[00:00:08] Speaker A: Good planets are hard to find now.
Temperate zones and tropic climbs and run through currents and thriving seas.
Winds blowing through breathing trees, Strong ozone and safe sunshine.
Good planets are hard to find. Yeah.
[00:00:36] Speaker B: Hello, K SQUID listeners. It's every other Sunday again and you're listening to Sustainability Now, a bi weekly case Good radio show focused on environment, sustainability and social justice in the Monterey Bay region, California and the world. I'm your host, Ronnie Lipschitz.
Carbon is a boon and a bane. It is at the core of all life on Earth, past and present.
In the atmosphere. Carbon is what keeps the Earth's temperature at tolerable levels. Yet carbon dioxide levels in the atmosphere are rising, raising global temperatures and disrupting climate and weather and oceans.
So limiting carbon dioxide emissions into the atmosphere has become the holy grail of global climate policy.
Cap and trade is one approach to this goal. And California has its own cap and trade system.
What is it? How does it work? And does it work as advertised? My guests on Sustainability now today are Dr. Barbara Haya, senior fellow at the UC Berkeley for environmental Public Policy, where she directs the Berkeley Carbon trading project, and Dr. Steven Liszak, a visiting professor at the Berkeley Carbon Trading.
What is it? How does it work?
And does it work as advertised?
My guests on sustainability now are Dr. Barbara Haya, senior fellow at the UC Berkeley center for Environmental Public Policy, where she directs the Berkeley Carbon trading project, and Dr. Steven Liszak, a visiting fellow at the Berkeley Carbon Trading Project.
We're going to talk about many things. Carbon carbon trading, California's cap and trade program, carbon offsets and carbon leakage, among other things, and how the resources generated by the cap and trade program could be put to better use.
Doctors Barbara Hayh and Steven Liszak, welcome to Sustainability Now.
[00:02:31] Speaker C: Wonderful to be here.
[00:02:33] Speaker B: Okay. Why don't we start by having you tell us who you are, what you do, and how you got to Berkeley.
[00:02:42] Speaker C: I'm Barbara Haya. I direct the Berkeley Carbon Trading Project.
We're a research group at UC Berkeley's Goldman School of Public Policy, where we study the quality and effectiveness of carbon trading programs and alternatives to carbon trading.
I started this work on carbon credit quality over 20 years ago as a PhD student. I was studying the effects of UN climate agreements in India, doing field research in India, and pretty early on found that the UN's carbon offset program was not working well. It was mostly generating carbon credits from projects that didn't actually reduce emissions.
I then turned attention to California's offset program, to various carbon market programs on the voluntary carbon market and found very similar high levels of false crediting from across a range of different carbon markets. Now I work here with Stephen Liszak at the Berkeley Carbon Trading Project, continuing to study the carbon market as it evolves, along with studying alternatives to offsetting.
[00:03:56] Speaker B: And you, Stephen?
[00:03:58] Speaker D: Well, my journey into the environmental space, I think, as with a lot of folks, has been a long and winding path. And it began in a geology classroom my sophomore year of college when a professor Zeb Page taught a lecture on deep time.
And, and at that point in my life, I was very interested in political science and social justice and was sitting in this classroom and thinking, oh my God, what does social justice look like on a 4.5 billion year timescale? And, and that just really kind of set me off on a path where my, my work since then has, has been really invested in thinking about, thinking about what it means to make the world a better place for humans and also everything else that we share this planet with. That took me to Oxford and I ended up later at Cambridge.
Spent a lot of time working at the think tank called the Rocky Mountain Institute, which does a lot of interesting work on how the private sector can solve big environmental problems.
And I ended up at Berkeley getting to know Barbara through the work that we've both done on, on how to finance the energy transition and what policy instruments are available to effectively reduce greenhouse gas emissions.
[00:05:22] Speaker B: Okay. Well, I'm sure many of our listeners are familiar with the idea of putting a price on carbon. It's been called a carbon tax, but that may be something of a misnomer. But why would we put a price on carbon in the first place?
[00:05:36] Speaker C: Most simply, a government can use taxes to increase the cost of goods they want less of.
In the case of carbon burning coal, oil, natural gas emits greenhouse gases that cause tremendous cost to society. Those companies that are selling those products can emit those gases freely.
A carbon tax incorporates part of the societal cost of emissions into the price of goods that are involved in or associated with carbon emissions.
