[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
VOLUNTARY CARBON OFFSETS: GETTING WHAT YOU PAY FOR
=======================================================================
HEARING
before the
SELECT COMMITTEE ON
ENERGY INDEPENDENCE
AND GLOBAL WARMING
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JULY 18, 2007
__________
Serial No. 110-10
Printed for the use of the Select Committee on
Energy Independence and Global Warming
globalwarming.house.gov
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20402-0001
SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING
EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon F. JAMES SENSENBRENNER, Jr.,
JAY INSLEE, Washington Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN, CANDICE S. MILLER, Michigan
South Dakota JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
------
Professional Staff
David Moulton, Staff Director
Aliya Brodsky, Chief Clerk
Thomas Weimer, Minority Staff Director
C O N T E N T S
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Page
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Prepared Statement........................................... 3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress
from the State of Wisconsin, opening statement................. 5
Hon. Earl Blumenauer, a Representative in Congress from the State
of Oregon, opening statement................................... 6
Hon. Jay Inslee, a Representative in Congress from the State of
Washington, opening statement.................................. 6
Hon. Hilda Solis, a Representative in Congress from the State of
California, opening statement.................................. 7
Hon. Emanuel Cleaver II, a Representative in Congress from the
State of Missouri, opening statement........................... 7
Prepared Statement........................................... 8
Hon. John Hall, a Representative in Congress from the State of
New York, opening statement.................................... 9
Witnesses
Derik Broekhoff, Senior Associate, World Resources Institute..... 9
Prepared Testimony........................................... 11
Answers to Submitted Questions............................... 162
Joseph Romm, Senior Fellow, Center for American Progress......... 28
Prepared Testimony........................................... 30
Erik Blachford, Chief Executive Officer, TerraPass, Inc.......... 41
Prepared Testimony........................................... 43
Answers to Submitted Questions............................... 172
Russ George, President and Chief Executive Officer, Planktos,
Inc............................................................ 92
Prepared Testimony........................................... 94
Attachments to Testimony..................................... 102
Thomas Boucher, President and Chief Executive Officer,
NativeEnergy LLC............................................... 116
Prepared Testimony........................................... 118
Answers to Submitted Questions............................... 180
VOLUNTARY CARBON OFFSETS: GETTING WHAT YOU PAY FOR
----------
WEDNESDAY, JULY 18, 2007
House of Representatives,
Select Committee on Energy Independence
and Global Warming,
Washington, DC.
The Committee met, pursuant to call, at 9:30 a.m., in Room
2318 Rayburn House Office Building, Hon. Ed Markey [chairman of
the Select Committee] presiding.
Present: Representatives Markey, Blumenauer, Inslee,
Larson, Solis, Cleaver, Hall, McNerney, Sensenbrenner, Shadegg,
Walden, Sullivan, and Blackburn.
The Chairman. Good morning, ladies and gentlemen. In part
because of the federal government's continued failure to
regulate global warming pollution, American consumers and
corporations are increasingly turning to the purchase of
voluntary offsets to help reduce their carbon footprint. The
basic idea of offsets is to reduce greenhouse gases by
supporting projects that either reduce emissions, or sequester
carbon. Leading corporations, like Google, have announced plans
to go carbon-neutral, partly relying on carbon offsets to do
so. And a growing number of consumers are buying offsets to
compensate for the emissions associated with a plane trip, or a
daily commute to work.
As a result, there are now over three dozen offset
providers based in the United States. Globally, the voluntary
offset market is valued at over $100 million per year, and some
expect it to grow to half a billion dollars in the next few
years.
No one thinks the voluntary market alone can make a major
dent in global warming, or that it can supplant the urgent need
for mandatory federal limits on global warming pollution.
Still, this market has an important role to play. Voluntary
offsets can provide substantial funding for projects, such as
renewable electricity generation that can deliver real carbon
reductions. Global warming is a massive challenge, and every
ton counts.
Equally important is this market's power to educate people
about global warming, and to help get them engaged in
supporting solutions. Some criticize voluntary offsets as a
kind of modern-day papal indulgences designed to allow jet-
setting celebrities to soothe their guilt, without changing
their lifestyles. But today's testimony indicates that most
offset purchasers are conscientious individuals and companies
that are already taking steps to reduce their own emissions,
and who want to use offsets to supplement those steps.
Although this market holds promise, it also presents some
real challenges. This market is almost completely unregulated.
In the past year, a series of journalistic reports have called
into question the market's credibility. Those reports have
alleged that in some cases, companies are selling offsets based
on projects that would have happened regardless of the offsets.
This raises doubts about whether consumers are getting what
they paid for, real carbon reductions. These concerns are
heightened by the fact that many offset providers offer very
little information about their projects, or their carbon
accounting methods.
And, finally, there are some tough scientific questions
about whether certain kinds of offset projects will actually
deliver real and permanent carbon reductions.
All this has led some to characterize the voluntary offset
market as the wild west. I think that's overstating it, but I
do think we need to bring order to this market to ensure that
consumers don't get ripped off, that this source of funding for
carbon reductions isn't wasted, and that the public does not
lose confidence in offsets as a potential tool in a future cap
and trade system.
The question is, what kind of sheriff do we need to hire?
The offset industry and some environmental groups are trying to
meet that challenge by developing voluntary standards. That's a
positive step, but it remains to be seen whether it will be
adequate.
Right now, we're talking about an unregulated market, where
if the offset is not real, the main consequences are that an
individual or corporate conscience is falsely soothed, and that
potential funding for carbon reductions is wasted. But when we
move to a regulated carbon market, where offsets might be a
compliance option, the consequences of ineffective offsets will
be excess carbon emissions that undermine national and global
climate policy.
Today, the Select Committee begins the process of looking
at how to make the voluntary offset market work for everyone:
for consumers, for corporations, for national climate policy,
and, ultimately, for a healthy planet.
The time for the opening statement from the Chair has
expired. The Chair will recognize the ranking member, Mr.
Sensenbrenner from Wisconsin.
[The statement of Mr. Markey follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Sensenbrenner. Thank you very much, Mr. Chairman. At
the beginning, let me say that, unfortunately, I'm going to
have to be in the Judiciary Committee marking up the Patent
Reform Bill for most of today's hearing, but I will read your
testimony and absorb it over there, probably.
Today's hearing may be the most relevant yet in the short
life of this Select Committee. Offsets hold the potential to
help control greenhouse gas emissions, especially carbon
dioxide. They also hold the potential to give people warm,
fuzzy feelings for saving the earth, while actually doing
nothing to tangibly help the environment. I hope that today's
hearing helps us learn which it is.
The U.S. Supreme Court recently ruled that carbon dioxide
can be regulated as a pollutant. Despite this fact, billions
and billions of plants around the world have continued to
breathe this naturally occurring gas, and exhale the oxygen
that supports the diversity of life all over this planet.
While I question the term ``pollution'' is appropriate for
CO2, I do not question that there are significant
scientific findings to show that this gas is contributing to
global warming. Many who advocate taxes and regulations as a
solution to global warming like to emphasize their point by
using the image of smokestacks emitting dirty, black soot into
the air, but that image is a bit dishonest, isn't it? We're not
here to talk about black smoke. It's an entirely different
environmental issue that's regulated by, and under the
jurisdiction of a different committee.
Global warming is all about the clear invisible gases that
don't show up in these menacing photographs, like carbon
dioxide. Whether it comes from the coal-fired power plant, or
the mouth of the former Vice President, Mr. Gore, carbon
dioxide is plant food, and this fact helps create many possible
solutions for the global warming problem.
By breathing CO2, trees help take it out of the
atmosphere. That's why I've said that smart, healthy forest
management should be a part of any global warming policy. Trees
can also play a part in the global warming solution by being a
carbon offset. In fact, trees live up to one of the principles
that I staunchly advocated by providing an actual tangible
benefit to the environment. We not only know that trees take
CO2 out of the atmosphere, we generally know how
much they take out.
Some carbon offset projects have the potential to promote
advanced technology, which lives up to another principle I
champion. I'm still not sure fertilizing carbon dioxide eating
plankton would be an effective global warming solution. That's
up to the scientists to determine, but this idea is an example
of the creative possibilities that technology can produce.
However, while offsets hold some potential to control
CO2 in the atmosphere, we also have to be realistic
about the true capacities of offsetting. We can't offset our
way out of the global warming problem. We certainly can't
offset our way to meet Mr. Gore's goal of 80 percent greenhouse
gas reductions by 2050. The only way to meet these goals is
through the development and promotion of technology that
creates energy without emitting carbon dioxide, such as nuclear
power, renewable energy, or carbon sequestration.
I'm also very concerned that offsetting is the first step
on the path to onerous global warming regulations. Depending
upon how offsetting is structured, there is the potential for
fantastic abuse of taxpayer dollars. Some offset projects can
be legitimate, such as tree plantings, wind energy, and biomass
fuels. Yet, other projects are questionable, and in some cases,
may even border on fraud.
Does investing in an energy project that would have
happened anyway really make you carbon neutral? Call me
skeptical. There are also indications that some offsets are
counted twice, which doesn't get the world any closer to carbon
neutrality.
Carbon offsets give those who are deeply concerned about
global warming an option to put their money where their mouth
is, without having to adopt Grizzly Adams' lifestyle. But it is
always the case, when money changes hands, let the buyer
beware. The carbon offset industry is a business, but buyers of
offsets should use due diligence in researching these firms and
their standards before handing over a check. And that goes for
the federal government, too. Thank you.
The Chairman. Thank you. The gentleman's time has expired.
The Chair recognizes the gentleman from Oregon, Mr. Blumenauer.
Mr. Blumenauer. Thank you, Mr. Chairman. And, I, too, will
apologize in advance. We have a Ways and Means mark-up that is
occurring, but I am very interested in hearing the panel. I've
had a chance to review some of the testimony. I come from a
city. One of the opportunities I want when the committee comes
to Portland, is to be able to introduce the Climate Trust
that's based in Portland, which we like to think is the leading
non-profit dedicated to providing these solutions. It provides
offsets for power plants, regulators, business entities of all
sizes, and individuals. I think it was the first offset, almost
3 million cubic tons of CO2 at this point. Looking
forward to an opportunity, as I say, to include that as part of
the Portland tour, and look forward to hearing the testimony.
The Chairman. Okay. The gentleman's time has expired.
The gentleman from Washington.
Mr. Inslee. Thank you. I want to welcome the witnesses
particularly Mr. Romm, who's written ``Green Brook'', which I
really appreciate his work on. I'm interested, and I hope the
panelists will address how an offset program would work, if the
offsets are in countries that don't have caps. And I've always
wondered how an offset works, if you buy it in a country that
doesn't have caps, what are you actually achieving, because
you're not actually taking up a certain amount of the
allocation, if you will, of CO2. I'm interested in
your observations about that.
I just want to note one thing. Mr. Sensenbrenner referred
to CO2 as plant food, and I thought it was important
to relay something I saw last weekend up in the Cascade
Mountains. CO2 is plant food, obviously, and it's
necessary for photosynthesis, but up by Robin and Tuck Lakes up
by Mount Daniel in the Central Cascade Mountains last weekend,
I was coming down from these lakes that I last visited 25 years
ago, and these beautiful, beautiful alpine lakes, and as you
come down, we came down through these Silver Fir and True Fir,
and a little Douglas Fir forest. They were dead, or appeared to
be dying for miles, and miles, and miles due to the spruce
bloodworm, and the spruce bloodworm is a worm, it's a native
worm, but when winters don't get cold enough, it doesn't kill
them, and it doesn't suppress them. At least, this is one
hypothesis is what's going on, and you end up with dead and
dying forests. This has happened with the bark beetle with tens
of thousands, if not hundreds of thousands of acres in Alaska
and British Columbia, now starting in the eastern slopes of the
pine forest on the Cascade range, as well. So it is plant food,
but it's also causing the devastation of forests. Thank you.
The Chairman. Thank you. The gentleman's time has expired.
The Chair recognizes the gentlelady from California, Ms.
Solis.
Ms. Solis. Thank you, Mr. Chairman. I'll submit my
statement for the record, but I just want to leave one
question, and that is, when we talk about cap and trade, and
offsetting negative emissions, I worry about those communities
that I represent, environmental justice communities, low-income
communities, that may not be able to provide sufficient funds
to help offset some of the negativity. So where is your
thinking about helping those communities that typically are
communities of color, in urban areas, or poor rural areas?
The Chairman. The gentlelady's time has expired.
The gentleman from Missouri, Mr. Cleaver is recognized.
Mr. Cleaver. Thank you, Mr. Chairman. And thank you for
calling this hearing, and I express appreciation to this
distinguished panel this morning. Thank you for being here, and
I'm looking forward to hearing your testimony.
