The last few days have been rough for carbon offsets on Gristmill, with our own Gar Lipow launching several broadsides at the whole concept. Adam Stein over at TerraPass offered to reply to some of the criticisms.
Naturally, Stein is an interested party, as TerraPass sells offsets, but he's also a clever blogger, a smart guy, and at least in my experience, a mensch. So if we can, when discussing this, let's try to avoid parsing who is and isn't in hock to The Man, and focus instead on the issues.
Take it away, Adam!
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When I read these repeated attacks on carbon trading, I'm never entirely sure whether I'm supposed to hate carbon offsets because the projects used to create them are flawed and ineffective, or because existing carbon markets are poorly designed and ineffective, or because emissions markets are inherently bad and evil. I do know that the author sure seems to hate carbon markets, so much so that he's not going to let a few gaps in economic or evidentiary logic stand in the way of a good screed.
I should mention that the company I work for, TerraPass, sells carbon offsets. You might think this would make me a fan of offsets, and I do believe that offsets are a compelling way to channel funds to the types of projects that will result in progress towards a low-carbon future. Such projects might include renewable energy production, energy efficiency improvements, conservation, and sequestration. One of the things I like best about offsets is their potential to bind all forms of greenhouse gas reductions into a unified marketplace with a clear price signal and efficient flows of capital to the best available projects.
But I'm not a blind believer in offsets. A lot of vexingly hard questions surround the proper design and implementation of carbon markets. To be sure, efforts to date have had failures as well as successes, and we should expect that difficult policy questions will take time to resolve. Further, carbon markets are not the only or the exclusive means by which to address global warming. Carbon taxes, energy policy, regulation -- all have a role.
To read some recent criticisms, though, you wouldn't know that the issues surrounding carbon markets are a subject of lively discussion. In fact, you might reasonably conclude that carbon markets are the product of a cabal of clueless project developers, grasping consultants, hapless bureaucrats, and nefarious polluters. Heck, let's throw in the whaling industry for good measure. I'm sure they have a hand in this somewhere.
Let's dig into these criticisms a bit further.
Trees are evil
Critics of carbon offsets like to point to projects gone wrong. These are lazy criticisms, relying purely on anecdote, but they're also effective, because they have clear villains and make the entire enterprise of offsetting seem somehow tawdry. The Coldplay forest is one of the best known examples of good intentions gone awry, and in general these horror stories do tend to focus on tree-planting projects.
There's good reason for that. Tree-planting projects are difficult to execute in a high-quality manner, and TerraPass avoids them as a source of carbon offsets. Of course, deforestation accounts for about 25% of greenhouse gas emissions, so we remain strongly interested in the development of forestry projects. But in the meantime, the Kyoto Clean Development Mechanism (CDM) has identified approximately 200 other categories of greenhouse gas reductions.
Regardless, critics of offsets remain fairly obsessed with trees. Grist's Gar Lipow informs us that the "real world" of carbon trading makes "extensive use of sequestration offsets," which he identifies primarily as tree-planting projects and "clean coal" technology.
A quick survey of the pipeline of offsetting projects submitted for approval under Kyoto reveals that, out of 1,661 total projects, exactly 5 involve forestry. Exactly zero involve clean coal, because such technology is still experimental. So much for sequestration.
Unknown and unknowable
Another line of criticism regards the issue of additionality, which cuts to the core of what a carbon offset is. An offset represents a reduction in greenhouse gas emissions. For the reduction to have environmental value, it must be over and above ("additional" to) a business-as-usual scenario. If the reduction would have happened anyway, the offset doesn't have any real meaning.
Additionality is tricky business. No one in the industry would claim otherwise. A battery of tests and criteria have been developed to try to gauge additionality. In some cases these tests work quite well. In others, a measure of ambiguity is tolerated in recognition of the fact that, on balance, the projects in question will yield an environmental benefit.
The nuances of the additionality issue seem largely lost on some.
An offset only exists compared to what would have happened without the subsidy. This is almost always unknown and unknowable. Worse, most of the time, it remains unknown and unknowable.
Unknown and unknowable. This is damning stuff. If additionality is unknown and unknowable, then offsets truly are as worthless as critics contend. Given that carbon is now a $25 billion market worldwide; given that 191 countries have signed on to a global climate treaty that presumes additionality is in fact known and knowable; given that an increasingly large portion of the U.S. economy will soon be operating under carbon constraints built on a similar premise; given all of these things, surely anyone making such a daring assertion would have an ironclad set of arguments underlying the claim.
Not so much. Take their word for it. Sure, it might be possible, for example, to calculate the amount of super-regulatory landfill methane flaring that would occur in the absence of carbon offsets (none). And it might be possible to measure fairly precisely how much occurs when offsets are added as an economic incentive. But to actually determine additionality would require performing some simple math. Unknown and unknowable.
Markets just plain don't work
When all else fails, invoke an early 20th century Austrian economist to explain why emissions markets simply can't work. Carbon is mispriced, you see, because the bureaucrats in Brussels are tinkering with supply, and the public relations value of the reductions distorts the demand curve ...
Perhaps there's something to these criticisms. More likely not. One thing is indisputably true, though: emissions markets have been phenomenally successful in the past.
When the U.S. wanted to reduce sulfur dioxide emissions in the early '90s, it did so using an emissions market. Results came more quickly and cheaply than even the program's designers dared to hope. Are sulfur dioxide markets a perfect analogy for carbon markets? Certainly not. But neither do I see any good reasons to believe that the same market-based principles can't be applied to greenhouse gases.
In any case, we'll soon know one way or another for sure.
Carbon offsets and environmental justice issues
Critics have also pointed to environmental justice issues associated with pollution markets. Again, we see certain tree-planting projects held up as representative of all offsetting projects, despite making up a small portion of the industry. Again, we see cherry-picked anecdotes used to tar by association.
But let's take the criticism on its face. One potential problem with emissions markets is that they could allow polluters to cluster in small areas, where local residents will bear the brunt of their activities. This is certainly a possibility under the Kyoto system of allowances.
