Edited by: J. B. Ruhl, Vanderbilt University, United States
Reviewed by: Carolina Arlota, Sabin Center for Climate Change Law, United States
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Coastal U.S. states, including many that have opposed proactive U.S. climate policies, are contemplating entrance into the supply side of the international carbon credit markets by, among other things, hosting revenue-generating blue carbon projects on their submerged lands. The voluntary carbon credit markets already facilitate private investment in such activities, and the emerging Paris Agreement Article 6 framework is poised to generate investment interest at the national level as well. Reviewing these trends, this Perspective questions whether this is good climate, environmental, and social policy, and advises further oversight and accountability.
U.S. state governments, including U.S. state governments that have traditionally opposed U.S. climate policies, are contemplating entrance into the supply side of the carbon credit markets (Orford,
Emerging state interest is driven by the hope of new sources of state revenue. Coastal ecosystem conservation and restoration activities are increasingly understood to provide marketable carbon removal and sequestration benefits (Jessen et al.,
These developments, furthermore, are emerging concurrently with the painstaking finalization of the Paris Agreement Article 6 market mechanisms, governing transfer of “mitigation outcomes” between nations (UNFCCC,
Yet, the propriety of the use of U.S. state public lands to generate credits for the international carbon markets has gone almost totally unexamined. What risks do such activities pose? What conditions should be placed on them? Can they really provide simultaneous environmental, climate, and social benefits? Or might they divert resources away from more important climate mitigation efforts, undercut existing natural resource protection programs, and serve to reward state governments that are also most heavily invested in the industries that cause climate change in the first place? If so, should anything be done?
The United States has an enormous coastline, and much of the submerged land near the coast is held by U.S. state governments. Many of the states with the longest coastlines, including Alaska, Florida, and Texas, are “red states,” meaning states consistently represented by the more conservative Republican Party, which traditionally has opposed proactive climate policy at the state and national level.
The most important of these new initiatives recently occurred in Alaska. In January 2023, Alaska Governor Mike Dunleavy introduced legislation that, he said, would unlock Alaska's “potential to generate additional revenue… through biologic carbon storage projects” (Office of Alaska Governor,
Alaska is the first, and currently only, U.S. state to pass a law specifically to facilitate state carbon credit revenue from state coastal resources. It is, however, unlikely to be the last. Other, similarly situated states have indicated similar interests. Most notably, Texas's 2023 Coastal Resiliency Master Plan has, for the first time, attempted to quantify the alleged carbon sequestration value of all of the state's ongoing coastal conservation and restoration programs. Texas, furthermore, “is working with potential partners to investigate new opportunities to bring in funding from private investors to bear for living shoreline projects” in the state (Texas General Land Office,
Other coastal states have not yet acted. Florida is of particular interest, given its huge coastline and conservative state government, but coastal states from Georgia to Maine also control significant submerged land resources that could host carbon credit projects. Nor will interest be limited only to red states—although they have been innovating, revenue is universally attractive. The next new law may come in Washington state, where a proposed bill focused primarily on forests has proceeded without significant opposition during the current legislative session (Breda,
Although this new state revenue stream is real, it is also, at this point, somewhat theoretical. State governments are, like the rest of the world, responding to external signals and incentives, and for the purposes of coastal resources the most important of these is the rise of the “blue carbon credit” as a valuable commodity in the voluntary carbon markets.
A “carbon credit” is a tradeable unit representing a specific quantity of carbon removed from the atmosphere. Carbon credit “projects” are activities conducted to generate carbon credits, and many carbon credit projects involve, at base, planting or protecting forests, grasslands, and other plant-covered landscapes that extract and sequester atmospheric carbon. Credits generated by such projects have formed the basis of trading under the Kyoto Clean Development Mechanism (Gillenwater and Seres,
The new trend has been the recognition that coastal and marine landscapes have the potential to provide such carbon benefits equally or even better than forest or agricultural lands, resulting in so-called “blue carbon” credits and projects. Although healthy coastal ecosystems are understood to provide many natural benefits, including climate resilience (Spalding et al.,
The blue carbon credit market is poised to grow significantly in the next decades. The World Bank, for example, has predicted that global seaweed cultivation activities alone may provide billions of dollars in untapped carbon sequestration value (World Bank,
Although pressure for blue carbon credit project development has so far come from the voluntary carbon markets, the ongoing creation of the Paris Agreement's international carbon market has the potential to supercharge this process by bringing nations to the demand side of the market as well. In its own language, Paris Agreement Article 6 creates mechanisms for “voluntary cooperation” between nations seeking to reduce their greenhouse gas emissions. Parties are authorized to use “internationally transferred mitigation outcomes” (ITMOs) to achieve their “nationally determined contributions” (NDCs). Although the Paris Agreement intentionally avoids controversial terms such as “credits,” “allowances,” and “markets,” the Article 6 market provisions boil down to the same thing: the authorization of an international carbon credit market for purposes of demonstrating national emissions reductions (Marcu,
Blue carbon credits can and likely will fall neatly into this emerging system. The emerging Article 6 market mechanisms are necessarily informed by the lessons of prior, similar systems, including particularly the Kyoto Protocol's alternative compliance mechanisms. Notwithstanding decades of controversy, the Kyoto parties developed rules for counting the carbon-sequestration benefits of agriculture, forestry, and land use activities toward national emissions reduction commitments, and also developed a system of voluntary payments intended to reduce emissions through avoided deforestation (UNFCCC Secretariat, n.d.a,
In the event that blue carbon projects are successfully incorporated into the Article 6 market framework, it is no longer theoretical that these market mechanisms will be used. South Korea, for example, has announced its intention to use Article 6 market actions to supplement its NDCs (Jung,
The emergence of the Article 6 market system means that carbon credit suppliers, working with national partners, might now compete with each other to provide carbon credits to other nations in return for payments. And unlike prior programs that were limited to projects in and for the benefit of so-called developing nations, the Article 6 market mechanisms will have no such restrictions. In other words, the Article 6 market mechanisms appear to provide a pathway for Texas, say, to sell the carbon sequestration value of its coastlands to a wealthy foreign nation. Although the exact parameters of such transactions are not yet clear, and their governance implications are almost totally unexplored, some U.S. states are beginning to prepare themselves for whatever opportunities might arise.
