And speaking of independent group of environmental and energy folk, the program has an external advisory group. http://www.pge.com/ about_us/ environment/ features/ external_advisory_group.html
Did you not see the little congratulatory blub from Dan Kammen, who you’ve cited on this blog?

Again, the program isn’t perfect. But I don’t think you’ve done all your homework.

It turns out I know two members of the advisory group and have spoken to them, and I think they would be the first to admit that 1) they haven’t spent a lot of time on offsets in general, and 2) they had no idea about the details of the van Eck Forestry Project, which, if Salon is accurate, utterly fails any reasonable test for a good offset project.

I like Dan Kammen. I just e-mailed him my post.

I have now talked to several people about this program, and previously have talked to dozens of people about offsets. I am very careful to do my homework.

My friends on the advisory group urged me to share my concerns with PG&E, which I have just done.

I will report any and all corrections to what is in this post. If you can identify any mistakes, please do so. I have zero desire to be malicious, but I have a great desire to see California and the nation and the world achieve real greenhouse gas reductions.

And I do think PG&Es program is being done in good faith. The company has a relatively good track record, and they have a great advisory group, some of whom I know personally and admire a great deal.

But none of that matters, if the program — in the long run — doesn’t make the most efficient use of resources to cut the most GHG. And it does not.
The time when feel good programs that are less than optimal (and in this case, in the long run, potentially perverse in terms of results) is long gone.

We’re in the bottom-of-the-ninth-with-two-outs-and-no-one-on-base; We’re in the fourth-quarter-fourth-down-no-time-outs- ten-yards-to-go kind of territory, here when it comes to global warming.

Good intentions, and promises of real results eventually are way too little way too late.

For my money, I’d put the PG&E program into the “nice try guys” category and save the praise for those who are focusing on getting their own house in order and blazing new ground. Encouraging others to do so with potentially specious and probably temporary offsets just delays the kind of fundamental investments we need to make. In a sense, this is just another of a long line of actions in the environmental world I call “the tragedy of small victories.”

As Gore noted, the most dangerous thing facing us right now is that we do some half-measures, declare victory, and call it a day for a decade or so as we pursue these half-measures. As for offsets, at the end of the day, we run the risk of actually aggravating GW, we’ll certainly misallocate scarce resources and in any case, we’ll run out of “others” long before we get where we need to go. So doesn’t all this offset activity merely delay what we need now and need badly — a new energy infrastructure?

There is a place for offsets — one time trips, for example. And properly structured offsets subject to rules may make sense. But it’s time to move beyond good intentions.

First, PG&E is aggressively pursuing all available efficiency and renewable resources and supports a mandatory cap on emissions at the state and federal levels. The ClimateSmart program is in addition to all those other efforts. In particular, all carbon credits generated through this program will be retired and will not count towards PG&E’s emissions reductions obligations under AB32.

This contradicts your argument that Climate Smart projects are not additional because they would have been funded as part of a mandatory cap and trade program anyway. Any projects that are funded through ClimateSmart will not be available to meet cap & trade obligations which will have to be met by investments in additional reductions. (It is important to point out here that ARB has yet to decide the scope of the CA cap & trade program and, in particular, whether forest sector projects will be eligible to participate at all.) In effect, PG&E is doing exactly what you recommend: it is offering to buy and retire emissions credits for its customers.

Second, PG&E is limited to investing in projects that comply with the Climate Registry’s protocols in order to insure that all projects meet stringent accounting standards and are verified by independent third parties. The Climate Registry’s forest protocols in particular are, I believe, the most stringent and comprehensive forest protocol in use today. As you are well aware, there are plenty of offset programs that don’t meet these high standards.

Third, I think you are misreading the Gibbard et.al. article you cite regarding the net climate impact of tree planting. That study concluded that the albedo effect dominates for forests in high latitudes (i.e. 45°-90°) while the evaporation effect dominates in low latitudes. For mid-latitudes, like California (roughly 30°-40°), the two effects tend to balance each other out, allowing the sequestration effect to dominate. I think it’s also worth noting that the study’s conclusions are based on global averages which mask substantial regional variation and, more importantly, the results of a single modeling study should be extensively reviewed and confirmed by other efforts before it is generally accepted as truth.

