Cap and Trade

Offsets and Implications for Alaska

Joseph A. Roos, Valerie Barber, and Allen M. Brackley

United States 

Department of 

Agriculture

Forest Service

Pacific Northwest 

Research Station

General Technical Report 

PNW-GTR-836

March 2011

DEPAR TMENT OF AGRICULT URE
Authors

Joseph A. Roos is a research associate, University of Washington, Seattle, 

WA 98105; Valerie Barber is an assistant professor, Forest Products Program, 

University of Alaska-Fairbanks, Palmer, AK 99645; and Allen M. Brackley is 

a research forester, U.S. Department of Agriculture, Forest Service, Pacific 

Northwest Research Station, Alaska Wood Utilization Research and 

Development Center, 204 Siginaka Way, Sitka, AK 99835.

Cover photographs, providing examples of temporary carbon storage in 

products (clockwise from top left): spiritual statuary (Thousand Hand Buddha) 

and Starrigavin Creek Cabin, Tongass National Forest, by Allen M. Brackley; 

red alder lumber and sawmill company logo, by David L. Nicholls.

The Forest Service of the U.S. Department of Agriculture is dedicated to the principle of 

multiple use management of the Nation’s forest resources for sustained yields of wood, 

water, forage, wildlife, and recreation. Through forestry research, cooperation with the 

States and private forest owners, and management of the National Forests and National 

Grasslands, it strives—as directed by Congress—to provide increasingly greater service 

to a growing Nation.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and 

activities on the basis of race, color, national origin, age, disability, and where applicable, 

sex, marital status, familial status, parental status, religion, sexual orientation, genetic 

information, political beliefs, reprisal, or because all or part of an individual’s income 

is derived from any public assistance program. (Not all prohibited bases apply to all 

programs.) Persons with disabilities who require alternative means for communication of 

program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET 

Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write 

USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW, Washington, DC 

20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal 

opportunity provider and employer.
Abstract

Roos, Joseph A.; Barber, Valerie; Brackley, Allen M. 2011. Cap and trade: offsets 

and implications for Alaska. Gen. Tech. Rep. PNW-GTR-836. Portland, OR: U.S. 

Department of Agriculture, Forest Service, Pacific Northwest Research Station. 

27 p.

The Environmental Protection Agency (EPA) has formally declared that greenhouse 

gases (GHG) pose a threat to public health and the environment. This is significant 

because it gives the executive branch the authority to impose carbon regulations 

on carbon-emitting entities. United States GHG emissions have increased by 

approximately 17 percent between 1990 and 2007, and the EPA now has the 

authority to design regulation to reverse this trend. One of the regulatory tools 

being considered is a cap and trade system, whereby a ceiling is set for allowable 

carbon dioxide emissions and emitters are allowed to purchase offsets if they 

exceed their allowable emissions. Forests are major carbon sinks, and reforestation 

or projects to avoid deforestation are considered an offset with a monetary value 

under a majority of cap and trade systems. Alaska has vast forest resources 

including the largest national forest in the Nation. Alaska’s forest accounts for 17 

percent of all U.S. forest land. This paper provides an overview of a cap and trade 

system, the role of offsets, and the potential impact on Alaska’s forest stakeholders. 

Keywords: Forests, carbon, carbon trading offsets, Alaska, climate change.

1

Cap and Trade: Offsets and Implications for Alaska

Introduction

On April 17, 2009, the Environmental Protection Agency (EPA) formally 

announced that it had found that greenhouse gas (GHG) poses a threat to public 

health and the environment (EPA 2009a). This announcement was significant 

because it gives the executive branch the authority to impose carbon regulations on 

carbon-emitting entities. United States GHG emissions have increased by approximately 17 percent between 1990 and 2007, and the EPA now has the authority to 

design regulation to reverse this trend. One of the regulatory tools being considered 

is a cap and trade system, whereby a ceiling is set for allowable carbon dioxide 

(CO2) emissions and emitters are allowed to purchase credits if they exceed their 

allowable emissions. 

The EPA announcement brings the United States closer to participating in a 

global cap and trade agreement. The organization that drafts these global climate 

change agreements is the United Nations Framework Convention on Climate 

Change (UNFCCC). The first major climate change agreement developed under 

the UNFCCC was the Kyoto Protocol, which went into effect February 2005. The 

Kyoto Protocol set targets for 37 industrialized countries and the European community to reduce GHG emissions to an average of 5 percent below 1990 levels 

over the 5-year period from 2008 through 2012. Although the Kyoto Protocol is 

the first international agreement addressing GHGs, the agreement has two major 

limitations. First, some of the world’s largest GHG emitters including China, India, 

and the United States, did not sign the Kyoto Protocol, which severely limits the 

agreement’s effectiveness. Second, the agreement does not directly address tropical deforestation. Annex 1 countries (industrialized economies and economies in 

transition) are allowed to achieve some target emission reductions by investing 

in energy and tree planting projects (reforestation and afforestation) through the 

“Clean Development Mechanism” stipulated in the Kyoto Protocol. However, this 

provides little incentive for countries that are at high risk for deforestation, such as 

Brazil, Indonesia, Bolivia, Peru, Columbia, and central African nations to protect 

their tropical forests. It has been proposed that eliminating deforestation in Brazil 

and Indonesia during the Kyoto Protocol period would equal approximately 80 

percent of emission reductions gained by the Kyoto Protocol (Santilli et al. 2005). 

The Kyoto Protocol is set to expire in 2012, and a new global agreement to mitigate 

climate change is currently being debated. 

