Photo courtesy of Cal West/flickr.

DURBAN, South Africa (9 December, 2011)_California, which recently signed legislation to allow its businesses to offset their emissions, is working with the Governors’ Climate and Forests Task Force (GCF) to create the necessary requirements and institutions to include REDD+ carbon credits in the state’s compliance market.

Carbon credits in California’s emissions trading scheme — which will come into effect in 2013 — will have to meet the requirements for being “additional, enforceable, and verified,” said Mary Nichols, Chairman of the California Air Resources Board, on the sidelines of the UN climate talks in Durban this week.

California may allow companies to buy carbon credits to offset part of their emissions from outside the US as early as 2015. The move could allow more funds to flow into Reducing Emissions from Deforestation and forest Degradation (REDD+), a mechanism which hopes to compensate developing countries for keeping their forests by putting a monetary value on the carbon stored in trees.

“We have set up a ‘REDD Offset Working Group’ in partnership between Acre in Brazil, and Chiapas in Mexico, to come up with a set of rules that California could incorporate within its own program, that would also be the foundation for any REDD offset trading in the future,” said Anthony Brunello of the GCF, who is also the former Deputy Secretary for Climate Change at the California Natural Resource Agency, at a recent conference.

The GCF is a collection of 16 states and provinces in countries  such as the United States, Brazil, Indonesia, Nigeria, Mexico, and Peru, which work together to successfully integrate REDD+ programs and other forest carbon activities into emerging greenhouse gas compliance regimes.

According to the Air Resources Board, California produced 477.7 million tonnes of carbon emissions in 2008 — two percent of global greenhouse gas emissions.

California’s Cap and Trade program will see a cap on the total amount of carbon emissions produced by its main industries, such as oil and electricity. The state hopes to meet its long-term target to reduce emissions to 1990 levels by 2020. The majority of these reductions will come from direct regulatory measures, such as improving energy efficiency in homes and businesses, with only 20 percent from the Cap and Trade program.

“California recognises that the Cap and Trade program alone will not address the wider issues of global warming. We have an important role to play in working with other countries to reduce deforestation, which is why we are putting the provisions in place that would allow REDD+ offsets to be purchased in our programs, ” said Nichols.

There is increasing recognition of the role that the private sector could play in investing in REDD+ programs. However, with many uncertainties remaining over future finance, the verification of programs to ensure quality, and how REDD will work on the ground, the risk in investment is still too high.

This looks set to change as confidence in the verification of offsets grows, says Nichols. But in order for that to happen, the system will need to iron out existing problems to ensure a robust system is in place.

“At the moment, we are looking to ensure that every element of the Cap and Trade program is as efficient and credible as possible,” she said.

The impact of cap and trade programs as a means to reduce emissions has often come under scrutiny from environmentalists and climate experts who fear that allowing companies to simply offset their emissions does not incentivise them to make genuine reductions in emissions through sustainable and environmentally-friendly practices. Supporters of REDD have also criticised cap and trade for not tackling the main drivers of deforestation in developing countries.

However, Nichols acknowledges that much more needs to be done to ensure that the Cap and Trade program is part of wider initiatives to reduce overall deforestation.

“We are a big state and large economy, and seen as a leader in tackling environmental issues, but we would not be enough to sustain some of the forestry projects we are talking about with some of our colleagues from Canada, Brazil, and Mexico. It will take a much larger program, with multiple benefits, in order to motivate different stakeholders. We know that offsets alone will not do that.”

However, she is quick to note that until California starts to trade in offsets outside of the US, it is already doing its bit to protect the forest.

“California’s forests also face threats from expanding development, so we actually have a forest offset protocol in our cap and trade rule that is directed at domestic offsets for the prevention of deforestation and for reforestation, which is now turning out to be a fairly robust offset program”.

Mary Nichols, Chair of the California Air Resources Board, talking to CIFOR about California’s Cap and Trade program at Forest Day 5. More videos from Forest Day 5