The New Carbon Cycle

Bi-Partisan Western Governors Call for Energy and Climate Legislation

The Western Governors Association (WGA) sent a letter to President-elect Barack Obama, urging swift action in adopting and implementing a national energy plan that would transform the country's energy infrastructure and economy while reducing greenhouse gas emissions. The group of 19 Western governors from both political parties call for near-zero greenhouse gas emissions from new coal-fired electricity generation in 10 years and from existing generation no later than 2030. The bi-partisan group of governors called on President-Elect Obama to act within the first 100 days of his administration.

The organization is led by Utah Governor Jon M. Huntsman, Jr., Chairman, a Republican, and Montana Governor Brian Schweitzer, Vice Chairman, a Democrat. On Nov. 21, Huntsman and Schweitzer met with John Podesta, co-chairman of Obama's transition team, to promote the WGA proposal.

"The transformation we are talking about is broad based and will require new policies, incentives, market mechanisms and private-public partnerships to be in place by the end of next year," Huntsman said. "We plan to work with the new administration and Congress in addressing the multitude of energy challenges ahead."

"Western states are the country's energy breadbasket, but energy efficiency has also got to play a much bigger role," said Schweitzer. "That includes everything from manufacturing more fuel-efficient vehicles to changing regulatory structures so they reward utilities for achieving reduced energy usage among their customers."

The governors stated that a national energy policy must promote energy efficiency and reduce greenhouse gas emissions on a scale necessary to contribute to climate stabilization. They state the position that the Obama administration's energy/climate policy must maximize the economic development opportunities offered by clean energy; ensure energy costs are affordable and support a sustainable, growing economy. They urge the incoming administration to increase the proportion of energy supplies that come from domestic resources and friendly trading partners; and minimize adverse environmental impacts.

Within the first 100 days, the governors are calling on the Obama administration to:

--Establish an aggressive and achievable national greenhouse gas emissions reduction goal that will put the United States on a path to contribute to global climate stabilization.

--Propose a mandatory national system for reducing greenhouse gas emissions that makes maximum use of market-based mechanisms. Revenue raised should not be used as a means of sustaining or expanding general governmental operations.

--Pursue a national energy efficiency program to reduce existing and future energy demand and thereby reduce greenhouse gas emissions.

--Establish an oil import reduction goal that strengthens energy security and independence. Since nearly 90 percent of oil is used for transportation, an energy plan must bring more fuel-efficient and near-zero emission vehicles into the market; increase the supply of domestically produced, low-carbon fuels; minimize the economic and technological uncertainties inherent in deploying high efficiency vehicles and developing and using non-petroleum transportation fuels; and reduce vehicle miles traveled and increase mass movement of people and goods.

--Create a substantial, long-term national public investment on the scale of tens of billions of dollars annually, along with a similar investment from the private sector, to support the kind of basic and applied research and deployment of clean energy technology and infrastructure that will result in:

--Near-zero greenhouse gas emissions from new coal-fired electricity generation in 10 years and from existing generation no later than 2030.

--Dramatically increased energy from wind, solar, geothermal, hydro and biomass resources.

--Expansion and upgrade of the electricity transmission grid and storage capabilities.

--Advanced vehicle and battery technologies and alternative transportation fuels.

--Next generation energy efficiency technologies and practices.

The governors also urge affordability for lower income energy consumers through energy efficiency and cost assistance programs. They support workforce development and clean energy jobs, adaptation to climate change impacts, reduced consumer impacts - particularly for low-income consumers - and transition assistance to industries.

"While the first 100 days are critical, these actions only represent the first steps," the governors say in their letter. "Within the next year, a comprehensive energy plan must be enacted that will set the direction of this nation for the next 50 years. This plan, though adjustable over time, must establish measurable goals, strategies, milestones and funding to ensure that we are moving towards affordable and environmentally responsible energy security and independence."

"We must not repeat the mistakes of the past," the governors declared in their letter. "We must have the collective political will and resolve to create and implement a long-term comprehensive energy policy despite short-term political and market fluctuations. The future of our nation depends upon it."

The environment really isn't a red or a blue issue. It's an American issue. I'm trying my very best as just one Republican, and I know there are others, to remind people of that fact — and that it will take a bipartisan effort," the Utah governor said.

The governors are calling in a bi-partisan way for action on energy policy. The biggest question is whether US senators can find a bi-partisan solution that reflects the governors’ proposal. Huntsman has been criticized by some Republicans for supporting climate change legislation and cap and trade.

