The Environmental Perversity of Cap and Trade: Case N+1

A few weeks ago California announced a new carbon credit program associated with forest management, to give timber companies a chance to cash in on cap and trade programs by generating carbon credits which could be sold to offset emissions, such as by a coal fired power plant. California is supposed to start a carbon trading program in two years. All this sounds great until you learn about the details of the credits for forest management, which apparently allow -- and perhaps even create incentives for -- the clear cutting of forests.

Here is what the L.A. Times reported last week:

The Schwarzenegger administration pushed through new rules Thursday allowing California's biggest timber firms to cash in on the fight against global warming even as they clear-cut parts of their forests.

Forest owners stand to reap tens of millions of dollars in the coming decades by selling the capacity of their woods to cleanse the air of carbon dioxide, offsetting greenhouse gases belched by industrial polluters.

But the administration's successful effort to allow loggers to sell their carbon credits to industry while also clear-cutting their lands sparked intense opposition from several conservation groups.

Ecologists say the self-styled "green" governor, an opponent of global deforestation, is undermining his credibility by letting logging firms profit from the global-warming battle while practicing California-style deforestation.

"The governor is using Vietnam-era logic: We have to burn the village to save it," said Jeff Shellito, an environmental consultant. "It's hypocrisy. How can the governor be a leader on the world stage if his own regulators are saying it's OK to do clear-cutting?"

The basic requirement to secure carbon credits is to manage the land in such a way that more carbon is sequestered that would have occurred under a counterfactual baseline of "business as usual." This could mean that if regrowth occurs after a portion of forest is clear cut in such a way as to sequester more carbon (e.g., in faster growing young trees) then -- KaChing! -- carbon credits.

Not long after the new California plan was announced its biggest timber company annnounced that it was indeed cashing in:

The state's largest timber company Wednesday announced a groundbreaking agreement to begin marketing its vast forests as a weapon in the fight against global warming.

Sierra Pacific Industries' announcement comes less than a week after the administration of Gov. Arnold Schwarzenegger pushed through new rules that allow the firm to sell its trees' ability to absorb harmful carbon dioxide from the air. . .

Sierra Pacific will, over the next five years, manage 60,000 acres of its forests to boost the amount of carbon dioxide the trees absorb by 1.5 million tons. The company will offer this "offset" for sale to smokestack industries to help compensate for their polluting emissions.

The offsets could be worth $10 million or more at current prices.

The first project involves a plan to permanently declare 20,000 young conifers -- giant sequoias ranging from seedlings to trees 30 years old -- off limits to logging forever.

"They would have been harvested over time -- now they won't," declared Mark Pawlicki of Sierra Pacific.

Other changes could include slowing the harvest of trees or clearing brush and other debris, providing more light and space for trees. That can speed the growth of conifers, increasing their absorption of gases that trap heat.

Pawlicki said the air board's new rules provide abundant reviews by regulators to ensure that forests are absorbing more carbon than they otherwise would be.

Opponents of Sierra Pacific's logging practices say the agreement so far seems to simply promise a big payday to the firm for managing its forest much as it would have anyway. Preserving the sequoias would not increase carbon absorption in the short term, they said.

A spokesman for Governor Schwartzenegger asked what's wrong with clear cutting anyway? (emphasis added in the below)

Dan Pellissier, Schwarzenegger's deputy Cabinet secretary for energy and the environment, said such arguments are "specious," the product of longtime foes who had hoped to stop Sierra Pacific's practice of clear-cutting.

Opposition to clear-cutting "is like a religion to some folks," he said. "There is no amount of science that will undercut their beliefs."

Environmentalists opposed to clear cutting? Go figure. Pretty soon those environmentalists will be called "deniers" by cap and trade supporters. Oh wait, that is in a post to come. Stay tuned.