But Gar seems concerned in particular with the developing countries who aren't under the Kyoto system of allowances. Instead, these countries participate in Kyoto via the system of offsets set up under the CDM. And here there's good reason to believe that CDM projects are strongly beneficial to the developing world, because by necessity CDM projects always reduce carbon emissions from what would have happened otherwise.
As a result, we have 140 new wind farms in the developing world. Improved lighting. Methane digesters that clean up animal waste. Altogether, the CDM pipeline contains over 1,600 projects reducing 1.1 billion tons of CO2 and producing co-benefits across the developing world.
The bigger picture
Stepping back from the particulars, it's important to stress one key point: a carbon market is an economic tool useful for bringing about solutions to global warming, not a solution itself.
Just as a carbon tax isn't itself a reduction in greenhouse gas emissions, a carbon market is a policy framework that helps to bring about change. Markets can be designed to encourage (or punish) virtually any behavior you want.
So when you read statements like this:
Ultimately, only political action and a physical transformation of society that eliminates most fossil fuels can solve the problem.
Understand that you aren't reading a criticism of carbon markets or carbon offsets. The meaningful question is how that transformation is going to be brought about.
Comments
View as Flat
sunflower Posted 4:42 am
30 Jan 2007
Carbon markets
Just quick questions, what is the value ($ per ton or whatever) of carbon in the USA, overseas under Kyoto, and in Europe?
Also, given the elasticity of energy, how much carbon tax do you feel will be required?
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Bart Anderson Posted 5:01 am
30 Jan 2007
Hmmm
I don't have a strong opinion about carbon markets or carbon offsets. However it is a turn-off to hear that anyone who criticizes them
Maybe I'm old-fashioned, but I would like to see analysis, arguments pro and con, and a certain amount of objectivity.My skepticism about carbon offsets just went way up.
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PBrazelton Posted 5:12 am
30 Jan 2007
Weird
It's a new phenomenon, so maybe it'll be short lived, but it's fascinating to see the extreme hostility to carbon markets. Even Bart, normally thoughtful, goes straight to knee-jerk mode on an issue he claims to have no strong opinion about (hint, Bart: Adam does not make that criticism of 'anyone who criticizes [carbon markets]'. He's specifically addressing a single author, Gar Lipow).
I thought Adam's blogpost was well thought out and respectful for the most part, and enjoy seeing point by point rebuttals in any argument. Have fun, looking forward to the usual flameworks.
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Adam Stein Posted 5:12 am
30 Jan 2007
Pricing
Hi sunflower,
We actually just posted on this topic over at TerraPass. Historically, carbon prices in Europe have fluctuated quite a bit, but as recently as May they were over $40/ton. European prices collapsed over the summer, and are now at about $3/ton. Interestingly, this puts European prices for the first time lower than prices on the Chicago Climate, where they also fluctuate but recently have been at about $4/ton.
It's difficult to read much meaning into these numbers, though, because the two markets are so different. Because of the design of the European market, prices are expected to naturally fall to zero over time, as the allowances expire.
As to your second question, I have no idea. I've heard widely divergent estimates of this figure, and in part the answer depends on what you're trying to achieve. Unfortunately, people have proved strangely indifferent to fluctuations in energy prices, so the answer is probably: more than you would think.
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Gar Lipow Posted 5:31 am
30 Jan 2007
Carbon Markets
I'll give some detailed rebuttal later. In the meantime:
>Sure, it might be possible, for example, to calculate the amount of super-regulatory landfill methane flaring that would occur in the absence of carbon offsets (none).
No one every burns landfill methane to produce electricity, or to improve air quality? That would be a big surprise in California even under Reagan.
>Emissions markets have been phenomenally successful in the past.
>When the U.S. wanted to reduce sulfur dioxide emissions in the early '90s, it did so using an emissions market. Results came more quickly and cheaply than even the program's designers dared to hope.
Phenomenally successful? The SO2 program is expected to cut SO2 emissions by only about 35 percent by its 20th anniversary in 2010. In contrast, Germany cut power plant emissions by 90 percent from the first proposal in 1992 to completion of its program in 1998--all without trading.
>by necessity CDM projects always reduce carbon emissions from what would have happened otherwise.
To make that statement you have to assume that there is never a reason other than CDM credits to improve efficiency or use renewables.
>Carbon is mispriced, you see, because the bureaucrats in Brussels are tinkering with supply, and the public relations value of the reductions distorts the demand curve.
Oh come on. You can make your argument without mistating mine. My objection is not to tinkering, but to tinkering without feedback. I support Carbon Taxes of a type other than trading, regulation and public initiatives - all forms of bureaucratic tinkering. The problem with offsets is that most of them require a greater level of detail than we have access to. Because they are granted at an extremely micro-level you need to measure results at a micro level. Also because they require all sorts of economic assumptions. With forms of carbon taxation other than emissions trading, and with regulation, you can adjust according to measured results at the macro level - region, nation or even world if the appropriate treaty can be negotiated. With carbon trading, especially offset trading, your precision is greater than your accuracy.
>Carbon markets are not the only or the exclusive means by which to address global warming. Carbon taxes, energy policy, regulation -- all have a role.
OK -here is where you need to understand something. Emission trading IS a form of carbon tax. Both emission trading and carbon taxes are pigovian. They both put a price on carbon. The difference is that carbon taxes as actually carried out tend to be applied largely to fossil fuels when extracted. Yes they would have to be applied to some point sources as well cement factories, landfills and so on. But overwhelmingly you could tax GHG sources at the point of extraction, or the point of manufacture of stuff like HFC. In contrast emission trading as actually done tends to apply almost entirely at the point of use - where it is much more difficult to measure.
If you are reacting to feedback, any engineer can tell you that you need to scale your reactions to the actual precision with which you can measure - so you can react to information, not noise. The Kyoto market saw carbon prices drop by half recently. That volatility is reflection of a very noisy market indeed.
Incidentally you may sneer at me for citing Mises all you like. I agree with almost nothing he stands for, but when I cite an idea that is widespread today that he invented, I'm going to give him due credit. The idea of prices as information is an important one. When you support "carbon markets" or any Pigovian system you are indirectly making use of Mise's insight.