[00:06:14] Speaker B: Of course, the carbon tax, which was raised several decades ago, is something of a political third rail because it would probably, it'd be like a tariff, right? It would show up in the things that consumers buy.
So just, just as a, as a, as a way of, of explaining that, right. Cap and trade tries to do something a little bit different.
And we should come back to that in just a second. But just to clarify, we measure carbon emissions in terms of tons of carbon dioxide equivalent, right? How much is a ton of carbon dioxide equivalent? It Sounds really heavy, but of course it's air.
So, you know, can you give us some sense of, you know, how you would measure it?
[00:07:00] Speaker D: That's such a good question. And, and for reference, I'll give you a couple yardsticks.
The average American is responsible for about 16 tons of CO2 every year. You take a person, say in Kenya, they're responsible for probably more like 2 or 4 tons of CO2 per year.
And, and if you want to know what the real heavy hitters are, I'm a little embarrassed to say. I am getting on a flight to London next week and I believe that my round trip emissions of going from San Francisco to London and back will be about 2 tons of CO2.
[00:07:41] Speaker B: You better stay in one place for a long time.
[00:07:44] Speaker D: Tell me about it. Tell me about it. And, and so when we think about the emissions that come out of the tailpipe of a car, we normally think about that as grams per kilometer traveled or grams per mile traveled. So it, you know, it has a way of dribbling out in different parts of our life.
But, but for the average American, we could think of it as roughly, let's say a third of that person's 16 tons a year will be in transport.
Probably a third will be in, in heating the buildings that they live in, heating and cooling the buildings that they live in. And then another third will be in, you know, the food that we eat.
It will be in, you know, you go to see a movie and the AC is on in the movie theater.
You purchase an iPhone and you had to use a lot of energy to mine the components of that iPhone. So carbon is really, or really we should say carbon emissions, greenhouse gas emissions are in everything that we do. And that ton. While it sounds really abstract, you know, I would, I would actually encourage listeners if they're curious to learn more. You can just Google carbon footprint calculator and you can take five minutes and plug in some details about how far you travel, what kind of home you live in, and it'll show you where the sources of greenhouse gas emissions in your life come from.
[00:09:09] Speaker B: Yeah, I imagine that the vast majority of those emissions come from the top 10% of people on the planet in terms of wealth and consumption. I mean, it's a very distorted sort of picture even to say Americans produce 16 tons compared to Kenyans. There are some Americans who produce a lot, you know, who, who generate a lot more than that.
Just, just as an observation.
[00:09:34] Speaker D: That's absolutely right.
[00:09:35] Speaker B: The, the principle of course is, is a, is a basic one of market Supply and demand. If you raise the price of a good, or in this case the price of a bad, people either consume or are supposed to consume or produce less.
My question is, how large would a carbon price have to be to have a significant impact on emissions?
[00:09:58] Speaker C: One way to answer that is if you look in the transportation sector here in the U.S. so in California, the transportation sector is close to 40% of our total emissions. It's the largest emitting sector in that sector.
Here's basically how it works. So today's carbon price in California created by our cap and trade program is around $25 per ton. That translates into a 25 cent increase on the price of a gallon of gasoline. That's not enough to change much about the way people, how people drive, what vehicles people purchase if they decide to take a bus or bike instead of driving. And you think about, we need a carbon price that's well above $100 a ton or a dollar increase in the price of gasoline to start to change how people get themselves from place to place.
[00:10:59] Speaker B: We know from experience in California over the last few years that a dollar really doesn't do it, does it?
[00:11:05] Speaker C: Right.
[00:11:07] Speaker D: You know, these ideas, going back to Adam Smith who talked about the invisible hand of the market, these, these ideas have maybe fallen out of fashion a little bit. But there's some truth to the idea that every little bit helps.
So even if you were to raise the cost of gasoline in the state by $0.01, it would change people's decisions. They wouldn't notice it. And, and that's how economics work, that's how the market works.
But every little bit helps. And so that's why I think it's useful not to think of people as having these kind of internal thresholds where you say, oh, if it's a dollar, then people will change their behavior, but if it's 25 cents, people won't change their behavior.
Rather, there's infinite stops along the way between zero and a dollar. And I think from our perspective of needing to meet people where there are to make the tough compromises with policymakers, we have to say every little bit helps and we can't lose sight of the final goal.
