Jurisdictional Forest Offsets: California Dreamin’?

All the leaves are brown and the sky is gray
California dreamin’ on such a winter’s day.
—The Mamas and the Papas

After two weeks in Indonesia I returned to Washington to discover that fall had turned to winter in my absence.  A new CGD Working Paper explains how the prospects of jurisdictional forest offsets have experienced a similar chill in California since first proposed in the late 2000s.

An initial blaze of REDD+ foliage

Almost exactly six years ago, on November 18, 2008, California Governor Arnold Schwarzenegger convened a Governors Climate Change Summit in Los Angeles attended by governors of forest-rich provinces from Brazil and Indonesia.  The governors signed a memorandum of understanding to cooperate on forests and climate issues, thus sprinkling Schwarzenegger’s celebrity stardust on the REDD+ agenda. 

The context was the California Global Warming Solutions Act (known as AB 32) signed into law two years earlier, under which the California Air Resources Board (ARB) was in the process of designing a cap-and-trade program as a mechanism to meet emission reduction targets.  Policy entrepreneurs saw an opportunity to marry the state’s need for low-cost emission reduction options and the potential to supply such reductions through conservation of tropical forests at the subnational scale.

Before long, the possibility of financing REDD+ through “jurisdictional” forest offsets was one of the hottest topics in Forests and Climate World.  A potential California market was one of the few rays of hope for REDD+ finance following the crushing disappointment of the UNFCCC’s inability to reach an overall climate agreement in Copenhagen in 2009 and the subsequent failure of the US Senate to pass the Waxman-Markey legislation, which had included a large share of emission reductions from international offsets.  A Governors’ Climate and Forest Task Force initiated by Governor Schwarzenegger grew to include additional states and provinces from Brazil, Indonesia, Mexico, Peru, and Nigeria.

Fast forward to the present.  Last week I participated in a “Learning Exchange on Jurisdictional Approaches to Green Development” organized by the Nature Conservancy (TNC) in Jakarta along with participants from Brazil, Mexico, and Peru.  Although REDD+ was a topic of discussion—indeed, Indonesia’s new REDD+ Management Agency was a co-sponsor of the workshop—village-level planning and implementation of recent “deforestation-free” commodity supply chain commitments received as much if not more attention. The possibility of finance from California’s cap-and-trade program for efforts to reduce deforestation was not mentioned, at least in my presence.

Why did the REDD+ leaves turn brown, and the sky turn gray?

The new CGD Working Paper, “The California REDD+ Experience: The Ongoing Political History of California’s Initiative to Include Jurisdictional REDD+ Offsets within Its Cap-and-Trade System” by Jesse Lueders and colleagues at the Emmett Institute on Climate Change and the Environment at the UCLA School of Law, tells the story of how the season changed in California. The paper traces the political fate of international forest offsets from initial conception, through the transition from Governor Schwarzenegger to Governor Brown in 2011, the deliberations of a REDD Offsets Working Group (known as ROW), and relevant discussions in the state legislature.  The paper details the arguments that have been marshalled for and against inclusion of REDD+ offsets in the implementation of AB 32, and the constituencies aligned with each.

In brief, REDD+ proponents appealed to the potential for California to leverage broader reductions in emissions from tropical deforestation, a key element of any global climate protection strategy, and one with significant co-benefits for biodiversity and ecosystem services.  Cost-effective forestry offsets were also seen as a way to contain compliance costs of regulated entities.  Pro-REDD+ forces were led by a group of environmental and conservation organizations, including the Nature Conservancy, the Environmental Defense Fund, and Conservation International, with some mild support from the private sector.

Opposition to the inclusion of international forestry offsets in California’s emission reduction strategy was led by a few large environmental organizations, including Friends of the Earth and Greenpeace, who made common cause with smaller groups from California’s environmental justice community and international environmental and social justice movements.  Their objections focused on three issues:

1. Skepticism regarding the environmental integrity of forest-based emission reductions, which the law requires to be “real, additional, quantifiable, permanent, verifiable, and enforceable” (see a companion blog by my colleague Jonah Busch on the “Baker’s Dozen” solution to the environmental integrity problem).
2. Concern that REDD+ initiatives could result in adverse social and environmental consequences, including the violation of indigenous peoples’ rights to forests.
3. A desire to give priority to in-state emissions cuts, so that low-income communities could benefit from associated reductions in local air pollution. 

What’s striking to me is the seemingly inadequate analysis put forth by either side to justify their positions.  On the “pro” side, for example, “there is no comprehensive, publicly available analysis of the potential effect of REDD+ offsets on California’s overall AB 32 compliance costs.”  On the “anti” side, claims of harm allegedly caused by REDD+ projects appear to be based more on potential (rather than already realized) risks to vulnerable communities and ecosystems, as well as on the past performance of forest conservation efforts that look very different from those being contemplated by California.

According to Lueders et al.,

It is difficult to tell how much traction either side has made with policymakers. Outwardly at least, those in California government have maintained a mostly neutral stance, acknowledging the merits of both sides of the debate while declining either to move forward on REDD+ offsets or to abandon the idea.

Time is (not) on our side

As my colleague Michele de Nevers said in a blog on this topic back in August, “the window of opportunity to cut carbon emissions from deforestation dramatically may be closing.”

And while the door to including international forest offsets in California’s cap-and-trade program is still open, there is much uncertainty regarding whether, and how soon, that might happen.  As recently as September, on a panel at the “Forests Pavilion” convened in the sidelines of the UN Secretary General’s Climate Summit in New York, California Air Resources Board Chair Mary Nichols hinted that progress would be forthcoming “in the near future”.

Lueders et al. enumerate the various actors and factors that could influence a decision to move forward, which could take years to come into effect.  Key actors include the ARB, the governor, the legislature, and the regulated community.  If the last were to be more vocal in its support for international forest offsets, it could make big difference.

Key factors include the ability of the ARB to overcome legal and technical hurdles, the demand for offsets, and the degree of interest by other jurisdictions in following California’s example.   The linkage of California’s cap-and-trade program to Quebec’s in January of this year suggests the potential for other states and provinces to piggy-back on California’s investment in overcoming those legal and technical hurdles, and to increase demand.

But delay in moving forward has eroded the momentum in both California and partner jurisdictions alike.  Lueders et al. observe that over time, the voices of those opposing REDD+ have gotten louder, and garnered more political attention, compared to those of supporters.  

Delay has also prompted partner jurisdictions to look elsewhere for support and finance for their REDD+ efforts.  In a declaration resulting from their most recent meeting in Rio Branco in August, the Governors’ Climate and Forests Task Force reiterated their commitment to reduce deforestation through a jurisdictional approach.  But rather than look to California as a market for offsets, they highlighted the potential of “partnerships with private sector initiatives” and “performance-based funds”—echoed in the discussions at the TNC workshop in Jakarta last week.

Winter could be followed by spring

President Obama’s recent elevation of climate change in domestic and international policy arenas increases the pressure to identify emission reduction options in the run-up to COP21 in Paris. As mentioned in my blog earlier this week introducing another paper on the US politics of REDD+ finance, it’s possible that flexible federal incentives to reduce emissions could reinvigorate debates over international forest offsets at the state level. 

In the meantime, for a fascinating read on a winter’s day, the paper by Lueders et al. provides an illuminating primer on how those debates are likely to be joined.