Use of Forests as Carbon Offsets Fails to Impress In First Big Trial

More than a decade ago in the northeast corner of Bolivia, a group of polluters and environmentalists joined forces in the first large-scale experiment to curb climate change with a strategy that promised to suit their competing interests: compensating for greenhouse gas emissions by preserving forests.

The coalition of U.S. utility companies, two nonprofit groups and the Bolivian government had the common goal of making a dent in the worldwide deforestation that accounts for about 17 percent of greenhouse gas emissions each year. The outcome of that experiment is fueling debate over a key element in international climate strategy.

While the Noel Kempff Mercado Climate Action Project has succeeded in keeping a biologically rich preserve of more than 6,000 square miles free from logging, it has fallen far short of its goal of reducing emissions. The mix of pragmatism and idealism — providing powerful financial incentives to encourage influential companies and poor countries to work together to slow global warming — shows the complexity of a much-heralded approach that Democratic lawmakers and international negotiators are trying to write into law.

Preventing the clearing and burning of tropical forests, which help absorb carbon dioxide and provide habitat to an array of species, has become a critical objective for environmentalists.

“It doesn’t matter who caused the problem. We are in it together,” said Wangari Maathai, who won the Nobel Peace Prize in 2004 for her work on tree planting in Africa and appealed to President Obama in a meeting last week on the need to preserve forests overseas. “If forests can be kept standing, it would be good for developed nations, it would be good for the developing world.”

It also gives the world’s largest emitters of greenhouse gases more affordable carbon credits under the cap-and-trade system Congress is now debating. Without international offsets, pollution allowances would be 89 percent more expensive under the climate bill authored by Democratic Reps. Henry A. Waxman (Calif.) and Edward J. Markey (Mass.), according to the Environmental Protection Agency. Sixty percent of the international offsets would come from tropical forests, the agency said.

“Including offsets from tropical forests in a climate bill is a key to affordability,” said Nigel Purvis, executive director of the bipartisan Commission on Climate and Tropical Forests. “It would be geopolitically and economically foolish for us to push back on that.”

But a report Greenpeace will release Thursday questions the premise of using forest conservation overseas to compensate for U.S. pollution, noting that Noel Kempff envisioned keeping 55 million metric tons of carbon dioxide from entering the atmosphere over 30 years but has lowered that expectation to 5.8 million. The revised estimates do not take into account that logging may have moved to areas to the north, east and southwest of the project. And the report notes that the project’s three corporate underwriters — American Electric Power, BP America and PacifiCorp — overestimated how much carbon the project kept from entering the atmosphere, telling the EPA it accounted for 7.4 million metric tons from 1997 to 2004.

“At this crucial time, with the [climate] negotiations in Copenhagen and U.S. legislation, can we afford to take a gamble on what the backers of these programs say haven’t been as effective as they anticipated?” said Greenpeace spokesman Daniel Kessler.

American Electric Power chief executive Michael G. Morris said Greenpeace is naive to suggest the world should create a multibillion-dollar fund to preserve forests instead of letting corporations undertake these initiatives to meet their bottom line.

“When Greenpeace says the only reason American Electric Power wants to do this is because it doesn’t want to shut down its coal plants, my answer is, ‘You bet, because our coal plants serve our customers very cost-effectively,’ ” he said.

Several forestry experts said the world has learned from the Noel Kempff project and has incorporated lessons from it in the policies that U.S. lawmakers and international negotiators are now shaping. The sharp cut in verified emissions reductions came from satellite technology and better computer models that adjusted the baseline for what would have happened if the project had not been conducted.

Toby Janson Smith, who directs Conservation International’s forest carbon markets program, said two new global standards — one measuring a project’s carbon storage and another its social and environmental benefits — have built “great confidence in the market” in the last couple of years.

And Sarene Marshall, deputy director of the Nature Conservancy’s climate team, said any binding climate regime would allow emitters to use verified offsets only after the fact, rather than projected estimates. “We can definitely measure with a high degree of scientific accuracy, and this can be verified by a third party, what would have been the emissions from forests that were targeted for destruction,” she said.

The Norwegian government, which has pledged $1 billion between now and 2015 to conserve forests in Brazil, has proposed that any global climate deal inked this year spell out that rich nations pay to protect tropical forests and establish an offset program only once developing countries improve their governance and accounting systems. Audun Rosland, a Norway climate negotiator, said his country wants this stored forest carbon to be on top of what industrialized countries are already doing. “We need both deep cuts in developed countries and developing countries,” he said.

Markey, who focused on deforestation during a visit to Brazil last year, included a provision in his and Waxman’s bill that sets aside 5 percent of the money from emissions allowances to conserve forests overseas, and the bill states that offsets must come from projects in countries that have a national deforestation plan or are working toward one. The Senate bill includes the same set-aside and slightly different project requirements.

But Kyle L. Davis, PacifiCorp’s director of environmental policy and strategy, said the two bills’ strict forest requirements might make it impossible for companies like his to find the 2 billion tons of offsets they promise.

And Sen. Byron L. Dorgan (D-N.D.), a pivotal vote on climate legislation, said he remains concerned that this sort of system can lead to market speculation. “That’s a very complicated area where there’s not a lot of experience,” Dorgan said.

In the end, according to Center for Clean Air Policy President Ned Helme, both U.S. and international officials need to figure out how to preserve tropical forests as part of any domestic and international climate agreement.

“In terms of selling the deal, this is an important part of the deal, because so many countries benefit,” Helme said. “We have to make sure we’re not overselling the promise.”