[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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                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

                              ----------                              
                                                                   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:]

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    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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