I'm one who believes that we are moving in the right
direction with regard to carbon offsets. I'm not certain that
voluntary carbon offsets will work, but I am interested in your
opinion on this issue. But I do agree, and believe that carbon
offsets encourages the use of renewable energy, and that we can
reduce greenhouse gases. But I'm sure you've heard all of the
skepticism prior to coming here today, and all of the issues
that need to be resolved, so I look forward to hearing your
testimony, and also to the opportunity to raise some questions
with you. Thank you, Mr. Chairman.
[Prepared statement of Mr. Cleaver follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. I recognize the gentleman from New York, Mr.
Hall.
Mr. Hall. Thank you, Mr. Chairman. I'll just enter my
statement in the record, and look forward to hearing the
testimony of the witnesses. Yield back.
The Chairman. The Chair recognizes the gentleman from
California, Mr. McNerney.
Mr. McNerney. Thank you, Mr. Chairman. I'm going to fold my
time into the Q&A period, and yield back.
The Chairman. Great. So all time for opening statements
from the members of the Select Committee has concluded, so
we'll now turn to our first witness. And I am pleased to
welcome him, Mr. Derik Broekhoff. He is a Senior Associate at
the World Resources Institute. He's an expert on voluntary
carbon market. He's the author of the WRI's Greenhouse Gas
Protocol for project engineering. He's led their initiative on
carbon accounting and standard setting for project-based
offsets. He has participated extensively in stakeholder efforts
to develop voluntary standards for the voluntary offset market.
Thank you so much for joining us this morning. Whenever you're
ready, please begin.
STATEMENT OF DERIK BROEKHOFF, SENIOR ASSOCIATE, WORLD RESOURCES
INSTITUTE
Mr. Broekhoff. Thank you, Mr. Chairman. And I thank the
Committee for this opportunity to testify about the voluntary
carbon offset market.
Carbon offsets have been around in one form or other for
nearly two decades. Most recently, and most significantly, as a
compliance tool under the Kyoto Protocol. But interest in them
has also steadily grown as a way for buyers to voluntarily
offset their greenhouse gas emissions.
By some estimates, demand for voluntary offsets may achieve
global reductions of several hundred million tons of
CO2 per year by 2010. This would be a notable but
modest contribution to reducing the 25 billion tons of
greenhouse gases emitted every year due to human activities.
The primary challenge, as several people have noted, faced
by the voluntary carbon offset market is that it's developing
in a regulatory vacuum. Carbon offsets are a completely
intangible product, and their value depends entirely on how
they are defined, represented, and guaranteed. What the market
lacks are common standards for defining and guaranteeing carbon
offsets in order to assure consumers that they're getting what
they pay for.
There are three basic requirements for creating a
standardized carbon offset commodity. First, accounting
standards for quantifying the emission reductions that offset
projects generate. Second, verification standards to ensure
that projects have their performance adequately reviewed by
qualified parties. And, third, publicly reviewable registry and
enforcement systems to ensure that emission reductions are not
sold more than once, or claimed by more than one party.
A number of initiatives over the last two years has
attempted to set standards for the voluntary offset market, but
so far, none of them has adequately addressed all three of
these requirements. Rather than bringing clarity to the market,
the proliferation of multiple standards has created confusion,
and even skepticism.
The case for some level of government oversight would seem
to be clear. The question remains, at what level should the
federal government engage in the voluntary carbon offset
market? In the future, this market could be largely superseded
by a mandatory program. Nevertheless, I would argue that
oversight today may be desirable to protect consumers and the
public interest, to allow learning, and inform the development
of a future mandatory program, and to provide greater certainty
for investors.
Oversight could take several forms, ranging from endorsing
particular standards and programs, to providing guidance on
accounting standards, accrediting offset verifiers, certifying
carbon offset registries.
In general, any government oversight should build off the
work of existing standards and programs, and should seek to
bring minimum standards of transparency, consistency, and
quality to the voluntary offset market. Government oversight
should not seek to limit the market, but should encourage
maximum participation, subject to minimum standards.
On balance, carbon offsets afford real opportunities, and
should be encouraged. They allow their buyers to do more than
they otherwise could to help avert climate change. Realizing
even their modest potential, however, will require creating a
standard carbon offset commodity that consumers can trust.
Thank you for this opportunity to provide my input to your
deliberations, and I look forward to answering any questions
you may have.
[The prepared statement of Mr. Broekhoff follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you very much.
Our second witness is Joseph Romm. He is currently a Senior
Fellow at the Center for American Progress. A physicist by
training, Mr. Romm is a former Acting Assistant Secretary of
Energy for Efficiency in Renewable Energy. He's recognized as
one of the leading national experts on clean energy technology,
and climate issues. He is the author of the recent book, ``Hell
and High Water: Global Warming--The Solution and the
Politics'', and he's been an active commentator on the
voluntary offset market. Mr. Romm, thank you.
STATEMENT OF JOSEPH ROMM, SENIOR FELLOW, CENTER FOR AMERICAN
PROGRESS
Mr. Romm. Thank you, Mr. Chairman, members of the
Committee. I appreciate the opportunity to share my views on
carbon offsets, which are based on dozens of discussions with
leading environmentalists, energy experts, and companies over
the past 15 years.
I believe there is something very wrong about the general
understanding of offsets. If a smart company like Google can
seriously think it can go green by burning coal, and they
buying offsets; if a smart company, like PG&E, is bragging
about a new program that allows customers to offset their
electricity emissions by measures, such as tree planting, if
something as controversial and unproven as ocean fertilization
can be sold to the public under the name carbon offset, and if
the Vatican can announce its intention to offset all its
emissions with a Hungarian Forestry Initiative. We all want to
avoid catastrophic global warming, such as 80 foot sea level
rise, and that means limiting future warming to 2 degree
Fahrenheit, and that requires mandatory regulations cutting
greenhouse gas emission 60 to 80 percent by 2050.
Absent that mandatory action, it is no surprise that
individuals and companies have sought voluntary or unregulated
strategies for reducing emissions, of which offsets are a prime
example.
No consensus set of rules exist for determining what
offsets are credible, as you just heard. Absent a legal
framework, many different groups are offering their own set of
standards, and many companies are offering offsets that are
questionable, at best, such as trees, and ocean fertilization.
Trees are very popular offsets. Unfortunately, trees are
lousy offsets for many reasons. First, trees grow slowly, so
that the carbon pollution you emit today won't be sequestered
fully for many decades. Second, trees aren't permanent. They
can be cut down, or die. Third, it is hard to measure the
amount of carbon absorbed by a forest. Fourth, how do you know
that preserving trees in one place, doesn't just lead to more
deforestation in other places? Congressman Inslee, that's sort
of the answer to your question. If you don't have a cap in a
country, then you don't know preserving a thousand acres of
Brazilian rainforest won't just lead to 2,000 acres being cut
somewhere else.
Fifth, trees often fail the additionality test. As one,
I've been blogging on this extensively at Climate Progress, and
have gotten a lot of phone calls. And one forestry expert told
me, ``Everybody is selling offsets for things they were already
doing.'' Certainly, that's not good.
Finally, because forests are relatively dark compared to
what they replace outside the tropics, they absorb more of the
sun's heating rays. That may negate the benefit trees have
soaking up carbon dioxide.
The co-author of a 2005 study on the subject said bluntly,
``To plant forests to mitigate climate change outside of the
tropics is a waste of time.'' Large-scale ocean fertilization
is more problematic. A leading group studying this issue, The
Surface Ocean Lower Atmosphere Study, or SOLAS, said just last
month, ``Given our present lack of knowledge, the judgment of
the SOLAS Scientific Steering Committee is that ocean
fertilization will be ineffective, and potentially deleterious,
and should not be used as a strategy for offsetting
CO2 emissions.'' We just don't know whether ocean
fertilization can deliver measurable and verifiable emissions
reductions, and we don't know if it will do more harm than
good.
What type of offset projects make sense? The two key points
are, we need deep cuts in greenhouse gas emissions, and burning
fossil fuels is responsible for 85 percent of U.S. emissions.
Therefore, the major focus of offsets should be aimed at
reducing fossil fuel combustion, and the best offsets will
jumpstart the transition to a low-carbon economy.
The gold standard is one international standard for
offsets, whose projects focus exclusively on reducing fossil
fuel emissions at the source, primarily through energy
efficiency, and renewable energy. And I certainly endorse that
standard.
In conclusion, I don't believe the voluntary offset market
can make a significant contribution to greenhouse gas
mitigation for one simple reason. The scale and speed of
mitigation the nation must pursue to avoid catastrophic climate
impacts is so great, 60 to 80 percent reductions by 2050, that
only a mandatory regime can plausibly achieve such cuts. And
that regime must be put in place within the next few years by
Congress, together with the President.
Once a mandatory cap and trade system is in place, I
believe the voluntary market will largely disappear. People may
still wish to purchase offsets to become carbon neutral, but
then they will almost certainly just purchase credits, or
allowances on the regulated traded market.
I would, therefore, urge Congress to focus its efforts on
developing and implementing a mandatory regime. And I know the
Chairman has been a leader in that regard.
Thank you very much, and I look forward to your questions.
[The prepared statement of Mr. Romm follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you very much. Our next witness is Mr.
Erik Blachford. He is the CEO and Director of TerraPass, the
nation's largest retail carbon offset provider. He has had a
distinguished career in business, having served as CEO of
Expedia, and later IAC Travel Expedia, one of the world's
largest online travel booking companies. Thank you so much for
joining us.
STATEMENT OF ERIK BLACHFORD, CEO, TERRAPASS, INC.
Mr. Blachford. Thank you, Chairman Markey, and members of
the Select Committee on Energy Independence and Global Warming
for the invitation to speak today. TerraPass applauds the work
of the Committee, and welcomes this opportunity, the carbon
market.
A few months ago, I became CEO of TerraPass, a leading
retailer of carbon offsets. TerraPass has helped over 50,000
citizens balance their emissions, driving, flying, and home,
purchasing offsets from clean energy and energy efficiency
projects in the U.S. voluntary carbon market. Household carbon
reductions totaling 175 metric tons, at the same time, over
half a million Americans have calculated some aspect of carbon
footprint on the TerraPass website, and over 30,000 readers
subscribe to our email newsletter. Some have asked whether
these individuals buy offsets to avoid directly reducing carbon
emissions. Votes from a recent TerraPass customer survey make
it clear that the opposite is true.
For example, almost two-thirds of TerraPass customers have
bought energy-saving light bulbs. Five times more likely to
commute by public transportation, 31 times more likely to drive
a hybrid vehicle, 210 times more likely to have a solar energy
system installed on their houses. We strongly believe that our
government must lead the effort to fight global warming.
As a retailer of carbon offsets, TerraPass does not engage
in project development. Rather, we have designed a portfolio of
high-quality carbon reductions which we offer to consumers at a
mark-up that provides a path to allow us to cover our overhead
expenses. We are exclusively focused on the consumer segment of
the voluntary carbon market, directly through our website at
TerraPass.com, and through our partnerships with other consumer
business firms, such as Ford, Expedia, and Sam's Club. We
source our carbon reductions from projects falling into three
categories, each representing one-third of our portfolio. These
are wind power, dairy farm, methane digest, more commonly known
as cow power, and landfill gas flaring projects.
We subject each of our projects to a rigorous quality
screening process with efforts focusing on different levels of
our operations. First, we enforce project level quality using a
combination of existing industry protocols and internal review;
wind projects under the Green-e program of the Center for
Resource Solutions; dairy farm methane by C&S Gas, and landfill
gas flaring by First Environment.
Second, TerraPass adheres to a wide variety of portfolio-
level quality metrics. All offsets we sell are generated in the
same year as the consumer purchase. This quality practice
precludes most tree-planting projects, and most projects for
carbon accounting extends into the future.
Third, we believe in disclosure. We have always listed in
our website all projects that we support, a practice which we
believe to be unique in our industry.
Fourth layer of quality enforcement, we submit to an annual
audit by the non-profit Center for Resource Solutions to assure
that our carbon purchases match our customer obligations.
Finally, to ensure we're making responsible marketing
claims, our marketing literature for both TerraPass and
TerraPass partners is reviewed by the Center for Resource
Solutions. We believe our approach is robust, but also believe
the time is right for the development of a consumer protection
standard in a retail voluntary carbon offset market, and
encourage the appropriate agency of federal government to play
an active role in the standard-setting process.
As a stakeholder in existing standard development efforts,
and as a leader in subsequent efforts, we believe a standard is
necessary to spur growth in voluntary carbon offset markets,
which exist not only to generate immediate reductions in carbon
dioxide emissions, but also to serve as something of a
laboratory for policy innovation, at no cost to taxpayers, and
to give businesses and individuals experience working in the
carbon markets.
