#12: What Should You Do When The Fire Starts to Burn? (Pt.2)

What happens when the forests needed to be managed alongside a global carbon budget? How can we do this in an orderly way without creating excessive financial gains, losses and fraud?


This is the second of three issues talking about fire. What is a carbon offset, how does it work and why are forests and nature so regularly talked about in this equation? We explain these ideas and lead to an obvious, important question: can there be a functioning market when it’s constrained by, and beholden to nature?

Share Climate and Money

Welcome to the second in a three-part series on fire.

  • In the first issue we examined what happens after the fire has burned. How do forests regenerate, and why does this matter so much in how we respond and innovate?

  • This second issue explores the $260 billion global carbon offsets market, why companies like Amazon and Microsoft are buying up carbon credits from forestry entities, and what this means for fire.

  • In the third and final issue, we’ll look at the uncomfortable future ahead for people who live in what’s known as the wildlife-urban interface. How will they get insurance, how do they flee fires and rebuild, and what will their homes be worth if no one wants to live in these locations afterwards?


A recent ABC (Australia) story helped to illustrate the basics of our carbon dilemma in a simple, effective way:

  • Every time we burn coal or gas or petrol, we release CO2, which is a molecule that keeps our atmosphere warm

  • Roughly half is absorbed by what are called carbon sinks (i.e. oceans and forests)

  • But here’s the important bit: the other half doesn’t disappear — it stays in the atmosphere

  • If we want to stop temperatures rising, we have to stop emitting CO2. No amount of political slogans or spin can change that

The below image shows a blob, and an orange line: the blob represented the world’s emissions in 1940, since the start of the industrial revolution, and the orange is a metaphorical budget line that the world can’t go over, lest we push beyond a 1.5C rise in global average temperatures, and kick off a chain reaction in our fragile ecosystems that will be difficult to ever correct. Essentially we need to stop emitting CO2 before the blob goes beyond the circle.

The blob in the next image represents total emissions in 1980.

And.. you guessed it. This is the present day: 2021.

Every bit of CO2 we don’t emit each year means more space left in the budget for future years. But we’ve nearly run out of space.

You hear politicians speak of ‘net zero’ and ‘2050’ so much because we’ve now run out of time: the time to decarbonise slowly was in the 1980s and 1990s, but the politics and the technology simply wasn’t there.

And if we continued to emit at current rates, even for five years, it simply brings the 1.5C threshold in closer and closer.

So the world has a problem. We have to drastically reduce our carbon intensity in all forms of energy production, while finding ways to withdraw or ‘offset’ the carbon we’ll still need to produce for parts of life where there is no fossil fuel substitute (e.g. commercial aviation, steel production, etc).

This second issue looks at the fact that the US is about to go all-in on carbon removal: we’ll leave industrial carbon removal for future issues, and focus for now on ecological carbon removali.e. paying farmers and foresters to trap carbon back in the soil we once took it from. But what does this mean, and crucially, do we know if it will work?


Stories are easiest to tell when we follow people. So let’s look out through the eyes of Kelly Garrett (below), the manager of a 7,000 acre farm in western Iowa. His story was recently featured in a Grist piece examining this very question: how much of the carbon removal effort is new, versus a market being created in processes that were already underway?

Garrett is the seventh generation of his family to live and work on the rolling hills of Garrett Land and Cattle in Arion, Iowa, tending to lush fields of corn and soybean crops and raising cattle for beef. He’s also a believer in innovation, and founded XtremeAg.farm, a website where Garrett and six other farmers review agricultural tools and practices so other farmers don’t get caught using new equipment that doesn’t serve its purpose.

It was through this side gig that Garrett first seriously considered carbon capture. Large companies like Amazon, Microsoft, Delta Air Lines or Shell are under pressure to curb their emissions, but this can only happen so fast. The alternative is to ‘offset’ their necessary carbon footprint, given it’s often cheaper to pay somebody like Garrett to trap more carbon than it is for them to fundamentally change their business model.

How exactly does Garrett store carbon for an S&P 500 firm? Avoiding the plow. He hasn’t plowed or otherwise tilled his fields since 2012, and had already sowed many of his fields with cover crops — not for harvest but to improve soil health and capture carbon dioxide through photosynthesis. After discussions with a carbon market broker named Nori, Garrett realised any field not plowed since 2010 was eligible for carbon-sequestering value under the terms of the market.

Since signing up with Nori, Garrett has raked in nearly $150,000 for capturing carbon in his soil, though it’s hard to know exactly how much carbon Garrett is actually storing. And because of that, it’s impossible to know if he’s storing more carbon than he would have put into his fields if he hadn’t gotten paid.

This is a major accounting problem. Businesses — and even governments — will think they’ve zeroed out each additional ton of pollution they put into the atmosphere, but in fact it might’ve gone to improved farming practices that were underway regardless.


Good question. The first carbon offset scheme started in 1989, when the Virginia-based utility, AES Corporation, sought to build a coal-fired power plant north of New London, Connecticut. This particular power station was supposed to be special — a carbon-neutral facility. The company paid $2 million to small farmers in Guatemala to plant some 50 million trees, expected to be enough to suck up all the power plant’s carbon dioxide emissions over 40 years. 

But nothing quite worked as planned. The Guatemalan farmers planted trees over an area the size of Chicago, much of which they then harvested for fuel and lumber well before the 40 years was out. On the bright side, it perhaps kept farmers from chopping down nearby forests. “Did it work? I have no idea. It’s almost impossible to tell,” said Mark Trexler, who helped design and analyse the project while working at the World Resources Institute. A study published in 2009 found that it had sequestered less than one-tenth the carbon expected.