[00:12:15] Speaker B: Part of that is a conversation for another show on how economists think and how people behave. But there's a concept called the social cost of carbon. And I mean, I want to set up some comparisons in terms of that $25 that you cited, Barbara, and this notion of the social cost, what is that and how large is it?
[00:12:37] Speaker C: The economic idea behind the social cost of carbon is to quantify the actual impact to society of emitting one ton of carbon dioxide, or carbon dioxide equivalent.
And the current models show that the global impact to society of one more ton of emissions is around 80, 180, $185 per ton. But if you take into account that some countries and people are wealthier than others, the most recent models show that the current global social cost of carbon is $185 per ton.
But when we adjust that price for wealth or the social cost of carbon here in California, in a wealthy region of the world, is upwards of $1,000 per ton. That is, when we fly across the country and back, we cause over $1,000 worth of impact, societal impact, and most of that impact is experienced, unfortunately, by the most vulnerable communities globally.
[00:13:54] Speaker B: So there's not only a transfer of visible wealth from the poor to the rich, there's also this cost imposed, this invisible cost imposed.
What is the range of carbon prices in carbon markets nowadays?
Are they anything like this thousand dollars, not like $1,000?
[00:14:15] Speaker D: And we do see some examples in Europe where carbon prices are squeaking up around $150 per ton.
We should put it this way. There are a lot of very low price carbon taxes in the world. There's a lot of carbon taxes at $5 a ton, $10 a ton, $20 a ton.
And we do start to see some that are getting up into 50, 60, 70, where we're getting close to that social cost of carbon, or at least close to certain estimates of it. And to be clear, the goal here is not to have a carbon tax at $1,000 per ton.
The goal is to have a carbon tax that sufficiently puts a price on the harm that emissions cause, such that you get to stabilize global warming at a safe level.
So oftentimes we hear scientists talk about 1.5 degrees of warming or 2 degrees of warming. A $25 fee to pollute the atmosphere with 1 ton of carbon dioxide isn't going to get us to that 1.5 degrees or 2 degrees, but it get us a long way of the distance there. If we did start to see kind of $100 a ton, $150 a ton.
[00:15:37] Speaker B: You're listening to Sustainability Now. I'm your host, Ronnie Lipschutz, and my guests today are doctors Barbara Hayek and Steven Lisak, who work at the Berkeley Carbon Trading Project at UC Berkeley. And we've just been having a conversation about the price of carbon in existing markets and what's called a social cost, which would take into Account, I guess, all present and future harms imposed per ton of carbon dioxide equivalent emitted. Let's turn to cap and trade. California's cap and trade program is up for reauthorization. We're going to talk about that. But before that, what is the theory behind cap and trade?
[00:16:18] Speaker C: So we were talking earlier about carbon pricing and carbon taxes. Basically, carbon taxes and cap and trade are both ways of imposing a price on carbon.
So you know, taxes, you define what the price is in the market, determines what the quantity of emissions reductions are.
A cap puts a cap on the quantity of emissions, and the market determines the price.
[00:16:49] Speaker B: How is the cap determined?
Just to make it clear, this is a cap for the total emissions in any one year in California from all sources? Well, from all large sources. We should make clear who has to do this.
[00:17:06] Speaker C: Yeah. So in California, the government sets a cap on emissions over the heavy emitters, that is in the electricity sector, the industrial sectors, and the fuel sectors, including vehicle fuels. Industrial emitters means anyone besides the use of electricity that's directly generating emissions on their campuses, in their facilities.
So California's cap and tree program sets a cap on that set of emitters. It's around 650 different facilities across the state.
And the way it works is basically every year the California government digitally prints a number of credits equal to the cap.
And then at the end of each compliance period, that set of emitters has to hold a credit or a permit to emit for every ton that they've emitted.
So it's like a game of musical chairs, right? So every round you get fewer chairs, you get fewer permits, and that forces a reduction in emissions across the set of 650 facilities in the state.
[00:18:20] Speaker B: Well, let me ask a hypothetical question. Let's just say I'm a large emitter. I have credits for 100,000 tons of carbon dioxide in a year, but I emit 120,000 tons. What happens then?
[00:18:32] Speaker C: There are different options. So you can, you know, ideally you reduce your emissions, but if you haven't, you can buy credits from within the cap. So that is, let's say your neighbor can reduce emissions less expensively than you. Maybe they would choose to reduce their emissions and then sell you 20 credits.