In conclusion, TerraPass believes that the voluntary retail
carbon market can drive citizen awareness of the impact of
their lifestyle choices, and educate citizens on actions they
can take in their everyday lives to reduce carbon emissions,
and to generate incremental carbon emission reduction, by
giving consumers a simple mechanism for funding American
entrepreneurs and companies who wish to reduce carbon
emissions.
Americans want to take action in the fight against climate
change, and TerraPass welcomes government involvement to make
those citizens more confident in a voluntary retail carbon
offset market. Thank you.
[The prepared statement of Erik Blachford follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Blachford, very much. Our next
witness is Mr. Russ George. He is the President and CEO of
Planktos, Inc. Planktos has attracted considerable attention
recently with its proposal to generate carbon graphics through
ocean fertilization near the Galapagos Islands. Planktos
Hungarian subsidiary, KlimaFa, has recently donated carbon
graphics from reforestation projects to the Vatican in support
of the Vatican's announcement of its intent to become the first
carbon neutral sovereign state. Welcome you, Mr. George. When
you're ready, please begin.
STATEMENT OF RUSS GEORGE, PRESIDENT AND CEO, PLANKTOS, INC.
Mr. George. Thank you very much for having me here. I very
much appreciate the chance to talk about ecco restoration of
the trees and seas of this planet. This planet is 72 percent
ocean, and 28 percent land. And the problem of global warming
of excess anthropogenic CO2 is on the living planet.
That's what we're concerned about. That living planet is
diminishing in its life capacity. The oceans especially are in
dire circumstances. Seventeen percent of all plant life in the
North Atlantic Ocean has disappeared since the early 80s, when
we got satellite observations up, and were really able to
monitor it. Twenty-eight percent in the North Pacific Ocean,
and in Antarctic, a recent article in the Journal of Science,
paper in the Journal of Science, as much as 50 percent in the
sub-tropical, tropical oceans of plant life has disappeared.
That's equivalent to the 1 percent per year annual rate of loss
of the rainforests on land. But on land, the rainforests cover
3 percent of this planet. The ocean forest, ocean plants cover
72 percent of this planet.
So in each three to four year period, the loss of ocean
plant life on this planet is equal to losing all of the
rainforests on this planet. So I maintain, and we maintain that
the greatest crisis on this planet is the catastrophic decline
of plant life in the oceans.
If you looked in the scientific literature about a week and
a half ago, you might have seen an article that reported the
discovery of the clearest water on earth, from the American
Geophysical Union. That report talked about the sub-tropical
Pacific Ocean south of the Galapagos Islands, having been noted
as having the clearest water on the planet earth. The only
place on earth where the water was as clear, was in the lakes
that are under two miles of ice on the Antarctic Continent.
It's clear because it is lifeless water, and it's not supposed
to be that way. It is supposed to be pea soup. Right? And
that's the status of the decline, the catastrophic decline of
ocean plant life.
My company is involved in tree planting projects. Beginning
in 1972, I started a tree planting company in British Columbia.
That company is still continuing today. It's planted about a
quarter of a billion trees across Canada. Right now, we're
involved in a major tree planting project in the European
Union. We are planting a quarter of a million acres of new
natural, native mixed species forests into the European Union's
national parks, because if you're going to bank carbon dioxide
in a carbon bank account, which is a forest, you need a bank
guard. And we've selected the European National Park System as
the bank guard for our carbon deposits that we're banking. We
think that's safe, secure carbon.
Our ocean projects have come under a rather blistering
criticism by a number of groups who've attacked us, because
they say we're going to dump iron near the Galapagos Islands,
and possibly endanger those beautiful environments. Well, in
fact, the reason why we go there, the reason why two projects
in the past funded as part of the 20-year, hundred million
dollar research projects on iron fertilization that have taken
place, much of that money has come from the United States, and
have had international projects, is that the Galapagos Islands,
themselves, provide a rich amount of iron into the oceans,
produce a massive bloom that envelops and enshrouds those
islands, and goes a thousand miles to the west, and it is a
life-giving feature to those islands. So it's natural that we
go there to conduct the next logical step in ocean
fertilization, iron fertilization projects, which the science
community has called for, which is scaling up the projects that
have been done to-date with $100 million worth of public funds
one order of magnitude to the next logical size, and seeing if
its got commercial legs, and seeing if the offsets are
measurable.
Many papers have reported that the measurement of carbon
sequestration by ocean plankton is well in hand, and readily
available to be done, and it's quite a substantial thing. One
paper that came out recently suggested that in two locations in
the Pacific Ocean, in one case, 20 percent of the plankton
bloom was sequestered, the carbon was sequestered. And in
another case, 50 percent was sequestered. Well, those are
large, large numbers relative to this, and so the ocean forests
ought to be in play, because the ocean forest is the most
endangered forest on this planet.
So that's what our business does, and we think the
voluntary market is part of it. Yes, we did, indeed, work with
the Vatican over the better part of a year to review with them,
and show them what we were doing in our tree planting projects.
We think they took an extremely slow, careful look at our work,
and two weeks ago, they agreed to finally sort of go public
with this information, that they would become the first
sovereign state owner to go green with our tree planting
projects in Europe, and they have been taking an active role to
promote the faithful of the Catholic Church do the same, which
we think is a mighty testimony to the effectiveness of this. So
I'm here to answer all your questions.
[The prepared statement of Russ George follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. George, very much.
Our final witness is Mr. Thomas Boucher. He is the
President and CEO, and one of the co-founders of NativeEnergy,
one of the country's leading voluntary offset providers.
NativeEnergy is a Native-American owned company that generates
offsets primarily from renewable energy projects, many of them
located in Native-American communities. NativeEnergy has
provided offsets for a number of prominent companies and
events, including the recent Live Earth Concerts, and the
movie, ``An Inconvenient Truth''.
Thank you so much for being here, Mr. Boucher. Whenever
you're ready, please begin.
STATEMENT OF THOMAS BOUCHER, PRESIDENT AND CEO, NATIVEENERGY
LLC
Mr. Boucher. Thank you, Mr. Chairman, and members of the
Committee for allowing us to be here today, and share a bit of
what we do.
We have been a leader in the emerging voluntary carbon
offsets market over the past six years. And in that time,
building a business and the critical relationships with
partners to make that happen. We are a privately-held company,
and in 2005, did become majority-owned by a Native-American
interest. And we have found, actually, their long-term
perspective on the environment and beyond to be very helpful in
this regard.
The formation of this Committee, the number of global
warming bills now being entertained demonstrate the timeliness
of our actions on combating global warming pollution. And
NativeEnergy is very proud of providing and promoting high-
quality offsets to this new marketplace.
My written testimony provides detailed answers to the four
specific questions that were posed, and what I'll do here is
simply briefly cover the items in that written testimony.
As I said, we've been a pioneer and active participant in
the U.S. voluntary carbon offsets and renewable energy credits
market for over six years. We market renewable energy credits
as green power, and we also turn to renewable-based offsets,
and other carbon offsets from wind, biomass, solar, and
agricultural methane abatement.
To date, we have enabled 25 new renewable energy generation
projects that depended on the voluntary market to be
implemented. All of these projects are owned and operated by
Native-American tribes, Alaska Native villages, family farmers,
communities, and are provided distributed generation to enhance
grid reliability, help build sustainable local economies, and
increase energy security.
Although our early growth was what you might call painfully
slow, growing public awareness through events, such as Live
Earth, through films like, ``An Inconvenient Truth'', and
simply the catastrophic weather events that have occurred over
the last few years have really promoted action now.
We have an expanding staff of more than 20 employees and
consultants, and are expecting to market and sell this year
more offsets than all our prior years combined.
Our customers and business partners include individuals and
households throughout the U.S., and really around the world,
include small businesses and NGOs, regional and multi-national
corporations and NGOs.
We employ two principal business models for purchasing and
selling carbon offsets. As most marketers do, we do sell carbon
offsets generated in the year they are produced. We also
designed a forward-stream model. This enables our customers to
directly fund new projects that come on line as part of an up
front one-time payment to the projects. Most of our customers
prefer this forward-stream model. It provides the project the
financial equivalent of long-term revenues, it can help small
and mid-sized projects overcome their lack of economy of scale,
as what occurs here is a one-time transaction for a 10 to 25
year sales volume.
It enables customers to match their share of the expected
carbon offsets from these projects with their own carbon
footprint. In that way, they can be associated with a specific
new project that they can help build each year.
We ensure the environmental integrity of the offsets we
sell in two principal ways. We sell offsets from renewable
energy projects, we are confident do not have significant
adverse environmental impact. And we sell offsets from projects
that demonstrate additionality, in accordance with the United
Nations Framework Convention on climate change, tool for the
assessment and demonstration of additionality. We believe the
overall environmental quality of the offsets being sold into
the voluntary market is good.
In our experience, most carbon offset marketers are well
aware and follow the principles set forth in the Consumer
Protection and Unfair Trade Practices law, and various
environmental marketing guidelines. These provide adequate
protection, but there's further protection provided by non-
profit certifying organizations, whose standards are developed
through open stakeholder processes.
Voluntary offset market does not, at this point, need
government regulation, and we don't believe it would benefit
from it significantly. You see the market improving in quality
through the availability and use of third-party certification,
and the competitive forces.
The voluntary market has provided leadership in the United
States, demonstrating how carbon offsetting works, how easy and
cost-effective it can be. And in the European Union, a vibrant
voluntary market has complemented the mandatory cap and trade
system in place known as the Kyoto Protocol. We expect this to
be the case in a future cap and trade regime here in the U.S.
However large the voluntary offset market becomes, it is
much more than tons of carbon avoided and offset. It's about
engaging people. The voluntary market gives ordinary
individuals and businesses a genuine and effective way to take
a significant step to address their contribution to global
warming. Thank you.
[The prepared statement of Thomas Boucher follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Boucher, very much.
That completes the time for opening statements. Witness
will now turn to questions from any Member. The Chair will
recognize himself for questions.
Mr. Romm, Planktos' subsidiary has donated carbon offsets
to the Vatican, but you say that offsets based on temperate
forest projects are not effective. Are you suggesting that
Planktos has led the Pope astray, that this is not a project
that will, in fact, successfully offset the Vatican's
emissions?
Mr. Romm. Trees are a messy business. They--I think the
research that's been done on trees calls into serious question
whether outside of the tropics tree projects actually help the
climate. There are, certainly, leading climate scientists in
this country who think that they don't.
I mean, I would note that in clean development mechanism of
Kyoto, which also oversees offset projects under the rubric of
Kyoto, only six out of 1,783 projects are trees, so in Kyoto--
under the Kyoto Protocol, not a lot of trees are being done as
offsets.
The European Emissions Trading System doesn't allow trees
as part of emissions trading, and the gold standard that I
mentioned that's been endorsed by a number of environmental
groups explicitly doesn't allow forestry projects. So I just
think our problem is you burn fossil fuels. That carbon dioxide
is in the atmosphere for a long time. According to James
Hanson, a quarter of all emissions from burning fossil fuels
stay in the atmosphere forever. Trees can take decades before
they're sequestering a full amount.
I don't want to leave people with the impression that they
can burn fossil fuels on the one hand, and plant some trees on
the other hand, and that's going to solve climate change. Thank
you.
The Chairman. Mr. George, you've heard Mr. Romm's argument.
How would you respond?
Mr. George. Well, number one, our KlimaFa project based in
Hungary is a Kyoto-qualified joint implementation track one
verified, certified project in the European Union. And it's
judged by the--it's been set up in association with the
Hungarian Academy of Sciences, the Sopron School of Forestry.
We have the third-party verification agencies of the European
Union on board with us, and we also have the buyers from the
major buying organizations of the EU buying those credits from
us, as well. So the Pope wasn't misled. He is getting the most
highly regulated, highly certified product on the planet, and
those trees are going into the national park system of the
European Union. And they provide a plethora of other ecco
system service values, from clean water, to biodiversity
benefits, so there's a vast amount of positive signs on the
tree things.
And the comments about the one single climate scientist on
the planet who has posited one hypothetical mathematical model
suggesting that you can reduce forest ecco systems to a few
climate physics equations about albido and warming, that's just
that one single hypothesis has not stood the test of time. It
is highly disputed by all forest ecologists everywhere.
The Chairman. Thank you, Mr. George. Mr. Blachford, Mr.
Boucher, and Mr. Broekhoff, the Federal Trade Commission has
guidelines for environmental marketing claims, which could be
applied to offsets. Do you think that Federal Trade Commission
oversight of offset providers' compliance with these guidelines
would be a useful step? Mr. Broekhoff?
Mr. Broekhoff. Thank you, Mr. Chairman. Certainly, that
could be a useful first step in providing some assurance to the
market. However, I'm not sure that the real issue here is a
question of whether we have a bunch of fly-by-night operators
offering fraudulent products on the market. The issue that
we're dealing with here is, essentially, a definition of the
commodity that's being sold. And without some standards for how
you define these carbon offsets, how you quantify the
reductions standards for how they get verified in a registry,
where there's publicly available information about these
projects, I think you're still going to have these issues
about--some confusion about what it is that's actually being
traded, and that's what's really needed.
