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Volume X, Number 302


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Wildfires Burn Carbon Offsets

The Western United States is in the middle of one of the biggest wildfire seasons to date. Not only have these wildfires significantly impacted surrounding communities and ecosystems, but they have threatened carbon offset projects. As forest owners grapple with these fires, they also may need to contend with reporting requirements, a re-accounting of the carbon offsets, and additional reporting to offset registries and the California Air Resources Board (CARB).

For example, in Central Oregon, the Lionshead Fire burned approximately 190,000 acres of forest. The Confederated Tribes of Warm Springs owned 24,000 of the 190,000 acres that burned and operated the forest as a carbon offset project. California previously issued more than 2.6 million offset credits for the carbon stored in those 24,000 acres. However, now that there are no longer trees to sequester carbon, the offsets from that forest are no longer viable. This is just one example of the impact that this year’s fires are having on forest carbon offset projects across the American West.

Immediate Reporting Requirements for Forest Offset Project Operators

Under forest carbon offset methodologies, including those approved under California’s Cap-and-Trade Regulation, if an unintentional reversal, such as a wildfire, occurs, then the project operator must provide the CARB and the Offset Project Registry with written notice of the reversal. They must provide an explanation for the nature of the unintentional reversal within 30 calendar days of its discovery. The project operator also must complete a verified estimate of current carbon stocks within the offset project boundary within 23 months of the unintentional reversal, again reporting that data to the relevant registry and CARB. Failure to comply with these reporting requirements can risk the imposition of penalties by CARB.

CARB Re-accounting

Prevailing offset methodologies–including compliance methodologies approved by CARB—employ a Forest Buffer Account to act as a reserve of offset credits that is deployed in situations when offset credits that were previously issued are later unintentionally “reversed”, resulting in a release of that carbon back into the atmosphere. Reversals may occur for a number of reasons, including pest infestations and wildfires.

If CARB (or the registry, for non-compliance projects) concludes that an unintentional reversal occurred, and it has already issued offset credits to the offset project, then CARB or the relevant registry will withdraw an appropriate number of credits from the Forest Buffer Account. In this way, the Forest Buffer Account acts as an insurance policy against losses from natural disasters. When projects are initially registered, they conduct an analysis based on the localized risk of reversal and contribute a percentage of offsets issued from the project into the Forest Buffer Account, with the idea that these contributions will, in whole, balance out any reversals that occur across all forest offset projects. This year’s unprecedented fires are putting that concept to the test.

Currently, the Forest Buffer Account has roughly 25 million credits. In the context of the Lionshead Fire, if the fire burns all 24,000 acres of the Confederated Tribes of Warm Springs’ forest offset project, then CARB would need to withdraw 2.6 million credits from the buffer account. That consists of approximately 10% of the current Forest Buffer Account expended, for a single fire and a single project. 

Broader Impacts

If wildfires like the Lionshead Fire continue to consume large swaths of forest land, carbon offset project owners have the additional requirement of reporting any losses to CARB. Additionally, wildfires could potentially have long term impacts on the carbon offset accounting scheme, leading to a reassessment of the risks wildfires pose to a given carbon offset project. Will this ultimately result in changes to the way that CARB and offset registries manage their forest buffer accounts? Only time will tell. But in the meantime, the fires burn on.

© 2020 Beveridge & Diamond PC National Law Review, Volume X, Number 266



About this Author

Brook Detterman Environmental Litigation Attorney Beveridge & Diamond Boston, MA

Brook's practice focuses on climate change, renewable energy, and environmental litigation.

Brook helps his clients to navigate domestic and international climate change programs, develop renewable energy projects, and generate carbon offsets.  He helps his clients to negotiate, structure, and implement transactions related to carbon offsets and renewable energy, and works with clients during all phases of renewable energy and carbon offset project development.  Brook also represents clients during complex environmental litigation, having served as litigation and appellate counsel...

Kirstin K. Gruver Environmental Litigation Attorney Beveridge & Diamond Seattle, WA

Kirstin Gruver is efficient and responsive to clients' needs.

She maintains a diverse environmental litigation and regulatory practice, working with clients nationwide across industrial sectors with a focus on wetlands and water issues. She also has experience in product stewardship and sustainability matters.

Prior to joining Beveridge & Diamond, Kirstin worked as a deputy prosecuting attorney at the Clark County Prosecutor's office. She also worked as a legal intern with the Department of Transportation, Maritime Administration, and as a summer clerk at Earthjustice.

Kirstin attended law school at the University of Washington School of Law, where she served as an extern at the Attorney General's Office of the University of Washington and as a legal intern at the University of Washington Tribal Defense Clinic. She also acted as the Notes & Comments Editor of the Washington Journal of Environmental Law & Policy.

Before attending law school, Kirstin served a year with AmeriCorps working in the Flathead Valley doing watershed conservation and restoration work on the Flathead River, working with local farmers to create and implement restoration plans for their riverbanks. She also led environmental education sessions at her local Boys and Girls Club on the importance of wetlands and sustainable water resources.

Kirstin has also taught a portion of an environmental law class at the University of Washington School of Law, walking students through a case study of the practical application of the Comprehensive Environmental Response, Compensation, and Liability Act (known as CERCLA or Superfund) in the context of the Portland Harbor Superfund site.