And that's the efficiency, the increased efficiency from a cap and trade program. It creates an incentive within that 650 facilities to reduce emissions wherever it's least expensive because that's less expensive for everyone.
But then the other option in California has created a carbon offset program that allows that emitter to pay for Emissions reductions outside of the capacity as a way to meet their compliance. So the carbon offset program defines a set of four different project types, types of activities that can be done anywhere in the US and that emitter can buy credits from reductions from those activities.
[00:19:46] Speaker B: Can anyone buy carbon in these carbon markets? If I, for instance, decided I wanted to capture, I had the money and I wanted to take, you know, sort of capture all of the carbon credits in any one year, could I do that in California?
[00:20:01] Speaker D: I'm not sure. But there is a cap and trade market in the northeastern United States called Reggie, which involves the power plants that generate electricity in it in a handful of states in New England. And there's some very clever people who set up a fund where you can donate to the fund and they will purchase emissions allowances on Reggie and not use them. And so it has been done elsewhere.
[00:20:25] Speaker C: And I'm pretty sure that you can also do that in California as well.
[00:20:30] Speaker B: So, I mean, in theory, if I could buy enough, you know, if I could corral the market, I could basically ask for a higher price. Right. I'm just thinking about. About speculation, right. Speculative activity in carbon markets, which I think we're a far, far piece from. But. But the possibility, I guess, is there.
[00:20:51] Speaker D: Ronnie, I just want to step back for a moment to add one thing for listeners, which is they might be thinking, well, this, this whole setup sounds incredibly arcane and complicated, and why haven't they just done something more simple?
And. And the thing that's important to remember here is that from the get go, conversations around a carbon tax suffered from one very big problem, which is that they included the word tax.
And historically, Americans have not liked that word. And for listeners who might even remember, 20 years ago, there was a lot of conversation in the US Congress at the end of George W. Bush's administration about some sort of carbon pricing. This was at the same time that you had the sort of early bubblings around the Tea Party. This was a time in American politics where maybe even more so than today, there was an aversion to that word tax.
And in some sense, the advocates of the carbon tax may have doomed it from the start.
I do want to volunteer that a tax traditionally is a way that a government raises revenue to do things like build roads and build schools. And a carbon tax, strictly its purpose is not to raise revenue to keep the lights on in the fire department.
It's to make sure that people can't pollute for free, because currently polluters get to pollute for free when it comes to carbon dioxide. And so the, the alternative frame that we hear discussed quite a lot is it's not a carbon tax, but it's a carbon fee.
And, and where the money goes at the end of the day doesn't actually matter. And there are policy proposals out there, and some of these actually exist in the world where the government, whether it's a nation or a region, a sub national jurisdiction, they set a fee on carbon emissions. It's paid by the emitters, so the polluter pays, and then that money just gets bundled into a big fund and sent back to citizens because you don't actually need to do anything with the money. You just need to make it more expensive to pollute so that you'll make sure that the only people who are polluting are those who say, well, I don't have an easier way to do this.
And so the goal here is the same, whether it's a carbon fee or you can call it a carbon tax or a cap and trade program, but the goal is to take the status quo where it's free to pollute and to say we're going to make it no longer free to pollute, you're going to have to pay a little bit.
[00:23:46] Speaker B: I'm presuming that the carbon cost is pretty minimal. Right. But that the, the emitter who's producing stuff will incorporate it into the price of the good eventually. Right. I mean, that's, that's the idea. It won't show up as very much there unless it gets to be pretty significant.
[00:24:06] Speaker D: Right. And exactly right.
[00:24:08] Speaker B: Seeing the same thing with the tariffs. Right.
In essence, and it depends a little.
[00:24:13] Speaker D: Bit on, on your industry. And that's where the flexibility of the cap and trade program becomes really useful. And say that you are a steel maker and you really need to use a whole bunch of coal in order to make steel. That's how most steel is made. You don't have a lot of other options and you use a ton of coal.
But say that you're an electricity generator and you have a natural gas plant, well, you could build some solar panels or you could build wind turbines and you, voila, have an option for much lower carbon electricity. That's a pretty easy switch for you.
So you say, look, I've got these extra credits, I'm going to sell them to the steel maker who really needs them more than I do.