I also disagree with your statement that the Registry isn’t concerned about albedo effects. The Registry protocols are intended to capture the full range of climate effects. The reason albedo isn’t part of the accounting requirements is the lack of any scientific confidence or feasible methodology on whether and how to measure those effects.

Third, despite what the Salon article says, PG&E has not contracted for any emissions reductions yet since the RFO was just released last week. (The RFO and associated documents is available at http://www.pge.com/ about_us/ environment/ features/ climatesmart_2007_requests.html)

If the Van Eck project bids into the program, PG&E can evaluate whether the proposed reductions are additional. As clearly stated in the RFO, bidders are required to demonstrate that the proposed reductions would not have occurred but for the funding provided by the Climate Smart program. Generally, the Registry protocols include the requirement of legal additionality under which projects are not allowed to claim credit for reductions that are required under a legal or regulatory obligation.

I think it’s also worth noting that an overly aggressive concern about additionality can be problematic. For example, the Climate Registry forest protocols generally credit forest landowners with all carbon savings above what would be required under the California Forest Practices Act (CFPA). (That’s assuming there are no other legally binding obligations that would cause management to exceed the CFPA) Some people have argued that this is excessive because some landowners would have managed their stands in ways that would exceed the CFPA and, as a result, we might pay them for savings that would have occurred otherwise. I’m sure you’ll recognize this as the classic “free riders” concern that has bedeviled energy efficiency programs for decades. The forest sector program response is the same as it is for efficiency programs. Effectively run programs can account for and minimize free ridership, provide cost effective benefits, and maximize free drivers, leading to long-term market transformation.

Finally, there is widespread agreement that it would be better to have a more diverse portfolio of offset projects and there is a concerted effort underway to expand the range of eligible project types beyond the forestry projects. As you note manure management protocols were recently adopted and, pending PUC approval, will also be eligible. Urban forestry protocols are being developed by the Registry and should be adopted sometime in 2008.

We may disagree, but I believe that PG&E has created a credible program that can serve as a model for other efforts and that it has already assembled an independent advisory group with expertise in the area of offsets. I think your concerns with most offset programs are on target, but that the Climate Smart program doesn’t suffer from those same flaws.

Several mutual friends and colleagues forwarded me your blog on ClimateSmart™ and I have the utmost respect for your work. However, your posting has a number of inaccuracies and I am writing to clarify how PG&E designed and plans to implement the ClimateSmart program.

We conceived of ClimateSmart during our January 24, 2006 testimony (https://www.pge.com/regulation/ClimateProtectionTariff/Testimony/PGE/2006-01-Fwd/ClimateProtectionTariff_Test_PGE_20060124-01.pdf) before the California Public Utilities Commission (CPUC):
“PG&E’s voluntary [program] is designed to be the proverbial “icing on the cake,” supplementing other programs and policies that address climate change.” (page 1-2)

That means ClimateSmart must be understood in the context of PG&E and California’s ambitious energy and climate change policies.
• As a world leader in energy efficiency, we are investing $1 billion in enhanced energy-efficiency programs from 2006 to 2008. (http://www.pge.com/about_us/environment/features/energy_efficiency.html)
• PG&E delivers some of the cleanest electric power of any major electric company in the United States. And we are aggressively adding renewable electric power resources to our energy portfolio. (http://www.pge.com/about_us/environment/features/clean_energy.html)
• We are committed to leading by example when it comes to climate change. (http://www.pge.com/about_us/environment/features/climatechange.html)

After an eleven month public approval process, the CPUC approved the program (http://www.cpuc.ca.gov/word_pdf/final_decision/63046.doc) on a 5-0 decision on December 14, 2006. In their summary, they stated:

“Pacific Gas and Electric (PG&E) demonstrates strong environmental leadership by being the first utility in the nation to offer its customers a means to offset their greenhouse gas (GHG) emissions. This proposal is a very important step in developing awareness of the causes of global warming and creating a sustainable and credible emissions offset program.” (page 2)

But don’t take our word for it; listen to what others have said.