In sum, U.S. states are preparing to use their public lands to generate revenue by creating marketable credits for the international carbon markets, with little oversight. These activities pose significant risks that deserve more attention than they have yet received.
As a threshold matter, there is a risk that the commodification of the carbon sequestration services on the U.S. coastline will occur without sufficient discussion, in a victory by fait accompli for market logic over other possible frames. The conceptual conversion of coastal resource conservation into an analog for state forestry activities is consistent with nineteenth-century conceptions of conservation as a means toward resource extraction and revenue generation. Non-monetary environmental values such as wildness, inherent beauty, ecological connection, and habitat for species deserving of moral consideration even if they are not directly beneficial to human beings, go almost entirely unconsidered in economized discussions of market systems. Rare attempts to integrate the consideration of these values as the “co-benefits” of marketable ecosystem services still places them, if at all, into distinctly secondary roles. Transforming the ocean into yet another substrate for globalized financialization, monetization, and commodification of natural resources should be seen as a choice rather than as an inevitability, and the downsides of this conversion ought to be examined and debated on their own terms.
That said, in a world already largely committed to such commodification, it is also necessary to confront the risks of the market system as it is actually evolving. If the coastline and ocean is understood primarily as a potentially productive source of carbon sequestration service revenues, the questions become, for example, whether or to what extent state commodification of carbon sequestration services will provide real, rather than chimerical, environmental, climate, and social benefits—and there is real risk that the answers are negative.
In this author's view, these risks become particularly acute when state climate policy is focused primarily on revenue generation. Current debate rages over the integrity of credits issued under existing voluntary standards (Cadman and Hales,
With respect to other environmental benefits, there is also risk that normalizing compensation for conservation will undercut existing uncompensated conservation efforts, while being less effective. Although blue carbon projects are often viewed by coastal conservation interests as a potential source of much-needed funding, it is important to consider whether U.S. state access to carbon market conservation finance might have unintended consequences. Conservation-for-pay should be recognized as a significant departure from past practice of conservation for the public good. Must we, now, begin to pay our states, and our counties, and our communities, to not cut down their trees, and not dig up their wetlands, and not contribute to climate change? And if so, how much? And for how long? What happens, furthermore, if the market does not value such conservation more than development alternatives? Won't a market system that values only carbon sequestration be blind to other important values, such as biodiversity, or social equity, that may also be protected by conservation. These are not new observations (Crook and Clapp,
With respect to social benefits, there is risk that U.S. participation diverts resources inequitably and rewards the same parties that are actually causing the problems of climate change. The entrance of wealthy U.S. states into the supply side of the credit market puts them in direct competition with so-called developing nations which have traditionally been the recipients of this investment. U.S. states, furthermore, are likely to be potent competitors, as they have technical capacities that may make them attractive investment partners for project developers. Should the state governments of the United States—the world's largest historic contributor to the problem of climate change—also be the recipient of a large portion of the world's carbon sequestration investment? How does U.S. state participation impact the other social goals of the international climate governance system?
To the extent that these problems require response, there are several potential points of intervention. The first is the emerging Article 6 market itself. It is possible, although currently unlikely, that rules could be developed in this system to devalue carbon credits generated in industrialized countries, or even within U.S. states that are not actively pursuing direct emissions reductions. The second is via the standard-setting organizations such as Verra, which create the rules for carbon credit project accreditation. Although they are likely reluctant to do so, it is at least possible that rules for high-integrity carbon credit development could begin to account for political and historic responsibility factors in the same way that they currently can and should be made to account for social justice factors. A third possibility is U.S. federal law, which could, among other things, set minimum standards for the integrity of carbon credits developed in the U.S. states, and provide for oversight by competent regulatory authorities. A more aggressive approach could involve conditioning certain federal funding access on the state-level adoption of such standards. A fourth potential avenue of intervention could be regulatory, for example in standards or guidance for coastal carbon accounting under Coastal Zone Management Act programs. And finally, states themselves can and should work to develop their own legislation and regulations to ensure that carbon credits developed and sold on their public lands are of high quality.
For now, however, these issues are not being carefully considered as the community of nations follows the private sector into the business of purchasing the ability to claim credit for the removal of carbon from the atmosphere through coastal and marine biological processes, and U.S. states begin to move to profit from this market. Further oversight and accountability are needed.
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AO: Writing – original draft.
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1The United States is a federal republic with a great deal of authority vested in its states. U.S. states not only retain all governmental power not vested in the national government, but also exert power over the national government through the U.S. Senate, power in which is apportioned equally between the states, not state populations. In this context, U.S. political debates often involve disagreements over the scope of the federal government's authority to act. U.S. politics is also dominated by two political parties which, today, tend to reflect strongly opposed conservative and progressive political agendas and positions. Thus, conservative states, meaning states with state governments and federal delegations dominated by the more conservative Republican Party, have tended to oppose federal action, including federal climate action, and have largely prevented the United States from acting as a leader in international climate policy. In the U.S., these states tend to be called “red states,” the color indicative of Republican Party victory on election maps since about the year 2000.
2The “Article 6 Rulebook” refers to an evolving series of implementing decisions on Article 6. They include Dec. 2/CMA.3 (