[00:24:59] Speaker C: And this also explains why carbon pricing, whether tax or cap, is not sufficient on its own to drive emissions reductions as are needed, because it does have a differential impact on different sectors where we need to be working across all sectors at once to drive down emissions reductions in the long run.
So that's one of the reasons why we really need many policies working together where carbon pricing is one policy among many.
[00:25:32] Speaker B: I'm actually curious about. You say it has differential effects on different sectors. Can you give some examples of that?
[00:25:39] Speaker C: Yeah, I mean, the biggest example is in the transportation sector.
You need a very high price of carbon in order to drive emissions reductions where a lower price of carbon can have a larger effect in certain industries.
[00:25:58] Speaker B: I mean, that's the logic of the electrification mandate basically, is because a high price of carbon in the transportation sector would be quite visible, you know, and distributed among all drivers. Right. All operators of vehicles.
The push to electrify really starts with the wealthy. Right. And then eventually we hope it'll trickle down, I suppose.
Right. And I mean, and that's. That's the advantage of a cap.
Of a cap is that it's not as visible, you know, as a tax would be. Right. Or as a carbon user fee would be.
[00:26:37] Speaker C: Yeah.
[00:26:38] Speaker B: So the program in California is, I think you said, a bit more than 10 years old.
How did it get started?
[00:26:47] Speaker C: The cap and trade program started when the legislator implemented our first carbon target for 2020, and then they since legislated another carbon target for 2030 and then 2045.
And as a part of creating the legislature creating that goal, they gave the reins to the state agency, the California Air Resources Board, to implement a suite of policies that would reduce emissions in California to meet those goals.
[00:27:30] Speaker B: So CARB is essentially responsible for issuing the credits and. And then monitoring what happens with them.
[00:27:39] Speaker C: Yes, as well as designing. Designing the program.
[00:27:43] Speaker B: Okay. Who's just. Just to reiterate. So who is required to participate in the cap and trade program? How, you know, how do you decide between the margin, sort of the marginal parties that have to participate. Do. Do you. Do you know that.
[00:28:04] Speaker C: Yeah. There's a cutoff of.
If you emit over a certain amount per year, you're covered under the cap and trade program.
[00:28:16] Speaker B: Okay. But if you're below that, you're not.
[00:28:21] Speaker C: Yes. Unless you emitted above that threshold in the past, then you're.
[00:28:26] Speaker B: I see. So there's a sort of a legacy impact for that.
You know, one other thing, I remember reading that California had joined with other states and Canadian provinces to create a single carbon market. You know, and that was a big deal. I think it was with Quebec and I can't remember who else.
Does that still exist?
[00:28:47] Speaker D: The California market and the Quebec markets are still Linked. And there is talk about a new market that is currently being set up in Washington state of also linking.
[00:29:05] Speaker B: You're listening to Sustainability now. I'm your host Ronnie Lipschitz, and my guests today are Drs. Barbara Haya and Dr. Stephen Lisak, who work at the Berkeley Carbon Trading Project with tracks, which tracks in particular California's cap and trade program.
And we spent the last, I don't know, half hour trying to sort of tease out what cap and trade is. How do you put a price on carbon? Who pays the price on carbon? And let's, let's talk about the program itself, how it's operating. Earlier, Barbara, you were starting to explain to us the idea not, not of reducing carbon emissions, but buying offsets.
And you know, maybe you can explain what a carbon offset actually is and how one might generate it and acquire it.
[00:30:01] Speaker C: Great. Yeah. And just for a bit of context, so right now the state is considering extending its cap and trade program.
Currently it's set to end in 2030. It's considering extending it to 2040.
And I think in that reauthorization process we have a real opportunity to fix the weak parts of the cap and trade program so it works more effectively. And the single I believe weakest part of that program is its carbon offset program. So first, what is a carbon offset? So the idea is. So an offset credit allows an emitter covered under a cap to pay someone else outside of the cap to reduce emissions instead of reducing their own emissions. The whole idea is greenhouse gases are well mixed in the atmosphere. It doesn't matter if we reduce emissions here in California or if someone across the US or really across the world reduces that ton of emissions. It has the same benefit to climate change, to the climate.
And so here in California, our carbon offset program, the California Air Resources Board has defined four project types that are allowed to generate offset credits. Three quarters of our credits come from so called improved forest management.
