Massive wildfires in Oregon and Washington are torching more than vegetation. They’re also burning through a system used by states and businesses to fight climate change.
The Bootleg Fire is raging through a project in southern Oregon, where 400,000 acres of forest owned by Green Diamond Resource Co. are being preserved to compensate for greenhouse gas emissions elsewhere. Microsoft in February paid Green Diamond to offset a quarter million tons of the tech giant’s 2021 carbon emissions.
Two other wildfires are active within a Colville Indian Reservation carbon project in eastern Washington.
Carbon offsets — a system of credits created by planting trees, preserving mangroves, buying renewable energy and other activities — are bought and sold as a tool to reduce greenhouse gas emissions. Landowners pledge to keep their forests healthy enough to store carbon for at least 100 years. The resulting credits are sold to refineries, factories and other big emitters, which use them as a substitute for reducing their own greenhouse gas emissions.
If forest offsets are burning less than 10 years into their projected lifetimes, that's a problem for landowners, industry and policymakers — not to mention the trees, which are estimated to store about twice as much carbon than they emit and are a crucial component of global plans to address climate change. The increasing severity and frequency of wildfires could reverse their role.
"Right now, the view is this is one of the sectors that's going to help," said Danny Cullenward, policy director with the group CarbonPlan, who has called attention to the burning offsets in the Northwest. "We have to ask serious questions about 'Is that sector going to help or going to hurt?'"
The project on the Colville Indian Reservation, owned by a confederation of 12 tribes, is one of the largest sellers of carbon credits under a California cap-and-trade program. The Summit Trail and Chuweah Creek fires have covered about 3.5 percent of the project's 453,000 acres, according to an analysis by CarbonPlan.
The Bootleg Fire so far has covered 23.9 percent of Green Diamond's project area, according to CarbonPlan.
Project owners haven't begun to evaluate their losses, which will depend not just on the area burned, but the intensity of the fire.
"Once all of this calms down and the fire is essentially out, then we'll go back in and assess what the actual damage is and start to make those calculations as far as what kind of reversal this is," Green Diamond spokesperson Patti Case said.
Rules governing offsets anticipate damage from fires. They require landowners to store a certain percent of a project's credits in a buffer pool that they can tap if offset acreage is lost to wildfires, disease or insect outbreaks.
For now, the buffer pool, with about 28.5 million credits, is large enough to absorb the recent fires, said Dan McGraw, head of Americas at Carbon Pulse, a market analysis firm. But if acreage keeps burning at greater rates, the carbon accounting system could find itself in the red.
"We've had two projects be affected by fires, and it's July, and it's only going to get worse," McGraw said.
If fires multiply and more projects are affected, the buffer pool is strained and “it becomes a little more of an issue down the road,” he said.
A 3.2-million credit project managed by the Confederated Tribes of Warm Springs is thought to be one of the first to have suffered significant wildfire damage. In 2020, the Lionshead Fire in Oregon burned through some of the tribe’s land, and it is still evaluating how much carbon it lost. The process can take up to two years under California Air Resources Board rules.
Environmental justice advocates have long opposed the use of offsets, in part because the practice doesn't prioritize disadvantaged communities that tend to be close to industrial greenhouse gas emitters.
The carbon credits burning in the Northwest have bolstered the argument that emissions should be reduced at the source, said Roger Lin, climate and air counsel for the California Environmental Justice Alliance.
"We have the evidence right in front of us in these fires in Oregon and Washington that there really has to be a fundamental course correction," Lin said. “To solve the global, you have to solve the local first."
California has reduced the proportion of offsets businesses can use, due to pressure from environmental justice activists. But the global supply is growing. Nearly 200 million offset credits were issued worldwide in 2020, according to a University of California Berkeley database.
Cullenward says California should consider growing the buffer pool, which would reduce the number of offsets that can be sold.
"Even if you don't exhaust the entire buffer pool from fires, you draw it down against all the other risks over the next 100 years and it doesn't look very good," he said.
The developer of the Colville reservation project said more research into forest emissions is needed, and that companies pledging to get to net-zero emissions should be the ones funding it. He pointed to Microsoft and Amazon's funding of a working group at the University of Idaho to review projects' accounting methods.
"If the contribution is too high, it means less money will be available to fund improved forest management that, by extension, can reduce fire risk," Sean Carney, president of Finite Carbon, which BP acquired a majority stake in last year, said in an email. "If the contribution is too low, the program may eventually have a carbon deficit. We’re in a situation where the policy needs to be just right."
The California Air Resources Board has no immediate plans to update its rules, but agency spokesperson Stanley Young said it would take any new findings into account.
"We developed the risk metrics that determine the buffer account contribution based on the best information available to us at the time we adopted the protocol," he said in an email. "We will of course assess all relevant science and new information when we conduct our next protocol update.”