Planktos, a Bay Area eco-restoration firm, has a scheme to sequester greenhouse gas emissions and reduce global warming. Just as medieval alchemists sought to convert lead into gold, Planktos hopes to convert the oceans into carbon sinks by “fertilizing” them with iron dust to grow phytoplankton blooms that can absorb carbon dioxide from the atmosphere through photosynthesis. Planktos is banking that it can reap hefty profits by selling carbon offsets from its plankton-seeding venture in global markets that trade greenhouse gas emission credits. The firm’s subsidiary, KlimaFa, has been selling carbon credits from its forest restoration project in Hungary to electric power and petrochemical companies in Europe and the United States. The Planktos Weatherbird II. research vessel set sail in May to deposit 50 tons of iron dust in a 3,800-square-mile area of the southern Pacific Ocean west of the Galapagos Islands to demonstrate the ocean’s potential as a carbon sink. Planktos’ ocean fertilization scheme is controversial. Some scientists dispute that it would actually reduce greenhouse gas emissions and contend that the rotting plankton would release more methane and nitrous oxide than the oceans could sequester. Others say there is simply no way to verify whether carbon is actually sequestered by the seas. Funded by Silicon Valley venture capitalists, Planktos epitomizes a new green gold rush for high tech global warming solutions and carbon offsets spurred by California’s landmark greenhouse gas reduction law, Assembly Bill 32. With California facing AB 32’s mandate to reduce greenhouse gas emissions 25 percent by 2020 energy traders and marketers are eyeing the Golden State as a potentially lucrative market for trading carbon offsets. On June 29 the California Environmental Protection Agency’s Market Advisory Committee (MAC) issued its final recommendations to the California Air Resources Board for a cap-and-trade system to reduce greenhouse gas emissions in California. MAC recommended allowing electric utilities, oil refineries, cement plants, and other large greenhouse gas emitters to buy offsets from sources not subject to the carbon cap in lieu of cutting their own CO2 emissions or paying fines. It endorsed using offsets from sources both within and outside California to reduce emissions at the lowest costs, providing flexibility in meeting the state mandate, and encouraging other states to follow California’s lead on climate change. California investor-owned utilities, industry, and business groups have enthusiastically endorsed a broad use of carbon offsets without any geographic or quantitative limits to lower the cost of reducing GHG emissions. They argue that global warming is a global problem that requires a global solution. “We’re never going to get to a zero-carbon economy, so offsets will play an important role,” said Alexia Kelly of Climate Trust. “Limiting the types of offsets will restrict demand.” Yet carbon offsets have become nearly as controversial as Planktos’ iron dusting scheme. Critics and some MAC members contend that it is virtually impossible to quantify actual emissions reductions and verify that sources not subject to the cap would yield additional carbon reductions. Critics contend that offsets also raise serious environmental justice and social equity concerns. Environmental, public health, and consumer advocates warn that allowing polluters to offset their emissions by purchasing carbon credits could result in hot spots of pollution in urban areas and undermine local and regional air quality rules. “We don’t think the fossil fuel emitters should be able to get out of their obligations to reduce their emissions by buying offsets from another sector,” said Bill Magavern, Sierra Club senior legislative representative. “We want to see reduced emissions from electric utilities, oil refineries, cement manufacturers, and transportation.” The MAC’s own guiding principles include avoiding localized effects or weakening air quality and other environmental regulations in California. Indeed AB 32 mandates that measures taken to reduce greenhouse gas emissions also must reduce local air pollutants and improve air quality. If offsets are allowed they should be restricted to specific project types that will provide air quality and other environmental benefits and must be verifiable and enforced, said Bonnie Holmes-Gen, American Lung Association of California assistant vice president of government relations. Some offset projects could result in environmental degradation and undermine state policy, such as conversion of agricultural land for production of biofuels and proliferation of non-native species like eucalyptus, critics warn. Offsets could result in some emitters double-dipping or getting credit twice. For example, if biomass products are counted upstream they should not be counted in landfills downstream as offsets, recyclers and composters argue. Reducing greenhouse gas emissions in California should not come at the expense of degrading air quality in neighboring states and developing countries. California businesses and industries should not be permitted to offset their own emissions by buying carbon credits from coal-fired power plants and other high polluting sources out-of-state, environmentalists argue. Most MAC members felt that allowing offsets for sources outside California would encourage other states to follow California’s lead on climate change. Crediting out-of-state