Numerous organizations sent in letters during the extensive CPUC regulatory proceedings on ClimateSmart, including Environmental Defense, Small Business California, and the Natural Resources Defense Council. Here is a link to those letters (https://www.pge.com/regulation/ClimateProtectionTariff/Testimony/PGE/2006-01-Fwd/ClimateProtectionTariff_Test_PGE_20060606-01.pdf).

Since the unanimous approval of the program by the CPUC, here is a sampling of what climate change policy leaders have said:

“ClimateSmart, combined with energy efficiency and solar power, can shrink our climate footprint. We hope that ClimateSmart can play an integral role in helping San Francisco meet our aggressive greenhouse gas emissions reduction goals.”
– Jared Blumenfeld, Director, Department of the Environment, City and County of San Francisco

“ClimateSmart’s focus on transparency, accountability, and environmental protection provides a great example for all carbon offset programs.”
– Diane Wittenberg, President, California Climate Action Registry

“The Climate Group congratulates PG&E for its ongoing leadership to address global warming through programs such as ClimateSmart. The company’s actions are serving to educate and deepen community awareness of the issue, while providing an opportunity for the general public to take positive steps to reduce their carbon footprint.”
– Mark Kenber, Policy Director, The Climate Group

“We can prevent the most devastating consequences of global warming, but only if we act swiftly and decisively to reduce global warming emissions. By meeting strict standards for offsets, the ClimateSmart program will engage individuals and businesses as part of the solution in the fight on global warming.”
– Karen Douglas, Director, California Climate Initiative, Environmental Defense

“NRDC today reaffirms its view that the ClimateSmart program is an effective way for PG&E customers to invest individually in rigorously verified environmental benefits, even as we continue to emphasize (like PG&E itself) that voluntary measures are complementary to the mandatory measures that are needed to meet the challenge of global warming.”
– Luke Tonachel, Energy Program Analyst, Natural Resources Defense Council

“I am delighted to see the PG&E ClimateSmart program opening to enrollment, and intend for our family to sign up right away. Voluntary programs such as ClimateSmart illustrate the opportunities that exist to address global warming, and the power of individuals to send a message that personal action is both possible and significant.”
– Dan Kammen, Professor in the Energy and Resources Group, in the Goldman School of Public Policy, and Director of the Renewable and Appropriate Energy Laboratory, University of California, Berkeley

Our partners joined with us to debate the challenges of the voluntary carbon market.

On June 28, when the program was launched (http://www.pge.com/news/news_releases/q2_2007/070628.html), we held a symposium called “Voluntary Carbon Offset Programs: A License to Pollute or a Climate Change Remedy?” This program featured the views from:

• Ricardo Bayon, Director, Ecosystem Marketplace and Author of Voluntary Carbon Markets
• Cheri Chastain, Sustainability Coordinator, Sierra Nevada Brewing Company
• Eric Holst, Manager, Center for Conservation Incentives, Environmental Defense
• Dan Kammen, Professor, Energy and Resources Group, in the Goldman School of Public Policy, and Director, Renewable and Appropriate Energy Laboratory, University of California at Berkeley
• Peter Liu, Initial Founder and Vice-Chairman, New Resource Bank
• Wendy Pulling, Director, Environmental Policy, PG&E
• Laurie Wayburn, Co-Founder and President, Pacific Forest Trust
• Diane Wittenberg, President, California Climate Action Registry

The audio of the program can be heard here (http://www.pge.com/about_us/environment/features/news/climatesmart_symp_discussion.html). We encourage you and your readers to listen to it.

Through ClimateSmart, PG&E will be purchasing greenhouse gas emissions reductions through a formal, competitive process.

We are investing 100% of the ClimateSmart payments toward new GHG emission reduction projects in California.

