Oregon Cap and Invest Should Allow Aggregation

Sheldon Zakreski, The Climate Trust
Weekly Policy and Finance Update – November 20, 2017

Bottom line | Aggregation allows small landowners to access carbon markets without sacrificing necessary safeguards.

The State of Oregon established several working groups to advance debate and find common ground on designing a carbon cap and invest bill. The Agriculture, Forests, Fisheries, Rural Communities, and Tribes Work Group became the focal point for discussing the role of offsets in the Bill. This Group recently asked whether a cap and invest program in Oregon should allow for aggregation of offset projects. It was surprising to hear one commenter oppose aggregation on the grounds it was akin to mortgage backed securities. While large financial institutions pushed for a way to split and combine multiple mortgages into an opaque financial product, in carbon markets it’s largely nonprofits pushing for aggregation.

A strong reason to support aggregation is that environmental markets and the safeguards they employ often make it too costly for small projects to access the market; leaving only medium and large projects to take part. Aggregation, by contrast, allows the pooling of several small projects into a single project to streamline management and spread the costs over several project sites. Therefore, aggregation has the promise of overcoming an access barrier by reducing the costs small landowners would face in the carbon market. This can be done without sacrificing safeguards, as auditors can review documentation verifying each landowner’s participation in the aggregated project, and conduct statistically significant sampling of data combined with random site visits.

Opening the market to small landowners is something that should be supported and encouraged in Oregon. A policy that can achieve the dual goals of promoting rural economic development, while generating offsets that can help contain the costs associated with capping greenhouse gas emissions, is worth developing.