projects for contributing to California’s emissions reductions could undermine the investments, economic benefits, and new jobs that are expected to flow to the state from new environmental technologies, critics warn. Over-reliance on offsets could impede the critical investment and development of new technology and alternative fuels needed to transform the economy from dependence on fossil fuels, critics argue. California regulators will have a difficult time monitoring and verifying offset projects in Asia or Africa outside of an international program, said Karen Douglas, California legislative director for Environmental Defense, which supports broad offsets. While endorsing carbon offsets, the MAC conceded that there will be significant risks in monitoring and verifying that they deliver additional emission reductions above the cap MAC recommended that: -Offsets be “real, additional, independently verifiable, permanent, enforceable, and transparent” to ensure the environmental integrity of offset projects; -California adopt strict standards and identify specific types of eligible projects to maximize the environmental benefits of using offsets; -Offsets be phased in beginning with in-state sources to ensure integrity; -Projects receive credits for emissions reductions only after the reductions have been achieved to address inherent risks in offsets; -State regulators conduct periodic reviews to ensure that offsets do not result in “hot spots” or backsliding on emissions of non-GHG air pollutants; -California only accept offsets from jurisdictions that assure the same level of accountability for projects; and -California enter into a memorandum of understanding with any other state from which it accepts offsets. Some MAC members felt that California should only enter into memoranda of understanding with other jurisdictions that agree to adopt a mandatory cap on global warming pollution and should not accept international offsets at this time. Carbon offsets could play a critical role in conserving forest lands, which are an important sink because healthy forests sequester large amounts of carbon dioxide. Indeed, trees themselves are comprised of 50 percent carbon. When forests are logged and forest lands converted to other uses the trees release the carbon they have stored into the atmosphere. Loss of native forests is the second leading cause of climate change, accounting for 20 percent of CO2 emissions. Deforestation currently contributes some two billion tons of carbon per year–more than the entire transportation sector. The influential Stern Review on climate change by former World Bank chief economist Sir Nicholas Stern warned that CO2 emissions from deforestation could reach 40 billion tons between by 2012 if immediate measures are not taken to halt this destructive trend. The United States has lost one-third to one-half of its forest lands since European settlement. Today forests occupy one-third of the country’s land mass, or 747 million acres; two-thirds of U.S. forests, or 424 million acres, are privately-owned and increasingly threatened by timber harvesting and development. The nation is losing twice as many acres of forest land as farm land. Consequently the U.S. is now losing more carbon in private forests than it is accumulating. California alone loses 40,000 hectares of forests a year to development. Industrial timber harvesting has left a legacy of hideous clear-cuts scarring the spectacular Mendocino coast, the majestic California redwoods, and the Sierra Nevada “range of light.” Yet the MAC excluded the forest sector from its recommendations for a carbon cap in California. Forest conservation projects currently comprise the predominant source of voluntary carbon offsets, although they are excluded from the European Union’s carbon market and comprise less than 1 percent of Kyoto Protocol markets. The California Climate Change Registry developed a protocol for forest projects and recently developed guidelines for biodigesters that convert methane from livestock waste into biogas. Methane is more than 20 times potent as a greenhouse gas than carbon dioxide. The registry also is considering protocols for exotic gases. However, the Registry has yet to certify any actual projects as carbon offsets. “Unlike the Kyoto approach we’re setting up climate standards. Anything above that we’ll measure as a reduction,” said Diane Wittenberg, the Registry’s president. Kelly of Climate Trust called for creating a low-interest public trust fund to finance greenhouse gas reduction technologies that are not covered by the cap or offsets. “The key barrier to development of greenhouse gas reduction technologies is the lack of investment capital for projects with significant long-term reductions,” according to Kelly. Yet companies are unlikely to develop new technologies to reduce greenhouse gases unless there are tough standards in place to force technological innovation and break society’s addiction to fossil fuels. In their drive to attain California’s greenhouse gas reduction mandate state policy makers must resist opening the doors wide to a new gold rush that enables profiteers to exploit the global warming crisis for their own short-term financial gain. We cannot afford to repeat the mistakes made in deregulating California’s electric power industry a decade ago from which the state’s economy has yet to recover. The stakes are too high this time around. The future of life on our planet is in jeopardy.