The Giving Trees

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Inducing foresters and landowners to manage forests for their carbon value, as well as for their timber, will take a revolutionary shift in both mind set and economics. Eddy flux studies like Law's provide solid evidence that letting forests grow longer can lead to real climate benefits, but creating financial incentives to make that shift a reality is a complex proposition.

Ten years ago the Kyoto Protocol established a system for capping emissions of greenhouse gases, setting up a "cap and trade" carbon market. The basic idea is that governments limit the total amount of greenhouse gases that can be released, divvying up pollution rights among regulated industries. Those industries can then buy and sell carbon allowances. Over time the cap becomes more stringent, eventually leading to a significant overall drop in emissions. By 2006 the global market in carbon allowances, governed by Kyoto and the European Union Emissions Trading Scheme, had reached $30 billion, and it is growing rapidly.

Polluters who can't manage to reduce their own emissions can also compensate by buying a carbon emission reduction credit, or offset -- that is, paying for someone else to either lower emissions or increase CO2 capture. Sellers of offsets are supposed to meet strict standards that show their actions really are reducing the amount of atmospheric CO2 in a way that would not happen without the incentives offered by the carbon market.

Rewarding the conservation of forests is especially tricky, and the Kyoto -E.U. market did not create any way to do so, despite the alarm at the original Kyoto conference over the headlong destruction of tropical forests. The problem is that while power plant emissions are easy to measure, the market in forest carbon could easily become a shell game, with all-too-real CO2 emissions being traded for possibly illusory increases in forest carbon storage.

Independent of Kyoto and the E.U., a busy market in unregulated carbon offsets has sprung to life, and its shortcomings are apparent. About $5 billion worth of these offsets were traded in 2007, more than a third of them based on forest conservation projects. But it's difficult to know what these were worth in terms of real climate mitigation. In Brazil, one infamous project, supported by the World Bank, has marketed carbon credits based on a vast commercial plantation of nonnative eucalyptus trees that required heavy loads of pesticides and fertilizers, without producing any demonstrable increase in carbon sequestration. "The voluntary carbon offset market is truly a Wild West," Wayburn says. "The buyer must look carefully to find out if these projects are permanent, if they'll store more carbon than a business-as-usual approach, if what they claim to be doing on the ground is verified."

The idea of marketing the carbon held in tropical forests was much discussed at the United Nations Forum on Climate Change in Bali last December, and delegates floated several models. Some proposed allowing nongovernmental organizations, governments, or private entrepreneurs to develop conservation projects and to sell carbon offsets based on the deforestation they prevent. Others suggested creating a fund to provide incentives for forest protection without involving any trade of offsets for pollution allowances.

The boldest effort yet to create a viable carbon offset market for forests has been in California, where the California Air Resources Board (CARB) recently adopted a new forest protocol that aims to provide financial incentives for increasing carbon storage. The protocol is one of a series of new policies sparked by the California Global Warming Solutions Act of 2006, which mandates reduction of greenhouse gas emissions in the state to 1990 levels by the year 2020.

Wayburn, who helped shape the CARB forest protocol, says that it sets up "a standardized system that recognizes the climate value of standing forests for the first time globally." California's flagship offset project is the van Eck Forest, a 2,100-acre tract of Humboldt County coastal redwoods. Governor Arnold Schwarzenegger, Assembly speaker Fabian Nuñez, and speaker of the U.S. House of Representatives Nancy Pelosi have all personally bought van Eck offsets to balance out the emissions generated by their jet travel. And Pacific Gas & Electric, California's major power supplier, offers its ratepayers the chance to pay a "Climate Smart" surcharge on their energy bills, which will go in part toward buying the carbon in living trees at van Eck.

Yet van Eck illustrates some of the pitfalls and limitations of the CARB scheme. The forest, which had been cut over in the 1950s, was bought in 1969 by New York investment banker Fred van Eck, who loved the woods and didn't need to milk them for money. The forest is now owned by a foundation set up in van Eck's will and managed under a conservation easement held by Wayburn's Pacific Forest Trust.

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