Offset Rule 2: Two RARE Exceptions To Rule 1

Trees are terrific in every way but one: They make lousy carbon offsets. That was the point of the First Rule of Carbon Offsets. But a number of comments at the Grist blog, and some media queries, have led me include two rare exceptions: certified urban trees and certified tropical forest preservation. The word “certified” is key in both cases.

For these two rare cases, I would allow trees to comprise no more than 10% of an overall offset portfolio (which should be heavily weighted toward efficiency, renewables, fuel switching, and perhaps carbon capture and storage). Also, their offset value should probably be discounted over time (because urban trees are unlikely to be permanent and tropical forest accounting is quite uncertain).

Let’s start with urban trees. I am a big fan of those — I have coauthored a Technology Review article and blogged on how shade trees in particular reduce the urban heat island, providing direct cooling as well as reduced air conditioning use. A good article on urban trees as offsets is here.

I would especially support urban trees that were 1) planted as shade trees and 2) part of an overall heat island mitigation strategy that included lighter color roofs. That said, I am unaware of any tree offset program that actually focuses on urban trees — primarily because they tend to be more expensive to plant and more expensive to maintain and monitor then trees outside of cities, which can be planted in large number in a small space (rather than individually over a large city).

The tricky part of urban tree planting is to set up a certification system that ensures these trees are permanent — and not, say, cut down by some landowner expanding their house or lost in a storm. I expect these will be rare offsets.

Now to tropical forest preservation, which is clearly both important and difficult. These are rare offsets for two reasons.

First, the whole point of the current generation of offsets is to sell people something cheap, well under $10 a ton of carbon dioxide. As I will discuss in a subsequent post, nobody is going to buy an offset in a country without a carbon cap that is more expensive than the market price for an emission reduction in a country with a carbon cap — since that represents certified (i.e. highest quality) reductions.

But genuine tropical forest preservation is not cheap. In a recent study, McKinsey put the cost at some 30 euros per ton of CO2 saved. That is some 40 dollars a ton — more than the current price of CO2 on the European market and for more than most people are willing to pay for offsets.

The second problem is one I laid out before:

How can we be sure that the project is resulting in a net increase in tropical trees? Imagine planting 1000 acres of trees in Brazil, where the full extent of annual deforestation is not known precisely. How do we know that an extra 1000 acres won’t be chopped down somewhere else in the country?

Until countries with tropical forests join an international greenhouse gas treaty and are subject to rigorous verification strategies, tree-related offset projects will not deliver guaranteed, quantifiable benefits.

You must address this “leakage” problem with a country-wide certification system. Reuters has just reported on a forthcoming (December 2007) UN report on this very subject, “Reduced Emissions from Deforestation” (RED):

RED schemes would be run via national carbon accounting and verification, rather than being project-based. Remote sensing technology and “ground truthing” checks would verify reductions and monitor their “additionality” (a net reduction) and “leakage” (man-made damage to forest carbon stores).

Project-based forest preservation, which is how offsets have typically been conceived, is no good. You must do genuine certification, but again, this won’t be cheap and thus is likely to be rather rare as an offset. Indeed as a comment on Gristmill notes

for this (and several other reasons), forest carbon projects have been quite limited relative to all the other types of offset projects.

So in the vast majority of cases The First Rule of Offsets applies: No trees.