Cap & Trade: Selling Pollution

Across the last 160 years, the timber industry has leveled the largest trees in California's north coast counties in a burst of wealth that would be impossible to replicate for hundreds of years, even if industrial civilization persists for that long despite global climate change and a broad, interlocking global environmental crisis.

But the climate change era is also supplementing the region's lumber economy by offering up the latest secondary forest product boom: carbon molecules. As I found in a review for the AVA, Mendocino and Humboldt Counties – which are home to some of the world's fastest-growing forests, despite those forests' thoroughly diminished state – have had a dominant role in the California's Cap-and-Trade program.

Under the program, owners of forestland can generate “carbon credits” after they enlist licensed certifiers who use complex methodologies to tally the volume of carbon dioxide being stored in the trees on their property. The landowner then sells these “credits” or “offsets”  to California's largest greenhouse gas emitters, including power plants, refineries, cement factories, and shipping ports, who shop for them as part of a commodity futures trading program and need them to comply with regulatory limits.   Landowners in every US state, as well as the Canadian province of Québec, are eligible to sell offsets as part of California's program.

Each offset is equivalent to one metric ton of carbon dioxide or its equivalent in greenhouse gas potency.  As a study I published here in June 2015 revealed, 46.9 percent of all forest offsets generated under the program up to that point came from Mendocino and Humboldt counties. The rest came from forests in Arkansas, Maine, New Hampshire, New York State, South Carolina, and North Carolina.

More detailed information on individual entities' activities under the Cap-and-Trade program has now been analyzed by the Oakland-based California Environmental Justice Alliance (CEJA).     The ARB itself has never provided a consolidated report on these entities' activities under the program, so CEJA's researcher chased down Air Resources Board data on the program's inaugural years, 2013-14, from multiple official sources.

Chevron, for example, has offset its emissions from oil refineries in Richmond and El Segundo, as well as vast oil drilling operations in Kern County and along the Southern California coast, using Rich Padula's Willits forestland and the Yurok Reservation in Humboldt County, among others, the CEJA study found.   The utility corporation Calpine, California's second leading purchaser of offsets behind Chevron, has also purchased carbon credits from Padula's Willits land and the Yurok project.

The top 10 offset users were, in order: Chevron, Calpine Energy, Tesoro, Southern California Edison, Shell Oil, PG&E, Valero, La Paloma, San Diego Gas & Electric, and NRG Energy.  These 10 corporations and government agencies accounted for most of the offsets purchases.

The largest share of these offsets came from forests: 46.3 percent.  Destruction of ozone-depleting substances accounted for 45.6 percent, while methane digesters on cattle ranches comprised 6.6 percent.  Methane capture in mines covered the remaining balance: 1.4 percent.

In Mendocino County, the forest offset projects have included only a handful so far: Padula's Willits forestland (which I chronicled in the AVA three weeks ago), Hanes Ranch in the Garcia River watershed, the Conservation Fund's Garcia River project (land formerly owned by Padula), and the Round Valley Indian Tribes' project in the Douglas fir and pine-studded forests surrounding Covelo to the north and east.

But the Air Resources Board expects forests to be the biggest source of future growth in the offset program, with the ozone-depleting substance market largely played out.  Thus, as Laurie Wayburn, president of the Pacific Forest Trust, which helped to design California's forest offset program, told me in an interview last year, the timber industry is preparing to use forest offsets as a source of cash in near-universal fashion. "This really has gone from a what-are-you-smoking kind of reception to every single forest owner who manages their land looking at the protocols as part of a business approach," Wayburn said.

Indeed, several of the North Coast's largest landowners are working to develop carbon credits. Last year, Mendocino Redwood Company, submitted projects encompassing 78,801 acres to the California Climate Action Registry (CAR), a Los Angeles-based nonprofit that monitors, calculates, and certifies carbon dioxide storage resulting from the conservation of California's native forests.  MRC is Mendocino County's largest landowner. The six land areas they submitted to the CAR  include the Hollow Tree Creek watershed outside of Westport, the Albion, the Garcia, Greenwood Creek outside of Elk, and the northwestern Navarro.

MRC’s Forest Inventory Manager Larry Wilson, the developer of the company's carbon offset projects, was previously a forester for the company SCS Global Services, helping to conduct certifications of carbon offsets for the Air Resources Board.