And those projects can happen anywhere in the United States.
[00:31:41] Speaker B: Okay, what are the others?
[00:31:44] Speaker C: The others are reducing methane emissions from coal mines, reducing a methane, reducing methane emissions from manure pools at livestock facilities, and reducing emissions of high potency refrigerants before. Yeah, destroying them before they're allowed to be released, leaked, vented into the atmosphere.
[00:32:11] Speaker D: When the reason we talk about greenhouse gases is that it's not just carbon dioxide that heats up the planet. There are a bunch of other gases too. And while for the vast majority of humans, impact on the climate has been through the emissions of carbon dioxide, there are several other chemicals, such as methane and these particular substances that are used as refrigerants, for example, that in most instances are much more potent than carbon dioxide. Methane, for example, is estimated to be 40 times more potent than carbon dioxide pound per pound in terms of how much it heats the planet.
[00:32:55] Speaker B: I sort of recollect though that methane has a shorter atmospheric lifetime than carbon dioxide doesn't does.
[00:33:03] Speaker D: And that 40x potency reflects that shorter half life. So, so methane gets emitted and over the course of several decades it hangs out in the atmosphere and it slowly breaks down into carbon dioxide. But it's still up there on a, on a decades long scale and does a lot of damage.
[00:33:26] Speaker B: Yeah. I wanted to ask Barbara, is methane from landfills included in the, in that, you know, restriction? It's not.
[00:33:35] Speaker C: It's not. So it is in the so called voluntary market. So companies or individuals can still buy offsets from the capture of methane from landfills through this other.
Voluntarily, through this other voluntary market. But no, it's not included in California's program.
[00:33:54] Speaker B: Okay, you mentioned improved forest management as a way of, of generating carbon offsets.
How does that work?
[00:34:03] Speaker C: The California's improved forest management protocol, which is generating 3/4 of credits allowed to be used in California, generates credits in this way. So any forest landowner in the US can generate credits if they commit to holding more carbon in their forest than the baseline than they say they would have done without the offset program. And here we're getting into. So the bread and butter of the Berkeley Carbon Trading Project is studying how effective these programs are.
So the improved forest management allow protocol allows landowners to generate credits by saying that without credits they would significantly reduce the carbon in their forests by harvesting.
And they can generate credits against that story that they would have harvested without being paid not to.
[00:35:03] Speaker B: And what's to keep them from engaging in, let's say, stealth activities? I mean, the only real incentive is to get paid for doing this. Right, but is there monitoring of what forest, you know, what forest owners are doing?
[00:35:24] Speaker C: So you do have really good monitoring of the carbon in the forest over time. What you can't monitor is what they would, what the landowners would have done without the payment. And most of the credits generated so far are not for increasing carbon in the forest, therefore not depleting the carbon. On the forest research that I collaborated on and from other research groups took a look at those storylines that the forest landowners were saying of what they would have done and how they would have depleted and harvested were it not for the offset program.
And the research shows actually little to no impact from the offset program compared to what forest landowners were doing before the offset program and compared to similar lands, we see no impact at all.
The stories that the landowners would have depleted the carbon on their forests are not credible.
[00:36:34] Speaker B: And it doesn't prevent forests from being cut down elsewhere.
Right. To replace the timber that would have come from the protected one.
[00:36:43] Speaker D: Well, and there's the rub that even if, and this is not the case, but even if the participating forest owners in the credit program had made this really big change in their practices.
Well, let's think a couple steps down the line here. You still have the local sawmill and suddenly, you know, Ronnie's forestry company is not sending as many logs to the local sawmill to get, to get turned into boards. The sawmill is not going to just wind up operations or give everyone Fridays off. They're going to find another source of timber for them to then use in their operations.
And even if the sawmill closed up shop or moved to a four day work week, you still have the furniture company and the paper mill.
And they're not going to start winding down their operations just because a handful of landowners in California decided to cut down fewer trees.
And so the great, the great sort of collective suspension of disbelief, the big fairy tale that holds together the whole system is that if you have a few landowners producing less timber, that you're going to somehow reduce the supply of timber in the world. When the reality is that if people want timber, there is a global market for these products and they will go elsewhere for it. It's the same as if, if Chevron announced tomorrow that they were just going to stop selling gasoline.