On June 28 we initiated a competitive process (http://www.pge.com/about_us/environment/features/climatesmart_2007_requests.html) to select the projects in which we will invest. The process is based on PG&E’s best practice of renewable and conventional energy purchasing process. We are currently in the process of collecting those offers and will select the projects later this year. Eligibility for the ClimateSmart competitive bid process requires that Projects meet the stringent requirements of either the Forest Project Protocol (http://www.climateregistry.org/docs/PROTOCOLS/Forestry/Forest%20Project%20Protocol_Version%202.0.pdf) or Livestock Project Reporting Protocol (http://www.climateregistry.org/docs/PROTOCOLS/CCAR_Livestock_Project_Reporting_Protocol_June_2007.pdf) of the California Climate Action Registry (http://www.climateregistry.org/) (Registry). It is designed to include other types of GHG emission reduction projects as the Registry completes and adopts a broader range of project measurement protocols.

PG&E is applying stringent additionality requirements.

Additionality is most commonly defined as doing something that wouldn’t have been done under a “business as usual” condition. While that is a simple principle, most people involved in quantifying GHG emissions reductions agree that it is complicated to implement. In order to quantify these reductions, PG&E is applying two additionality tests to projects submitting bids to our request – regulatory additionality and financial additionality.

By following the stringent Registry protocols, we are ensuring regulatory additionality. The Registry’s Forest Project Protocol (http://www.climateregistry.org/docs/PROTOCOLS/Forestry/Forest%20Project%20Protocol_Version%202.0.pdf) states that “Project Developers are required to describe their project activity and explain how their project activity exceeds, or is additional to, the baseline qualitative characterization, including any mandatory statutes or regulations used to characterize the project baseline.” (page25)

In addition to the Registry additionality requirements, PG&E – as a part of our competitive solicitation process (http://www.pge.com/about_us/environment/features/climatesmart_2007_requests.html) – is requiring every bidder to specify exactly how ClimateSmart funding would be used for new projects. This is our financial additionality test. In our request for offers we state that we “will require all ClimateSmart Projects to provide evidence that but for ClimateSmart funds, the Project that generates the Registry-certified GHG emission reductions would not have occurred.” (page 9)

As you indicated in the Salon.com article that you referenced in your post, people should not invest in carbon offset program if they don’t meet basic additionality standards. PG&E won’t invest in them and neither should anyone else. The pictures of the van Eck and Garcia River forests are just examples of the projects that are going through the Registry certification process. They may or may not qualify for the PG&E program based on their response to the competitive bid process. You blog has shown us that the van Eck picture may be confusing, so we will take a fresh look at how we caption that photo to make sure that we are being as clear as possible.

Accountability and transparency are key aspects of this program.

With ClimateSmart, our goal is to create a voluntary GHG emission reduction program with the highest standards of accountability and transparency. In developing the program, we worked with regulators, key environmental groups, and other stakeholders to create this process, incorporating a wide variety of best practice oversight and verification measures. Some of the measures we have put in place to reach these high standards are:

• Limiting investments to projects with an approved project protocol from the Registry and accepted by the CPUC
• Seeking ongoing feedback and input from an External Advisory Group (http://www.pge.com/about_us/environment/features/external_advisory_group.html) of respected community, environmental, business, and government leaders
• Requiring that all emission reductions for the selected projects are independently certified and registered with the Registry
• Permanently retiring all of ClimateSmart’s certified GHG emission reductions, which means they cannot be used by PG&E or anyone else for any other purpose
• Requiring an independent, annual program audit and regularly reporting the results to the CPUC and enrolled customers

Through the ClimateSmart competitive bidding process, we are also requiring all projects to be new. Even if a project had been certified, PG&E will not purchase the reductions unless they occurred after December 14, 2006, the date which the CPUC unanimously approved the program. PG&E will only enter into contracts for projects that invest in new GHG emission reductions that would not have otherwise occurred.

Voluntary programs are only part of the solution.