In 2015, Mendocino County's second largest private stretch of private timberland traded hands.  The Campbell Group sold its 111,967-acre property in the county's northwest to Lyme Timber Company, a real estate investment trust based in New Hampshire that owns roughly 600,000 acres of timberland across the US.

Lyme Timber has sold carbon credits to the California Cap-and-Trade market from one of its other properties, which borders Grand Lake in Maine, along with its partner in the land, the Downeast Lakes Land Trust.  The company appears poised to develop carbon credits on its new Mendocino County land.

Various other Mendocino County land barons have developed offsets as part of voluntary carbon trading programs.  As David Severn discovered, and reported to the AVA, Laytonville-based wine-grape Stewart Bewley is selling carbon credits from his 2,625 acres on Mountain View Rd. above Boonville. Beweley's wealth originates in the California Wine Coolers craze of the 1980s.  In the mid-Aughts, he ran afoul of the National Marine Fisheries Service after causing the “take” (killing) Steelhead trout in the South Fork Eel River watershed after clear-cutting more than 100 acres of his land in Laytonville to install grapes.

Forest offsets can serve a much-needed cash source for conservation-oriented forest owners.  The Yurok Tribe's offsets, for example, derive from 22,237 acres of land the Tribe bought in 2011 from Green Diamond Resource Co., the second-largest landowner in Redwood Country other than the Fisher Family of The Gap retail clothing empire fame, who own both Mendocino Redwood Co. and Humobldt Redwood Co.

“We're able to do better land management with those carbon credits,” former Yurok Tribal Chair James Dunlap told me in a conversation earlier this year (he was removed as tribal chairman a few days later, in March, after news broke about his arrest for the stabbing death of his infant daughter in 1988).

Secondary commodities have had booms in Mendocino County many times before.  There was the cyclonic boom in tan bark for tanning of hides. Wood chips have been a secondary revenue stream.   Other than marijuana and wine-grapes, the county's timber base is destined to continue in some form.

The largest land-owner of any sort is Mendocino Redwood Company, with their 227,000 acres.  Extrapolating from data in the county's 2009 general plan, they are followed by the US Forest Service at 174,000, the Bureau of Land Management with 120,730, and Lyme Timber Group.

In all, Mendocino County's timber production zones (TPZs) encompass 854,383 acres of land.  For a comparison, consider that the county's incorporated cities – Ukiah, Willits, Fort Bragg, and Point Arena – cover 7,394 acres, or less than one percent of the county's designated timber-producing areas.  From a carbon offsets standpoint, that makes Mendocino County a tremendous potential growth market.

Cap-and-trade has generated overwhelming criticism in some circles, however, as I have described in past stories.  For example, The same combustion processes that release global climate pollutants from these facilities also spew toxic effluents that cause cancer and neurological damage, as well as particulate matter that penetrates lungs and clots arteries.  By opting for offsets rather than cutting emissions at the source, Cap-and-Trade has perpetuated existing devastating health impacts on those who live downwind and downstream of these facilities, who are overwhelmingly low-income working class people and people of color.

Meanwhile, California is pushing to become the first jurisdiction in the world to allow its largest polluters to offset their climate pollution through investments in tropical forest regions.  The common name for such efforts, which the World Bank and United Nations have previously implemented as pilot projects, is Reducing Emissions from Deforestation and Forest Degradation – REDD.

On April 28^th, the Air Resources Board held a uniquely multi-cultural and multi-national workshop in Sacramento concerning the extension of Cap-and-Trade to Acre, Brazil and other “sub-national jurisdictions.”   The uniquely multi-cultural group on hand included foresters, indigenous people, and human rights activists from four countries outside the US.  Gustavo Sanchez of the Campesino Forest Producers Network in Mexico and Candido Mezua, who represents an indigenous people's federation in Panama, spoke in favor of the ARB's proposal.  Fyneface D. Fyneface, a human rights activist from Cross-River State, Nigeria, spoke against it.

Representatives of regional and national environmental and social justice groups were also on hand, oddly mixing in alongside lobbyists for oil, gas, and utility corporations.  By the time Mari Rose Taruc and Katie Valenzuela-Garcia, members of an official ARB-designated group called the Environmental Justice Advisory Committee (EJAC) sat down before the diverse crowd inside the California Environmental Protection Agency's Sacramento headquarters on April 28th, the all-day workshop was nearing the finish-line.

“I do not consent for my two children's lungs to be polluted even more so these industries can go buy an offset credit somewhere else,” stated Taruc, who is raising two children who suffer from chronic asthma.