In December 2009, the United Nations held a climate change conference in 

Copenhagen to draft a climate change agreement to follow the Kyoto Protocol. This 

conference included 193 countries and resulted in a draft of an agreement called 

the Copenhagen Accord (UNFCCC 2009). Although the draft has not been finalized, 
2

GENERAL TECHNICAL REPORT PNW-GTR-836

one area the Copenhagen Accord focuses on is the United Nation’s framework to 

reduce deforestation called Reducing Emissions from Deforestation and Forest 

Degradation (REDD). The strategy of REDD is to reward countries, companies, 

and forest-land owners for maintaining their forests rather than cutting them down, 

while avoiding CO2 leakage. The REDD program relies on a trust fund, established 

in September 2008, that allows donors to pool resources and provides funding 

for activities toward this program. The core concept is that wealthier nations will 

contribute to the trust fund and subsidize developing nations for maintaining their 

forests and for increasing the carbon sink potential of their forests.

Item 6 of the Copenhagen Accord (UNFCCC 2009) reads: 

We recognize the crucial role of reducing emission from deforestation and 

forest degradation and the need to enhance removals of greenhouse gas 

emission by forests and agree on the need to provide positive incentives to 

such actions through the immediate establishment of a mechanism including REDD-plus, to enable the mobilization of financial resources from 

developed countries.

There are still many issues of disagreement among the participating countries 

of the Copenhagen conference. Before an agreement can be reached, a major rift 

needs to be closed between developed and developing countries. 

As stated above, the United States did not sign onto the Kyoto Protocol. However, there are two bills discussed below that are being debated. These bills would 

mandate a cap and trade system in the United States. Both of these bills include 

provisions for forest-related offsets, and, if passed, would impact forest stakeholders 

throughout the United States. In summary, forest-based offsets are an important 

part of climate change mitigation mechanisms at the international, national, 

regional, and state levels, and it is important for Alaskan forest stakeholders to 

understand the forest’s role in these mechanisms. 

Greenhouse Gas Measurement

The basis for GHG emission measurement is the carbon dioxide equivalent (CO2e). 

A CO2e measures each gas by its global warming potential (GWP), which is the 

universal standard of measurement. A GWP is based on the ability of each GHG 

to trap heat in the atmosphere relative to an equivalent unit of CO2 over a specified 

period of time. Table 1 shows both the GWP unit and the percentage of total GHG 

emissions. The table highlights the intensive GHG warming potential of sulphur 

hexafluoride. Although the quantity of emissions released into the atmosphere is 

less than 1 percent of the total, its ability to trap heat in the atmosphere is 23,900 
3

Cap and Trade: Offsets and Implications for Alaska

times that of CO2. Therefore, in addition to reducing emissions of CO2, climate 

change mitigation policies need to reduce emissions in all the major GHG categories. 

Global Emissions

In 2006, total global emissions were estimated to be 29 billion metric tons of CO2e 

and are predicted to increase to 33.1 billion metric tons by 2015 (EIA 2009). The 

top five emitters are the United States, China, the Russian Federation, India, and 

Japan (table 2). These figures illustrate a major limitation of the Kyoto Protocol, 

which is that the world’s largest emitters are not regulated by the Kyoto Protocol.

Table 1—Global warming potential in carbon dioxide equivalents (CO2e)

Percentage of 2007 total 

Global greenhouse gas

Gas category warming potential emissions (CO2e basis)

CO2e Percent

Carbon dioxide 1 85

Methane 21 8

Nitrous oxide 310 4

Halocarbons (various 140 (HFC-152a) to 

 compounds) 11,700 (HFC-23) 2

Sulphur hexafluoride 23,900 <1

HFC = hydrofluorocarbon. 

HFC-152a and HFC-23 represent the range of warming potential halocarbons.

Source: EPA 2009c, IETA 2009. 

Table 2—Emissions of major emitting countries (countries with at least 

annual 500 million metric tons of carbon dioxide equivalents [CO2e])

Percentage change CO2e per 

Country CO2e since 1990 capita

Million metric tons Percent Metric tons

United States 7,017.32 14.4 22.96

China 6,103.35a — 3.39b

Russian Federation 2,190.24 -34.2 15.37

India 1,510.35a — 1.30b

Japan 1,340.08 5.3 10.51

Germany 1,004.79 -18.2 12.20

Canada 720.63 21.7 22.09

Brazil 658.65a 11.1 4.14b

United Kingdom 655.79 -15.1 10.83

Italy 567.92 9.9 9.63

Mexico 548.5 29.2 5.38

France 546.53 -3.5 8.90

Australia 536.07 28.8 25.99

a Figure reported in million metric tons of CO2 (rather than CO2e). b Figure for reported year of 1994. 

Source: United Nations Statistics Division 2009. 
4

GENERAL TECHNICAL REPORT PNW-GTR-836

In addition to total emissions emitted by each country, it is important to examine per capita emissions. When the emissions are measured on a per capita basis, 

the top five countries are Australia, the United States, Canada, the Russian Federation, the United Kingdom, and Germany. The discrepancy in per capita emissions 

between developed and developing countries were the seed of major disagreements 

at the Copenhagen Conference. 

United States Emissions

The EPA provides estimates for CO2 emissions in the United States. The unit of 

measure used by the EPA is teragrams of carbon dioxide equivalents (TgCO2e). 

According to EPA estimates, total GHG in the United States in 2007 were 7,150.1 

TgCO2e (table 3). 

The majority of U.S. GHG emissions are caused by fossil fuel combustion, 

which accounted for 80 percent of the 2007 total. The goal of the Kyoto Protocol 

was to reduce GHG emissions of its 

members by 5 percent below 1990 levels. 

As mentioned earlier, the United States is 

not bound by the Kyoto Protocol requirements, and it is interesting to note that 

U.S. emissions between 1990 and 2007 

increased by 17 percent. The largest 

source of emissions in the United States is 

transportation, followed by the industrial, 

residential, and commercial sectors (fig. 1). 

