Systematic over-crediting in California's forest carbon offsets program

Abstract

Carbon offsets are widely used by individuals, corporations, and governments to mitigate their greenhouse gas emissions on the assumption that offsets reflect equivalent climate benefits achieved elsewhere. These climate-equivalence claims depend on offsets providing "additional" climate benefits beyond what would have happened, counterfactually, without the offsets project. Here, we evaluate the design of Californias prominent forest carbon offsets program and demonstrate that its climate-equivalence claims fall far short on the basis of directly observable evidence. By design, Californias program awards large volumes of offset credits to forest projects with carbon stocks that exceed regional averages. This paradigm allows for adverse selection, which could occur if project developers preferentially select forests that are ecologically distinct from unrepresentative regional averages. By digitizing and analyzing comprehensive offset project records alongside detailed forest inventory data, we provide direct evidence that comparing projects against coarse regional carbon averages has led to systematic over-crediting of 30.0 million tCO2e (90% CI: 20.5 to 38.6 million tCO2e) or 29.4% of the credits we analyzed (90% CI: 20.1 to 37.8%). These excess credits are worth an estimated $410 million (90% CI: $280 to $528 million) at recent market prices. Rather than improve forest management to store additional carbon, Californias offsets program creates incentives to generate offset credits that do not reflect real climate benefits. Significance StatementForest carbon offsets are increasingly prominent in corporate and government "net zero" emission strategies, but face growing criticism about their efficacy. Californias forest offsets program is frequently promoted as a high-quality approach that improves on the failures of earlier efforts. Our analysis demonstrates, however, that substantial ecological and statistical shortcomings in the design of Californias forest offset protocol generate offset credits that do not reflect real climate benefits. Looking globally, our results illustrate how protocol designs with easily exploitable rules can undermine policy objectives and highlight the need for stronger governance in carbon offset markets.