How would we summarise the ecological carbon offsets market for now? A work in progress. The majority of payments to land managers — the people responsible for plowing up soil and cutting down trees — don’t actually change behaviour. Offsets only work to stop climate change when they reduce the amount of carbon in the air, and that means behavioural shifts well above existing patterns.


Even if land managers aren’t storing carbon in farming soil like Garett, they can be storing it in forests and trees like the Guatemalan example. How much confidence can we have in forests staying untouched? Not much.

In September 2020, a blaze known as the Lionshead Fire tore through 190,000 acres of forest in Central Oregon and forced a terrifying evacuation of the nearby town of Detroit. It also did something else: it almost completely engulfed ACR260, the largest forest dedicated to sequestering carbon dioxide in the state.  

The project, owned by the Confederated Tribes of Warm Springs, spans 24,000 acres. Before the fires, the state of California had issued more than 2.6 million offset credits based on the carbon stored in its trees. That translates to 2.6 million metric tons of carbon dioxide — or the equivalent of driving 560,000 cars around for one year.

Suppose an oil refinery purchased offsets premised on the existence of those trees: if they burn down, there’s a problem. Luckily, California anticipated this problem when designing their cap and trade laws. The California Air Resources Board, or CARB, which oversees the offset program, built in a type of insurance that accounts for risks like fire, disease, and drought.

This is how it works. Land owners that manage forests under California’s program only get paid for between 80-90% of the carbon they store. This means all of the forests in the program are storing an extra 10-20% more carbon than California actually sells as credits on the offset market. CARB keeps track of this ‘buffer pool’ of extra carbon, and can tap into it if any of the forests with existing credits get destroyed.

For example, back in 2015, a fire wiped out Trinity Timberlands, a forest management project in Northern California worth about 850,000 credits. In response, CARB pulled 850,000 credits out of the buffer pool to compensate for all that lost carbon storage. The system worked.

But right now, the buffer pool has about 25 million credits — and many scientists are worried that won’t be enough. 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. 


There’s another problem. The offset program allows forest owners across the country to earn credits for taking care of their land in ways that store or absorb more carbon. But an investigation by ProPublica and CarbonPlan found California’s program has generated between 20 million and 39 million credits that don’t achieve real climate benefits. They are, in effect, ghost credits that didn’t preserve additional carbon in forests but did allow polluters to emit far more CO2. Those ghost credits represent nearly one in three credits issued through California’s primary forest offset program.

This wasn’t fraud with deliberate intent, but instead a system poorly designed by regulators, enabling the sale of credits with fraudulent value.

Companies are currently paying between $3.00 - 15.00 for every ton of carbon pollution, which translates to some $20 per acre for farmers — a fee experts say is too low to trigger transformative changes. ‘The $20 price point is enough to get growers already interested in credits, but it’s not enough to get the grower who doesn’t know about it at all,’ said Kari Hernandez, vice president for carbon operations at Indigo, another carbon offsets startup. ‘Growers say, at $40, $50, $80 an acre, ‘I’m willing to try some things.’ 


Forest offsets have been criticised for a variety of problems, including the risks that the carbon reductions will be short-lived, that carbon savings will be wiped out by increased logging elsewhere, and that the projects are preserving forests never in jeopardy of being chopped down, producing credits that don’t reflect real-world changes in carbon levels.

All of this might be true, and it still might be right that immature markets take time and are worthwhile proceeding with regardless. Forest offsets are likely to work and add value in the long run. But far from addressing climate change, California’s forest offsets appear to be adding tens of millions of tons of CO2 into the atmosphere on balance, undermining progress on the state’s long-term emissions goals, and letting justified cynicism swirl in a decarbonisation effort that needs all the credibility it can find. Persistent fires adds to the complexity by undermining the perception of a market supposedly in a state of conservation.

And with the fire risk continually rising, it begs the question whether any land manager can sell offset credits confident in the belief they will be able to keep the forest intact for 40 years.

Knowing all of the above, we return to our regular question: would you invest?

In the first issue we saw there is going to be a lot of money to be made in the recovery of forests. In this second issue we have seen there is money to be made in offsets, but it is a very unstable market, and debatable as to its overall impact in reducing emissions. Next issue we will see the biggest problem of all: whether it makes to live in areas likely to burn.


Owen C. Woolcock

3 Questions I Am Asking Myself This Week

1. 2,000 firefighters on the ground are battling wildfires raging across almost 800,000 hectares (roughly 2 million acres) in Siberia. Many high schools are larger than 2,000 people.

2. This excellent MIT Technology Review piece asks the question: are plummeting sunny day solar prices undermining the case to build more solar farms?

3. About 1,300 people are ‘assumed’ missing from flooding in Rhineland-Palatinate state in Germany this week. I worked in Hamburg for 18 months in the built environment, and reflect on the fact that if Germany, with its strict building codes, and supposedly well-built infrastructure isn’t ready, then no country can be.

If You Read Or Listen To One Thing This Week

(Non-Climate): A short but incredibly powerful video on the story of mental asylum closures across the US in the 20th Century: in effect, the closing of mental hospitals on supposedly humanitarian grounds ended up transferring the challenge to everywhere else — private homes, the streets, traditional healthcare systems.

This video made me think deeply on the ways we can transfer rather than address systemic problems. It is a lesson pertinent for everything from welfare to the climate.