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Gar Lipow Posted 5:53 am
30 Jan 2007
by necessity CDM projects always reduce carbon emi
A longer answer to this, by a supporter of CDM is found in the following PDF
http://iis-db.stanford.edu/pubs/21211/Wara_CDM.pdf
Bart in all fairness - I'm criticizing a business which Adam not only makes his living from but strongly believes in. The effectiveness of at least some offsets have to be a pretty core belief for him; he is a smart guy - could have made a living some other way if he did not believe in this. Anybody in his position would be angry, and few could avoid letting that anger show. Judge his arguments on their merits and don't let the occasional stylistic flaws springing from sincere and strong passions prejudice you against him.
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Jangal Khubeh Posted 6:48 am
30 Jan 2007
Forest Offsets
I would just like to offer a comment that the discussion of forest offsets has been somewhat imprecise. Not all forest offsets are tree-planting offsets, although most are. I will not argue Caldeira/Livermore right now, but (just) for the sake of argument will accept the idea that tree-planting doesn't provide a net benefit because of decreased albedo relative to grassland.
However, forest carbon offsets from managed forests are albedo-neutral. That is to say, changes in management of existing forests in order to store additional carbon do not result in significant changes in albedo. So the albedo argument is moot when it comes to managed forest offset projects. And, contrary to the assertions of some in this space, means of measuring the additional sequestered carbon are quite well established. And, there are well-established means of establishing additionality and permanence to these offsets.
Anyone curious can go explore the California Climate Action Registry's Forest Protocols. Rigorous, verifiable, permanent, additional. Groovy.
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Adam Stein Posted 6:48 am
30 Jan 2007
Carbon critics
I was fully expecting the line-by-line dissection, although I notice it's silent on the topic of those trees. In response, I'd like to try to avoid getting excessively caught up in the minutia of Gar's arguments. I suspect we could spend a lot of time shouting about CDM protocols without shedding a lot of light on the topic of carbon markets. Instead I'd like to address some of the broader outlines of his comments.
It seems to me that there are three main strands of criticism, each problematic in its own way:
Taking each in turn:
Anecdotes. Gar doesn't seem overly interested in sticking up for his claims about tree-planting projects, so I won't rehash this debate. It is worth mentioning, though, that these types of criticisms have provided most of the read meat to those who seem reflexively suspicious of carbon markets, so I hope critics aren't losing their nerve on this one.
Economics. Regarding the abstruse economic principles, Gar suggests that I've mistated his argument. I'm going to come clean here and make an admission: I can't respond directly to his economic argument because I don't understand it. To avoid an possible misstatement, here's a version of it in direct quotation:
I'm sure I'm missing something here, but I just can't parse this. Carbon markets have a supply curve and a demand curve, much like any other other market. Where the curves intersect, you get a carbon price. That carbon price contains useful information about the cost of carbon reductions, which businesses, governments, and project developers can use to make judgments about how to allocate their money for future carbon reductions.
Suggesting that the project-based carbon reductions are a fiction created by "bureaucrats" is a bit like suggesting that corporate profits are a fiction created by accountants. Pollution markets have worked phenomenally well in the past (really, they have), so I see no a priori reason to believe they can't work in principle.
Scams, etc. The third line of criticism is not really criticism at all, so much as outright condemnation:
I know blogs aren't the most nuanced medium in the world, but statements like these can't stand on their own. There are a lot of people out there who seem to hold contrary opinions, so it is incumbent upon the author to actually support these statements. A grab bag of criticisms don't add up to an argument.
Let's look again at additionality. I mention above a category of project called super-regulatory landfill methane flaring, which are generally regarded to be highly additional. Gar responds, "No one every burns landfill methane to produce electricity, or to improve air quality? That would be a big surprise in California even under Reagan."
To answer his question, plenty of people do burn landfill gas for electricity, but that isn't relevant. The relevant question is, "How difficult is it to distinguish additional from non-additional landfill methane projects?" And the answer is: not very difficult. There are two additionality tests that come in quite handy here. The first is the regulatory test. If the flaring happens due to regulatory requirements, it can't be additional. The second is the financial test. If the project couldn't be profitable in the absence of offsets, then it's most likely additional. It's pretty easy to spot non-profitable projects - they're the ones that aren't producing electricity.
Getting back up out of the weeds here, the bigger point is that a lot of thinking has been put into how to address issues such as additionality, carbon pricing, etc. Of course, that doesn't mean the questions have been fully resolved - they haven't - but to read these out-of-hand dismissals of carbon offsets as a scam, you'd think no one had ever thought about these issues before.
191 countries are already signed up for some form of carbon trading. The U.S. is rapidly heading in the same direction. Carbon markets may or may not work. But I'm pretty confident that they're not just some elaborate hoax.
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wiscidea Posted 6:56 am
30 Jan 2007
regarding the 1,656 other projects
Hello.
Thank you very much for this post.
I had the impression that this particular Grist kerfuffle started because someone cited evidence suggesting that boreal forests are not appropriate for carbon sequestration. This lead to some discussion about the overall value of planting trees and whether growing them in place of other vegetation is really a net gain. My major concern is that if planting trees will be used to reduce net carbon emissions, we should make sure that there is a real benefit, especially if the trees will replace a different biome. I did not question the value of other means for countering carbon emissions.
Adam Stein wrote...
"A quick survey of the pipeline of offsetting projects submitted for approval under Kyoto reveals that, out of 1,661 total projects, exactly 5 involve forestry. Exactly zero involve clean coal, because such technology is still experimental. So much for sequestration."
Could someone direct me to information about the other 1,656 carbon offset projects? How do they work?
I was looking at only one aspect of this issue, an aspect that happens to conflict with other environmental concerns that I do follow closely. Otherwise, I know very little about this issue.
It just seems that we hear primarily about planting trees. Calculators that suggest how one might compensate for carbon emissions often tell you how many trees you should plant. Environmental organizations tell us to plant more trees. They will even send out free trees (though not appropriate for the region). Maybe trees are simply something the carbon offset people think the public will best understand. So I have this image that planting trees is the primary tactic when, in fact, it is a very small element of the overall strategy.
