Thursday, January 7, 2021

These Trees Are Not What They Seem - How the Nature Conservancy, the world’s biggest environmental group, became a dealer of meaningless carbon offsets

At first glance, big corporations appear to be protecting great swaths of U.S. forests in the fight against climate change.

JPMorgan Chase & Co. has paid almost $1 million to preserve forestland in eastern Pennsylvania. Forty miles away, Walt Disney Co. has spent hundreds of thousands to keep the city of Bethlehem, Pa., from aggressively harvesting a forest that surrounds its reservoirs.  Across the state line in New York, investment giant BlackRock Inc. has paid thousands to the city of Albany to refrain from cutting trees around its reservoirs.

... By funding the preservation of carbon-absorbing forests, the companies say, they’re offsetting the carbon-producing impact of their global operations. But in all of those cases, the land was never threatened; the trees were already part of well-preserved forests.... By taking credit for saving well-protected land, these companies are reducing nowhere near the pollution that they claim.

The Nature Conservancy recruits landowners and enrolls its own well-protected properties in carbon-offset projects, which generate credits that give big companies an inexpensive way to claim large emissions reductions. In these transactions, each metric ton of reduced emissions is represented by a financial instrument known as a carbon offset. The corporations buy the offsets, with the money flowing to the landowners and the Conservancy. The corporate buyers then use those credits to subtract an equivalent amount of emissions from their own ledgers.
The market for these credits is booming, according to BloombergNEF.... In the first 10 months of this year, companies used more than 55.1 million carbon credits to offset their emissions (equivalent to the pollution from 12 million cars), a 28% increase from the same period in 2019. While some of these credits are paying for projects that are truly reducing emissions, an unknown number represent inflated claims.

Few have jumped into this growing market with as much zeal as the Nature Conservancy,... protecting more than 125 million acres. Last year its revenue was $932 million, which eclipsed the combined budgets of the country’s next three largest environmental nonprofits.

Danny Cullenward, a lecturer at Stanford and policy director at CarbonPlan, a nonprofit that analyzes climate solutions says.if the Conservancy is enrolling landowners who had no intention of cutting their trees ... “they’re engaged in the business of creating fake carbon offsets.”

The Conservancy defends its carbon-offset projects, saying that all adhere to peer-reviewed methodologies developed by independent registries and that each project is validated by third-party auditors.
A forested ridge, 80 miles northwest of Philadelphia, ... claimed as a protectorate of JPMorgan and other corporate patrons, ... generates carbon credits.... These 2,380 acres of trees have absorbed almost a half-million tons of carbon dioxide, storing it in their trunks, stems, and roots. If not for payments for carbon offsets ... This would be jeopardized, according to documents for the project, developed by the Nature Conservancy and Blue Source LLC, a carbon-project development company. Aggressive timber harvesting could “feasibly occur,” the documents say, wiping out about 89% of the living trees in only five years.... The landowner generates hundreds of thousands of carbon offsets—worth millions of dollars—over a two-decade period. JPMorgan has ... acquired more than 96,000 of the offsets, which  ... help erase the emissions from its employees’ air travel.  But this ... ridge wasn’t in peril. Ninety years ago hunters congregated on these mountains each fall to shoot the hawks for sport.  Rosalie Edge, a philanthropist ... acquired the land, hired a warden, and kicked out the hunters in the 1930s. Edge created a nonprofit ... to preserve the forested land as natural habitat for the migrating birds.  The trees have remained untouched for 85 years. Hawk Mountain has become wildly popular with researchers and birdwatchers, with 60,000 visitors each year. The nonprofit has grown into a $3 million organization.... The additional revenue from the carbon-offset program helps them take better care of the land, plant more saplings, and improve the forest’s health.... The project documents show almost all of the credits come from the assumption that the land would have been heavily harvested. However, the nonprofit had no intention to cut down most of its trees.
ACR, like other carbon registries, says it’s impossible to predict how lands will be managed in the future and prefers to compare the forested properties to nearby parcels, including those run by commercial timber harvesters.

... Carbon can gets reduced by spending $200 a ton capturing CO2 from the exhaust of a coal-burning power plant in China or one-tenth that amount planting trees to absorb the gas in Chile.   By allowing companies or governments to pay—and take credit for—cheaper emissions reductions beyond their fence lines, the cost of addressing climate change becomes less formidable. It also allows industries with little flexibility, such as airlines, where cleaner biofuels aren’t yet widely available to power fleets, to start taking action to reduce their net emissions.
Delta Air Lines Inc., for instance, earlier this year vowed to allocate $1 billion over the next decade, much of it on carbon offsets, to zero out the greenhouse gas emissions from its hundreds of aircraft. Royal Dutch Shell Plc says it’s spending $300 million over three years on projects that will eventually generate offsets by increasing the amount of carbon trees and soil absorb. And Microsoft Corp. and Google recently vowed to erase all of the historic carbon emissions from their operations, which will require them to buy millions of offsets (most cost about $8 to $10 per credit).

Some experts say this is just the beginning. Offsets will need to grow by at least fifteenfold if the world is to have any chance of zeroing out all its carbon emissions by 2050, says Mark Carney, special envoy on climate action and finance to the United Nations, who started a task force in September to help boost the credibility and supply of offsets.