Let's say, I have no idea if this is true, but let's say that Chevron sells 20% of the gasoline in the country. We wouldn't expect that Americans would use 20% less gasoline just because Chevron closed up their shops. They'd go elsewhere. And so that myth, it sounds so simple, but really that myth upholds the entire, not the entire, but it upholds a large part of these offset programs. And these are the questions that you can't really ask because you pull the thread and the whole sweater starts to unravel.
[00:39:00] Speaker B: That's a good metaphor. You're listening to Sustainability Now. I'm your host, Ronnie Lipschutz. My guests this week are Drs. Barbara Hayek and Steven Liszak, who work at the Berkeley Carbon Trading Project. And we've just been talking about what's called carbon leakage from improved forest management.
Well, I mean, we could go on talking about that for a Long time. But you, you have proposed using the resources that come from cap and trade in a different way and you had a piece in the crown about it. Maybe you can talk about that now. Just explain what that would entail.
[00:39:36] Speaker C: Great.
Before we get there, I just want to say that a lot of our work is looking at how do we improve or reform carbon offset programs so that they work.
The problems that we've seen with the improved forest management program in California is something that we've seen across many different project types and many different offset programs.
And our proposal, which, and I'll pass on to Stephen to describe it in many ways, is a response to this. I've been studying carbon offsets for 20 years and I've had the same conversations over all of those 20 years about poor quality.
I'm having the same conversations today as I had 20 years ago as a PhD student in India about over crediting.
I think that that means that there's structural reasons for poor quality with carbon offset programs. And just to say I think there's some really good, and one in particular really good solution to replace the current system that keeps on not working with something that I believe is a no brainer that can work a whole lot better. And passing on to Steven to describe.
[00:41:07] Speaker D: Sure, yeah.
And our goal here is to say currently the state is spending about $200 million every single year on projects that don't really solve the climate issue.
And that money, well, where does it go? It goes to landowners, it goes to forestry companies, it goes to consultants, it goes to brokers, it goes to folks who are doing all this scientific work to verify these credits that don't work in the first place.
So it's money wasted on both fronts and that it's not really helping Californians who need it. And it's also not solving the climate problem.
Our proposal is basically almost copied and pasted from what Oregon has done, which is they've said we're not going to deal with this forest offset business.
Other people have tried for decades to make it work. They haven't been able to make it work.
We're going to do what we know does work, which is we're going to raise money through the sale of these credits and we're going to hand it out to certified nonprofits who are going to go do targeted work in low income communities and tribal communities to improve public health, to improve energy affordability, to improve access to low carbon transportation. So we're talking about things like helping to weatherize homes, replacing unhealthy gas Burning appliances with much healthier electrical appliances.
Things that have a sort of double bottom line and that they're good for the poorest communities, they improve energy access and energy affordability, and they also have a positive impact on the climate.
[00:43:05] Speaker B: Is this being incorporated into the reauthorization legislation or where do things stand with respect to this idea?
[00:43:15] Speaker D: Well, currently this is one option among infinite options that legislators and their staff and the governor's office are currently debating.
And the goal is to have something firmed up by the end of this year.
And we know that there is a whole range of interests from folks who say, yes, we should do something like what Oregon has done and we should get rid of the forest based offsets and make sure that we're delivering real benefits to Californians and doing something for the climate. And then on the other side, you have a lot of vested interest. And these are particularly big polluters who say no, we think the system is working great and it is working great for them because these offsets are basically a pretty low cost, get out of jail free card for them.
What we are hoping will happen. We understand, of course, that energy affordability is a big issue right now.
And the message that we are telling our friends in Sacramento and across the state is that there is a way to move away from offsets that doesn't increase energy prices within the state and that there are policy levers available to transition from an offset style program to what we call a contributions program where you're paying for energy affordability and retrofit style projects where you keep the same cash flow so you don't raise prices, but you have a much better impact.
[00:44:49] Speaker C: And let me. Yeah, and let me say the. In Oregon, they focus their program within the cap sectors.
This approach can take many different forms. And it can also be focused in the land sector, agriculture, waste, the sectors outside of the cap and trade program too.
And I really think that what this, what this approach does is it can have, it can be structured in a way that has all of the benefits of the offset program, but without wasting money and reinvesting that money in California.
[00:45:27] Speaker B: And you would, you would get clearly measurable reductions.
Right. Compared to sort of current, current production of emissions, for example, through installing solar on roofs. Right. And replacing gas appliances.