I would like to suggest reducing the emphasis on and marketing of planting trees. Plesase tell us more about the othe projects.
[This was probably discussed elsewhere on the Grist site, but I did not follow the discussion until the tree kerfuffle emerged. Sorry! There is just so much valuable information here, I can't read all of it.]
Forward!
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Jangal Khubeh Posted 7:06 am
30 Jan 2007
Forest Offsets
Sorry to be repetitive here, but: not all forest offsets are tree-planting (aka afforestation). There are also offsets from forest management and conservation, that have very different characteristics. Lumping them all together isn't helpful.
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Adam Stein Posted 7:22 am
30 Jan 2007
Forestry projects
Hi Jangal,
You're absolutely right. This is a problem in general when discussing these topics - it's very hard to generalize. This is another reason arguments from anecdote aren't very compelling.
Adam
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sunflower Posted 7:27 am
30 Jan 2007
Gar --
Right or wrong, these $4 carbon prices will not wag the energy dogs. Example, under ideal conditions - $50/ton C would make solar zero cost @ $100/m2 & 1 bbl/m2 (20 years & 0% discount).
But that does not matter. Nothing we do individually matters in terms of carbon markets. Participation does matter in terms of political markets. Carbon credits are, at worse, harmless, not in the same league as coal power plants.
I mostly agree with Ross Gelbspan in this most excellent interview by Kate Sheppard...
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sunflower Posted 7:34 am
30 Jan 2007
$100/m2 & 1 bbl/m2/year oil displacement
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Adam Stein Posted 7:46 am
30 Jan 2007
Pricing
Hi sunflower,
I appreciate your comment, but it's not really possible to draw many conclusions from prices on the CCX, which is a voluntary exchange. I think the CCX is a worthwhile experiment, but we need a carbon market that is mandatory and encompasses the entire economy.
Also, a $50/ton surcharge will be politically difficult to achieve in the near-term via any mechanism - carbon markets, carbon taxes, or otherwise - so I'm not sure this criticism is really specific to any one approach.
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sunflower Posted 8:01 am
30 Jan 2007
Must do the impossible...
I am far more radical than that example, which would be self sustaining solar w/o credits.
I want $0.30/lb C tax ($600/ton) as soon as possible. That would only increase the price of gasoline about $1.50/gallon, but hopefully would sharply curtail coal.
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Adam Stein Posted 8:15 am
30 Jan 2007
CDM project pipeline
Hi wiscidea,
Here's a spreadsheet that contains the complete list of projects in the CDM pipeline:
http://www.cd4cdm.org/Publications/GuidanceCDMPipeline.pd...
For a quick overview of the pipeline, look at Table 2 on the Analysis tab. ("EE" stands for energy efficiency, by the way.)
And here's a document that describes the spreadsheet:
http://www.cd4cdm.org/Publications/GuidanceCDMPipeline.pd...
I'm not going to lie to you -- this is pretty boring stuff. But if you're interested, you can find plenty more information on the various project types online.
Regarding forestry projects more generally, you're right that these tend to be overrepresented in consumer consciousness because they're very popular as a means of consumer outreach.
One thing that's important to note is that there's nothing inherently wrong with tree-planting projects. The reason TerraPass doesn't purchase offsets from tree-planting projects is the difficulties in measuring and verifying the carbon reductions. But that doesn't mean that well-managed projects can't have other benefits that make them worthwhile.
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Bart Anderson Posted 8:20 am
30 Jan 2007
Transmuting anger
Understood. But anger is a big motivation for many of us, I know it is for me. The big challenge is transmuting it into something productive. Thanks to Adam for arguing more objectively in the comments. I can tell that he is passionate and knows a lot about the subject.I notice that when I'm working up nerve to speak out in a debate, I tend to go overboard. I throw everything I can think of into the fray. Not much finesse. Afterwards, if I perceive that people are really listening to me - even if they don't agree, I calm down.
FWIW, I agree with Adam about there being a place for carbon offsets and carbon markets. On the other hand, the opportunities are stupendous for corruption, greenwashing, and manipulation. The Christian Science Monitor had a good article on the subject today (On global warming, what US can learn from Europe):
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wiscidea Posted 8:30 am
30 Jan 2007
Is this the spreadsheet?
Is this the spreadsheet you referred to?
http://www.cd4cdm.org/Publications/CDMpipeline.xls
Found it via the site map for www.cd4cdm.org.
Forward!
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Adam Stein Posted 9:44 am
30 Jan 2007
That's the spreadsheet
Yep, that's it. Sorry the URLs got munged, but if you click the links in my comment, they'll take you to the right place.
Bart, just so you know, I'm not actually all that angry. Bemused is probably a better word to describe my current emotional state of being. I do enjoy me a good blog kerfuffle, though.
Happy to answer additional questions...
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Gar Lipow Posted 10:10 am
30 Jan 2007
trees
>I was fully expecting the line-by-line dissection, although I notice it's silent on the topic of those trees.
Lordy me. You write a 1,300 word screed (which I don't object to) then complain cause my partial rebuttal is too long, and worse does not deal with every argument.
Note that you conceded that tree planting is difficult to do right and that Terrapass avoids tree projects for just that reason. To be brief, my objection was not tree planting, but to A) Carbon plantations which so far have proven evil things in terms of human rights affects and to B) counting offsets from trees - which whether or not they sequester carbon (and usually outside they tropics they apparently don't) are very hard to measure in terms of what they sequester.
>The relevant question is, "How difficult is it to distinguish additional from non-additional landfill methane projects?" And the answer is: not very difficult. There are two additionality tests that come in quite handy here. The first is the regulatory test. If the flaring happens due to regulatory requirements, it can't be additional. The second is the financial test. If the project couldn't be profitable in the absence of offsets, then it's most likely additional. It's pretty easy to spot non-profitable projects - they're the ones that aren't producing electricity.