As stated by Peter Darbee, Chairman, CEO and President of PG&E Corporation before the U.S. Senate Committee on Environment and Public Works on June 28 (http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=90c23c0e-52a2-4b4e-b0cc-d8938bf5fba0), PG&E believes:

“Voluntary programs alone are insufficient and will not send the appropriate price signal to U.S. industry to make a measurable impact on global climate change. Only a mandatory, national reduction program is capable of stimulating sustained action and investment on the scale required to meaningfully reduce emissions and establish the U.S. as a leader in the response to global climate change.”

Consistent with our policy position on mandatory regulation, in 2006, PG&E joined with other leading businesses and environmental nongovernmental organizations as part of the U.S. Climate Action Partnership (http://www.us-cap.org/) to develop a set of policy principles and a legislative framework for a federal, market-based, mandatory climate change program.

And, while we prefer a national approach to addressing climate change, we also recognize the important role that states can play—in terms of acting as a catalyst for federal legislation, bringing forth innovative ideas and approaches to tackle the complexities of the issue, and making progress toward combating climate change. That is why we worked constructively with the California legislature and the Administration to enact AB 32 (Nunez/Pavely), the Global Warming Solutions Act, and were the first major utility to support its passage.

We also supported passage of SB 1368 (Perata), which requires that all power sold to utilities in the state under long-term contracts meet a GHG emissions performance standard that is equivalent to that of an efficient, combined-cycle natural gas plant. Implementation of these two pieces of legislation will ensure that California continues on a path of reducing its overall carbon footprint and challenging its businesses to do the same.

The ClimateSmart program was designed as a demonstration program to provide customers with an option to mitigate the GHG emissions associated with their own energy use. When mandatory GHG regulations are about to be implemented, PG&E will re-evaluate the program and determine if it should be ended or modified to ensure consistency with any such new mandates.

We look forward to continued discussion on these important topics and would welcome the opportunity to discuss ClimateSmart, as well as PG&E’s broader commitment to climate change, with you personally the next time you are in San Francisco.

Kind Regards,

Robert Parkhurst
Pacific Gas and Electric Company
ClimateSmart Manager

1) PG&E’s new “ClimateSmart” doesn’t commit PG&E to provide any green energy.

2) ClimateSmart is about PG&E allowing you, the customer, to pay more money each month to offset their company’s emissions.

3) Californians need clean energy and PG&E should be looking out for our best interest instead of fighting to cover its tracks.

4) PG&E’s corporate social responsibility report admits it’s plan “to enroll approximately 4 to 5 percent of eligible customers into the program by the end of its third year.” That leaves 95% of the impact completely untouched.

5) PG$E is launching a $17 million PR campaign to advertise “ClimateSmart”. And it is charging it all to you by raising your monthly bill. That’s right. Every time you see an ad from PG&E promoting this greenwashing, you can be proud to know that the state regulators allowed them to pass the buck to you.

6) This program has nothing to do with PG&E making an effort to reduce emissions from it’s electricity. PG&E is responsible for 18 million tons of carbon emissions each year. It is the largest source of carbon emissions in San Francisco. Unlike most businesses, PG&E can actually reduce emissions from electric power generation all over the state by choosing to sell clean renewable energy. ClimateSmart does not make PG&E’s power any cleaner.

7) PG$E’s own commitment to ClimateSmart is merely to pay to plant trees to offset the impact of its office buildings, not the impact of the power generators it owns.

Offsets should only be used to address the remaining energy after all other efforts have been made to reduce demand and use renewable energy.

9) PG&E is using the least sound form of offset. Tree planting, or forest-management, is a double-whammy: it fails to improve our energy system and it forces future generations to manage those particular forests indefinitely. This type of offset is not allowed under Kyoto.