The Chairman. Mr. Boucher.
Mr. Boucher. I would just add that I believe the existing
guidelines that are out there can be used to inform us in this
new market. And the issues at-hand, as the other panelists have
indicated, are really fundamental in terms of defining the
products that are being sold. And I think the standards that
are coming out now will get us to the finish line there, and
make it far less confusing in the marketplace.
The Chairman. All right. So just go down here; yes/no,
Federal Trade Commission Oversight. Yes/no, go down. Broekhoff.
Mr. Broekhoff. Yes, as an initial first step.
The Chairman. Okay. Mr. Blachford.
Mr. Blachford. Yes.
The Chairman. Mr. George.
Mr. George. More help, not less.
The Chairman. Great. Mr. Boucher.
Mr. Boucher. Yes, over time.
The Chairman. The Chair's time has expired. The chair
recognizes the gentleman from Arizona, Mr. Shadegg.
Mr. Shadegg. Thank you, Mr. Chairman.
Mr. Romm, I'd like to give you an opportunity to educate me
a little bit, and explain to me, is it just that trees take too
long to absorb carbon, or in this dispute between you and Mr.
George, is there further argument--I think Mr. George referred
to it as to why trees are not an appropriate offset?
Mr. Romm. Yes. I will say that if you talk to the
environmental community that's interested in offsets, many of
them are not opposed to trees being part of the portfolio, but
they really have a problem with someone offsetting their
emissions 100 percent with trees. Yes, I think there's issue,
that trees take a long time to sequester carbon. I think
there's issue with permanence, how can you be certain that the
trees are going to stick around, that they're not going to be
burned down, or cut down?
There's problems with what's called additionality. As I
said, I talked to a forester who works with an aggregater in
this country of trees for carbon offsets, and he said to me,
``Everybody is selling offsets for things they were already
doing.''
I mean, I think it's a great--trees have many, many
benefits, and I'm a big fan of trees. That's why people plant
them, and save forests, anyway. So the big question is, are you
paying for something that would have happened anyway? Is
someone going to preserve that forest, because it's a good idea
for 10 other reasons? And I do think that the scientific
community has called into serious question what happens if
you're planting trees in the north, in the northern hemisphere,
are you increasing the--decreasing the earth's reflectivity;
and, therefore, helping warm up the planet?
The Chairman. Mr. George.
Mr. George. Well, to address this question about the
scientists in the community who have questioned trees in the
temperate zones being a problem, there is one scientist who has
written one mathematical model that's a highly restrictive
model, that only considers the warming effect, atmospheric
effect of trees. And it fails to deal with the fact that
trees--the carbon dioxide that comes out of the atmosphere and
is parked inside of a tree would be somewhere else influencing
some other system, so there's a complex world of
interdependencies in our ecology. And we know that most of that
carbon dioxide is going to end up in the ocean, where it's
going to produce ocean acidification, because H2O
plus CO2 equals H2CO3, which
is carbonic acid, which tastes great in a carbonated beverage,
but kills ocean life. And we have to slow that process down.
That's a desperate problem. And trees will have a dramatic
influence on that effect, as will the ocean plants.
Mr. Shadegg. This isn't really where I had intended to go,
but let me ask this question. Given that, at least, Mr. Romm
thinks trees are less than perfect, I'd like to ask anybody on
the panel to respond to this.
Do you think offsets should be awarded for the construction
of either hydro power facilities, or nuclear facilities, given
that they generate electricity, generate energy, but produce no
hydrocarbon, or no carbon emissions at all?
Mr. George. All the work with the living planet, the plants
of the planet, the trees, and the plants, and the ocean isn't
going to be enough. That's not enough. If we're lucky, it might
be half the problem, half of the solution.
Mr. Shadegg. So would you give credits for those----
Mr. George. Sure, I'd give credits for them. I mean, we
need to throw everything at this problem that we can come up
with. And all of the technologies----
Mr. Shadegg. You just go down and----
Mr. George. Yes.
Mr. Shadegg. Would you?
Mr. Broekhoff. Well, I would say that rule number one for
offsets is that they should not have any deleterious, adverse
effects. And a concern for those types of projects, nuclear and
hydro, large hydro dams, is that they may have adverse effects
on local communities, or in terms of environmental----
Mr. Shadegg. So your definition of adverse effects wouldn't
be just carbon. Mr. Romm?
Mr. Romm. Yes, I'm mixed. There really is a lot of large
hydro around the world to be done. Nuclear, I think--I mean, I
agree with Vice President Gore. I think you can't rule out
anything that doesn't produce carbon dioxide emissions, and
generates electricity. I'm not certain it's going to be a big
part of the solution.
Mr. Shadegg. Mr. Boucher.
Mr. Boucher. I think until nuclear has a solution for
storage, that one has to remain really off the table. I think
large-scale hydro would need to meet strict environmental
criteria, and that's pretty difficult to do.
Mr. Shadegg. So your answer is no.
Mr. Boucher. I think case-by-case is the way to look at it.
Mr. Shadegg. I'd like to ask, if I have time.
The Chairman. A quick question.
Mr. Shadegg. Just, the Financial Times had an article
recently in April, which was very critical of this current
voluntary market. I think you've answered it by saying all of
you would agree with the Chairman's suggestion that, or all of
you, I think, agree that FTC monitoring would be helpful, so
that answers the question. Thank you.
The Chairman. Thank you.
Mr. Shadegg. Yield back.
The Chairman. The gentleman's time has expired. The Chair
recognizes the gentleman from Washington State, Mr. Inslee.
Mr. Inslee. Thank you. I really appreciate your comments. I
want to ask a question, focus on this issue of what are you
getting when you buy an offset? Now let's say that I found some
great tree-hugger friend of mine that would give me $5,000 if I
would agree that Jay Inslee would not build a coal-fired
generating plant. I'd probably take the money, but I'm not sure
what he'd be getting, because I wasn't going to do it, anyway.
If I'm a tree farmer in Brazil, and I own 10,000 acres, and
I'm going to cut a thousand acres a year, and I say I'll give
you $5,000 not to cut this thousand acres, he says fine, I'll
take your $5,000. I'll go cut another thousand acres on the
rest of my plot. What am I getting?
If a dredger utility that's planning a nuclear power plant,
as one was recently, and built it, and some person says I'll
give you $5,000 if you'll build a nuke plant instead of a coal-
fired plant. Great, I'll take your money, but what am I
getting? I was going to build a nuke plant, anyway.
So one of the great conundrums I have is that, what asset
can we say we're really bringing to the table to reduce overall
CO2 reductions, when this behavior--we can't
guarantee this behavior wouldn't have been the same, anyway? So
how you guarantee that, Mr. Blachford, Mr. George, how do you
know these behaviors would not have taken place, anyway?
Mr. Blachford. It's a--you're basically asking the
question, how do you know that a reduction is not simply part
of business as usual? How do you know that it's actually
incremental, or additional, as people in the industry talk
about it? You have to apply a series of tests. And if a project
can't pass the tests, then it shouldn't be used as an offset.
So as a consumer, what you're getting there is a verified
reduction because that flaring would not have occurred absent
the offset market.
If it's not true, it wouldn't have occurred, and then he
doesn't have the offset, and it can't be used----
Mr. Shadegg. But how do you determine that? I can see your
logic when you're saying we're going to fund activities that
have no economic value, except CO2 reduction. So
flaring CO2 may have no economic value, except
CO2 reduction, so in that case, I can see where
you're buying an offset, you're inspiring a behavior that has
no economic incentive, other than the fact that you're going to
sell the offset.
But how about the fact that you're going to--what do you do
with a biodigester that has economic value, that I might decide
to put in, anyway, because it's going to generate electricity?
So how do you distinguish, you just tell me in your operations,
how do you distinguish that? You do some third-tier economic
analysis to determine whether they would or not, which would
require incredible sensitivity to figure that out? How do you
do that?
Mr. Blachford. Now you understand why we're asking for
standards. Basically, yes. There are standards that are out
there. There's a variety of them, which makes it confusing, but
what we would typically do is we'd go in, we'd look at the
financials. A number of other tests you have to put it through,
as well.
Mr. Shadegg. Gotcha. I want to ask a quick question of Mr.
George.
On plankton, no sequestration, I don't know what the life
cycle is of plankton. I don't know how long it is. It's less
than the cedar trees, probably.
Mr. George. But the beauty about plankton, about the ocean
forest, is it's a very--we call them plankton blooms because
they're a very sudden, vibrant events that are very short----
Mr. Shadegg. What happens when they die, where does their
carbon go?
Mr. George. Well, plankton takes the carbon dioxide out of
the air, turns it into the plant biomass. That's the grass of
the ocean, the sea life eats it, a bunch of it, so----
Mr. Shadegg. They respirate it.
Mr. George. They eat it, and they recycle it back into
CO2.
Mr. Shadegg. Right. That's what I'm saying.
Mr. George. Some portion sinks.
Mr. Shadegg. Okay. I want to get to that. Plankton live,
they take CO2, they die.
Mr. George. Right.
Mr. Shadegg. Somebody eats them, they're respirated,
CO2 goes back into the atmosphere.
Mr. George. Some portion goes back into the system, and
some portion sinks.
Mr. Shadegg. What portion?
Mr. George. Well, it depends on the location, and the kind
of bloom, and the duration of the bloom. Blooms never last more
than about six months at a time, so instead of a forest that
lasts hundreds of years, you have a forest that lasts months,
so the accounting time frame is very much easier to handle. The
amount that sinks, in two recent studies, one in the North
Pacific near the Hawaiian Islands that looked at natural
plankton blooms, they found 20 percent of the net biomass of
the bloom sank to great depth, where it was sequestered for at
least 1,000 years.
In the North Pacific, where the blooms are more vibrant, 50
percent of the net biomass sank, so they're quite efficient in
terms of sequestering biomass into the deep ocean where the
recycle time back to the atmosphere is on the millennial scale.
And that's why 20 years and $100 million of public funds makes
it time to try this as a pilot project.
The Chairman. The gentleman's time has expired. The
gentleman from--Mr. Sullivan.
Mr. Sullivan. Thank you, Mr. Chairman. And this will be
from anybody that wants to answer it.
Would you agree that it would be better for an individual
or a company to try to directly reduce their emission-
generating actions, rather than purchase an offset?
Mr. Broekhoff. Absolutely, I think that would be better.
And I think in terms of the approach to offsets, we should
encourage people to reduce emissions that they're personally
responsible for in any way they can. I think the question is,
do you want to afford them the opportunity to go beyond what
they could easily reduce, or what they could afford to reduce.
And carbon offsets are a mechanism for doing that, so it's an
opportunity to achieve more than what people might be able to
do on their own.
Mr. Sullivan. Mr. Romm.
Mr. Romm. Yes, I couldn't agree more. I think people need
to reduce their own emissions, and particularly, their own
fossil fuel consumption, because that's 85 percent of U.S.
emissions. There are activities that are hard to reduce the
emissions from, air travel, one-time events, so I think that
makes sense to buy offsets for.
Mr. George. You know, we all need to reduce every way we
can. I was in the London Underground the other day, and I saw
an ad that pointed to a plastic water bottle. And it said if
you recycle that bottle, you save six hours of light time of
100 watt lightbulb on your energy thing. And if you don't use
the bottle at all, it's more like three times that amount. So
if you pour your water out of a pitcher, instead of out of a
plastic bottle, you save a day's worth of lighting, so we need
to do everything to solve this problem. And most of the
solutions are really easy, they're readily at-hand. And if we
throw a little bit of everything at this problem, we'll solve
it.
Mr. Boucher. Most of our customers are trying to get to
carbon neutral, really to get to a net zero. The only practical
way to get there is to use offsets. And, certainly, most of
them are doing all they can to reduce their carbon footprint
along the way, so it's really a two-pronged effort. Do all you
can to continue to reduce your carbon footprint, use offsets to
get to zero. And, again, most of our customers are trying to
get there, which I think the merit of the voluntary market is
that it's going to be a slow-burn, I think, on the mandatory
side, whereas, voluntary purchasers are getting to net zero.
Mr. Sullivan. Kind of answered my next question, but I'd
like to ask, is it Blachford, your business came about, and is
very successful, was it because of the growth of a voluntary
market? It was because of that, a voluntary market, your
students, I guess, creative students, those kinds of things, or
was it more government action? Which one do you think was a
contributor to your success more?
Mr. Blachford. Well, I would say in the near-term, it's
only been around for two and a half years. And I would say it
came entirely from entrepreneurial desire to help solve the
climate change problem in a way that would make them feel good
about what they're doing, and come back and do it some more. So
I think to the extent that the government, in particular, I
think the Environmental Protection Agency has been very
helpful. Certainly, the voluntary market couldn't exist as it
does today without some of these standards that are now in
place. And to that extent, government has been helpful, but I
think I would, generally speaking, say that it's the product
more of just an entrepreneurial incentive to solve the
problems.