Sorry not sufficient:
There are a number of landfills in South Africa which local people were lobbying to shut down, and which carbon credits played a large role in keeping open. Without these carbon credits, loss of landfill might have resulted in waste reduction programs, along with concentration of remaining wastes in landfills where methane burning would have been economical on its own. It is really ironic that you give landfill methane as an example of additionality. Landfills in the Durban region of South Africa are considered classic examples of lack of additionality.
Neither is the regulatory test as simple as you seem to think. Because methane emissions contribute so greatly to air pollution, the standards for them tend to tighten over time. But if you can paid for eliminating pollution, that is a strong incentive to stop regulating it.
As the Standford study I posted earlier says:
http://iis-db.stanford.edu/pubs/21211/Wara_CDM.pdf
>The CDM fails as a market because it has animated accounting tricks that allow participants to manufacture CERs at little or no cost. It fails as a subsidy because the developed world has had to purchase these emissions reductions at an extremely high premium that bears no relation to their cost. The CDM, even as it is supplying CERs to developed world parties to the Kyoto Protocol at prices that are less than they would otherwise have to pay, is an excessive subsidy that represents a massive waste of developed world resources.
Adam Stein also says:
>The bigger point is that a lot of thinking has been put into how to address issues such as additionality, carbon pricing, etc. Of course, that doesn't mean the questions have been fully resolved - they haven't - but to read these out-of-hand dismissals of carbon offsets as a scam, you'd think no one had ever thought about these issues before.
OK I actually usually say "either a scam or an honest error". But if I left out the phrase "honest error" some place you have me for intemperate language - not that you are sticking to the most temperate language yourself. What I'm presenting are not just my views, but the views of a large minority - many of them in the Southern hemisphere where they have witnessed real suffering by real people when CDM and offset trading went wrong.
>but I just can't parse this. Carbon markets have a supply curve and a demand curve, much like any other other market. Where the curves intersect, you get a carbon price. That carbon price contains useful information about the cost of carbon reductions, which businesses, governments, and project developers can use to make judgments about how to allocate their money for future carbon reductions.
There is an old joke: I think maybe Mark Twain invented it. It is very difficult to explain something to a man whose job depends on not understanding it.
Information doesn't come from the magic intersection of supply and demand. It comes from that intersection representing real phenomena in the real world. So it is important what those symbols we call money represent. There are several informational problems with carbon offsets vs. a carbon tax.
One is the additionality problem we have been discussing. You have yet to make a case for anything like certainty in additionality -even in your hand-picked example of landfill methane. If you can't make even one case for one type of offset with 100% additionality, your argument on that does not look good. If people are paying for additionality, and you don't know whether you have additionality or not then you have no real world feedback mechansim. If someone sells oranges and they taste awful, after a while the price will drop. If you sell an emission credit and no one can ever detect that it was not additional, then the buyer won't know to stop buying it. In this case, the supply demand curve represents PR value, not price to lower carbon emissions. That is the primary informational problem. You don't have feedback on whether your carbon credit actually represents a reduction in carbon emissions.
The second is accumulation of measuring error. You could add cup of milk to a recipe by pouring the milk into a measuring cup once, or by pouring it into a teaspoon 48 times. There is measuring error in either case, but greater measuring error in the second than in the first.
Carbon emissions are much harder to measure milk. For example fossil fuels are hetrogenous in terms of carbon per gallon for oil, or energy per pound for coal. (Natural gas has less variation, but still some.) While it is not inherent in permitting, actual emissions trading systems measure pretty far downstream - at factory and power plant sites. As in the case of the teaspoon vs. the measuring cup, you are accumulating errors - much greater errors than in the cooking example. Also when you apply an offset to an emission you are combining two sets of errors.
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Jangal Khubeh Posted 10:19 am
30 Jan 2007
Forest offsets
My grandmother used to make a wonderful kerfluffle, from a recipe she brought from the Old Country. Aah, Grandma's Kerfluffle...
Even though it seems no one but me is interested in forests, I will assert that forest-based offsets have very significant potential to help with global warming solutions. Huge, in fact.
Did you know, that North American forests currently store only a small fraction of the carbon they stored before European occupation began? These forests can again store massively greater amounts of carbon. I am talking about standing forests that pre-date the global warming problem and that not even Ken Caldeira is proposing we cut down.
Since they pre-date global warming, and Dr. Caldeira agrees we shouldn't cut them down (because of their many lovely and useful properties), they are effectively albedo-neutral and we should be thinking of ways for landowners to store more carbon in them, no? Wasteful and foolish not to, don't you think?
If only we could measure the forests' storage of carbon...guess what, we can! Quite well!
OK, well, too bad we don't have a crystal ball or really powerful truth serum in order to divine a producer's motivations and make absolutely sure there's no rewards for the undeserving...guess what, we don't need one!
The proper way to measure additionality is not to say, simplistically, that nothing should count that can not be proven to have been done solely because of the offset incentive. That speculates about motivations for no reason. The better way to define additionality is to carefully define prevailing business-as-usual conditions in a given region and to reward those who exceed the baseline. That is what is known as a performance standard. Those who are opposed to performance standards seem obsessed with eliminating excess rewards for a few, at the risk of removing a powerful incentive for the many.
So, to return to trees, trees store more carbon as they get bigger and older, and our North American forests can store massively larger amounts in some cases than they do presently. But they don't, presently, because of financial pressures that shorten rotations and simplify structures. So, incentives are needed to encourage private landowners to grow bigger trees, manage less intensively, and therefore store more carbon. Forest carbon offsets, in the form of avoided or reduced timber harvest, in perpetuity. (Please don't get hung up on senescence- I'm not talking about specific trees, but the forest inventory over time, which in many forests can continue to rise for much longer than you'll be on this planet, while individual trees are still being harvested). You thereby get not only a small part of the solution for global warming, but you also protect nature and put more money in the pockets of the wonderful stewards of our nation's forests (that crook Charlie Hurwitz excepted).
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Bart Anderson Posted 10:27 am
30 Jan 2007
Brain ... getting ... overloaded
Lots of good stuff here, now.