"The Republican values I'm speaking to are right out of ... Teddy Roosevelt's playbook. He taught us all to revere our land, to leave a legacy ... to the next generation," Huntsman responded to criticism from some Republicans. "I'm also doing a very Republican thing to incentivize and develop technologies that are going to fuel our economy."

As 2009 approaches and the new administration prepares to work on climate legislation in the new Congress, this call by governors of both parties for climate and energy legislation suggests growing pressure on Congress to pass a climate bill. It appears only a possible filibuster in the Senate stands in the way of climate legislation. How the votes will come out on a climate filibuster remains to be seen.

Vatican Supporting Steps to Address Climate Change

The Vatican is supporting action to address climate change and has placed solar panels on part of the roof of the Paul VI Hall.  Pope Benedict the XVI has launched an effort to reduce the Vatican's carbon footprint.  The solar installation consists of photovoltaic panels capable of producing 300,000 kilowatt hours of 

of electricity.  The solar power will provide a renewable energy source that will offset some of the Vatican's carbon emissions of 10,000 tons per year.   The Vatican has committed to the use of 20 percent renewable energy by 2020.

The Voluntary Carbon Standard Issued Revised Agriculture, Forestry and Other Land Use Documents

The Voluntary Carbon Standard (VCS) issued its revised stanard that addresses forest-based voluntary carbon credits. The standard is known as the Guidance for Agriculture, Forestry, and Other Land Use Projects.  Many of the avoided deforestation and REDD projects are seeking verification under the VCS. 

Two other documents were issued with this revised guidance:

Guidance for AFOLU Methodological Issues, and

Tool for AFOLU Non-Permanence Risk Analysis and Buffer Determination.

These new documents are being received with excitement by those involved in REDD transactions and studies as they provide more detail for evaluating potential carbon credits that may be generated from forest projects and for seeking validation and verification of projects and carbon credits.

Governor Schwarzenegger and Two Other US Governors Enter into Avoided Deforestation Agreement with Governors from Brazil and Indonesia

Press release issued regarding governors agreement regarding avoided deforestation and climate change:

Continuing his leadership to collaborate with other states to minimize climate change impacts, Governor Arnold Schwarzenegger today will join with Wisconsin Governor Jim Doyle, Illinois Governor Rod Blagojevich and six governors from Brazil and Indonesia in signing a Memorandum of Understanding (MOU) to reduce forestry-related greenhouse gas emissions at the Governors' Global Climate Summit in Los Angeles, CA.

"Tropical deforestation accounts for 20 percent of all human-caused carbon emissions in the world, and the governors signing these MOUs with us manage more than 60 percent of the world's tropical forest lands," Governor Schwarzenegger said. "With this agreement, we are focusing our collective efforts on the problem and requiring our states to jointly develop rules, incentives and tools to ensure reduced emissions from deforestation and land degradation. We are also sending a strong message that this issue should be front and center during negotiations for the next global agreement on climate change."

The agreement commits the U.S. States of California, Illinois and Wisconsin to work with the governors of the following six states and provinces within Indonesia and Brazil to help slow and stop tropical deforestation, the cutting and burning of trees to convert land to grow crops and raise livestock, and land degradation through joint projects and incentive programs: Governor Antônio Waldez Góes da Silva, Amapa, Brazil; Governor Eduardo Braga, Amazonas, Brazil; Governor Blario Maggi, Mato Grosso, Brazil; Governor Ana Júla de Vasconcelos Carepa, Para, Brazil; Governor Yusof Irwandi, Aceh, Indonesia; and Governor Barnamas Suebu, Papua, Indonesia.

This agreement is the first state-to-state, sub-national agreement focused on reducing emissions from deforestation and land degradation (REDD) programs. The agreement will focus on improving forest carbon accounting methodologies and will work to link state greenhouse gas mitigation programs with REDD efforts in Brazil and Indonesia.