Mr. Sullivan. Thank you, and I thank the rest of the panel.
I yield back, Mr. Chairman.
The Chairman. The gentleman's time has expired. The Chair
recognizes the gentlelady from California, Ms. Solis.
Ms. Solis. Thank you.
I asked a question earlier regarding carbon offset. Perhaps
collaboration with some urban groups, if there's an incidents
of that going on now? My concern is that, again, in communities
that are poorly represented, under-represented, that we have
environmental justice issues where you could typically have
generators, or landfills that surround a district, which is
very typical of my district. Folks that could typically afford
to pay for these carbon offsets are, obviously, the big
companies. And what happens then to those communities, and how
can we help empower them? So I would just start, whoever wants
to answer.
Mr. Broekhoff. Certainly, there are some concerns about
offset projects. As I said earlier, the first rule of offsets
should be a portion of the Hippocratic Oath, they should do no
harm. But there is the potential for carbon offsets, I think,
to benefit poorer communities. And, particularly, if you're
looking at projects in energy efficiency, renewable energy, if
you're talking about landfills in your community, and providing
an incentive to cap the emissions, and improve the safety of
those landfills, carbon offsets can provide a mechanism to fund
those kinds of opportunities. So there can be a win/win
situation here.
Mr. Romm. I agree. And I think it would be useful for the
Congress to start the process of setting up protocols for what
is a legitimate offset. And one could clearly set up some
protocols to make low-income housing more energy efficient,
which would, obviously, have multiple benefits, so I tend to
agree with that, yes.
Mr. Blachford. I think, if you can hear me okay, I think
that really efficiency is probably the most logical place to
look, as well as, there's probably a number of other things
that could be investigated. I'm more aware right now of the
offset market helping from an income point in rural
communities, specifically, small family farms that maybe
wouldn't be able to make a go of it without some new sources of
revenue. I'm not as aware of things happening in the urban
centers.
Mr. George. Our projects very specifically involve hiring
people from poor communities that do the work planting the
trees, and in our ocean projects, we've been approached by a
number of island nations around the world, whose fisheries
resources have dramatically dwindled because of the collapse of
the ocean food chain, the collapse of the phytoplankton. And
they've asked us whether our projects are ocean restoration
projects, will revitalize those local fishing economies.
I met with the chief scientist of the United Kingdom some
months ago. He pointed out to me that his studies have shown
that the collapse of the North Atlantic Fishery was largely due
to the collapse of the plankton food chain, below it. So as we
work on these issues, we are certainly going to impact and
influence in a very positive way the lifestyles of people who
are living by the land, or by the sea.
Mr. Boucher. We see social justice issues as a key
component of our projects. That has really caused us to focus
on travel projects, in particular, but also, the farming
communities, and other local communities where our projects
have extra benefit. They're helping build local sustainable
economies.
For the tribes, there's great potential there to build out
wind on their reservations, and they want to be an owner/
operator to the extent they can, and to the extent that tax law
really enables that. Right now, that's a bit of a problem. But,
to us, the social justice side is very important in our
selection of projects that we support.
Ms. Solis. I'm very interested in learning more about
what's happening on Native-American reservations, because we
hear many very troubling stories about high levels of
contamination, previous use of projects there, and lack of
cleanup, and the fact that we still have communities that are
exposed to very harmful residue that was not collected, or not
being cleaned. And I know that the Native-American tribes also
have a tremendous influx of funding now through casinos and
gaming in the State of California. That's something that also--
--
Mr. Boucher. Yes. I mean, there's a combination of
opportunities there. Some of the tribes with more wealth can
help develop projects on Native-American lands and other
places. Much of the wind resources on tribal lands where there
is not a big casino operation, and they are some of the poorest
areas in the country, Pine Ridge, Rosebud Reservation, but they
have tremendous wind resources. So the solution there is to
build projects and have local native involvement.
Ms. Solis. I didn't get a response, though, about any
groups or coalitions, if that's something that you are aware
of, so----
Mr. George. I could make one mention. I'm working very
closely with the Haida First Nations in the Province of British
Columbia, as well as a group of 13 First Nations people on
Vancouver Island in British Columbia, where we are developing
climate forest projects that are majority-owned by those First
Nations people. And the bulk of the value of those projects,
they will produce a new series of ecco forestry careers, green
collar jobs, for those people, and long-term revenue streams
for decades to come from the carbon credits from those new
forests.
Ms. Solis. Thank you. Thank you, Mr. Chair.
The Chairman. The gentlelady's time has expired. The Chair
recognizes the gentlelady----
Ms. Blackburn. Thank you, Mr. Chairman. And I want to thank
all of you for being here. It's so interesting, as we look at
the carbon credit market, and talk about carbon offset. I find
it so interesting, having had the opportunity with some of my
colleagues from this Committee and Energy and Commerce
Committee to look at it. They call it a scheme, and I think
that's probably a pretty appropriate name for it, because I'm
not certain that it's what it's cracked up to be. I'm not
certain that gets us where we would like to be, at being better
consumers.
You know, one of the things we do have to realize is that
it should be encouraging us to make better personal decisions
when it comes to conservation, and when it comes to efficiency.
Mr. George, I appreciate that you just talked about the
water bottle issue. And there are a lot of people that thought
that the bottled water industry was much to do about nothing
for many years. I find that quite interesting.
On the carbon market, there are a couple of things that
disturb me, or concern me, or cause me to take pause as we look
at the Chicago Exchange, and the European Exchange, and debate
this issue here amongst us. And one of those is lack of
consistency of quality, and that is of concern to me. And I do
have a couple of questions I want to touch on.
Mr. George, I think I will come to you first, and then
probably go to the others on the Committee. Do you, with
Planktos, do you provide your consumers with detailed
information on all your projects, and what the money is going
toward with carbon offsets? Do your consumers have full
exposure----
Mr. George. Yes, they do, in so far as the primary focus of
our business is the European Union's regulated marketplace,
where in order to sell our products, we have to pass through
their very rigid third-party regulatory mechanism. And so, if
we fail to do that--our plankton projects are, in fact, the
pilot projects. We've proposed to do six pilot projects, and
part of the purpose of that is to develop the methodology, and
present that methodology to the EU's regulatory process, and
have it accepted.
If we succeed, we will have created a new industry. If we
don't succeed, we will have produced a lot of great science.
But it's a very highly regulated process, so in so far as
people who seek to buy the credits from us in the voluntary
market, they're getting the same degree of regulatory oversight
that comes from the most highly regulated carbon market on the
planet. And we are being very transparent about our work, in
that we're presenting what we're doing, where we're doing, how
we're doing, and we're engaging the scientific community as
participants in it.
Ms. Blackburn. Okay, and Terrapass does that. Do you have
the same type transparency with your group?
Mr. Blachford. Well, we do. It's a slightly different
flavor transparency because we don't originate projects
ourselves. What we do is post out for public consumption on the
website every project we've ever bought from, how much we've
bought from them, what's the date of the purchases.
Ms. Blackburn. Okay, and Mr. Boucher.
Mr. Boucher. Yes, we post a full disclosure really on a
website for each project that is being supported with the
exception of the specific wholesale or margin involved with the
project. That is information for competitive reasons.
Obviously, we cannot post. But we provide the full calculation
of the offset, the methodology that is used by different types
of offset projects and I support the view that the more that
can be shown on the website the better in terms of full
disclosure, folks know what they're supporting and where their
dollars are going.
Ms. Blackburn. Now let me ask you. Do you get government
subsidies for selling electricity through renewal energy?
Mr. Boucher. We certainly do not ourselves.
Ms. Blackburn. You do not. You all do not.
Mr. Boucher. No.
Ms. Blackburn. Thanks.
The Chairman. And the lady's time has expired.
Ms. Blackburn. Oh, I'm already out of time. Well, I guess
I'll have to submit the rest of my questions.
The Chairman. We'll have a second round if you would like.
Ms. Blackburn. Okay. Good. Thank you, Mr. Chairman. Thank
you.
The Chairman. The gentleman from Missouri, Mr. Cleaver, is
recognized.
Mr. Cleaver. Thank you, Mr. Chairman. Let me--The first
time I went to London I went down from my room into the
restaurant area to have pot of tea and biscuits and I wanted to
get a full breakfast and they brought down hot tea and cookies
and the British didn't seem to know that cookies in the United
States where English originated should be sweet and cookies.
They turned things around. They think that biscuits are cookies
and cookies are biscuits.
And one of the problems that the woman from Tennessee
mentioned is in Europe they use the word ``scheme'' and she
absolutely right except they are confused again. The word
``scheme'' in Europe is synonymous with the word ``plan'' in
English where it originated here in the United States. And so I
just wanted to make sure that in Europe they are not trying to
say there is some kind of underhanded opportunity to do people
in. I hate that she left.
But at any rate, I'm on the Financial Services Committee
and we always have difficulty when the need is for us to do
something. For example, people after Katrina including at least
two members of Congress have not had their insurance to pay out
as of today. I think Senator Lott had his home paid for and
whenever we hold hearings as we did yesterday, there's always
resistance that the government should stay out of it, that the
insurance industry will fix it up. The same thing holds true
with subprime lenders, don't get involved. The government
should stay out.
And so with this kind of attitude in Congress certainly
there will be those who would say that with regard to carbon
offsets that we just let it go, the government should stay out,
that we don't need it. Can I just hear from you whether you
think that voluntary offsets will continue and whether or not
you think that the reason we have voluntary offsets now is
because government has moved in and if government moves in and
it's all encompassing, then we don't need offsets and if we
don't need voluntary offsets, that the government would take in
all of it. Anyone. Mr. Romm.
Mr. Romm. I certainly agree with that. I think that once
the absence of the government taking action has led individuals
to try to do what they can and so you're handed up with this
voluntary market. I believe that once the government
establishes a mandatory cap and trade system, that will
establish official emissions reductions and then if someone
wants to reduce their emissions, they will purchase their tons
on that market and they won't go to some voluntary vendor.
Mr. George. I might add though in Europe where there's a
highly regulated, well-established market there's a very large
voluntary market, much larger than here in the United States.
So the voluntary market will exist side by side with the
regulated mandatory market.
Mr. Cleaver. I mean even if the government implements some
kind of program that encompasses just about every sector.
Mr. George. Well, that's the case in Europe. The voluntary
market still exists. I mean the government I don't think will
ever go all the way down to sort of the root level individual.
Mr. Broekhoff. I think we had to distinguish between the
voluntary demand for carbon offsets which is quite alive in
Europe and the voluntary supply because if we have a mandatory
program that defines the rules for creating these carbon
offsets, there may be a limited space for any kind of voluntary
market to develop, to have its own rules, in addition to the
mandatory program. The voluntary demand will still be there.
The voluntary supply will be primarily, I think, a way to
experiment with new types of projects and technologies perhaps.
Mr. Boucher. We also think there will be always a demand
for more than simply the offset volume itself. It's whether
it's supporting a special program. Are there's other benefits
associated with the program? So I don't think it's going to all
collapse to a single commodity.
Mr. George. We have a lot of companies in Europe who aren't
in the regulated markets space but are asking to buy from us
voluntary credits that meet the full certification requirements
of the mandatory market. So, in fact, the voluntary market I
think will always remain. The mandatory market will set the
standard though for the quality of the product.
Mr. Blachford. Let me make just one final point on this
subject. Most cap and trade markets today have as their goal a
percentage reduction in carbon that's usually in the 10 to 20
percent over time range. Most individuals and companies who are
using carbon offsets are self-imposing a cap that looks like a
100 percent. They want to go to carbon neutral. I can't imagine
a government regulation that is going to make the vast majority
of businesses and consumers 100 percent carbon neutral. Those
people who want to go above and beyond a government standard
are always going to look to a voluntary market.
Mr. Cleaver. Thank you, Mr. Chairman.
The Chairman. Gentlemen, time has expired. Several members
has asked unanimous consent that they be allowed to submit
questions in writing. That will be so ordered and it is, by the
way, the intention of the Chair to conduct a second round of
questions. The Chair recognizes the gentleman from California,
Mr. McNerney.
Mr. McNerney. Thank you, Mr. Chairman. I want to thank the
Board for coming and giving your expert testimony. It's very
enlightening and there is a diversity of viewpoints. So it's
going to be useful, I think.
I'm going to start with Mr. George. Your testimony on the
state of the oceans is very startling and I'd like to know how
important has global warming been in that devastation of ocean
plant life?