But for those of us with IQ < 190, would it be possible to have this info in a more structured form? For example, like the Guide to GW Skeptics that Gar wrote.
Since Gar and Adam seem to be the heavy hitters here, perhaps something like:
- Points of agreement
- Points of partial agreement (with short summary of each side)
- Points of total disagreement.
Or perhaps a list from Gar of "If these things were done, I would sign on"For some reason, I don't think the sides are as far apart as it seems at first.
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Gar Lipow Posted 11:34 am
30 Jan 2007
Forest storage
>If only we could measure the forests' storage of carbon...guess what, we can! Quite well!
Most of this takes place in nations without carbon caps. So if there is no limit to the amount of carbon they can produce performance standards get harder to set.
Also, unfortunately, when it comes to forest storage it is not just a matter of getting a convincing business as usual scenario. Forests t hat do store carbon vary a lot from year to year. They vary a lot from acre to acre. And guess what? actual measurement is pretty iffy in a case like this. So you have to depend on averages.
Does this mean that you can't provide incentives for various types of sequestration (including tree sequwestration)? Of course not! It means that any subsidies for things of this sort should not be in the form of credits. If you want to encourage people to grow more trees in an area set up those performance standards and offer cash! That way they don't have to generate their own cash by selling doubtful carbon credits to others as permission not keep burning fossil fuels. Support PV, and wind generators and carbon conserving agriculture, and carbon conserving siva culture. If done right emissions reductions from these thing are real. But you still don't know how great that emission reduction was. So don't depend on knowing the magnitude. If you can determine that something is worthwhile even if you can't put an exact number on , provide the incentive in some form other than permission for someone else to burn emit carbon.
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Gar Lipow Posted 11:42 am
30 Jan 2007
Brain Overload
Yeah - I responded quickly, cause I did not want to let too much of this sit there unanswered. Sometime in the forseeable future I will do a reply post, where I can answer more quickly. But I think one of the keys is what I answered above. Offset schemes vary. Some are truly awful consisting of supporting stuff like the Ugandan plantation I described, or buying up spare credits where coal utilities were granted more credits than they needed based on too high projected demand. Some support decent things. But even the latter don't know how much emissions they have reduced, even if they think they do.
I would like to see all the voluntary offset schemes converted into certificates that don't claim to offset X emissions, but simply state what they help support. You could still use "offset" guesses as the best (if not very good) way to compare one such scheme to another, but you would name the unit something else so as not to confuse it with an actual hard number to apply GHG emitted.
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atreyger Posted 1:53 pm
30 Jan 2007
Forests...
I like this topic because this is what I think about, so thank you, Jangal, for bringing it back up. I don't feel like writing a lot, so I would like to suggest that the primary reason that carbon offsets are not properly implemented with forestry projects is because foresters are not contacted. I would think that there are zero foresters who are concerned with this issue right now in the NE. They do their best and do a pretty good job (the ones that are standing by their ethics), but communication and incentives for landowners and agencies are required to make this work.
There needs to be a unified forest policy in the United States and other forestes countries, which would promote carbon sequestration in forest management (let's start with having forest management).
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Adam Stein Posted 3:39 pm
30 Jan 2007
Reaching
I'm sorry, Gar, but the kitchen sink approach still isn't adding up to much.
No, your objection is not to A or B. Your objection is to carbon markets. That is very clear from your numerous posts on the topic. Tree-planting projects are simply a convenient way to bash carbon trading. We all agree that there are problems with tree-planting projects, but to me that isn't a fundamental problem. I simply don't purchase tree-planting offsets. And because forestry makes up only a tiny portion of real-world projects, I can't make out why they're so crucial to the validity of carbon trading in the abstract.
If your objection were to A or B, you might advocate stricter guidelines for tree-planting projects or removing them from offset regimes altogether. But it's more convenient to elide implementation problems - which everyone admits are numerous - with fundamental problems.
This is your refutation of the additionality of landfill gas flaring projects? If offsets didn't exist, some landfills in South Africa might have been shut down, which might have led to waste reduction programs, and also might have led to a situation in which more economically viable flaring programs rose up in their place?
If this isn't reaching, I don't know what is. Carbon offsets are the only value stream for landfill gas flaring projects. This is as close to 100% additionality as one could hope for. A counterfactual universe in which alternative value streams spring up to replace carbon offsets doesn't count as a refutation. (Question: why aren't those value streams spontaneously springing up now all over South Africa?)
Your comments also betray a misunderstanding of additionality. There is no such thing as an ironclad additionality test, and some non-additional projects are always going to slip through even the best screen. They goal of well-designed additionality tests is to favor additional projects without being so onerous as to restrict any projects from ever happening. Asking for "certainty in additionality" or "100% additionality" is missing the point.
There's a further point here which might seem minor but does have some relevance: TerraPass doesn't purchase offsets from South African landfills. We purchase from US landfills that we're quite sure local villages didn't lobby to close down. The issue, again, is whether the problems you raise are implementation-specific or fundamental to carbon trading.
The CDM absolutely is flawed. But Kyoto expires in 2012 and the US is only just starting to draw up carbon legislation. Can we learn from the mistakes of the CDM? I believe absolutely we can, and one of our goals at TerraPass is to make sure that future markets do draw on the lessons of the past.
I understand better now what you're saying. To paraphrase: if additionality doesn't exist and carbon reductions are impossible to measure, then offsets don't have any meaningful value and can't be priced correctly.
On this we can agree. If either of those two conditions are true, then offsets have no value. Of course, it is my strong hope and belief that neither of those conditions is true, because the converse statement is quite joyful: if additionality is real and carbon reductions measurable, then offsets could be one of the most powerful tools we have to fight climate change.
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Gar Lipow Posted 12:21 am
31 Jan 2007
Rebutting your arguments rather than some other
To show how unreasonable it is to concentrate on CDM flaws Adam says:
>The CDM absolutely is flawed. But Kyoto expires in 2012 and the US is only just starting to draw up carbon legislation. Can we learn from the mistakes of the CDM?
