Hopefuls seek green in carbon offsets

Reprinted from the San Diego Union Tribune:


SATURDAY, MAY 21, 2011 AT 6 P.M.

As California’s climate regulators scramble to launch the state’s landmark “cap-and-trade” program, Cuyamaca Rancho State Park is in the enviable position of being one the few spots inSouthern California ready to get financing from climate polluters trying to offset their emissions.


California is setting up a system that combines regulation and market forces to reduce greenhouse gas emissions to 1990 levels by 2020.

• Starting in 2012 it covers electricity and large industrial facilities.

• Starting in 2015 it expands to include distributors of transportation fuels, natural gas and other fuels.

• Includes approximately 350 businesses, representing 600 facilities.

• Emissions cap declines approximately 2 percent per year in from 2012 through 2014; then cap declines approximately 3 percent per year.

• Cumulative reductions needed from 2012 through 2020 are equivalent to 273 million metric tons of carbon dioxide.

Source: Air Resources Board

The park and a dairy in Imperial County stand to benefit from increased spending by utilities, industrial companies and others that face limits on releases of carbon dioxide and similar byproducts linked to global warming. Urban treescapes in places such as Chula Vistaeventually may draw investment, as could a landfill gas extraction project in Ensenada if international efforts are approved for California.

“We know that this market is about ready to take off,” said Gary Gero, president of the Climate Action Reserve, a Los Angeles-based nonprofit and the only carbon offset registry whose protocols have been adopted by the state. “It sort of feels like the Silicon Valley startup phase, where you are at the beginning of something that is going to become very big and you have to hope that you have the system in place to accommodate it.”

Starting Jan. 1, emissions will be capped for about 600 of California’s major emitters of greenhouse gases, including a few dozen sites in San Diego County. Owners will be allowed to finance approved carbon-reduction projects for the right to discharge up to certain amounts. Critics challenge the effectiveness of the scheme and the potential for gaming the system but state leaders expressed confidence that “cap-and-trade” will move ahead despite at least one lawsuit.

It’s all part of California’s landmark Assembly Bill 32 of 2006, which was designed to reduce releases of greenhouse gases to 1990 levels by 2020. Scientists link gases such as carbon dioxide and methane to global warming, and California is among the most aggressive governments in the world when it comes to cracking down on them. Last year, state voters rejected an attempt to suspend the bill.

State officials are finalizing the details of “cap-and-trade,” and the head of California’s Environmental Protection Agency recently told a San Diego audience that the effort will come down the wire.

“We always assumed we would be pre-empted by a federal act,” said Linda Adams, secretary ofCal EPA. “But we kept working and thought we better get this done just in case and now it looks like we will actually launch this carbon market … after the efforts fell apart in Congress.”

Polluters would be able to exceed certain limits by financing projects that decrease carbon emissions in some other spot, such as a forest or farm. Trees soak up carbon dioxide and methane-capture projects turn gas from cows or landfills into energy instead of letting it escape into the atmosphere.

To count, those efforts must go beyond what is required by law and must be verified by a third party to make sure that they are credible and measurable.

Uncertainties about the final offset rules have kept companies such as San Diego Gas & Electricfrom buying offsets but they haven’t stopped potential recipients of corporate money from proposing carbon-reduction strategies. Today, offsets sell for about $10 per metric ton of carbon dioxide removed, giving projects the potential to generate millions of dollars.

Nationwide, more than 400 offset projects have applied for certification under the Climate Action Reserve, with landfill gas and forestry projects being the most common.

All but two of the reserve’s projects in California are in the northern part of the state, which Gero linked to the preponderance of dairies and forests in that region. He expects more offset options to emerge in Southern California.

“There is money to be made in this market and people are going to find those opportunities,” he said. “They are going to come to San Diego.”

California has approved standards for four types of offsets — forestry, urban forests, livestock methane digesters and reduction of ozone-depleting substances. Under state rules, offsets can be purchased at certified projects anywhere in the country but some carbon emitters are likely to look close to home as a marketing tool.

Forestry advocates said their projects have appeal because they involve 100-year management commitments and offer investors something tangible to show customers. But they also can involve a long wait before trees take up substantial amounts of carbon dioxide.

Cuyamaca Rancho State Park has been working toward certification since 2008 and already has attracted $2.8 million from ConocoPhillips even though it likely won’t get final signoffs by the Climate Action Reserve for months. The early money helped to plant more than 200,000 trees across roughly 1,000 acres burned in the 2003 Cedar Fire.

Parks officials hope additional offset payments can finance trees across 1,500 more acres and lead to reductions of atmospheric carbon dioxide by up to 700,000 tons over 100 years.

“There is a lot of interest because it’s a compelling reforestation story,” said Nancy Budge, a consultant for California State Parks. “It’s a well thought-out project as far as the design and making sure that it’s going to replace a forest, not just some trees.”

In Imperial County, the lone offset project being assessed by the Climate Action Reserve, is at Bullfrog Farms, a dairy with 4,000 cows. The owner is seeking to enter the carbon market by collecting methane from the manure lagoon and producing energy for the electrical grid rather than letting the gas escape into the atmosphere.

The project in Ensenada is similar. It’s designed to capture gas from decaying waste in a major landfill and burn it off, reducing the site’s impact on the climate. While such operations are common in the U.S., Gero’s group determined they weren’t in Mexico, making the project a candidate for offsets.

Gero said he’s encouraging Chula Vista to consider an urban forestry offset program and set a national standard for how it’s done. He said the trend is for cities not to replace trees that die even though they have a positive effect on the climate.

Chula Vista leaders said their budget for trees has been trimmed by budget cuts and they are looking for money.

“Offsets could be an opportunity in the future to leverage the new carbon market to support the maintenance and expansion of the city’s urban forests, including street trees,” said Brendan Reed, environmental resources manager for the city.

Mike Lee: (619)293-2034; mike.lee@uniontrib.com. Follow on Twitter @sdutlee.


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