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Market cooling

Will Western states and British Columbia knock down global warming by buying and selling carbon?



By Oakley Brooks

High Country News

SINCE THE 1940s, the Collins family has brought tough environmental standards to its 94,000 acres of forestland around Lake Almanor in northeastern California. The family company avoids clear-cutting and concentrates on harvesting dead trees and overstocked stands where trees grow too thickly. The Almanor Forest is a far cry from other working forests — there are simply more trees left growing. In 1993, it became the first North American industrial forest certified by the international Forest Stewardship Council.

With climate change bearing down on the West and the world, forests like the Almanor may gain new value since well-managed forests suck up more greenhouse gases like carbon dioxide than stump-stubbled clear-cuts. "We think we're going to play a role in solving global warming," says Wade Mosby, vice president of the Collins Companies.

But exactly what that role will look like for forests and other carbon dioxide "sinks" remains uncertain, as Western states work on setting up a market-based system to reduce greenhouse gas emissions.

Market-based pollution-control systems, which allow polluters to buy and sell emissions allowances, have proven successful in the past; they're credited with alleviating the acid rain problem in the Eastern United States. Western policymakers hope greenhouse gas exchanges, or "carbon markets," will help reverse global warming more quickly and effectively than traditional regulation by allowing polluters to seek out the cheapest reductions.

"There's no way on God's green Earth you can get the reductions we need using (traditional) regulation," says Winston Hickox, a former head of the California Environmental Protection Agency and chair of Governor Arnold Schwarzenegger's carbon market advisory committee.

Schwarzenegger, a Republican, sees carbon markets as a significant means of reaching the aggressive greenhouse gas reduction targets he set last year. In late February, Oregon, Arizona, New Mexico and Washington agreed to join California in establishing reduction targets and setting up a regional carbon market by August 2008.

Last month, B.C. Premier Gordon Campbell announced that British Columbia had joined the five states in the Western Regional Climate Action Initiative. A release from the premier’s office stated: “The WRCAI is the first step in developing a regional carbon-trading mechanism that can help industry to meet GHG reduction targets at the lowest possible cost.”

The West is following in the footsteps of others, including a European market, the Chicago Climate Exchange — a voluntary market among American corporations and government agencies — and the newly formed Regional Greenhouse Gas Initiative, which includes eight Eastern states.

But today's effort to reduce global warming gases through market systems is far more ambitious than earlier market approaches. Previous systems included only polluters, those companies big and small that contributed to the problem being tackled. But greenhouse gas markets could allow polluters to buy into projects that offset their emissions — such as the Collins Companies' Almanor Forest. And Europe's experience with its first regulated carbon market offers a clear message for the Western states: Without a well-designed system, all the buying and selling of carbon emissions ultimately does nothing more than create an illusion that global warming is being solved.