Only a damn dirty hippie would criticise CDM rather than trying to fix it:
Except that Adam origionally said:
>
>by necessity CDM projects always reduce carbon emissions from what would have happened otherwise.
Gee, why would anyone take the time to point out flaws in CDM in response to this.
Similarly Adam says:
>Your comments also betray a misunderstanding of additionality. There is no such thing as an ironclad additionality test, and some iron-additional projects are always going to slip through even the best screen.
But originally Adam said:
>Sure, it might be possible, for example, to calculate the amount of super-regulatory landfill methane flaring that would occur in the absence of carbon offsets (none).
No one could take that for a claim of 100% additionality now could they? Adam objects that I rebutted what he said, rather than some other argument made by somebody else.
This is where the objection of offsets merges with the objection to carbon trading. Providing incentives to reduce carbon use without very precise knowledge of how much you are reducing would be fine. (That is why I support carbon taxes, regulations, subsidies, public works and various types of subsidy.) The problem occurs when you take a very imprecise result in one place, put an exact number on it, and allow someone to produce a very exact amount of emission because of that number.
I will note that Adam spends time over and over again on personal attacks against me, while handwaving much of what I say. This is classic ad hominem, using attacks on the messenger as a substitute for rebutting the message. This is often a sign of lack of faith in the strength of the argument. I dismissed it in the original post as a side effect of passion, but I notice that it does not stop,even when another commenter pointed it out - so I have to conclude it is deliberate.
Just for the record - I have never hidden that my primary problem is with carbon trading. For example:
http://gristmill.grist.org/story/2006/12/3/13597/2556
But that doesn't mean there cannot be particular objections A and B to a particular practice over and above the general objections. Very roughly:
1)Carbon trading in general is flawed
2)Offsets produced by cap n. trade are worse than offsets produced by baseline and trade.
3)Project based offsets are worse than offsets in general
4)CDM is a particularly egregious form of project based offset.
5)Tree plantations are particularly egregious forms of CDM
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atreyger Posted 2:15 am
31 Jan 2007
Gar
A) Carbon plantations which so far have proven evil things in terms of human rights affects and to B) counting offsets from trees - which whether or not they sequester carbon (and usually outside they tropics they apparently don't) are very hard to measure in terms of what they sequester.
I agree with Adam Stein that you are over-reaching your argument. There are several aspects I would prefer not getting into because of personal reservations and lack of time, specifically carbon trading and markets. I do think that there is potential in these aspects, and I do not see you providing any solution, just armchair criticism of people who are working on these issues.
To the point of the quotation: carbon plantations, in some cases, have been socially unacceptable and somewhat undesirable. This is not a reflection on the nature of carbon plantations, but on the companies' social vs. profit-driven agenda. If you want to criticize the companies for their poor practices, go right ahead. You are currently arguing the wrong angle.
I think what you meant to say for the second bullet was: 'We can tell how much carbon the trees in the northern latitudes are sequestering, but at the current time, it is difficult to say exactly how much of an influence this is having on the climate'.
Clearly you do not know much about forest mensuration, silviculture and plant ecology. Please stay out of arguments that you know next to nothing about, i.e. trees. It is very possible to know the amount of carbon stored in trees, especially in the northern hemisphere where there is a long-standing forestry tradition and lots of long-term research established and maintained. Any profesional forester, let alone a researcher, can let you know the amount of carbon currently present in standing biomass and create a good projection of how much will be stored in the forests and taken out with harvests.
Personally, I am not as familiar with tropical forestry, and I assume that carbon accounting will be more difficult, but I have no specific knowledge of this. I know several people that are working on this topic right now, and I believe that it is still a work in progress.
What I think is currently important is the climatic aspect of re-planting or maintaining forests in the north, specifically the amount of influence that albedo exerts vs. evapotranspirative cooling vs. carbon sequestration. This appears to be a very 'hot' area, into which I am hoping to shift my research at this moment, provided funding opportunities.
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sunflower Posted 2:49 am
31 Jan 2007
Reflecting on trees
I burned off the tops of trees with concentrated sunlight and found much albedo variance between species, tree health, and time of year (sap running). Doug Fir was less able to reflect than was White Fir. I wonder if referenced grass albedo is dry brown grass or wet green grass.
http://people.linux-gull.ch/rossen/solar/deathray.html
As per fiber carbon storage, lumber is fine provided it is continually recycled and isolated from rot, or used as a fuel source to displace fossil fuels. Much of lumber trees are left in the forest and that carbon is released. Making wood stove pellets would use that carbon to displace fossil carbon. Just planting trees and then allowing the same to eventually die and rot does very little or nothing to sequester additional carbon.
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Jangal Khubeh Posted 3:15 am
31 Jan 2007
Trees
Thanks to Atreyger for your comments about trees. I have also been disturbed by Gar's loose treatment of the issue. I agree, Gar does not seem to understand forestry yet seems to feel free making sweeping statements about it. That makes me wonder about Gar's statements about other sectors in which I do not have expertise.
Atreyger, California has done a lot of work on how to incorporate real foresters into the policy-making process. It isn't perfect, but perhaps this experience could be useful in the northeast. Check out: http://www.climateregistry.org/PROTOCOLS/FP/. Mark Harmon at Oregon State University does good work on this too.
People, for the record,
- It is NOT a mystery as to how to measure forest inventories and above and below-ground stores of carbon. Just because there is flux does not mean you can't measure total stores to a reasonable degree; you can also craft an offset system to discount or disallow stores that are more uncertain, or which are onerous to measure regularly. Setting baselines- not difficult scientifically, but potentially difficult to agree on politically.
- Tree plantations are not the same as managed natural forests. In a sustainably managed forest, you can continue to harvest trees while actually increasing forest inventory and carbon stores. How? Harvest at a rate less than growth, and leave down woody debris, among other things. Many forest types can continue to store additional carbon for many hundreds of years, but the economically optimal rotation length is only 40-60 years. If you can find financial incentives for lengthening rotation length, or encouraging uneven-aged management that leaves more volume in perpetuity, then you can store more carbon than would otherwise have been practically possible. It is measurable. It is additional. It is a good idea.
