It seems forest fires on the west coast of the United States are threatening access to carbon offsets used by BP and Microsoft among others.
Some have claimed forest fires mean the carbon captured in forests could be less than permanent. Here is the Climate Change Commission in their final report (p65):
Climate change exacerbates forest fires, strong winds, storms, droughts, pests and pathogens – so there are also risks associated with the permanence of using forestry to remove emissions from the atmosphere, as these emissions are released if the forest degrades or is destroyed.
But it is easy to make carbon removals by forests permanent even with forest fires. Simply oblige forest owners to report fires and make them responsible for re-capturing each tonne of carbon released into the air, either by replanting the forest or some other offset.
In practice, this is a matter of assigning accounting liability to the forest owner.
Measurement might be complicated in the detail, but the principle is simple: the forest owner is only rewarded for the emissions they capture.
Responsibility for the emissions component of the risk of forest fires should sit with the forest owner, on the principle that risk and control should sit in the same place.
The New Zealand ETS assigns responsibility for the emissions from forest fires to the forest owner. Good. My understanding is that after changes last year, a forest owner has four years to replant their forest after a fire. After that, the owner is assigned an ETS liability equal to the emissions released from the fire. That obligation means the owner must purchase and surrender emissions units back to the government, which effectively funds emissions reductions elsewhere in the economy.
I have used the example of forest fires to demonstrate how an emissions accounting system can make impermanent carbon stores permanent. All that is required is that emissions are measured, surrender obligations are enforced, and there is a system in place to keep track of obligations over time. These do not seem like difficult problems to solve. Where these requirements are met, as they appear to be in New Zealand (at least for the forests in the ETS), forest fires have no effect on overall emissions.
The same logic applies, or can be made to apply, to other problems like pestilence that affect carbon capture and storage of forests.
There does not even need to be a cap on overall emissions. It is enough to just make owners responsible for recapturing emissions or offsetting elsewhere to turn flammable forests into permanent carbon stores.
That is the power of emissions accounting.
So how did the experts at the Climate Change Commission fail to take liability rules into account, especially in their final report after their public consultation had almost certainly alerted them to the idea? How could the Commission not have noticed fires lead to obligations for owners and the consequences of those obligations for emissions?
Here is a presentation I gave on this in March to the Waikato Economics Forum.