeds (and damage to property). Streams become impaired. Fish suffocate.

In the Battle Creek watershed of the Sacramento River, which lies between Redding and Lassen National Park and Forest, SPI has logged 21,000 acres of forest since 1998. Battle Creek Alliance founder Marily Woodhouse, a resident of the western slopes of Mount Lassen, has campaigned for years for a ban on clear-cutting in California, due to its impacts on local residents, wildlife, and, indeed, climate change. “Sierra Pacific Industries is doing essentially the same things that are occurring in the Amazon,” she said. “Yet there it’s categorized as ‘bad’ while here it’s ‘no problem.'”

Throughout the Global South, indigenous people commonly depend on their traditional forested homelands as the basis of their cultures and subsistence. According to a 2008 World Bank study, areas in which indigenous people occupy or control their traditional territory encompass 22 percent of the world’s land surface and coincide with areas that hold 80 percent of the planet’s biodiversity. In addition, the greatest diversity of indigenous groups in the world reside in the globe’s largest tropical forest wilderness areas in the Americas (including the Amazon), Africa, and Asia, and 11 percent of world forestlands are legally owned by indigenous peoples and communities.

In October 2015, CARB released a white paper regarding its progress on establishing REDD as part of cap-and-trade. “CARB staff believes there is value in developing proposed regulatory amendments and pursuing a sector-based REDD linkage in time for the third compliance period of the Cap-and-Trade Program,” it stated, referring to the years 2017–2020. It notes that the “sub-national” governments that California is targeting for inclusion in cap-and-trade include Acre, Brazil and Chiapas, Mexico. Establishing such links, the paper notes, “could result in partnering on other mutually beneficial climate and low emissions development initiatives.”

Under the proposed program, the state would use satellite technology to track deforestation rates as a way to prevent “leakage” — curbing logging in one area while allowing logging in another. As the thinking goes, any attempt to do so would show up on the satellites. But critics note that moving bulldozers and chainsaws across state lines would still be perfectly legal under the program, even though this also represents leakage.

“Capital flows to where it finds a profit, and if there is money to be made in deforestation for whatever purpose — for palm oil or cattle ranching or hardwoods that are there — resource shuffling will lead to increased levels elsewhere,” said Nowicki of the Center for Biological Diversity. “All the concerns we had about US carbon credits under the California cap-and-trade program are bearing out, and the problems in this country will be even greater when it comes to international offsets.”

For Nowicki and other critics, concerns about human rights are every bit as important as these practical considerations. When California conducted a public forum in Sacramento concerning REDD last fall, Jeff Conant of Friends of the Earth was on hand, and Gary Hughes of the same organization was in Chiapas. The Chiapas region, which was the location of the well-known 1994 Zapatista rebellion, is also a hotbed of opposition to REDD. In 2012, when a previous meeting of the Governors’ Forest and Climate Task Force convened in the city, indigenous people gained entry to the proceedings and read a statement denouncing REDD.

“People on the ground there see REDD as a threat to their livelihood, to their connection with place and the land, in much the same way they perceive a timber company, a gold mine, or someone coming for fossil fuels,” Hughes said.
Corrections: The original version of this report stated that the Geos Institute conducted a climate assessment of Oregon’s forestry practices. The assessment was developed collaboratively by the Center for Sustainable Economy, the Geos Institute, and Oregon Wild. It also stated that 676,000 acres of old-growth forest in Tongass National Forest in Alaska would be logged in the next 10 years; it is actually 676,000 board-feet, or about 27,000 acres. It also stated that Marily Woodhouse lives on the eastern slope of Mt. Lassen. She lives on the western slope.