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Carbon Offset Programs Are Failing as Climate Solutions

December 2, 2019

New reports are questioning the effectiveness of cap-and-trade programs against climate change in California and for East Coast states. Emissions in California and globally are projected to skyrocket in the decades ahead unless significant action is taken.

New reports are questioning the effectiveness of cap-and-trade programs against climate change in California and for East Coast states. Emissions in California and globally are projected to skyrocket in the decades ahead unless significant action is taken.


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Story Transcript

DIMITRI LASCARIS: Welcome to The Real News Network. I’m Dimitri Lascaris reporting from Montreal.

A new study by the United Nations Environment Program has concluded that if dramatic action is not taken to tackle the climate crisis, the world could warm by seven degrees Fahrenheit or 3.9 degrees Celsius by the end of this century. That’s within one lifetime. This would lock in extreme climate impacts such as completely flooded, heavily populated coastal regions, increasingly devastating mega storms, food production risk, extreme heat waves, and massive loss of biodiversity. And that’s not all. With the potential nightmarish future like this imagined by policy makers and regulators, the California legislature passed years ago a bill creating the nation’s first statewide cap and trade system.

It was reauthorized in 2017, signed into law both times by Democratic Governor Jerry Brown. The law creates market-based incentives for industrial actors to cap their emissions over time as opposed to imposing strict caps. Likewise, in 2009, Northeast coastal and mid-Atlantic States created a group called the Regional Greenhouse Gas Initiative, or RGGI, known affectionately as Reggie, it is like it’s California cousin, a cap and trade system. Years into existence now, the big question is this: are the programs proving effective and cutting climate causing greenhouse gas emissions? Two new reports, one by investigative journalism outlet ProPublica about California and the other by the environmental advocacy group Food and Water Watch, say for the most part: no.

Here to talk about that are the authors of these two reports themselves. Lisa Song reports on the environment, energy and climate change for ProPublica, while Nikita Naik works as a senior researcher for Food and Water Watch, where she works on climate and energy issues. Thank you to you both for joining us today.

LISA SONG: Thanks.

NIKITA NAIK: Glad to be here.

DIMITRI LASCARIS: Lisa, I would like to start with you. California’s government likes to style itself as a climate leader on the global stage. What are some of the major takeaways of your recent piece entitled “Cap and trade is supposed to solve climate change, but oil and gas company emissions are up?”

LISA SONG: The way to think about California is that it has a whole range of climate regulations. They have done some really great things on renewable energy for electricity, on vehicle emission standards for cars, and in that mix is this cap and trade market based program for climate change. This market based cap and trade program has gotten a lot of the attention and publicity and is seen as this great pioneering program. The reality is a lot more complicated. What we’re seeing is that in fact, the state doesn’t have really any data that shows exactly what cap and trade has done.

And one of the few studies they’ve done has shown it probably did very little in terms of reducing emissions at least in the first few years of the program. So you have this disconnect between how the program is discussed by regulators in the state and politicians, and the promise it seems to hold, versus what it’s actually done on the ground. And on top of that, there is a lot of evidence that the oil and gas industry have put in a lot of work to lobby to make the program weaker over time.

DIMITRI LASCARIS: Nikita, your report is entitled “Cap and trade: More pollution for the poor and people of color.” That’s quite a provocative title. Tell us a bit more about the origins of RGGI, and why your report has come to the conclusions it has.

NIKITA NAIK: As you mentioned, Reggie was started in 2009. It was started by a group of states, ten states in the Northeast and mid-Atlantic region. And it was initiated to control carbon emissions from the electric sector. What we’ve been seeing is that, from the outside, it looks like Reggie has brought about significant reductions in CO2 emissions. But because it’s a market-based mechanism, we actually long suspected that there may be environmental justice impacts associated with this program. So we conducted a similar study based off of one that came out of California last year that looked at California’s cap and trade program, and saw that Reggie was actually increasing CO2 emissions and [inaudible 00:04:55] emissions in neighborhoods that were predominantly people of color and poor communities.

DIMITRI LASCARIS: So taking into account this very serious climate justice issue you’ve identified, was it nonetheless your conclusion that the overall impact of Reggie was to decrease carbon emissions?

NIKITA NAIK: Again, from the outside it looks like  CO2 emissions were decreasing in the Reggie region. So yeah, while it looks like that these emissions were decreasing, nonetheless, environmental justice neighborhoods, neighborhoods that were predominantly people of color and had a lower median household income, they were actually experiencing increases in CO2 emissions from the power plant sector participating within the Reggie program.

DIMITRI LASCARIS: Lisa, your report also named some names, so to speak, pointing to lobbying disclosure forms and expenditures for lobbying for maintenance of the cap and trade system in the state. You narrowed your focus in particular on Western States Petroleum Association. What is this association and what role has it played in affecting the makeup of the cap and trade system and the policy debate in California?

LISA SONG: This organization, the acronym is WSPA, or WSPA for short, they are the largest oil and gas lobbying group in the Western U.S. and they’re pretty active in California, Washington and Oregon. And what we’ve seen is that they were particularly influential in 2017 when the cap and trade program needed to be renewed by the state legislature. And the program needed a two thirds majority to pass. So you had a situation where you needed something that was pretty politically palatable to a broad spectrum of the state politicians. And WSPA really put a lot of money into lobbying at that point.