Mr. George. Well, global warming is probably not the way to
go on that. It's really anthropogenic CO2. It's
carbon dioxide. All the carbon dioxide that's going into the
air from fossil fuel today, natural gas and oil was plankton
200 million years ago. It's solar energy stored in plankton
biomass that went through the geologic process and we've burned
it up. We've burned up a 200 million year savings account in
about 150 years or so. It's a heck of a party and we've left a
big mess and we need to clean it up.
That CO2 is going back into the oceans,
converting the oceans, making the oceans acidic. They've become
10 percent more acidic in the last few decades. The Royal
Society of the U.K. reported a year and a half ago that
acidification would reach a state that by the year 2050,
sometime between the year 2050 and 2100 CO2
saturation would occur.
Well, about a month ago, a paper came out and said in the
Southern Ocean of surrounding Antarctica, CO2
saturation had already suddenly appeared a hundred years ahead
of schedule and there's no wonder that we've seen an 80 percent
decline in the krill populations of the Southern Ocean. So
there is an enormous crisis on the planet of carbon dioxide
that's influencing the ocean through direct effects, being
soluble and making that oceans acidic.
The other probably more important effect is that
CO2 feeds plants on land. Well, this planet is
mostly grass, not mostly trees and when grass gets--grass is
that stuff that's green in the spring and brown in the summer
and when it's brown, it's not such good ground cover. If a dust
arrives, that dust feeds the ocean. In the past 30 years, we've
seen the dry grasses of the world that go brown in the summer
stay green for two to three weeks longer every year in the
summer, two to three weeks in the summer. That's a big piece of
summer and the amount of dust circulating in the planet's
atmosphere is measurably clearly shown by the atmospheric
agencies to have dramatically declines. That dust in the wind
was the vital mineral micro nutrients for the ocean and that's
what the past 20 years and hundred million dollars worth of
public spending has been targeting to see if we can unravel
that mystery and see if we could reverse it.
And we think the result of that research says we can do it.
We can take a shot at actually restoring starting selectively
in a few locations that ocean plant life.
Mr. McNerney. Thanks for the clarification that the cause
of global warming is also the same cause as much of the
devastation in the plant life. Do you have any evidence or
proof that the ocean fertilization will lead to a healthy ocean
as opposed to some other form of problem?
Mr. George. Well, sure. The reason why we're going to the
Galapagos Islands and the reason why the first two iron
fertilization experiments that were funded by the U.S.
Government went there was that the Galapagos Islands themselves
are a major source of iron for that portion of the world's
oceans and the iron that leeches off of those islands produces
a massive plankton bloom that envelopes and surrounds those
islands and drifts 1,000 miles to the west and everything we
know about that plankton bloom which is stimulated by iron is
that it produces a wonderful marine oasis effect and that's why
the Galapagos Islands are so famous.
So we use that bloom. The two previous projects have used
that bloom and we will use that bloom as natural control study
site so that we can try to match up the bloom that we produce
by adding a very small amount of iron to an area of about \1/
50\th of the size of the natural Galapagos bloom and if we're
lucky, if we do everything right, we might be able to mimic
that effect and develop this as a technology that might have
major utility in helping to reverse the decline of the ocean
ecosystems.
Mr. McNerney. Thank you. Mr. Broekhoff, you gave us three
elements in the early part of your testimony, the accounting
standards, the monitoring and verification standards, and
registration and enforcement standards. Do you think those
could form the basis of federal oversight of the voluntary
system?
Mr. Broekhoff. Yes, absolutely and I should note that there
are various voluntary initiatives that have been developing
pieces of these standards. So you have my institute has
developed accounting standards for carbon offsets projects but
without the verification and the registry pieces there. You
need all three pieces in order to establish a commodity.
Mr. McNerney. Thank you. One last question. Mr. Romm, your
written testimony has a discussion, the Golden Offsets, and
what I would like you to do is discuss that keeping in mind how
we might find that useful in developing federal regulations or
federal statutes.
Mr. Romm. Sure. Well, this is called the Gold Standard
which is an international standard for offsets that a number of
environmental groups have endorsed and they are fairly rigid
criteria for meeting these. That's why they're called the Gold
Standard and in particular, really need the project need to
energy efficiency or renewable energy projects or methane to
energy to projects and they have to pass a sustainable
development screen and they must provide an energy service that
catalyzes the transition to a clean energy economy.
I mean I think people need to understand offsets aren't
going to solve the global warming problem, but they could help
spur the transition to the clean energy economy that we need
and I think that's why I personally think that offsets should
focus on energy efficiency and renewable energy projects.
So that was the thinking behind the Gold Standard and I
think that the government is going to have to set protocols for
what is an offset and what isn't an offset. Sooner or later,
it's going to have to set up offsets in the mandatory regime
for what is a real emission reduction and those same protocols
in the mandatory regime, if they are started earlier, could be
used in the voluntary regime.
Mr. McNerney. Thank you. I yield.
The Chairman. Great. The gentleman's time has expired. The
gentleman from Oregon, Mr. Walden.
Mr. Walden. Thank you very much, Mr. Chairman, and I
appreciate the panel here. I'm sorry I had a conflict earlier
this morning and wasn't able to be here for all of it of your
testimony, but I have it.
I want to follow up on some discussions that took place
regarding forestry. Prior to this Congress, I chaired the
Forest Subcommittee. On the Resources Committee, I've been very
active on these forestry issues and I understand there's been
pretty good discussion here today about the role of forests'
potential sequesters of carbon. My understanding, there was a
study done by a Dr. Helms who, I believe, testified before this
committee that in extreme cases wildfire, catastrophic wildfire
where everything burns, you could have up to 100 tons per acre
of greenhouse gas emissions. On average, according to Winrock
International wildfire estimates, or Winrock International,
they say wildfire averages about 6 tons of carbon per acre, so
somewhere, worst case 100 tons per acre, best case probably
more like 6 tons. Now I'm told that the average vehicle on the
road today in America emits about 5 tons of carbon per year. So
if you have one acre burn at the low end of the scale you're
emitting 6 tons of carbon gas versus a vehicle that's 5 tons.
So far this year, in American, we've burned 3.1 million
acres. Most of my district in rural Oregon is literally on fire
today. I flew over it this weekend. I'm going back this coming
weekend. So that means we've emitted 18.9 million tons of
carbon from wildfire.
It strikes me that if, indeed, the globe is warming and the
Pacific Northwest is going to see temperatures increasing by
upwards of six to seven degrees potentially within 100 years,
that the need to get in and manage the Federal Government's
land which constitutes 55 percent of the State of Oregon is
even more important than ever because you're going to have more
drought, therefore, more pressure on the trees, therefore, more
bug infestations and, therefore, more wildfire.
Would you all care to comment on the need to change Federal
land policy so that we prepare our forests that we own as
taxpayers so that they are more fire tolerant, disease
tolerant, insect tolerant and more adaptable to the change in
climate? Mr. George, do you want to comment on that?
Mr. George. Well, it's a challenge I've been working forest
ecology all my life and trying to manage forests against fire
risk is a tough problem. I'm not sure that cutting them down is
a good alternative because you emit an awful lot of carbon when
you cut and clear forests as well.
Mr. Walden. I didn't say go in and cut them all down and
blacktop.
Mr. George. Yes. No.
Mr. Walden. Although with pressure on the industry, a lot
of it is getting converted into residential land if it's
private.
Mr. George. Sure.
Mr. Walden. I'm talking about Federal land that is
overstocked and if you've been in forest ecology, you know it's
overstocked on the Federal ground.
Mr. George. Sure.
Mr. Walden. Fuels and everything else.
Mr. George. Sure, and there is room for intensive forest
management on many lands, but whether or not the economics are
there to do that kind of intensive forest management is another
question. The carbon credit value in forestry isn't competitive
with commercial aspects, you know, with the timber values in
forests.
To address your question of the emissions from a forest.
Mr. Walden. Yes.
Mr. George. We're working on several different forest
projects in different parts of the world in the temperate
rainforest of British Columbia which parts of Oregon are
similar to that.
Mr. Walden. Right.
Mr. George. A forest there at maturity is storing 2,000
tons per hectare or something like that or 2,500 tons per
hectare or 1,000 tons per acre of carbon dioxide in that
forest. In the temperate forests of Europe, it's about half
that amount. In Costa Rica, it's in between those two sums,
those two amounts. So forests do store a lot of carbon dioxide
and indeed when they burn, it doesn't all go into the air
instantly.
Mr. Walden. I understand that. I guess I'm confused by your
comment. So are you saying forests, it doesn't really matter
what we do out there as it relates to carbon?
Mr. George. Well, they're big ecosystems. I'm not sure we
can manage them for their risk, for their fire risk, because
I'm not sure that fire risk management has worked in forests.
Mr. Walden. Oh, I guess because I live around them and seen
them where we have managed and done the thinning and opened up
the stance, gotten them back to their historical separation of
tree patterns. You know, we suppressed fire for 100 years.
Mr. George. In our old ecology, but we're entering an age
of new drier ecology and we're going to have more fires.
Mr. Walden. Right, but what I've seen on the ground and in
reality in almost every case where we have gone in and thinned
back to what the historical stumpage should be per acre when
they do get a fire it drops the ground and they get it out as
opposed to these crown fires. I have fires out there that are
spotting a mile ahead right now.
Mr. George. Yes.
Mr. Walden. In the Malheur National Forest. A mile ahead.
Mr. George. Yes, I've been on the fire line on big fires
like that. So I know them well.
Mr. Walden. Well, my time has expired.
The Chairman. The gentleman's time has expired and we will
move to a second round of questions. The Chair will recognize
himself.
Mr. George, the IPCC, the Scientific Group of the London
Convention and other scientific groups have all suggested that
we should not go forward with large scale ocean fertilization
tests until we know more about the potential risks posed by
such projects. Given the weight of scientific authority, why
should Planktos be permitted to go forward with its planned
project in Galapagos at this time?
Mr. George. Well, our projects have been highly
misrepresented by a lot of organizations who have suggested
that they involve a lot of risk and danger to the environment
when, in fact, these very projects, the scope and scale of our
projects are on the record as proposals by many nations through
their national science foundations and agencies.
In Germany, for instance, the Alfred Wegener Institute in
Bremerhaven has a project almost identical to our pilot project
series on the book scheduled for 2011. We've been in close
discussions with the Wegener Institute about helping to fund
that project, to accelerate it in the near term instead of
waiting until 2011. We know the team at Moss Landing Marine
Labs which originated this field has had many proposals at the
National Science Foundation to do this next scaled-up
experiment.
What we are as a company is we thought we were the
government research industry's dream come true. After 20 years
and $100 million worth of public funds, we're a private company
who says ``That was fantastic research. There is a terrific
opportunity here. Let us step in and do a series of carefully
planned pilot projects, six, that match exactly what the
scientific community has said has to be done to discover
whether this is viable to gather the information. We're not
going to only academic science. We're going to do intensive
academic science.''
But like any true commercial pilot project, we're going to
look at the cost of engineering, the economics of the process,
the regulatory requirements, the public requirements and, of
course, the environmental impacts of that and if we don't do
that, we won't have the knowledge that we need to answer these
questions that are being asked.
The Chairman. Okay. Why would it be unreasonable for the
EPA to require you to obtain a permit under the Ocean Dumping
Act before dumping 100 tons of iron into the ocean? What
permits have you sought or received?
Mr. George. What we have is we've received one fax from the
EPA asking me to phone them. I telephoned them. I had about an
hour long, informal phone conversation with them. The very next
thing I heard from the EPA, well, I heard about the EPA, was I
received a telephone call from a reporter in Ottawa, Canada who
said that a very radical environmental group called ETC based
in Ottawa had handed the reporter the contents of the EPA's
presentation to the London Dumping Convention meeting in Spain
that was taking place at that very moment and would I comment
on the EPA's criticism of our work. So it was a little bit
extraordinary to discover that the EPA's comments about our
work weren't made to us, weren't presented to us in any formal
fashion or presented to a radical environmental group who went
to a reporter in their country and who challenged us to answer
these accusations and I don't know if that's normal procedure
and protocol for the U.S. EPA to address a U.S. company through
a foreign media and foreign radical environmental group just
before it files a position statement that includes the text of
that radical group's position statement on us which is utterly
false and misleading with an international body. I think that's
an extraordinary behavior of a U.S. regulatory agency.
The Chairman. Mr. George, I'm going to ask Mr. Romm to
comment on it.
Mr. Romm. Yes. It is worthwhile to pursue these experiments
if they meet appropriate EPA regulations. I think it's
inappropriate to sell consumers, to charge consumers money,
under the claim that this has been proven to avoid, sequester,
a certain amount of carbon dioxide. As you said, there are a
lot of scientific organizations that have a lot of doubts about
this organization. I included in my written testimony an
extended statement that was issued just last month by one of
the leading groups of experts on the ocean atmosphere system
which went out of their way to issue this statement saying,
``We don't think this is a good idea at all.'' And in the
addendum to my testimony, I have an excerpt from a science
magazine article that says point blank ocean fertilization
should not be allowed carbon offsets credits. So that's
certainly my position.