Gar, your focus on tough solutions to global warming is hugely appreciated, and we are for sure on the same side, but please try to use language more carefully and stop bashing well-intentioned people working on legitimate solutions because you happen to prefer other parts of the puzzle. The problem of global warming is so serious that we need all the solutions we can get.Permalink
Gar Lipow Posted 5:14 am
31 Jan 2007
Trees:
Atregar
>Please stay out of arguments that you know next to nothing about, i.e. trees. It is very possible to know the amount of carbon stored in trees, especially in the northern hemisphere where there is a long-standing forestry tradition and lots of long-term research established and maintained. Any profesional forester, let alone a researcher, can let you know the amount of carbon currently present in standing biomass and create a good projection of how much will be stored in the forests and taken out with harvests.
Carbon stored BY trees includes more than carbon installed in trees. Lets look at what a couple of other experts say on the topic:
Larry Lohman, author of Fate of the Forests:
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Gar Lipow Posted 5:16 am
31 Jan 2007
Obviously that was one expert
The other person I was about to quote was Jutta Kill, but since she said essentially the same thing, I'm going to spare the bandwidth.
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Jangal Khubeh Posted 5:35 am
31 Jan 2007
Gobbledygook
Gobbledygook, another one's of Grandma's wonderful treats from the Old Country. Yum!
What exactly are Larry Lohman's credentials for being considered an "expert" on forestry? That he's an activist? That he wrote a book? Does he manage forests?
I noticed a lot of big words and sweeping statements in the quote, but actually what he is saying is not accurate, from a practical standpoint. What matters, in terms of measuring forest carbon for offset purposes, is not the behavior of every last molecule of carbon at 3am on the north side of a black spruce in a ravine on the western slope 5 miles from the coast on a slightly windy day in March...What matters is the larger amounts, for which measurement is significantly more straightforward.
Do you honestly believe that billions of dollars are invested in timberland without foresters knowing how to measure how much wood they can produce and how that is affected by management and other inputs?
That reminds me of the time more than ten years ago when I was showing someone around my totally solar powered home and talking about how we didn't have to skimp too much on amenities, and he insisted that solar power can't work because of too much moisture and other particles in the atmosphere limiting the poor well-intentioned photons, and he knew this because he was an ENGINEER. Theory getting in the way of being able to observe reality.
Gar, foresters CAN measure what's going on in forests. In fact, they do! And they don't have to count every last tree, and root, and piece of duff and humus, at each moment continuously, to 5 decimal places, to do it. It's called statistical sampling. If you don't like that degree of certainty for the small stuff, then you can just say only the big pools or the pools that can be measured well should get full credit.
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Gar Lipow Posted 6:07 am
31 Jan 2007
Measuring
Many of these problems are not solved by sampling:
1) - Maybe the most significant is your base case - how to hell do you know what the forest would have sequestered if left to itself.
2)Methane. That is not trival. You sample at interveral. So have carbon at time A and Carbon at time B. There have been fluctations in between, that produced leaves and bark that rotted on the ground. Some of that turn into CO2 - which is covered in your inventory. Buts some of it turned into methane, and your inventories don't tell you that. Nor can methane sampling solve that problem. (Not that many people are doing it.) Methane production varies a lot over time. So samples at points in time months apart won't tell you much. You could do continous monitoring instead of interval monitoring - but that really is expensive.
3)Carbon sampling can detect part of the carbon in soils. But there are new studies constantly on carbon fluxes. So our understanding of carbon storage in soils is nowhere near that of carbon in plants - because it is not as straighforward. Estimate the biomass, use knowledge of the plant or samplign to estimate carbon stored per kilogram and you have a pretty good gross number. Soil estimatation is not that straighforward. And when you consider methane and other fluxes even net sequestration in the plants themselves is not that straightfoward.
4) Soil carbon is extremely heterogeneous. That affects the sampling process. This is trivial compared to the other points I mentioned but still important because these errors get multiplied by the other factors.
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Jangal Khubeh Posted 6:53 am
31 Jan 2007
measuring
As Atreyger and I have both said, forest mensuration in North America is very well-developed, and in other countries as well.
Baseline: You make a projection of where carbon storage will be over a period, say 50 years, based on where it is now, and expected management and growth rates, etc. Expected growth rates depend on site factors such as species, soil, climate, etc. and management factors such as thinning etc., and are not a total mystery as some would suggest. Your management assumptions for the baseline would be set based on prevailing practices for that region and forest type, and very importantly, what is allowable under law. You can set that baseline tighter or looser, but it's important to make sure it isn't so tight or onerous that it's not actually an incentive to participate, and not so loose that it credits normal activity by the average actor.
The increase is measured by comparing the baseline storage to storage projected under a more conservative case, call it the "offset case".
You can then go back and check storage in the "offset case" against your projections at periodic intervals. Ideally, you only "bank" and sell offsets as they actually accrue, rather than selling futures. Just my opinion.
As to methane, are you suggesting that forests are generally net emitters of carbon, or that methane release via decay is very significant compared to sequestration through growth?
I think we can both agree that trees get bigger by storing carbon dioxide, and that a bigger tree contains more carbon than a smaller tree of the same species, and that it would be worthwhile to encourage landowners to grow bigger trees and try to store more carbon than they currently do, because that would benefit our poor little overworked climate. Yes? I think we could further both agree on my earlier post that many forests in North America are harvested WAY before their carbon storage potential is reached (think NW coastal rainforests, for example), and that such forests might be good candidates for projects to encourage greater carbon storage. Yes? Finally, I think you would agree that we can quantify and certify what we think is sufficiently measurable, and discount or disqualify what we think is not sufficiently measurable, and in so doing we can capture the major part of the carbon balance and not have to throw the baby out with the bathwater. I can sense you're feeling agreeable on that, yes? If we can agree on all that, then I am confident that we can work out the details of how to make sure there are not perverse outcomes or benefits to the undeserving and how to protect the consumer so they know they're consistently buying what they think they are.
Then we can be done, and move on. Great!
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