They ended up providing a wishlist of the design elements they wanted in the programs, such as tools to slow down the price of rising carbon permits in the program, which would end up saving money for the oil and gas industry. They asked basically to preempt an attempt by local activists to try and cap CO2 on a local or regional level and they got that as well. There were a number of things they wanted that they all received, which, in the end, has made cap and trade less stringent on that industry in particular. And what the data actually shows is it’s now been six to seven years since cap and trade started in California. And if you look at the most recent CO2 data and compare it to just before cap and trade began, you’ll see that the emissions from the oil and gas sector have actually gone up a little bit since cap and trade began.

And what we explained in the story is that you could think of cap and trade as a group project. So if somebody in the group does a really good job of lowering their emissions, then others can even increase their emissions a little bit and the overall cap and overall decline in greenhouse gases in the state can still be achieved. So what we’re seeing is that the electricity sector and power plants have decreased their emissions a lot and that has padded the program, so to speak, so that emissions from oil and gas production and oil and gas refineries have gone up. And emissions from transportation, which is the downstream side of oil and gas, have gone up as well.

DIMITRI LASCARIS: And Nikita, California’s cap and trade system was opposed by certain environmental groups and indigenous peoples. By comparison, would you say that RGGI has enjoyed wider acceptance, and if so, why?

NIKITA NAIK: It appears that there has been some environmental justice opposition in the Reggie region as well. It’s been opposed by the poor people’s campaign as one of their strongest opponents. But I think overall, it seems to be that, for the most part, environmental justice communities haven’t been brought into the discussion of Reggie, and it’s mostly been about mitigating Reggie’s negative impacts and making the program less bad.

DIMITRI LASCARIS: Lisa, you previously reported on the tropical forest standard, in which California is offering up its cap and trade system to the world in the name of combating global deforestation. You did so by going on the ground to the Amazon to see how offsets actually work on the ground. And I think it’s fair to say that the picture emerging from your investigation is not pretty. You concluded that “it may be worse than doing nothing.” Our climate reporter and producer Steve Horn covered the Air Resources Board hearing in Sacramento, which the agency approved the scheme and has also followed the issue closely.

Please remind those watching this interview what the TFS is; how it fits into your findings and your most recent article. Is it unfair to say it appears that the Newsom administration is only doubling down on the cap and trade program by extending it across the globe?

LISA SONG: These tropical forest offsets are about, if you are a company or a polluter and you want to pay somebody else to reduce emissions for you basically, you can pay a landowner in a tropical forest country like Brazil to not cut down an area of the forest they otherwise would have cut down. And you would be paying them basically in carbon credits. So you calculate how many carbon credits are generated by not cutting down these trees that would otherwise have been cut down. Convert that to a number of tons of CO2.

And then you say because this has happened, then this refinery or power plant in California, or some other developed nation, can emit the same amount of CO2 and it will be canceled out by these trees. The problem, as I found, is that there are a lot of legitimate concerns with the accounting and the monitoring, making sure that the trees end up staying up for a hundred years, which is what you need to maintain the integrity of these offsets. There are other problems. You have to make sure that that forest was originally going to be cut down before you preserved it, because if that isn’t true, and that’s a very hard thing to prove, then you’re not actually changing anything. You’re just getting paid to do what you would have done anyway.

And one of the things I found when I went to Brazil is that some of these local governments and state governments, they’re so desperate for conservation money, that they’re more concerned about getting money to preserve these forests than they are about the scientific integrity of the offsets themselves. And we tried to make it clear in this story that this is a legitimate concern. A lot of these agencies and conservation groups have very little funding. And with President Bolsonaro in Brazil really embracing agribusiness and other industries that are doing logging and mining in the forest, any kind of conservation enforcement and funding has only gone down.

So there’s this real struggle to figure out is it worth doing these offsets, even if we can’t really trust the integrity of them. And there are some scientists who say it’s more important to just keep trees standing than it is to try and figure out if we can actually trust these carbon offsets. And what’s happening in California is they recently approved the Tropical Forest Standard, which is essentially a rule book on the best way to ensure that these international offset schemes work well. And now that they’ve approved it, it is available for other states and countries to adopt as their own and to use if they see fit. So we’re still a ways from having people actually use it, but it has been approved, so it has this stamp of approval from the California government. And so now, it’s just a matter of seeing who will be the first to actually use it.

DIMITRI LASCARIS: Lastly, Nikita, we’ll conclude with you. What do you foresee in terms of the future of the RGGI system? Is it here for the long term, in your view? And if we’re going to rectify this serious issue of climate justice that your research has uncovered, namely the increase in emissions in poor parts of the covered area, how are we going to rectify that issue of climate justice?

NIKITA NAIK: Reggie and other cap and trade systems seem to be gaining in popularity, Reggie in particular. We have New Jersey rejoining next year, Pennsylvania is looking to rejoin, but I think the bottom line is when you have a market based mechanism like cap and trade that values emissions reductions, making emissions reductions via financial incentive rather than the need to protect human health and the environment, we’re just going to see more environmental justice disparities.

I think the takeaway is that we really need bold, uncompromising solutions that push for systemic change. And this is why at Food and Water Watch we push for 100% clean, renewable energy by 2030. We think this is totally doable. We have the technology to do so. And we also think this is the way to bring about healthier, cleaner, more equitable energy systems that are also cheaper compared to fossil fuel. So we just need the political will to bring about this change.

DIMITRI LASCARIS: I’ve been speaking to Lisa Song of ProPublica and Nikita Niyik of Food and Water Watch about new research relating to two major cap and trade systems in the United States. Thank you very much for joining us today.

LISA SONG: Thank you.

NIKITA NAIK: Thank you.

DIMITRI LASCARIS: And this is Dimitri Lascaris reporting for The Real News Network.