California Ponders Expanding Cap and Trade to Brazil

[U]nder a plan state air regulators are considering, industries that emit greenhouse gas pollution in California could form multimillion dollar relationships with indigenous communities ... by paying them to preserve trees deep in the Amazon rainforest of Brazil.

It’s part of a proposal to expand California’s cap and trade system, which is designed to encourage companies to reduce climate-warming pollution by making them pay for it.  Businesses can comply, in part, by buying credits to support environmental projects that offset their carbon emissions in California.

Oil companies and other polluting industries in California have been buying offset credits for projects across the United States that preserve forestland, capture methane from pigs and cows and destroy gases that deplete the ozone layer.  Now state officials are evaluating whether to expand cap and trade by including offsets for preserving forest in Brazil.  A decision is expected next year.

The proposal has touched off a debate that is dividing environmental advocates as Gov. Jerry Brown works to build a legacy of action combatting climate change in his fourth and final term as governor.

Supporters say preventing deforestation in tropical regions will have huge climate benefits for the entire globe while keeping costs down for Californians.  Critics say the plan doesn’t do enough to fight pollution in California and puts the state at risk of facilitating business with unstable regimes.  Brown, who was heckled by opponents after meeting with governors of tropical rainforest regions last year, has not yet taken a position.

“It’s a very fascinating political moment,” said Daniel Nepstad, an ecologist who heads the Earth Innovation Institute, a major proponent of the plan.

“I’m confident that when the governor sees through some of the political risk issues that he will make this happen.  It is such a big positive thing to do.” 

Nepstad’s group, with funding from the Gordon and Betty Moore Foundation, brought Kuntanawa and five other indigenous leaders from tropical regions of Peru, Ecuador, Mexico and Panama to Sacramento recently.  They met with government officials to express support for the proposal and describe how their communities benefit from forest preservation.

“When we look at the forest we don’t just look at it as carbon,” Kuntanawa said through an interpreter at a meeting organized by the Air Resources Board.

Indigenous people in his state of Acre, Brazil, harvest nuts and tap rubber from the trees.  Participation in California’s cap and trade market would provide them with a huge boon – likely between $50 million and $200 million from 2017 to 2020, Nepstad said.

That sounds like a lot of money moving out of the California economy and into the Amazon rainforests.  But for businesses that must participate in cap and trade, it’s a relatively cheap option. Which is why California’s oil industry supports the proposal to create offset credits in Brazil.

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