A New Study Casts Doubt on California Compliance Credits

We were sad to see this latest Nature paper describing evidently little impact of the California Air Resource Board’s forest carbon projects on disturbance rates: Little evidence of management change in California’s forest offset program

The study examined projects enrolled in the CARB compliance program and compared their deforestation rates before and after. It found little difference.

We’re sad, but not surprised. Even though Verra’s REDD+ program has gotten the lion’s share of the public flack over the past six months, we see problems in many other nature-based protocols. The CARB protocol certainly fairs better than Verra’s in some ways – there do seem to be a decent chunk of high quality CARB projects, such as those taking place on historically degraded Native American lands. Nevertheless, we do see manipulation pretty frequently in this program. Here are the three problems that we see the most:

1. Baselines, Baselines, Baselines. The CARB protocol creates a baseline by essentially assuming that the forest will just reach the regional average carbon stock in the absence of intervention (this is a slight simplification). In some ways that’s a lot better than other protocols that allow you to weave elaborate fairy tales about apocalyptic clearcuts.

Unfortunately, people quickly realized that if there are many different forest types in their region, then by placing their projects in the most productive forest type, they could get more credits. Likewise, they could enroll forests that are more productive than the average and basically not change their normal behavior. As a consequence, there are a large number of CARB projects that seem to just be timber companies doing what they normally do.

That’s the thing about the average: 50% of the forests are going to be beneath that number and hence potentially unfairly excluded from the program just because they’re in a drier/colder area. On the other hand, 50% of the forests are going to be above that number and get too many credits! This is a cautionary tale of what happens when we try to oversimplify things (cautionary for Verra’s nested baseline program).

A figure from a 2021 CarbonPlan report showing how many CARB projects are clustered towards the edges of their ecoregion in sites that are more productive forests than average.

2. The CARB protocol more so than any other that we’ve observed is susceptible to gerrymandering. This means that people are enrolling tiny slivers of land that they had never intended to harvest, or just simply weren’t capable of. This includes buffer areas around water bodies, steep ravines, tiny islands, etc… In the worst cases we’ve seen “project activity areas'' be snaked around individual big trees.
People do this for two reasons. First, to get credits for doing nothing – protecting trees that are in no need of protection. Second, to drive their average carbon stock up above the regional average. This strategy plays into how the baseline works: if the forest is starting with less carbon than the average, it doesn’t get any credits. By including tiny slivers of high-carbon areas, they can eek their average carbon stock above the cutoff line. What’s the average carbon per hectare of a sliver of project area the size of a house that only includes a handful of huge trees? Thousands of tonnes!

The ACR Shaan project has gerrymandered its project area to an extreme degree while clearcutting all the rest.

3. Additionality and justification. For some bizarre reason, no American IFM protocol has sufficiently firm checks on whether or not the forest was really at risk. Nobody just looks at the 40 year management history of the forest and says:

“Well, these guys have never harvested their trees in the past, so they’re not going to do it now…”

As a result, there are some CARB projects that appear to be taking place on land that’s already protected. Little land-trusts and even big non-profits have enrolled land that they’ve been managing peacefully for decades, making the claim in their documentation that if not for the project, they would have cut the trees down to the regional average stocking.

On the other hand, there are a lot of CARB projects sponsored by conservation organizations that correspond with the purchase of the land. And that’s perfectly okay in our book. That’s land that was historically degraded, and the profit from the credits is being used to place it into long-term conservation. Exactly what these programs are intended for.

The Cook’s Branch Conservancy has a 33 year history of successful forest conservation, and claims that clearcuts were imminent without the project. Source - NPR station KUT Austin.

So, after all that, where are we left? Renoster’s own analysis indicates that CARB projects are flawed, but still more successful on average than many voluntary protocols. Some simple tweaks would fix the system (such as historical harvest checks and a smarter baseline).
Here’s one final interesting note: Renoster as a review agency has never once been commercially commissioned to review a CARB compliance project. Why is that? One hypothesis is that there’s less demand for quality in the compliance markets. If the government is forcing you to check a box, why should you care if the offsets are real?

This has some interesting implications. It means that compliance programs REALLY need to get their stuff right, because there’s no self-correction mechanism. It also is a strike in favor of the Voluntary Carbon Markets. As flawed as the VCM is, people generally do care at the end of the day if they’re doing this voluntarily. After all the scandals, nobody’s out there buying credits from Kariba or Tumring.

On the other hand, scientists at CarbonPlan and Universities have been raising the alarm about CARB projects for years – to no avail. While Verra rethinks their system, CARB’s last protocol update was 2015. Credits from the worst projects still command a decent premium.

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