Table 3—U.S. carbon emission

Gas/source 1990 1995 2000 2005 2006 2007

Teragrams carbon dioxide equivalents

Carbon dioxide 5,076.7 5,407.9 5,955.2 6,090.8 6,014.9 6,103.4

Methane 616.6 615.8 591.1 561.7 582.0 585.3

Nitrous oxide 315.0 334.1 329.2 315.9 312.1 311.9

Hydrofluorocarbons 36.9 61.8 100.1 116.1 119.1 125.5

Perfluorinated compounds 20.8 15.6 13.5 6.2 6.0 7.5

Sulphur hexafluoride 32.8 28.1 19.2 17.9 17.0 16.5

 Total 6,098.7 6,463.3 7,008.2 7,108.6 7,051.1 7,150.1

Source: EPA 2009c.

Figure 1—Percentage of U.S. emissions 

sources by sector. Source: EPA 2009c.

Transportation

33%

Industrial

28%

Residential

21%

Commercial

18%
5

Cap and Trade: Offsets and Implications for Alaska

Transportation Sector

The transportation sector comprised 33 percent of total U.S. CO2 emissions in 2007. 

Transportation emissions rose by 29 percent between 1990 and 2007. According to 

the EPA, this rise can be attributed to increased demand for travel and the stagnation of fuel efficiency of U.S. vehicles. The largest sources of transportation GHGs 

in 2007 were passenger cars (33 percent); light duty trucks, which include sport utility vehicles, pickup trucks, and minivans (28 percent); freight trucks (21 percent); 

and commercial aircraft (8 percent). Passenger cars and light duty trucks increased 

by 40 percent owing to population growth, economic growth, urban sprawl, and 

lower fuel prices (EPA 2009c).

Industrial Sector

The industrial sector is the second largest emitting category. In 2007, the industrial sector accounted for 28 percent of total U.S. emissions. The EPA defines the 

industrial sector as all manufacturing facilities plus emissions that are a byproduct 

of the non-energy-related industrial process activities such as fugitive1

 methane 

emissions (CH4); emissions from coal mining; byproduct CO2 emissions from 

cement manufacturing; and hydrofluorocarbon, perfluorinated compounds, and 

sulphur hexafluoride byproduct emissions from semiconductor manufacturing. 

Overall, industrial sector emissions have declined since 1990. This reflects a shift in 

the U.S. economy from heavy industries such as steel to lighter industries such as 

technology. Although industrial sector emissions have declined in the United States, 

industrial sector emissions have increased in developing countries such as China as 

heavy industrial production shifts from the United States to developing countries. 

Residential Sector

The third category, the residential sector, made up 21 percent of total U.S. emissions in 2007. The residential sector includes all emissions arising from residential 

activity including HVAC (heating, ventilation, and air conditioning), cooking, 

and appliance use. Emissions in this category increased between 1990 and 2007, 

largely reflecting the increase in the U.S. population. Between 1990 and 2007, the 

U.S. population increased from 250 to 302 million, which was about a 20 percent 

increase (U.S. Census Bureau 2010). 

Commercial Sector

The commercial sector contributes nonindustrial emissions that arise from 

commercial activities, and, in 2007, constituted (or formed) 21 percent of U.S. 

1 Fugitive emissions are emissions that are released through events such as leaks, spills, 

and evaporation.
6

GENERAL TECHNICAL REPORT PNW-GTR-836

emissions. As with the residential sector, the commercial sector is heavily reliant 

on electricity. A majority of emissions in this category come from electricity for 

lighting, heating, air conditioning, and operating appliances (EPA 2009c). This 

category also includes emissions from natural gas, petroleum products, landfills, 

and wastewater treatment facilities. Overall, this category has increased owing to 

a variety of factors including weather and economic activity. 

U.S. Carbon Sequestration

The largest source of carbon sequestration in the United States is forests. Forests 

sequester approximately 910 TgCO2e annually, which is about 12 percent of annual 

U.S. emissions (table 4). Although forests are by far the largest category of carbon 

sequestration, other categories include urban trees, agricultural soil, yard trimmings, and food scraps. Another category not included in the table is harvested 

wood products. It was estimated that the annual sequestration of harvested wood 

products in 2000 was 108.5 TgCO2e (Skog 2008). 

Table 5 shows the approximate correlations of U.S. gross domestic product 

(GDP) growth to U.S. GHG emissions from 1990 to 2007. The table shows that 

the annual GDP growth rate has exceeded the emissions growth rate. This may 

be the result of industry becoming more energy efficient. However, it can also be 

partially attributed to a large portion of U.S. heavy industry manufacturing such as 

steel moving to developing countries such as India and China. This illustrates the 

importance of pursuing a global agreement so that increased U.S. regulation does 

not act as an incentive to shift manufacturing to countries with weaker or no GHG 

regulations. 

Table 4—Recent trends in U.S. greenhouse gas emissions and sinks 

1990 1995 2000 2005 2006 2007

Teragrams carbon dioxide equivalents

Total emissions 6,098.7 6,463.3 7,008.2 7,108.6 7,051.1 7,150.1

Carbon dioxide sequestration from forests 

 -661.1 -686.6 -512.6 -975.7 -900.3 -910.1

Carbon dioxide from urban trees -60.6 -71.5 -82.4 -93.3 -95.5 -97.6

Carbon dioxide sequestration from agricultural 

soil carbon stocks -96.3 -78.9 -111.2 -43.6 -44.5 -45.1

Carbon dioxide from landfills, yard trimmings,

and food scraps -23.5 -13.9 -11.3 -10.2 -10.4 -9.8

 Total carbon dioxide in sinks -841.4 -851 -717.5 -1,122.7 -1,050.5 -1,062.6

Total net emissions (sources and sinks) 5,257.3 5,612.3 6,290.7 5,985.9 6,000.6 6,087.5

a Totals may not sum owing to independent rounding.

Source: EPA 2009c.
7

Cap and Trade: Offsets and Implications for Alaska

Alaska’s emission sources—

Alaska’s 2010 GHG emissions are projected to be 53.5 million metric tons (MMT) 

of CO2e and are projected to grow to 62.8 MMT CO2e by 2025 (table 6). The major 

2010 emissions sources are industrial fuel (26.5 MMT CO2e), transportation (18.5 

MMT CO2e), residential/commercial fuel (3.91 MMT CO2e), and electricity (3.58 

MMT CO2e). The remaining 1.9 percent of emissions is composed of agriculture, 

industrial processes, and waste management. 