10) PG$E says it “may enter into ghg emission reduction contracts where the reductions occur over time into the future.” Counting future reductions today is like telling the bank to count all the mortgage payments you plan to make for the next 10 years, and asking them to consider your debt paid off now. This dubious choice of carbon accounting methodology smells like Enron.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PG&E’s ClimateSmart plan tells customers that if they care about the climate, they should pay to offset the company’s emissions. PG&E knows that by shifting the responsibility on to the consumers, the overwhelming majority of it’s impact (95%) will never be addressed. This is a common corporate strategy for keeping the public from demanding corporate accountability. Welcome to greenwashing.

On top of the danger of shifting climate responsibility away from energy companies and government and towards the millions of individual consumers, there is the simple fact that offsetting is not an acceptable strategy for the company determining the type of energy being used by 14 million Californians. PG&E’s primary area of impact, and therefore responsibility, is on the type of electricity it provides. And advertising offsets is no compensation for its claim that nuclear is an environmentally-friendly choice nor of its use of 0% solar. We can do better. “ClimateSmart”? We think it’s more like ClimateCopout. What do you think?

More ClimateSmart Critique:
http://climateprogress.org/ 2007/ 07/ 09/ pges-climatesmart-offsets-are-anything-but/

Poonam Whabi
LetsGreenwashThisCity.org

Thanks for reaching out with your questions. I agree that the
high level initial marketing can’t go into as much detail as wonks like
you and me like, but there is plenty of detail on this high quality
program and I will have info sent.
Did you go to the website and read the FAQs and such for starters?
www.pge.com/climatesmart

Key things that set this program apart: (1) it is subject to CPUC
regulation and will be transparent; (2) all CO2 reductions are
independently certified by the governmentally-created nonprofit
California Climate Action Registry which is nationally recognized as
having the most rigorous GHG project measurement protocols; (3) the
protocols will drive high quality GHG reduction projects that are not
currently receiving enough investment. For example, California has
2,000 dairies but only about couple dozen of them have methane capture
for their manure and methane is 21 time more potent than CO2 as a GHG,
we will also initially invest in saving some forests in CA in permanent
conservation easements that would otherwise be lost to development or
lumber interests (such as the Van Eck redwood forest). The project
types will expand as the Registry develops more protocols, with the
next ones urban forestry and Clean Air Transportation alternatives
(transportation is 42% of CA’s GHG emissions whereas electricity is
only 20% since we don’t have coal). You are probably aware that there
is a lot of VC money going into renewables now, as well as all PG&E is
doing to reach 20% renewables by 20% in addition to what we already
have.

All ClimateSmart GHG reduction credits will be new and “additional”
meaning they would not have happened without this investment (not
required by low etc). The credits will also be retired so they are
only used to make participants’ homes and/or business climate neutral
for their energy use - and we know exactly what that usage is and what
its GHG footprint is because we certify our entity-wide emissions
through the Registry too, and we were the first utility to do that!
Also, PG&E is leading by example and was the first customer to sign up

for ClimateSmart (which was a major win for me inside the Company) and
has signed up for its own buildings with shareholder dollars (big bucks
- millions). We hope many other major businesses will follow this lead
as well as doing energy efficiency and installing renewables etc. We
have to do a lot of different things at once to catch up on the delays
we have sadly made as a country due to Bush’s unwillingness to lead on
Climate Change. But we can show the way in CA and this is an important
way to raise people’s awareness and give them another (easy) way to
act.

Hope that helps for starters. In short, I challenge you to find
another carbon offset program of this quality or with this kind of
reporting and oversight. This program is the first of its kind in the
country at the biggest single utility in the country — raising the bar
for all carbon offset approaches and developing critical climate change
systems infrastructure we desperately need as the State is struggling
to implement AB 32 which won’t take effect until 2012, though we are
working hard on making that a success too.

In short, it’s an easy way to take action, and I hope you do —
Goodness knows we need a lot of good action on many fronts at once
starting as soon as possible - the tipping point is not far away.

For a more accurate analysis visit:

http://ecopreservationsociety.wordpress.com/ 2008/ 02/ 12/ does-reforestation-contribute-to-global-warming-a-second-look-at-the-livermore-study/

Thank you for this informative blog.