That would be much more easily monitored, I imagine.
[00:45:48] Speaker C: Yeah. And you know, if, if the credits, if we want each credit from this program to represent 1 ton of emissions reductions, we're going to need a higher price like they have in, in Oregon, the price is 129 to $134 in this year.
And it could also be set at a lower price, which can be used to reduce overall cost of the program.
[00:46:23] Speaker B: Well, look, I have one last question which doesn't have a lot to do with forests and offsets, and that's when we buy a plane ticket, we're often offered the opportunity to buy carbon offsets to assuage our gift guilt from. From emissions. Do. Do these actually achieve anything?
[00:46:42] Speaker D: Ronnie, I have a controversial answer to this.
And, and the controversial answer is the offsets themselves most likely do not achieve anything.
So if you're offered to purchase carbon offsets for your flight, you should not think that those offsets will make your flight carbon neutral. There is a very small chance that that money is going to high quality projects, but the most likely outcome by far is that that money is going to finance projects that are having a very low impact.
But there is maybe one reason why you should still consider spending that money, which is that in the long run, we need to move toward a world where airlines are paying a lot more money for high tech, low carbon fuels. These are fuels that are made in laboratories rather than drilled out of the ground and refined in refineries.
And they can run on basically the same jet engines and have a very, very low carbon impact. And this is technology that is available today but has not yet scaled up. And the reason it hasn't scaled up is that you have airlines unsure of whether customers will be willing to pay a premium for a very low carbon flight.
And so clicking that button does something interesting. And this is my theory that airlines, of course, are tracking all of this data and they see when someone clicks that button and spends five bucks or 20 bucks for offsets, that registers to them and their analysts as, oh, people are willing to pay more for a flight that they think has a lower environmental impact.
And when someone leaves that box unticked, the message it sends is no, people are always going to ask for the lowest price.
And so one reason to consider ticking that box is it puts you in the camp of people who are sending a very loud message to these airlines and their executives saying, we feel bad about the environmental impact of our air travel and we want alternatives and we're willing to pay for them.
[00:49:12] Speaker C: And if I can add to that. Yeah, if I. If I can add.
You know, people ask me all the time, should I buy offsets when I fly?
And maybe in addition to clicking the box for the reason Steven just said, I want to underline that those credits most likely don't represent real emissions reductions. And they most likely do not mean that your flight, that flying, that your choice to fly has a net zero impact on the climate.
So my suggestions are, you know, in this order. Like, the most important thing is to choose really carefully when you fly. Don't take flying.
I don't take flying lightly.
So the most important thing is think carefully about whether you need to fly.
If you do and you want to compensate for the emissions from that flight, reduce your own emissions in another way. Like the most important things that we can do are to reduce our own emissions. There are a range of ways that you can do that.
Next choice would be to and maybe do this. In addition, next choice would be to give directly to an organization.
So if you want to do more than reduce your own emissions, donate directly to an organization that's doing really good climate work. It could be political work or it could be direct work reducing emissions. There's so many wonderful organizations out there that are not necessarily helped by the carbon market that your donation directly to them can make a difference. And then the last choice, I would say, is to buy credits from the market. But if you do that by very well vetted credits, choose carefully.
[00:51:04] Speaker B: Well, we're out of time, but this has been really interesting and I want to thank both of you very much for being my guests on Sustainability Now.
[00:51:14] Speaker D: Thanks, Ronnie.
[00:51:15] Speaker C: Thank you so much.
[00:51:18] Speaker B: You've been listening to a Sustainability now interview with Dr. Barbara Haya, senior fellow at the UC Berkeley for environmental Public Policy, where she directs the Berkeley Carbon Trading Project, and Steven Lisak, a visiting fellow at the Berkeley Carbon Trading Project. If you'd like to listen to previous shows, you can find
[email protected] Sustainability now, as well as Spotify, YouTube and Pocket Casts, among other podcast sites. So thanks for listening and thanks to all the staff and volunteers who make K SQUID your community radio station and keep it going.
And so, until next every other Sunday, Sustainability Now.
[00:52:05] Speaker A: Good planets are hard to find out Temperate zones and tropic climbs and run through currents and thriving seas Winds blowing through breathing trees and strong ozone Safe sunshine Good planets are hard to find. Yeah.
[00:52:31] Speaker B: Good planning.