Of Alaska’s total emissions, the production of industrial fuel is by far the largest 

source, accounting for 50 percent of the total (fig. 2). The industrial fuel category 

is composed of natural gas (75 percent), petroleum/oil (22 percent), and coal (3 

percent). Alaska’s second largest source of emissions is transportation, which 

makes up 34 percent of total emissions. The transportation category is composed of 

aviation (71 percent), on-road vehicles (25 percent), and marine vessels (4 percent). 

The third largest source of emissions is the residential/commercial fuel, which is 

slightly over 7 percent of the total (Center for Climate Strategies 2009). The residential/commercial fuel 

category is composed of 

natural gas (49 percent), 

petroleum/oil industry 

(33 percent), coal (17 

percent), and wood (1 

percent). Alaska’s fourth 

largest emissions source 

is electricity generation, 

which is 7 percent of 

the total. This category 

includes natural gas (62 

percent), oil (24 percent), 

and coal (14 percent). 

Table 5—Correlation of gross domestic product (GDP) growth to greenhouse gas emissions 

(index 1990 = 100)

 Mean Correlation to

Variable 1990 1995 2000 2005 2006 2007 growth rate GDP growth

Percent

Annual GDP growth 100 113 138 155 159 162 2.9 1

Greenhouse gas emissions 100 106 115 117 115 117 0.9 .922

Source: EPA 2009c.

Figure 2—Alaska's emissions by category. Source: Center for 

Climate Strategies 2009.

Industrial

fuel

(50%)

Transportation

(34%)

Waste management Electricity (7%)

 (1%)

Agriculture (1%)

Residential/

commercial fuel

 (7%)
8

GENERAL TECHNICAL REPORT PNW-GTR-836

Table 6—Alaska emissions 

Sector 1990 2000 2005 2010 2020 2025

Million metric tons carbon dioxide equivalents

Electricity use (consumption):

Coal 0.40 0.42 0.48 0.50 0.79 0.79

Natural gas 2.00 2.29 2.14 2.22 2.36 2.36

Oil 0.37 0.48 0.57 0.86 0.58 0.86

 Subtotala 2.76 3.19 3.20 3.58 3.74 4.02

Residential/commercial fuel use:

Coal 0.76 0.79 0.70 0.69 0.67 0.66

Natural gas 1.79 2.22 1.87 1.91 2.09 2.13

Petroleum 1.21 1.30 1.29 1.29 1.34 1.26

Wood (CH4 and N2O)b 0.01 0.01 0.02 0.02 0.02 0.02

 Subtotala 3.77 4.33 3.88 3.91 4.12 4.07

Industrial fuel use/fossil fuel industry:

Coal/coal mining 0.76 0.79 0.70 0.69 0.67 0.66

Natural gas/natural gas industry 13.40 17.70 19.10 20.50 25.10 26.10

Petroleum/oil industry 7.10 5.18 5.57 5.98 5.78 5.60

Wood (CH4 and N2O)b 0.012 0 0 0 0 0

 Subtotala 20.5 22.9 24.7 26.5 30.9 31.8

Transportation:

Aviation 7.15 10.60 12.90 13.10 13.40 13.70

Marine vessels 0.83 0.48 0.61 0.72 1.00 1.17

On-road vehicles 3.41 3.71 4.19 4.55 5.57 6.20

Rail and other 0.08 0.08 0.06 0.06 0.06 0.06

 Subtotala 11.5 14.9 17.8 18.5 20.1 21.1

Industrial processes 0.051 0.200 0.330 0.450 0.750 0.960

Waste management 0.320 0.530 0.630 0.520 0.730 0.860

Agriculture 0.053 0.054 0.053 0.056 0.066 0.073

Total gross emissions (consumption basis)a 39.0 46.1 50.6 53.5 60.3 62.8

a Totals may not sum owing to rounding at the source.

b CH4 = methane; N2O = nitrous oxide.

Source: Center for Climate Strategies 2009.

Alaska’s forest ownership structure includes the federal government, the state 

government, native corporations, and private ownership. Federal climate change 

legislation with a provision for forest-related offsets will impact each of these 

groups in different ways. Whether it is the Waxman-Markey Bill, the Kerry-Lieberman Bill, or EPA-mandated reductions, Alaska will be required to absorb a highly 

complex system regarding allowances and offsets for GHGs. Therefore, it will be 

important for Alaska policymakers to design a strategy to educate all stakeholders 

regarding climate change legislation and the impact on stakeholder operations once 

legislation is passed and becomes law. The next section presents an overview of cap 

and trade systems and how offsets are defined within these systems. 
9

Cap and Trade: Offsets and Implications for Alaska

Carbon Trading and Offsets

To understand carbon trading, it is important to understand the products that are 

being traded. The primary product in carbon markets is the trading of GHG emission allowances. Under a cap and trade system, permits are issued to various entities for the right to emit GHG emissions that meet emission reduction requirement 

caps. An offset is defined as the reduction, removal, or avoidance of GHG emissions 

from a specific project that is then used to compensate for GHG emissions occurring elsewhere (Offset Quality Initiative 2008). 

Offsets are an established component of various emission reduction programs 

including the Kyoto Protocol, the European Union Emissions Trading Scheme, 

the Regional Greenhouse Gas Initiative, and the Western Climate Initiative. One 

essential part of any climate change mitigation agreement is establishing strong 

criteria for GHG offsets. There are four criteria for including offsets in a climate 

change mitigation program. The avoidance or removal of a GHG must be real, additional, verifiable, and permanent (WCI 2009). The criterion of “real” assures that 

the offset results in an actual avoidance or removal of GHGs rather than a project 

that does not produce actual results beneficial to the environment. The criterion 

of “additional” assures that the offset reduces or avoids emissions more than a 

baseline scenario without the project. Furthermore, the offset must be created for 

the specific purpose of GHG removal or avoidance rather than a project that would 

have occurred anyway. The criterion of “verifiable” assures that the offsets can be 

verified by an independent third-party organization. Finally, the criterion of “permanence” assures that a minimum time requirement for the longevity of the offset 

is included and that there is no leakage. Leakage is when deforestation is avoided 

in one region at the expense of increased deforestation of another region (Brown 

2002). There are various offset mechanisms to accommodate different kinds of 

GHG reduction programs (table 7).

