we are already paying $16M to market the program that will at best bring in $20M.
PG&E's 'ClimateSmart' offsets are anything but
Breaking all the offset rules
Posted by Joseph Romm at 1:16 PM on 09 Jul 2007
One reason I began posting my Rules of Carbon Offsets is a dubious program by the California utility PG&E called ClimateSmart, which is supposed to allow PG&E customers to become "climate neutral."
This program actually manages to violate rules zero, 1, and 2 all at once! It really makes clear why offsets are bastardized emissions reductions -- and why trees are an especially dubious offset.
This picture graces the "Our Projects" page of the ClimateSmart website. The caption reads : "Photo of van Eck Forest, courtesy of Pacific Forest Trust." Well, that burns rule 1 and 2 -- no trees, and certainly not trees in a California forest comprising half your offset portfolio. (This forestry offset is particularly outrageous, as we will see at the end of this post.)
Worse, what PG&E is offering to do is offset customer's greenhouse gas emissions generated from their electricity purchases and natural gas consumption.
The $64,000 question is why doesn't PG&E just sell renewable power to its customers? Remember rule zero of offsets:
Before you pay others to reduce their emissions on your behalf, you need to do everything reasonably possible to reduce your own emissions first. As the saying goes, "Physician, heal thyself" before presuming to heal other people.
How does rule zero apply here? Consider what PG&E says:
The fastest, most cost-effective way to reduce greenhouse gas emissions is to use your energy more efficiently -- taking advantage of PG&E's smart energy rebates and programs. After doing what you can to reduce your energy use, make the rest "climate neutral" with ClimateSmart.
OK, energy efficiency is the first thing you do -- I've made that argument myself many times. But after doing what you can to reduce your energy use, the obvious next step is not paying someone else to reduce their emissions, but to purchase green power, directly eliminating any greenhouse gas emissions from your electricity use.
California is a state rich in renewable resources, and selling green power to customers who want zero emissions would be easy for PG&E. So why don't they? My guess is the cost is considerably higher than the forestry projects.
Yes, since GHGs don't have a price like, say, sulfur dioxide, lots of cheap GHG-reducing projects have been ignored. Isn't it a good idea that PG&E get money from their customers to fund such projects? Not really, for two reasons.
First, California has already enacted a law mandating a return of greenhouse gas emissions to 1990 levels by 2020 -- a 25 percent cut in just 13 years! That almost certainly means California will soon be enacting a cap-and-trade system that will set a fairly high price for GHGs. And that means all these cheap offsets projects will get funded soon anyway, which in climate-speak means PG&E's projects probably don't pass the addionality test. This is especially true for one of PG&E's specific projects.
What offsets does PG&E offer? The company explains:
PG&E will only invest in greenhouse gas reduction projects for which there is an approved project protocol from the California Climate Action Registry.
The problem is that the Registry is not concerned with offsets, but with helping to enable companies to set greenhouse gas baselines and overseeing certification of voluntary GHG reduction projects. The Registry wouldn't care if 100 percent of PG&E's offsets were trees. Nor would the Registry care if a tree planting project decreased the earth's albedo (reflectivity) and negated the GHG benefit, as a study (PDF) by Livermore Laboratories and the Carnegie Institution concludes is entirely possible for non-tropical forests.
Based on my conversations with environmentalists, as I've said in Rule 2, I would not allow more than 10 percent of an offset portfolio to be for trees, and those could only be urban shade trees or certified tropical forest preservation -- certainly not the dubious project PG&E seems to be pushing, as we'll see. (Even two of the highest rated offset-selling companies have a 20 percent limit on trees -- seehere (PDF), pages 17 and 18.)
Currently, the Registry's only approved protocols are for forestry-based carbon sequestration and livestock manure management projects. As a result, PG&E's 2007 ClimateSmart Solicitation is limited to these types of projects.
Again, that seems lame to me. A customer's electricity emissions should be avoided with green electricity.
But what is worse than lame is the tree project PG&E is pursuing. Salon published an exposé on PG&E and this project that is so astonishing I am just going to repeat part of it here:
Last December, however, PG&E spokesman Keely Wachs announced that customers' dollars would initially be invested in California forests. Indeed, the project closest to meeting the registry's standard involves selling credits from the 2,100-acre van Eck Forest in Northern California's Humboldt County. Laurie Wayburn, president of the Pacific Forest Trust, which is managing that project, predicted it will be certified in August.
This sounds good. But I decided to give it a closer look. I tracked down Charles Michler, an adviser to the Fred M. van Eck Forest Foundation, based at Purdue University in Indiana. Michler told me the forest's current sustainable management is owed to a "conservation easement" placed on the property back in 2001.
A conservation easement means that a property's owners have been paid for their agreement not to develop the land, a stipulation that stays with the land title, forever. But this easement went further, Michler said, including what he called "very strict" guidelines for conservation. In other words, my payments to PG&E for carbon credits weren't going to plant or protect any trees in the van Eck Forest; that had all already been arranged. Indeed, the foundation board was still deciding what to do with the PG&E money if it came through. One possible use, Michler speculated, might be to fund another building for the forestry department at Purdue — a likely disappointment for PG&E customers who think their money will be used to plant redwoods.
Ouch! Again, in offset lingo, this project fails the additionality test miserably -- the climate benefit, if there is any, would have happened anyway.
So we have utility customers paying for a project that would have happened anyway and probably doesn't even reduce global warming. To add minor ironic insult to injury, the money might go toward a building that itself would generate more greenhouse gas emissions.
Such is the path we traverse once we enter the offset labyrinth.
Bottom line: For electricity customers interested in going carbon neutral, PG&E should be selling them renewable power not trees that supposedly offset fossil fuel power.
One more point: For customers who want to offset the emissions from their direct natural gas purchases, PG&E could offer certified offsets, but given the imminence of a GHG price in California (if not the nation), I'm not certain even that has much value. Instead, when California enacts a cap-and-trade system, PG&E should offer to buy and retire emission credits for those customers. That would really be going carbon neutral.
Interestingly, Salon notes:
The company expects to collect $20 million, over three years, from the 5 percent of clients it predicts will sign up to buy the offsets. In the meantime, it will spend another $16 million to administer and market the program. That extra money will come from a rate increase, averaging 2 to 3 cents a month, approved by California regulators. Which means even PG&E's customers who won't buy offsets will pay to advertise them.
Yes, all PG&E customers are paying to advertise offsets that may not even be offsetting climate change and were going to happen anyway.
If PG&E really, really wants to sell legitimate offsets to its customers, I strongly urge it to assemble an independent group of environmental and energy folk with expertise in the area of offsets. That group could come up with guidelines for PG&E that would have some credibility. I'd be happy to provide the names of some people.
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
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