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COMMENT 

PROPOSED ADOPTION OF A CALIFORNIA CAP ON GREENHOUSE GAS EMISSIONS
AND MARKET-BASED COMPLIANCE MECHANISMS REGULATION, INCLUDING
COMPLIANCE OFFSET PROTOCOLS – IMPLEMENTATION OF AB32

Larry Lohmann
The Corner House
15 December 2010

None of the offset types described under the Offset Protocols under
discussion for AB32 could ever be demonstrated to be real,
permanent, quantifiable, verifiable, enforceable, or additional.
Hence they do not meet AB32 requirements and should be rejected.

Carbon trading in general would be counterproductive as a component
of AB32 because it selects for delay in addressing structural
change in those industries where it is most important (see, for
example, Driesen, D.M. ‘Sustainable Development and Market
Liberalism’s Shotgun Wedding: Emissions Trading under the Kyoto
Protocol’, Indiana Law Journal 83(1) (2008) 21–69; Larry Lohmann
(ed.), Carbon Trading: A Critical Conversation on Climate,
Privatization and Power, Dag Hammarskjold Foundation, Uppsala
(2006); Tamra Gilbertson and Oscar Reyes, Carbon Trading: How it
Works and Why it Fails, Uppsala (2009)). 

Offsets, however, would play an even more egregious role
undermining AB32 than emissions trading proper, for additional
reasons involving unverifiability, reflexivity, counterproductivity
and environmental and social damage that have been well-rehearsed
in the peer-reviewed literature (see, for example, B. K. Sovacool
and M. A. Brown “Scaling the Response to Climate Change,” Policy &
Society Vol. 27, No. 4 (2009), pp. 317-328; Larry Lohmann,
“Uncertainty Markets and Carbon Markets: Variations on Polanyian
Themes”, New Political Economy, Vol. 15, No. 2 (2010), pp. 225-254;
“Toward a Different Debate in Environmental Accounting: The Cases
of Carbon and Cost-Benefit”, Accounting, Organisations and Society
Vol. 34, Issues 3-4 (April/May 2009), pp. 499–534; “Carbon Trading,
Climate Justice and the Production of Ignorance: Ten Examples”,
Development, Vol. 51, No. 3 (2008) pp. 359–365; “Marketing and
Making Carbon Dumps: Commodification, Calculation and
Counterfactuals in Climate Change Mitigation”, Science as Culture,
Vol. 14, No. 3 (2005), pp. 203-235; “Climate as Investment,”
Development and Change Vol. 40, No. 6 (2009), pp. 1063-1083;
“Neoliberalism and the Calculable World: The Rise of Carbon
Trading”, in Kean Birch, Vlad Mykhnenko and Katherine Trebeck
(eds.), The Rise and Fall of Neoliberalism: The Collapse of an
Economic Order?, London, Zed Books (2010); “Climate Crisis: Social
Science Crisis,” in Martin Voss (ed.), Der Klimawandel:
Sozialwissenschaftliche Perspektiven, VS-Verlag, Berlin (2010), pp.
133-153 and Steffen Bohm and Siddhartha Dabha (eds.), Upsetting the
Offset: The Political Economy of Carbon Trading, Mayfly Books,
London (2010)). 

As the US General Accounting Office pointed out in 2009
(Observations on the Potential Role of Carbon Offsets in Climate
Change Legislation, GAO-09-456T), it is not possible, and never
will be possible, to demonstrate that any offset is either
additional or nonadditional. It should be added that offset
projects involving livestock manure, ozone depleting substances,
and forestry mentioned in the proposal under review have a
well-documented international record of being particularly damaging
not only to the climate, but to local economies and the
environment. HFC-23 offsets, for instance, have caused a scandal at
the level of the United Nations Framework Convention on Climate
Change because of their climatically-damaging effects due to
perverse incentives for production of additional greenhouse gas
(see, for example, CDM Watch website, www.cdm-watch.org). The
emphasis on “cost-savings” that has led to such projects becoming
prominent in, for example, the Clean Development Mechanism has
resulted in carbon trading schemes losing touch with what is being
costed (Lohmann, New Political Economy, 2010). Livestock manure
projects in Mexico and elsewhere are subject to the same problem
and are also provoking heavy public resistance, as are REDD and
other carbon forestry projects worldwide (see Ronnie Hall, REDD:
The Realities in Black and White, Friends of the Earth
International (2010); F. Carus, “Liberian President Calls for
Extradition of British Businessman over Alleged Carbon Offset
Deal”, BusinessGreen, 18 October 2010; Joanna Cabello and Tamra
Gilbertson (eds.) No Redd! A Reader. Hermosillo: Carbon Trade Watch
and Indigenous Environmental Network (2010)). Offset
unverifiability, in addition, is at the heart of rising concerns
about offsets becoming “toxic assets” infecting and undermining the
whole economic system (see Steve Suppan, “Speculating on Carbon:
The Next Toxic Asset”, Minneapolis: Institute for Agriculture and
Trade Policy (2009); “Trusting in Dark (Carbon) Markets? The UN
High-Level Advisory Group on Climate Finance”, Minneapolis:
Institute for Agriculture and Trade Policy (2010); Michelle Chan,
“Subprime Carbon: Rethinking the World’s Largest New Derivatives
Market”, San Francisco: Friends of the Earth (2009); “10 Ways to
Game the Carbon Markets”, San Francisco, Friends of the Earth
(2010)).

It should be emphasized, finally, that the impossibility of using
offsets for climate mitigation cannot be overcome through
“regulation” or “governance.” Indeed, attempts to regulate an
offset program would only make the problems described above worse
(see Larry Lohmann, “Regulatory Challenges for Financial and Carbon
Markets”, Carbon & Climate Law Review Vol. 3, No. 2 (2009), pp.
161-71; “Regulation as Corruption in Carbon Offset Markets,” in
Steffen Bohm and Siddhartha Dabha (eds.), Upsetting the Offset: The
Political Economy of Carbon Trading, Mayfly Books, London (2010),
pp. 175-191).