The MOU commits the signatories to:
Focus on reducing greenhouse gas emissions from deforestation and land degradation while promoting sequestration of additional carbon through restoration and reforestation and improved forest management practices;
Jointly develop rules to ensure that forest-sector emission reductions and sequestration could pass the strict criteria outlined in California's AB 32 Scoping Plan and potentially play a role in the Western Climate Initiative effort; and
Develop a Joint Action Plan by early 2009 to clearly outline progress. This progress will be discussed at the 2009 United Nations Framework Convention on Climate Change Conference in Copenhagen, Denmark.
Text of MOU:

ACKNOWLEDGING the friendship and excellent cooperation among the governments of the Federative Republic of Brazil/Republic of Indonesia and the United States of America;

TAKING INTO ACCOUNT the global nature of environmental problems and the ability of joint efforts to enhance joint policies for environmental protection and sustainable natural resources;

RATIFYING the willingness to promote new mechanisms of dialogue and agreement that lead to the strengthening of relationships and productive mutual action;

CONSIDERING the opportunities for collaboration between the State of Amazonas/State of Amapa/State of Mato Grosso/State of Para/Province of Aceh/Province of Papua, and the States of California, Illinois, and Wisconsin in combating climate change;

Recognizing the importance and value of implementing climate mitigation and adaptation actions at sub-national levels, both in their own right and as a means to furthering national and international efforts;

recognizing further the importance of focusing on issues of common interest between the Parties, such as reducing greenhouse gas emissions in the forest sector by preserving standing forests and sequestering additional carbon through the restoration and reforestation of degraded lands and forest and improved forest management practices;

EXPRESS their willingness to cooperate, in the search of joint actions that improve environmental quality and optimize the quality of life in the State of Amazonas State of Amapa/State of Mato Grosso/State of Para in the Federative Republic of Brazil/Province of Aceh/Province of Papua in the Republic of Indonesia, and the States of California, Illinois, and Wisconsin in the United States of America.

ARTICLE 1

This Memorandum of Understanding is intended to promote broader cooperation regarding environmental issues among the Parties within their respective purview and based on principles of reciprocity, information exchange and mutual benefit.

ARTICLE 2

The Parties will coordinate efforts and promote collaboration for environmental management, scientific and technical investigation, and capacity building, through cooperative efforts focused particularly, but not exclusively, on the following priorities:

a.       Reducing greenhouse gas emissions from deforestation and land degradation - otherwise known as "REDD" - and sequestration of additional carbon through the restoration and reforestation of degraded lands and forests, and through improved forest management practices;

b.      Developing rules to ensure that forest-sector emissions reductions and sequestrations, from activities undertaken at the sub-national level, will be real, measurable, verifiable and permanent, and capable of being recognized in compliance mechanisms of each party's state, provincial, regional, national or international programs such as the State of California's Global Warming Solutions Act (Assembly Bill 32), Midwestern Greenhouse Gas Accord, Western Climate Initiative, Regional Greenhouse Gas Initiative, or other initiatives;

c.       Initiating innovative financing between the Parties for the sustainable use of forest resources and biodiversity conservation;

d.      Adapting to future climate change impacts and the mitigation of greenhouse gas emissions; and

e.       Stimulating investment between the Parties to promote sustainable development.

ARTICLE 3

In furtherance of the priorities referenced in Article 2, the Parties may develop the following methods of cooperation, among others:

a.       Exchange of information;

b.      Design, implementation and joint financing of studies and projects;

c.       Development and dissemination of publications;

d.      Technology transfer;

e.       Exchange of scholars and experts;

f.        Development of capacity building programs;

g.       Joint development of seminars, workshops, conferences, courses, technical visits and certificate courses; or

h.       Other methods developed between the Parties.

ARTICLE 4

The Parties will cooperate in the development of a Joint Action Plan containing cooperative actions or projects and/or specific studies to be developed.

Each work plan will include all necessary provisions for implementing the cooperation activity agreed upon, including its scope, coordination and administration, resource allocation, expert and professional exchanges, administrative issues, and any other information deemed necessary for achieving the objective of this Memorandum of Understanding.

Independent of the formalization of work plans the Parties agree that collaboration proposals can be presented that allow the parties to optimize outcomes for achieving the objective of this Memorandum of Understanding.

For the follow up and implementation of work plans, theme-specific groups will be established. These groups will be led by officials of the Parties and will meet at a minimum of once a year.

ARTICLE 5

In activities of cooperation and information exchanges, if Parties deem it convenient, private and public sectors may be invited to participate, as well as public, academic and research institutions, or any other organization, as long as they can directly contribute to the achievement of the objective of this Memorandum of Understanding.