The Chairman. The Chair's time has expired. The Chair
recognizes the gentleman from Washington State, Mr. Inslee.
Mr. Inslee. Thank you. I spent the last year co-authoring a
book about clean interview, about how we develop a clean
interview future, and we called it Apollo's Fire because we
want to harken back to the idea of the original Apollo Project.
In looking at this thing, I became more and more convinced
that you have to develop new technologies to help solve this
problem. It's just absolutely fundamentally key to solving this
problem. There is just no way we can do enough trees or algae.
We just have to have new technology.
If that's true, and I'll ask this of Mr. Blachford and Mr.
George and Mr. Boucher, doesn't it make sense if we're going to
have offsets to focus on those that Mr. Romm suggested in this
gold standard that direct this offset investment towards
investments that will sprout new technological growth both in
efficiency and in renewable energy sources as opposed to
sequestration or land use or some areas. Isn't that a higher
view and, if so, what does the consumer know about that between
the various offset markets that are out there?
Mr. George. Could I answer that briefly? When you don't
put a ton of carbon dioxide into the earth's atmosphere, you
don't cause any further harm to the planet. When you hire a
tree or a green plant in the ocean to take that ton of carbon
dioxide out of the atmosphere and turn it into those living
plants, that living ecosystem, it's no longer harming the
planet, but it's also healing the harm done to date and
providing an ongoing healing form and what we're concerned
about with carbon dioxide in the air is the harm it does to the
living planet. It's the harm that it's doing to the ecosystems
of the planet. So why not employ those ecosystems which are in
a dramatically reduced state, why not bring them back?
In Hungary, it used to be 70 percent forest. It's now 17
percent. We're going to plant a quarter of a million acres of
new forest in Hungary that goes into the national parks system
there that will be very heavily protected. It will be a long
term, enormous benefit to that ecosystem there and the same
thing goes in restoring the ocean.
If we don't restore the harm already done by climate change
by carbon dioxide, what good does it do to do no further harm?
We have to also heal the harm done.
Mr. Inslee. I just want to know. One concern I have is
what really results in geological storage. You have to have
geological storage to make this. Trees fall over and die and
they decompose and then their CO2 is emitted and I
suppose what you're telling me is that these credits you're
buying is to keep these forests in perpetuity. So you just
replace the tree that's fallen down and decomposed. Is that the
idea?
Mr. George. Forests are self-sustaining green machines
that keep themselves going in perpetuity. The fossil fuel age
is only about 200 years old at best, really 100 years old in
high gear. You know, by all accounts it's only going to last a
few hundred years longer. In the ocean, it's very easy to see
CUB and repositioned in the deep ocean for periods of
millennia. It may be back 2,000 years from now, but the fossil
fuel age will be long gone.
Mr. Inslee. I want to ask about the European Certified
Emission Reductions. As I understand, these are certificates in
Europe.
Mr. George. Yes.
Mr. Inslee. Do your markets, and I ask all of you, do you
use those? Do you invest in them? And are they a prototype that
we should concern in the United States for a certificate? I
want to ask all the panel, not just Mr. George. Anyone who
wants to answer the question go ahead. Anyone?
Mr. Broekhoff. Mr. Inslee, the certified emission
reductions are actually units that are created under the Kyoto
protocol. The European Union has a trading system set up that
recognizes those credits. I think certainly within the
framework that the Kyoto protocol has established these, these
are credible carbon oxide instruments. Questions have been
raised about projects here and there, but overall it's a pretty
credible mechanism.
Mr. Inslee. So, Mr. Blachford, in your company do you sell
those? Do you meet those certification standards?
Mr. Blachford. No, because they're really for sale within
the Kyoto protocol. They're not really for sale in the
voluntary market. There are VERs, voluntary emission
reductions, that are again it's a just a denomination of the
credit but are held to a very similar standard typically from
developing countries. We sell projects that are in the United
States. So we don't right now sell anything that would qualify
there.
I think there are standards in development though,
including the gold standard that Mr. Romm was talking about
before, that incorporate most, if not all, of the same
attributes that those CERs and VERs have.
Mr. Inslee. So would you meet their standards in a
domestic context?
Mr. Blachford. Today's it's no so much a question of
whether we meet the standards. It's more a question of whether
the projects do. I actually went to a gold standard project
database this morning anticipating some of this conversation
and there is only one project listed in that database that's
operational today.
Mr. Inslee. Thank you.
Mr. George. You know, you have to understand that carbon
credits are, you should think them in terms of bottles of wine.
They have a vintage year and a label and there's quite a large
variety of different carbon credit markets out there. It's
important each year. The vintage is important because we retire
the credits on an annual basis. But the label is also
critically important. So there is plethora of different labels
of carbon credits emerging in the markets around the world
especially those markets where there is mandatory requirements.
The Chairman. Gentleman's time is expired. The Chair
recognizes the gentlelady, Ms. Blackburn.
Ms. Blackburn. Thank you, Mr. Chairman. A couple of quick
questions. Mr. Broekhoff, you said you all were developing some
accounting standards for carbon offsets. So let me ask you
this. Do you think that it is possible or that we should even
try to develop federal guidelines for voluntary carbon offsets,
develop some guidelines that would clarify the voluntary carbon
offset industry and still preserve it as a voluntary industry?
What is your take on that or should we just leave it alone and
avoid full scale government regulation?
Mr. Broekhoff. I think it's possible for the Federal
Government to provide some oversight and guidance, for example,
in recommending best practice accounting protocols for the
quantification of carbon assets, also perhaps in terms of
certifying verifiers or certifying registries that could serve
this market without directly controlling the market or
providing direct regulation.
Ms. Blackburn. Mr. George.
Mr. George. Well, you know, it's all about money. But if
you buy carbon credits from a hybrid car or vehicle purchaser,
right, you buy your hybrid vehicle and you pay about $5,000
extra for the hybrid vehicle as with a gas version of that
vehicle, it does emit about two tons of carbon dioxide a year
but you've paid $5,000 up front for it. If you invest in, if
you buy carbon credits from trees and ocean projects around the
world, you might pay about $5 a ton for it.
So not everybody can afford to go out and buy a brand new
automobile with a $5,000 premium on it to reduce their carbon
footprint by two tons a year. But everybody can afford to plant
enough trees to get two tons a year. That's $10 a year.
Everybody can afford to do that. A family of four in the United
States has a carbon footprint of about 20 tons per year. At $5
a ton, that tree planting project are selling. That's about
$100 bucks a year. That's $8.33 a month. So buy Mother Nature
one cheap cocktail a month and you've taken care of her.
Now people who don't like offset projects, who want the
high priced engineered solutions, are very opposed to this. But
it's part of the solution and it also heals the harm that's
done. And everybody can afford it. So the voluntary market to
choose these affordable low end solutions, the green solutions,
is a very practical step.
Ms. Blackburn. I can tell you, Mr. George, if you're
talking about hiring a tree, I think some of my foresters in
Tennessee have a lot of trees that they can hire out for you.
Now you're a for-profit company.
Mr. George. Yes. We're a for-profit public company.
Ms. Blackburn. And you are looking to increase and
stabilize your income stream. So do you think that the
entrepreneurial spirit that we have in the country, the
entrepreneurial we're seeing around this industry, coupling
with an increase environmental awareness by American families
and certainly that organizations and companies could drive the
voluntary carbon offset market without burdensome government
regulation?
Mr. George. Yes, I do and we're somewhat of an anomaly. You
know, we're an American entrepreneurial activity. We do all of
our science here and virtually 100 percent of our money comes
from Zurich and London.
Ms. Blackburn. So you would leave government out of
voluntary carbon offset market and Mr. Broekhoff says he thinks
that it would be helpful in establishing----
Mr. George. I'd love to have the government aboard on this
voluntary market. I think it would help. I think people would
have more confidence if there was some government oversight. It
would make life a lot easier. I mean, heaven help me, sometimes
the bureaucracy is a bit burdensome, but it's a positive thing
generally.
Ms. Blackburn. Mr. Boucher, I know I'm going to run out of
time and I may submit my question to you. I'm curious about
selling electricity through renewable energy and I had asked
you about if you had received any government subsidies and I
know that the wind turbine project with the Sioux Rosebud did
receive some and I know there was a DOE grant and I think a
Rural Development Grant in that. So I have some questions
surrounding that.
If you will, sir, I will submit those to you in writing for
an answer in writing from Native Energy and I think it's
important for us to look at whether or not this is something
that is sustainable and something that is going to be
profitable and doable and duplicative so that it can be
replicated. So let's--I do have some questions about that. I
will go and yield back my time and then submit that in writing.
Thank you, Mr. Chairman.
The Chairman. The gentlelady's time has expired and we ask
the panel to respond in writing to the gentlelady's questions
when she propounds them. The Chair recognizes the gentleman
from Missouri, Mr. Cleaver.
Mr. Cleaver. Thank you, Mr. Chairman. I think, Mr. George,
you partially answered this question. Several estimates
suggests that the average American family generates 20 tons of
carbon dioxide annually and I think about 4.5 for the rest of
the world.
Mr. George. The rest of the world's much lower.
Mr. Cleaver. Yes. And then you talked about the fact that
to buy an automobile that actually generates less greenhouse
gas contributors will cost more money. Do you think that the
reverse ought to be the case in the United States, in other
words, that you essentially pay for money if you buy a large
emitter? If you want a big SUV, you pay more for that than you
would pay for buying a hybrid because right now, if you're
trying to be environmentally sensitive, it costs you more money
and so just like cigarettes cost more money, if you want to go
ahead and smoke in spite of the hazards and the way you
contribute to the rising health costs in the country, okay.
It's going to cost you $4 a pack. Is it clear enough?
Mr. George. Yes. I think sure large footprint items ought
to pay their way and hopefully, recently we had an owner of a
large mega yacht. It's kind of like the most extreme example of
an object that somebody might own and they contacted us because
they were tied up next to our research ship that's down in
Florida picking up scientific gear and it's just the most
beautiful thing you've ever seen, polished to a high polish and
the owner of the yacht, I was drinking coffee on our research
ship one morning and he was drinking coffee on his and we were
literally tied together so we could almost touch and he said,
``Well, tell me about all this carbon sequestration stuff.''
And I said, ``Well, you tell me about your boat. How many
gallons of fuel do you burn?'' And he told me how many gallons
of fuel he burned and I said, ``Well, let's do the
calculation'' and I just did the back-of-the-envelope
calculation. I said, ``If you wanted to reduce the carbon
footprint of this 140 foot mega yacht, bigger than our research
ship, you would have to pay about $2,000 a year to make that
zero by planting trees.'' And he said, ``I just paid more than
that to varnish the back rail on this boat.'' And he said,
``Let me get my checkbook out'' and he did.
So if it's affordable, people will do this. But if you have
20 ton footprint and you have to pay effectively $2500 a ton,
right, that's Toyota's charge per your footprint, well, that's
a big number. You have to shell out $50,000 to go carbon
neutral.
Well, nobody--Some people can afford that. I can't. Most
people can't afford that. But I can afford $100 a year to do
the right thing for the greener solution. And that's why the
British Stern Report that talked about the need to spend $3 to
$4 trillion immediately to solve and address this problem of
climate change is such a staggering number. It's because they
use that engineering metric to come by that number. If you use
the green metric to come by the cost of making a really
meaningful part of the solution, the part of the solution of
climate change, we can afford it easily. It's very low cost.
Mr. Cleaver. Thank you, Mr. Chairman.
Mr. George. And it's immediately available. We can do it
today.
The Chairman. The gentleman's time is expired. The
gentleman from California, Mr. McNerney.
Mr. McNerney. Thank you, Mr. Chairman. The United States
has historically been the biggest contributor to greenhouse
trapping gases in the atmosphere. But that's changing now and
we have some other competitors out there that are going to at
least as good a job as we are of contributing those gases. And
I think one of our biggest challenges is to work with those
other countries to find ways to cooperate toward reducing our
footprint and their footprint at the same time. What lessons
can we learn from the voluntary system out there in maybe
moving toward mandatory systems that could be applied that we
could sort of encourage other countries to follow that may be
large contributors in the future and I'll take an answer from
anyone.
Mr. Blachford. I guess I would just point out that under
the Kyoto protocol part of the idea of having the offset
project type fee based in emerging markets is precisely to try
to stimulate the development of renewal energy and other clean
development. In those markets because as they mature and as
there's increasing demand for energy in those markets, it would
be nice if it was energy that was renewable instead of energy
that's based on fossil fuels. So I think that's one very
obvious way we can encourage the development of projects in
those countries.
Mr. George. You know every place in Europe you go you see
an advertisement on the wall put up by some public agency or
some organization giving a people an education on how to reduce
their carbon footprint. Everywhere you go in Europe you find
them.