An example of an organization addressing forest-related offsets is the Climatic 

Action Reserve. This organization was founded to ensure the integrity, transparency, and financial value in the North American carbon market. Eligibility rules 

and requirements under the Forest Project Protocol prepared by the Climatic Action 

Reserve are outlined in a draft submitted in July 2009 (CAR 2009). The draft 

addresses requirements for offsets including additionality, project start date, crediting period, minimum time commitment, implementation agreement, easements to 

insure continuation in the event of change of ownership, attestation of title, location 

of project, and sustainability of applied practices. 
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GENERAL TECHNICAL REPORT PNW-GTR-836

Table 7—Examples of offset mechanisms, regulations, and verification organizations

Alberta-Based Offset Credit System Created for entities regulated under Alberta’s mandatory 

greenhouse gas (GHG) emission regulations. Established 

protocols were created by the Alberta government in 

conjunction with stakeholders, defining offset requirements. 

Forestry-based offsets are currently under review.

British Columbia Emission Offset Regulation Created for British Columbia’s (BC) Greenhouse Gas Reduction 

Target Act of 2008 This legislation set the goal to reduce 

emissions to 33 percent below 2007 levels by 2020. Forest-based 

offsets are included and regulated by BC Forest Offset Protocol. 

California Global Warming Solutions Act of 2006 Established an emissions reduction program to reduce emissions 

to 1990 levels by 2020. The GHG emissions reduction program 

will begin being implemented in 2011. Forest offsets are allowed 

for afforestation, improved forest management, and avoided 

conversion of forest land. 

Protocol Clean Development Mechanism (CDM) Established under the Protocol and allows a country with an 

emission-reduction or emission-limitation commitment under 

the Protocol (Annex B Party) to implement an emissionreduction project in developing countries. Forest offsets are 

included for afforestation and reforestation. 

Protocol Joint Implementation (JI) This offset mechanism was also developed under the Protocol 

and allows a country with an emission reduction or limitation 

commitment under the Protocol (Annex B Party) to earn 

Emission Reduction Units from an emission-reduction 

or mission removal project in another Annex B Party country. 

Forest-based offsets are allowed as described with clean 

development mechanism (CDM).

International Organization for Standardization The ISO 14064 standards for GHG accounting and verification 

(ISO 14064) were launched in 2006. This offset verification system provides 

government and industry with a transparent system to account 

for the reduction and trading of GHG emissions. This provides 

a standard to account for forestry-based offsets. 

Regional Greenhouse Gas Initiative (RGGI) RGGI set up an offset system that is project based. It includes 

project categories that can be used to offset compliance five

obligations of member states. Forest-based offsets are allowed 

for afforestation. 

Gold Standard This is a voluntary carbon offset standard developed by the 

World Wildlife Fund for renewable energy and energy efficiency 

projects. Forest-based offsets are verified to assure their 

compliance with CDM and Joint Implementation regulations.

Voluntary Carbon Standard This standard was established to verify the validity of reductions 

and removals of carbon by offset projects. Forest based-offsets 

are verified for afforestation and reforestation projects. 

Source: WCI 2009.
11

Cap and Trade: Offsets and Implications for Alaska

Forestry-Based Offsets

There are four general types of forestry-based offset projects: afforestation, 

reforestation, reduced deforestation, and harvested wood products. Forestrybased offsets fall under the Land Use and Land-Use Change and Forestry section 

under the Kyoto Protocol. One of the main drawbacks of these forestry-based 

offsets is that the carbon sequestered may be reversed and re-released into the 

atmosphere (Perez-Garcia and Lippke 2008). This can happen through various 

forest disturbances including fires, pest infestation decay, or illegal harvesting. 

In accounting terms, the carbon credit received from the sequestration would be 

reversed in the future by debits in the account following disturbances such as 

decay and fires (Cairns and Lasserre 2006). If the forests are replanted or naturally 

regenerate at the same level of the decay and fire, the debits from decay and fire 

will be again offset as the carbon is once more sequestered. This cycle leads to the 

question of how can forests be managed to have a net gain in carbon sequestration? 

The possibilities include increasing the biomass (replanting and afforestation), 

reducing the release of carbon by forest fires and decay through forest management 

practices, and manufacturing harvested wood into wood products and replanting 

after the harvest. 

The concept of assigning carbon sequestration offset credit for harvested wood 

products is currently being debated. Von Hagen and Burnett (2006) categorized 

forestry offsets into two categories: land management-based offsets and productbased offsets. Land management-based offsets are those offsets that increase the 

sequestration of carbon in forests, whereas product substitution-based offsets are 

those that potentially serve as offsets through the substitution of forest products for 

fuels, mostly fossil based, that have a greater carbon footprint. The land management-based offsets include:

• Forest conservation—Offsets that prevent deforestation. 

• Afforestation—Offsets that plant trees on land that has not been forested 

previously.

• Reforestation—Offsets that plant trees in areas that have been harvested. 

• Forest management—Offsets that aim to increase the biomass of the forest 

through extended rotations, reducing fire risk through forest thinning, and 

other forest stewardship practices. 

Once forests are harvested, the carbon sequestration can continue if the harvested trees are manufactured into wood products. Sequestration stops when the 

wood products are burned or decay. Based on 2005 data, it was estimated that 

standing forests and harvested wood products sequester about 744 Tg of CO2e 

annually (Skog 2008). The method of accounting for carbon sequestration from 
12

GENERAL TECHNICAL REPORT PNW-GTR-836

plantation through harvested wood products is called life cycle analysis (LCA). 