ARTICLE 6

The Parties will finance activities referred to in this Memorandum of Understanding with resources allocated in their respective budgets, as these resources become available and as stipulated by their own legislation processes. Each Party will pay for expenses related to its own participation, unless alternative financial mechanisms can be used for specific activities, as appropriate and as approved by their respective appointing authority

ARTICLE 7

Confidential or protected information, material or equipment will not be subject to transfer pursuant to this Memorandum of Understanding.

If information, material and equipment is identified to require or to potentially require protection and classification, during the development of cooperation activities as stated in this Memorandum of Understanding, the Parties will inform corresponding authorities and will establish the appropriate protections in writing. Transfer or use of information, material and equipment not protected or classified which is controlled by any of the Parties, shall be done in accordance with applicable laws of each state, province, nation, or institution and must be properly identified.

ARTICLE 8

Officials designated by each Party to implement cooperation activities under this Memorandum of Understanding will continue working for the party to whom they belong, and no labor relations will be created with any other Party to this Memorandum of Understanding.

Cooperative activities under this Memorandum of Understanding will in no way change the original employer/employee relationship of the officials working together under this Memorandum of Understanding.

The Parties will make all necessary arrangements with corresponding authorities to facilitate customs entrance and exit of participants officially taking part in cooperation projects under this Memorandum of Understanding. These participants will be bound by migration, fiscal, customs, sanitary and national security provisions existing in each respective country and are not authorized to do any other activity without previous permission from the appropriate authorities.

The Parties will ensure that their official representatives participating in cooperation actions have medical, liability and life insurance, to pay costs related to damage repair or indemnification, in case that an accident may occur as a result of cooperation activities related to the execution of this Memorandum of Understanding.

ARTICLE 9

Any differences of interpretation, management or execution of this Memorandum of Understanding will be resolved by mutual understanding of the Parties.

ARTICLE 10

This Memorandum of Understanding can be modified by mutual consent of the Parties in writing, specifying the date of the entry into force of any such modifications.

ARTICLE 11

Termination of this Memorandum of Understanding can be made by any of the Parties, through written communication directed to the other Parties thirty (30) days in advance.

ARTICLE 12

The Parties acknowledge that this Memorandum of Understanding is only intended to provide for cooperation between the Parties, and does not create any legally binding rights or obligations. To the extent any other provision of this Memorandum of Understanding is inconsistent with this paragraph, this paragraph shall control.

Executed in California, United States of America, on November eighteen of two thousand and eight, in one original in the English language.

Will Voluntary Credits Dominate Forest Carbon Market?

The need to drastically reduce deforestation is critical to meeting greenhouse gas emissions goals.  Depending on the study of the issue, estimates of the percent of annual anthropogenic greenhouse greenhouse gas emissions from deforestation range from 17 to 20 percent.  This is almost a quarter of all human induced greenhouse gas emissions.  While not the entire solution, private investment is necessary to reduce if not end the net avoided deforestation in the world over the coming decades.

The carbon markets will supply the majority of the private funding for avoided deforestation projects.  However, the current afforestation and reforestation methodologies approved by the Kyoto Protocol do not provide a means of achieving the level of private investment needed.  First, avoided deforestation is not yet part of the program.  Second, the way the credits are issued, they may only bring $3 or $4 per credit. Third, the time and bureaucracy required to get through the inefficient Clean Development Mechanism (CDM) process under the Kytoto Protocol is too long and discourages investment, particularly since the Kyoto Protocol will expire in 2012.  To achieve approval in time to benefit from the Kyoto Protocol may be a challenge.

Surprisingly, the voluntary market may prove to be the best means of driving private capital to forest-based carbon credit projects.  The time and effort required to move projects forward is still significant, but much less than through the CDM process. The price for these credits can range from $5 to more than $10; thus, providing a much more profitable project and attracting more capital than CDM forest projects.  Finally, there is no short-term deadline.  Projects may be approved for 30 or more years, with requirements for periodic verification.

The fascinating aspect of the forest-related program under the voluntary process is that the private market and non-profit, non-governmental organizations have joined together to form their own system to address avoided deforestation in such a way that national government and certainly not United Nations participation is necessary.  The New Carbon Cycle, therefore, may evolve at least to some extent and at least with respect to avoided deforestation without government programs.  To ultimately meet the goal of substantial reductions in avoided reforestation and substantial increases in afforestation and reforestation, government participation is going to be required.  However, a significant level of forest protection and increased growth will be achieved through the voluntary carbon markets.