Mr. McNerney. I'm not talking about Europe. I'm talking
about Asia.
Mr. George. But that's producing this fantastic effect of
stimulating thinking and the Kyoto accord has been a fantastic
success story because its job was to stimulate people to try to
think our way and vent our way out of this crisis and we're
doing it.
Mr. McNerney. It just seems that a market-based approach
would be the most effective and if we can produce laws that
will be useful in encouraging Asia, in particular, to move
forward in this it would be good to have that input from the
market and from you guys.
Mr. George. Two and a half months ago I was in China
meeting with several different Chinese government
organizations. I was given tours around China of the tree
planting that's going on there and I'm a tree planter. So I
know a new tree when I see one. I saw 25 years of extensive
tree planting going on there in China.
China and Costa Rica are the only two countries on the
planet that are ahead of the game on forestry, planting more
trees than they're clearing every year. The Chinese are
enormously dedicated to climate change solutions. They're
working on it. They are very insular. They don't really talk
about it.
I was amazed when I met with foresters there who were
asking me about how to create carbon credits. I met with one
group about wind power. Some of these guys here are wind power
guys and they said, ``Well, can you earn a carbon credit with
wind power?'' And I said, ``Yeah.'' And I said, ``Are you going
to put wind power in?'' They said, ``Yeah, we're looking at 250
megawatts right away in one little area.'' And they said, ``Can
we earn a carbon credit for that?'' And I said, ``Well, of
course.'' So those countries are in fact actually working on
it.
On the other side of the equation, you know they're burning
the nastiest coal on earth. Do you know the mercury that we
worry about in tuna in the open ocean? Where does it come from?
It all comes from Chinese coal pollution. That's why mercury
has suddenly appeared in the fish world is that mercury has
come from those Chinese coal plants. So we have to shut those
things down with other means and for other purposes other than
strictly climate change.
Mr. Romm. To get to your question, I think the rate of
development in countries like China and India is going to have
to be met with intelligent cap and trade regulations that
they're going to have to sign onto to spur clean energy
technologies and carbon sequestration. I think that they're not
going to act. I'm sure if you've talked to them, you know
they're not going to act until we take some action ourselves.
So I think the first step is the development of U.S. mandatory
regime and then working with them as quickly as possible to get
them to develop a mandatory regime.
Mr. George. You know, in China, every man, woman and child
by law in China has to plant five trees per year. That's six
billion trees per year go in the ground and everywhere in China
where you go if you're an old tree planter like me, you see
that that's going on. I see those trees are in the ground
growing. So they're working on it.
Mr. McNerney. Okay. Thank you.
The Chairman. The time has expired. The gentleman from
Oregon, Mr. Walden.
Mr. Walden. Thank you, Mr. Chairman. I appreciate that. I'm
intrigued, Mr. George, by your comment about what great
foresters the Chinese are because there was an extensive series
of articles or at least one article in the Washington Post
recently about all the illegal logging that's going on in China
and despite their rules, they're incapable of enforcing them in
the provinces. So I'm glad that your view on that is a
different picture than what we read in The Post because that
was pretty devastating in terms of the harvest levels there,
Russia, Indonesia, Malaysian, other tropic countries where the
rain forests are being wiped out so they can ship the wood to
China so they can process it into furniture so we can buy it
here and feel good about ourselves, I guess. So I'm glad to
hear they're doing more in China than what we read.
It strikes me, too, that in China we're told that they're
putting two 500 megawatt coal burning power plants online, I
think, it's every week this year. Mr. Romm, is that----
Mr. Romm. Yes. No, it's staggering. It's like the
equivalent of a new California every year.
Mr. Walden. And isn't that why somehow by hook or crook we
need to get China and India and the other big carbon emitters
in with us globally to address this issue?
Mr. George. China, the premier of China did commit to about
two months when he was visiting with the premier of Japan or
prime minister of Japan, that China would be a full compliant
member of Kyoto beginning in the second period following 2012.
Mr. Walden. Well, I'm----
Mr. George. So, yes, they have made that commitment.
Mr. Walden. Yes, Mr. George, I'm glad to hear the
commitments. I've seen it in trade issues, too, where they've
made a lot of commitments and, gosh, some of them aren't always
followed and I actually supported putting China in WTO so that
we'd have international compliance and all. So I'm glad if he's
making that level of commitment.
Mr. George. Those coal prints are the ugliest thing on
earth.
Mr. Walden. Mr. Romm, let's continue on with this because I
know they are also committed to do other energy sources. But
are they using the latest technologies in these new plants that
they are putting on line? Do you know?
Mr. Romm. No, I mean, they're not and they're using--I
think by and large, they're using pulverized coal which may be
very difficult to retrofit to capture carbon. I think the top
priorities for the United States should be to develop a
mandatory regime ourselves just so we have credibility to go to
other countries. If you've talked to people from China and
India, you know that they scoff at the notion that the poorer
countries shouldn't--that the rich countries can't act until
the poor countries act.
Mr. Walden. Right.
Mr. Romm. But they're going to have to act right after we
act. So I think we need to do something for our own
credibility. I also think we have to figure out how to do this
technology transfer because they're going to build coal plants.
Mr. Walden. Right.
Mr. Romm. And so we have to figure out how to make sure
that they build coal plants that can capture carbon and work
with them to figure out how and where to sequester it.
Mr. Walden. Who among you is sort of up on sequestration?
Because when some of us were in Europe earlier this summer, we
went out to a coal plant where they were working on a
sequestration facility although we didn't end up getting to see
that facility itself. But my understanding is that's still
pretty experimental in trying to actually sequester carbon from
a coal plant.
Mr. Romm. Yes. I mean, we haven't--the Bush Administration
has FutureGen which I think is kind of a very slow process that
won't demonstrate the successful integration of everything for
ten years for sequestration. I think frankly a top priority of
the Federal Government should be to (a) start doing
demonstrations projects which I think are occurring, but (b)
someone has to go out and identify and certify geologic
repositories.
Mr. Walden. Right. In fact, that was an issue that came up
in Europe. They actually have on their books in some countries,
I'm told, antipollution laws and they treat carbon as a
pollutant and so they have to modify their law because you
can't put pollutants in the ground legally. So once they figure
out how to sequester carbon, they have to fix their law because
you're injecting a pollutant into the ground, a violation of
law.
The other issue that came up in our discussions was not
only how you resolve which could be done, but are there other
liability issues that could occur? Does carbon injected in the
ground force something else out that you become liable for?
Does it escape at some point and therefore how do you deal with
the escape gas if it does? Are you familiar with any of this?
Mr. Romm. Sure. The answers to your questions, they are all
good questions, and no one has addressed them formally in any
consensus based process and I would certainly urge again the
Committee or the government to pursue that aggressively because
carbon dioxide is an invisible gas. It is exceedingly difficult
to detect and in a worst case scenario, a massive leak of
carbon dioxide would cause harm.
Mr. Walden. In fact, there's that lake I just saw.
Mr. Romm. The lake in Africa, absolutely yes.
Mr. Walden. Where if the bubble pops, it could kill
everybody around there because it would inundate them with
carbon.
Mr. Romm. So people may not be thrilled to have a large
carbon dioxide repository in their backyard and, I think,
setting up a certification process is a very urgent thing.
Mr. Walden. Good point.
Mr. Romm. Look. It's taken--How long have we been trying to
certify one nuclear repository? I don't think it was as hard to
certify a carbon repository, but we're going to need dozens of
them.
Mr. Walden. Maybe we can put them both there in the Yucca
Mountain. What do you think? My time's expired, Mr. Chairman.
Thank you for your comments.
The Chairman. Thanks, gentlemen. Yucca Mountain won't be
storing nuclear waste in the near future. So maybe it's
something that could serve a dual purpose. So here's what I'd
like. I'd like each of the witnesses to give us their one
minute summation on what it is that you want the Select
Committee to remember from your testimony as we move forward
over the course of the next several months and couple of years
looking at this issue. Let's begin with you, Mr. Boucher, if
you would give us your final one minute.
Mr. Boucher. Thank you. Despite our position in the
voluntary carbon offsets market, I think the one thing we would
like to see Congress do as soon as possible is a well-designed
mandatory cap and trade put in place and I think the evolving
voluntary market will continue to support that. It will help
folks get from whatever level is established by mandates to net
zero for those who want to get there.
The other point I wanted to make is that in designing that
it has to be very well designed so that the mandatory cap and
trade does not strip away the benefits of renewable energy
projects in particular in the same way that has occurred on
SO2 cap and trading in that basically any reduction
from a renewable project goes to the benefit of the utility.
The utility then has additional allowances it can sell. There
has to be direct allocation of rights to the renewable energy
projects, so preserve the voluntary market in that future cap
and trade regime.
There has been discussion about the gold standard and I
would just like to note for the record that we are working with
gold standard to bring forward the first gold standard
certified project in the U.S. and we expect that to happen
later this year. It will be Owl Feather War Bonnet Project on
the Rosebud reservation. Thank you.
The Chairman. The gentleman's time has expired. Mr. George.
Mr. George. Well, I think you should pay attention to the
fact that there are sides forming on this issue. There are
people who are in favor of offsets from biological forestry and
other sources and there are people who are sort of in the
engineering world and there's a lot of territoriality being
expressed and we're not going to solve this problem if we sort
of let this thing disintegrate into factions, competing
factions.
We really need all of the solutions on the table. There
simply isn't time to engage sort of prohibitions of certain
things because we don't know enough yet when we're trying to
prohibit the ability to develop that knowledge. We simply need
to look at all of the possible solutions as fast as we can and
find the ones that work and I think it will sort itself out.
The Chairman. Mr. Blachford.
Mr. Blachford. I would echo Mr. Boucher's call for a well
designed, mandatory cap and trade or a combination of cap and
trade with other forms of regulation at the highest levels. I
would also again just repeat my call earlier for some level of
government involvement in forming better and more persistent
standards for offset project quality. I think it's just
essential for this market to really thrive and for these
reductions to happen for there to be clear rules of the road.
My company, it's wonderful that we were invited here today,
but the reality is we're six people sitting in a single room in
San Francisco trying to make a difference, trying to play by
the rules, and we have to have some rules so we know how to
play by them. We're doing the best we can but we really could
use some help.
The Chairman. Thank you, Mr. Blachford, very much. Mr.
Romm.
Mr. Romm. I mean I think I agree with the need for a
mandatory regime. Obviously, it's going to take awhile to set
up the rules of the road there. I think it is important for
Congress to not wait until you've passed the mandatory regime
to start the process of developing protocols for what are
verifiable emissions reductions because that could take two or
three, four or five years. So if we have to wait to, let's say,
2009 to start that process, we may not get those rules for
three or four or five years after that. So if there is any way
you can do some things in parallel over the next two years, I
just think that would be immensely valuable.
I will make one final point. We do need to figure out a way
to preserve tropic forests. They are the lungs of the planet
and the deforestation that is occurring is catastrophic from a
climate and many other points of view. I think you have to do
that at a nationwide level. That's what the U.N. is moving
towards rather than a project based level.
So I don't want to leave people with the impression that
the solution to our fossil fuel problem can be solved just by
planting trees. Trees could be part of the solution, but the
big part of the solution is energy efficiency and renewable
energy and perhaps carbon capture and storage from coal plants.
The Chairman. Thank you. Mr. Broekhoff.
Mr. Broekhoff. I agree with Dr. Romm. If there's a choice
between developing a mandatory program over C&D voluntary
market, I think the choice, the focus, should be on a mandatory
market program. However in the interim period, there's a role
for the voluntary market to play to provide a learning
experience. In developing these kinds of protocols, I think if
the Federal Government does choose to provide some oversight of
this market, it should build off of the standards and programs
that have been developed to date and can either take the form
of endorsing one of these programs or providing some explicit
guidance on the quantification protocols, the verification,
accreditation of verifiers and the establishment of
certification of registries so that we have a consistent carbon
offset commodity that people can trust. That's what the market
needs.
The Chairman. Thank you, Mr. Broekhoff, and we thank all
of you. What I'm going to do on behalf of the Select Committee
is write to the Federal Trade Commission and ask them to begin
a public process to look at this area of voluntary offsets.
There already is something in place that the FTC uses in
environmental programs. I think that clearly under Section 5 of
the Federal Trade Commission Act there is a place here for that
agency to look to ensure that consumers get what they have as
an expectation if they spend money and I hope that Chairwoman
Majoras at the Federal Trade Commission will respond to that
request.
This hearing has been very helpful to us. It is, I think,
the first hearing that has been held on this subject and I
think that it's something that's very illuminating and can be
very helpful in the long run as long as there are standards
which are transparent and understood by the marketplace.
So with that and the thanks of the Select Committee, this
hearing is adjourned.
[Whereupon, at 11:51 a.m., the Select Committee was
concluded.]
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