The LCA approach goes beyond the sequestration of carbon in natural forests 

and includes the carbon stored in harvested wood products and the substitution of 

energy-intensive building products, such as steel and concrete, by wood products 

(Perez-Garcia et al. 2005). Under the LCA approach, long cycles restrict return 

of carbon to the atmosphere. The second category of the von Hagen and Burnett 

(2006) classification of offsets accounts for product-based offsets and can be 

divided into the following three subcategories: 

• Harvested wood products—Offsets that account for the carbon being 

sequestered in manufactured wood products.

• Material substitution—Offsets that account for the substitution effect of 

utilizing wood building products in place of other building products that 

are nonrenewable and do not sequester carbon. In addition to the sequestration within the wood products, carbon emissions are avoided by using a less 

emission-intensive manufacturing process.

• Energy substitution—Offsets that account for using forest biomass energy 

as a replacement for fossil fuels. 

Note that inclusion of these three offset categories differs widely depending on 

the offset trading mechanism. The Kerry-Lieberman American Power Act allows 

offsets from harvested wood products and considers forest biomass energy carbon 

neutral, but it does not include material substitution offsets. The Copenhagen 

Climate Change Conference did address harvested wood product offsets with 

respect to reporting requirements and examining various approaches to retaining 

options. Specifically, progress was made in three areas (Bowyer et al. 2010). First, 

a resolution was drafted that harvested wood products in landfills will not receive 

offset credits. Second, the parties agreed to consider various alternatives to account 

for offsets from harvested wood products. Third, there were efforts made to begin 

drafting specific reporting requirements for countries. In spite of this general 

framework, there still is no final agreement on whether or not to include sequestration of carbon within harvested wood products in future climate change protocols. 

Kyoto Protocol Offset System 

The Kyoto Protocol framework was developed by the UNFCCC and serves as a 

global standard for emission allocation and offset systems. Although many countries did not participate in this agreement, the framework itself serves as a model 

for new agreements that are currently being negotiated. Therefore, it is important to 

understand the components of the Kyoto Protocol offset mechanism including the 

parties involved, compliance verification of funding sources, and the life cycle of an 
13

Cap and Trade: Offsets and Implications for Alaska

offset project. The offset mechanism developed by the Kyoto Protocol is the Clean 

Development Mechanism (CDM). Under this system, projects are developed to 

remove or reduce emissions, Certified Emission Reduction (CER) credits are issued, 

and these credits are sold through the European Climate Exchange. There are four 

main parties involved in the implementation of a carbon offset project (Kollmuss et 

al. 2008):

• Project owner—This is the entity that owns the physical installation where 

the project occurs. There are various categories of project owners including 

individuals, businesses, and nonprofit organizations.

• Project developer—This is the person or organization that is responsible to 

develop the emission reduction project. This developer could be the same as 

the project owner or an outside entity such as a consulting firm. 

• Project funder—One of the key components of a project is the funding 

source. Funding could be in the form of loans or equity investments, and 

sources include individual investors, banks, private equity firms, nonprofits, 

and other organizations. 

• Stakeholder—Stakeholders are parties that are affected directly or indirectly by the offset project. The various stakeholder groups include but 

are not limited to the project owner, developer, funder, local communities, 

nonprofit groups, national governments, and international agreements. Note 

that the interests of the various stakeholders differ and may not always be in 

agreement. For example, generally, the goal of project funders, owners, and 

developers is to maximize their return on investment and repatriate profits 

to their home country. In contrast, the goal of the host country is to develop 

their local communities where the project takes place and to retain investments within the local economy. Balancing the interests of the various 

stakeholders is a key to the success of any CDM project.

From implementation to completion there are many steps in a CDM project. 

The process starts with the development of an offset project concept and ends with 

the final project certification and commercialization. The CDM project life cycle 

was summarized by Kollmuss et al. (2008) and includes the following components:

• Project concept—This is a feasibility study that includes the technical 

feasibility, investment requirements, development and operational costs, 

expected returns, and other factors regarding the potential of the CDM project.

• Methodology—This defines the rules that the project developer must follow in order to calculate emission reductions. These include baseline and 

additionality requirements and the method to monitor the actual emissions 

reductions. 
14

GENERAL TECHNICAL REPORT PNW-GTR-836

• Project design document—This documents the details of the CDM project and is used for all future planning and administrative procedures. The 

document outlines the exact methodology used to establish the baseline and 

to assure the additionality requirement. The general purpose of this document is to provide a record of how actual emission reductions will be realized from the project. 

• Stakeholder consultations—All CDM projects are required to provide evidence that local populations and other stakeholders will not be adversely 

affected by the project. The project developer is required to inform stakeholders of the project through various forms of media, respond to all stakeholder comments, and describe a course of action to minimize negative 

impacts of the project.

• Project validation—This is a review process of the project that is conducted 

by an independent approved third party auditor defined as “designated 

operational entities” under CDM. This review process includes a review of 

the project design document, visits with project stakeholders, public comment period, resolution of stakeholder issues, and issuance of a final validation report. The final step of project validation is the submittal of this report 

along with the project design document to the CDM Executive Board for 

review and registration. 

• Host country approval—Before final approval by the CDM Executive 

Board, the project must be approved by the host country. The project plan is 

checked against the host country’s rules, regulations, laws, and sustainability criteria. 

• Project registration—The CDM Executive Board conducts a final review 

of the project design document, validation report, public feedback, and the 

host country approval and, if all the CDM project criteria are met, the CDM 

Executive Board certifies the submitted project proposal as an official CDM 

project. 