Academics have worried for years about the validity of many forest offset projects, because it’s difficult to predict what would have happened without carbon revenue. But some nonforest projects clearly show how offsets can be effective. For instance, Stripe, a San Francisco-based technology company, recently paid $775 per ton to Climeworks AG, a Swiss company that uses renewable geothermal energy to capture CO2 from the air, concentrate it, and store it underground in rock formations. In this case, the carbon payment from Stripe is causing the reduction to happen, because there is no other reason for Climeworks to carry out this expensive process. (It hopes to drive that cost down to $100 to $200 per ton.)
The powerful lure of this new revenue stream, however, has often attracted developers that were already undertaking emissions-reduction projects for other reasons but were craving additional profits. 
When the Kyoto Protocol took effect in 2005, ... it required wealthy countries to reduce their greenhouse gas emissions, and it created a market for buying and selling carbon offsets to lower the cost of hitting these targets. But about two-thirds of offset projects allowed into this market don’t represent true emissions reductions, say academics studying the projects.

Haya, the University of California researcher, interviewed developers of renewable-energy projects in India who were earning money from offsets, a dozen of whom said their projects would have been built with or without the carbon funds. They viewed the offset payments as “cream on the top,”

The questionable quality has created a stigma. California limited the use of offsets in its statewide cap-and-trade system, with polluters allowed to use the credits only for about 4% of their emissions. Some companies, including Capital One Financial Corp. and Lyft Inc., recently announced they will steer away from using offsets to hit their sustainability targets.

... When discussing potential projects, the Conservancy routinely describes natural habitats as “assets,” and its leaders pose questions such as “What rates of return can an investment in nature produce?”

The approach has produced some enormous victories. In 1998 the Nature Conservancy spent $35 million to buy pristine forests surrounding much of the 130-mile upper St. John River in Maine. A decade later it acquired 320,000 acres of forested land in Montana from a timber company before developers could get their hands on it. Each year, the Conservancy spends around $150 million purchasing land or paying for easements that shield it.

But there were also questionable choices. In a series of articles in 2003, the Washington Post revealed the Conservancy was drilling for oil ... on land in Texas inhabited by an endangered prairie chicken....The Conservancy bought land and sold it at a loss to its wealthy donors, who then made a donation to the Conservancy to cover the difference, generating hefty tax write-offs.... After the stories were published, the U.S. Senate Committee on Finance started an investigation, and the nonprofit halted some of the practices.
In 1996 it persuaded American Electric Power Co., a utility in Columbus, Ohio, that was the country’s biggest greenhouse gas polluter at the time, to commit more than $5 million for carbon credits from a rainforest in Bolivia that the nonprofit was helping to preserve.

In the beginning the nonprofit was strict about carbon accounting, making it clear it wouldn’t be an enabler for credits that weren’t actually creating emissions reductions.... The nonprofit’s conservative approach to carbon accounting was short-lived. 

A decade ago the Conservancy began pitching municipalities ... carbon-offset deals to preserve forested lands around their drinking-water reservoirs. Its first such deal, in 2011, was with Bethlehem, which owns two reservoirs ... surrounded by 22,000 acres of forests. ... Most local governments protect the trees around reservoirs to guard their water quality; it was highly unlikely these cities would aggressively cut down trees. In the two decades before Bethlehem signed its contract, each year it harvested about 70 acres, or 0.4% of its watershed land .... Albany’s forest plans show the watershed has not experienced any harvesting for “nearly two decades.” But the offset projects say that ... about 2/3 of Bethlehem’s trees and almost 90% of Albany’s trees would have been harvested within a decade. City officials in Albany and Bethlehem both say it’s unlikely....

These aggressive calculations generated an enormous stockpile of lucrative offsets. Bethlehem has received $1.2 million over the past eight years from its offsets, which have been acquired by Chevrolet and Disney. The funds have helped pay for upgrades to water infrastructure, as well as a security guard to deter illegal dumping on the land.... While all of that may be useful, the corporate money has done little to reduce carbon dioxide in the atmosphere.  The Nature Conservancy also takes a cut. In a similar contract that it signed last year with the city of Port Jervis, N.Y., the city gets 60% of the net proceeds from the carbon credits, and the Conservancy gets the rest. Over the first decade of that contract, the nonprofit expects to make $365,000.

The Conservancy defends the deals. As with Hawk Mountain, the agreements require municipalities to put an easement on the lands. In Bethlehem, the easement protects against development or aggressive harvesting for 60 years.
Companies participating in the Nature Conservancy’s offset program are turning their environmental performances into the stuff of legends. Disney says it’s cut its emissions almost in half by purchasing offsets.

There are four major online registries where corporations go to buy offsets. These registries create methodologies outlining rules that offset projects have to follow. Once a project is set up, a third-party verifier must confirm that it follows these rules. Offsets can be sold only when the verifier has signed off. But there are gaping loopholes that can let in programs that clearly don’t represent real emissions reductions. ... Third-party verifiers examine only whether a project follows the methodology’s rules, not whether it’s at all plausible that, say, a sanctuary would harvest 89% of its trees in five years.
By Ben Elgin
December 9, 2020

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