• Project implementation—Once the project receives approval from the 

CDM Executive Board, the project developers can start the project implementation. The project can also be implemented before the project receives 

final approval. However, the CDM Executive Board requires documentary 

evidence showing that the project meets CDM project criteria. If proper 

evidence is not supplied and the project is started, the project runs the risk 

of not receiving approval for reasons such as not meeting the additionality 

requirement. 
15

Cap and Trade: Offsets and Implications for Alaska

• Project monitoring—All CDM project developers are required to maintain 

records and submit reports documenting the actual emission reductions that 

are being achieved by the project. The procedures for reporting are outlined 

in the original project design documents. There are no official requirements 

for how often these reports must be submitted. However, in order to receive 

revenue from achieved emission reductions, the project needs to generate CER credits, and these credits are issued against emission reduction 

reports. Therefore, the more frequently the reports are submitted, the more 

frequently revenue can be generated for the achieved emission reductions.

• Project verification—This is a periodic and independent review to verify 

that the emission reductions have occurred as reported by the project monitoring program. The auditors for the verification must be different from the 

project validation auditors in order to avoid conflict of interest. 

• Project certification—Certification is the written assurance by the CDM 

Executive Board that the project has achieved a specified amount of emission reductions during a specified period. 

The Kyoto Protocol stipulates that forests can be used for carbon sequestration 

to offset GHG emissions by signatory countries (Amano and Sedjo 2006). There 

are approximately 2,080 registered projects under CDM, ranging from clean energy 

development to agricultural projects (UNFCCC 2010). As of this writing in March 

2010, there are only about 15 forestry-based projects (see appendix). It is important 

to understand the Kyoto Protocol standards for offset projects because it sets the 

standard for other offset mechanisms. Forest stakeholders in Alaska and other states 

can use the Kyoto Protocol standards as a template to understand the role of parties 

involved in offset projects and concepts such as baseline, additionality, verification, 

and certification. 

Climate Change Legislation and Regional 

Agreements in the United States

There are three levels of climate change policy in the United States: federal, 

regional, and state. As of this writing, the only mandatory cap and trade program 

in the United States is the Regional Greenhouse Gas Initiative. This section gives 

a brief overview of the American Clean Energy Act and some of the regional and 

state GHG reduction schemes.
16

GENERAL TECHNICAL REPORT PNW-GTR-836

Climate Change Legislation

The United States is starting to formulate its own climate change mitigation policy. 

Two bills are currently under consideration. The first is the American Clean Energy 

and Security Act of 2009, also known as the Waxman-Markey Bill. This bill passed 

the U.S. Congress in June 2009 and was sent to the Senate. The primary goal of 

the bill is to reduce GHG emissions to 20 percent below 2005 levels by 2020 (Pew 

Center on Global Climate Change 2009). The second is the American Power Act, 

also known as the Kerry-Lieberman Bill in the Senate. The Kerry-Lieberman Bill 

calls for a 17-percent reduction below 2005 levels by 2020 (Pew Center on Global 

Climate Change 2009). 

One key part of both bills is GHG emission offsets. In contrast to actual 

emission reductions, offsets sometimes are not permanent and may be reversible. 

For example, there may be an afforestation project that is modeled to sequester 

1 MMTS of carbon for 80 years. However, there is the risk that the carbon may 

be re-released into the atmosphere earlier than outlined in the project description 

owing to forest fires or premature decay from pest infestation or disease. Thus, 

climate change mitigation strategies generally include a constraint on the quantity 

of offsets in order to ensure that actual emission reductions occur within the 

capped sector. Both bills address this issue by limiting offsets for covered entities 

to a maximum of 2 billion metric tons of their annual emissions through projects 

that reduce emissions outside the scope of the cap. The Waxman-Markey Bill also 

specifies that entities choosing to offset their emissions through emission reduction 

projects must reduce 1.25 metric tons of emissions through these projects (outside 

the cap) for every 1 metric ton of emissions they aim to offset from their operations. 

In other words, the quantity of the emissions reduction offset is slightly higher than 

the amount of emissions itself. For example, a coal powerplant desiring to offset 

1 metric ton of CO2 emissions could invest in an afforestation project deemed to 

sequester 1.25 metric tons of CO2. A study by the EPA found that the offset program included in the bill would increase domestic afforestation efforts and methane 

capture from animal waste, and improve forest management activities and other 

carbon sequestration projects (EPA 2009b). 

In addition to federal legislation, there are also regional agreements being 

formed to reduce GHGs. Three of the most prominent of these are the Western 

Climate Initiative (WCI), the Regional Greenhouse Gas Initiative (RGGI), and the 

Midwestern Greenhouse Gas Reduction Accord. 
17

Cap and Trade: Offsets and Implications for Alaska

Western Climate Initiative

The WCI is a group of western states and provinces that have formed a regional 

coalition to combat climate change. The goal of the WCI is to reduce GHG emissions to 15 percent below 2005 levels by 2020, while maintaining economic 

growth. This coalition consists of seven U.S. states: Arizona, California, Montana, 

New Mexico, Oregon, Utah, and Washington. It also consists of four Canadian 

provinces: British Columbia, Quebec, Ontario, and Manitoba. Although Alaska is 

not actively participating in the WCI, the state is an observing member and may 

participate before the implementation. The initial framework for the WCI was 

released on September 23, 2008, and is scheduled to be fully implemented in 2015. 

This agreement will cover approximately 90 percent of the GHG emissions in WCI 

states and provinces and also allow offsets. 

Regional Greenhouse Gas Initiative

The RGGI is a group of 10 Northeastern and Mid-Atlantic states: Connecticut, 

Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New 

York, Rhode Island, and Vermont (RGGI 2010). This is the first mandatory cap and 

trade GHG emissions reduction program in the United States. This agreement has 

set a target of reducing GHG emissions from the power sector 10 percent below 

2009 levels by 2018. Emission allowances are auctioned off quarterly. In contrast to 

the WCI, which has yet to be implemented, the RGGI is now mandated and auctioning off emission permits as a tool to meet emission reduction targets. The RGGI 

invests funds collected from the auctions into energy efficiency and renewable 

energy programs. The RGGI allows offsets in five categories:

• Landfill methane capture and destruction.

• Reduction in emissions of sulphur hexafluoride in the electric power sector.

• Sequestration of carbon owing to afforestation.

• Reduction or avoidance of CO2 emissions from natural gas, oil, or propane 

and end-use combustion owing to end-use energy efficiency in the building 

sector.

• Avoided methane emissions from agricultural manure management operations.

The systems developed by the RGGI and WCI are serving as frameworks for 

a national GHG reduction strategy. If a U.S. climate change bill does get signed 

into law, the members of RGGI and WCI will have a head start to adjusting to a 

potential cap and trade scheme initiated by that legislation.
18

GENERAL TECHNICAL REPORT PNW-GTR-836

The Midwestern Greenhouse Gas Reduction Accord

The Midwestern Greenhouse Gas Reduction Accord was established in 2007 and 

includes six states and one Canadian province. The members are Iowa, Illinois, 

Kansas, Michigan, Minnesota, Wisconsin, and Manitoba. It also encompasses four 

observer states that are included in the process but are not held to the mandated 

GHG reductions. These are Indiana, Ohio, Ontario, and South Dakota. This agreement establishes a cap and trade program with the goal of reducing GHG levels 20 

percent below 2005 levels by December 31, 2020, and 80 percent below 2005 levels 

by December 31, 2050. The accord also includes an offset program and the monitoring and compliance mechanism to validate the offsets.

Carbon Exchanges

A majority of carbon offsets are currently traded on various exchanges, which are 

outlined below. As outlined above, the RGGI trades CO2e allowances through its 

own in-house auctions, rather than offering these through climate exchanges.

The European Climate Exchange (ECX) is the largest climate exchange as 

measured by trading volumes (table 8). This exchange was established in 2005 and 

traded approximately US$125 billion worth of carbon credits in 2008 (ECX 2010a). 

The ECX is a clearing house for carbon allowance permits that are issued in line 

with Kyoto Protocol reduction requirements. The ECX uses a trading framework 

established under the European Union Emissions Trading Scheme, and two carbon 

products are traded. The first is the European allowance unit (EAU), which is equal 

to 1 metric ton of CO2e emission allowance. The second is a CER. In contrast to 

an EAU, which is an allowance of emissions, a CER is a removal or avoidance of 

emissions. One CER represents a reduction or offset of GHG emissions of 1 metric 

ton of CO2e. The Kyoto Protocol limits offsets to 5 percent of a country's assigned 

emission allowances. 

Table 8—Volume of carbon dioxide equivalent (CO2e) allowances traded

European Climate Chicago Climate Regional Greenhouse 

Year Exchange Exchange Gas Initiative 

Million metric tons of CO2 e

2005 321 1 N/A

2006 1101 10 N/A

2007 2060 23 N/A

2008 3093 72 65

2009 6326 62 805

N/A = not available.

Source: Capoor and Ambrosi 2009.
19

Cap and Trade: Offsets and Implications for Alaska

The primary carbon exchange in the United States is the Chicago Climate 

Exchange (CCX). Although the United States currently has no mandated GHG 

emission cap and trade system, CCX members make voluntary, but legally binding, 

commitments to reduce emissions that are verified by independent third party auditors. The CCX has recently initiated offset trading through their Carbon Financial 

Instrument®. These are contracts that cover projects involving the sequestration, 

destruction, or reduction of GHG emissions (CCX 2010). Other smaller exchanges 

include the Montreal Climate Exchange, the New South Wales Climate Exchange, 

and the Tianjin Climate Exchange. 

The price of one EAU of CO2e on the ECX has declined from about €28.50 in 

mid-2008 to €13.00 in April 2010 (ECX 2010b). This decline can be attributed to a 

number of factors including the supply of carbon allowances, the economic slowdown, and the uncertainty of what framework will govern CO2e allowances post 

2012. The decline has been more drastic in the voluntary market, where prices have 

declined from a mid-2008 price of about US$7.00 to a price of US$0.10 in April 

2010. Price comparisons between the CCX and ECX illustrate how a mandated 

emission reduction system leads to a higher price (fig. 3). 

Figure 3—March 2010 carbon allowance pricing. Note: EXC = European Climate 

Exchange, RGGI = Regional Greenhouse Gas Initiative, CCX = Chicago Climate 

Exchange. Sources: CCX 2010, EXC 2010b, RGGI 2010.

$17.00 

$2.07 

$0.10 

EXC RGGI CCX

 18

16

14

12

10

8

6

4

2

0

March 2010 carbon allowance price (dollars 

per metric ton of carbon dioxide equivalent) 
20

GENERAL TECHNICAL REPORT PNW-GTR-836

The above are large-scale frameworks for reducing GHG emissions. However, 

there is also demand from individuals and businesses that wish to reduce GHGs but 

do not have the scale to participate in the larger exchanges. Therefore, a number of 

entities have emerged to supply offsets on a smaller scale to individuals and businesses (table 9). There are three key ingredients maintaining a viable offset market. 

First, there must be a supply and demand for the offsets. Second, there must be a 

market to buy and sell the offsets. Third, there must be a third party organization to 

independently verify the offset project. An example of a smaller scale offset project 

generated by an independent agency is the Genesis Forest Project funded by Carbonfund.org (Carbonfund.org 2009). The goal of this project is to protect about 1215 

hectares (3,000 acres) of tropical forest land, which Carbonfund.org estimates will 

sequester approximately 90,000 metric tons of CO2. These offsets can then be sold 

to individuals or businesses by Carbonfund.org directly. 

Conclusions

Forests cover 52.3 million hectares (129 million acres) of Alaska or about onethird of the state. Forest lands in Alaska are owned by the federal government (65 

percent), the state of Alaska (24.5 percent), regional and native corporations (10 

percent), and 0.5 percent by other private interests (State of Alaska 2010). Alaskan 

forests are a major carbon sink, accounting for approximately 17 percent of all U.S. 

forest land. A GHG offset mechanism would provide an incentive to manage Alaskan forests to maximize carbon sequestration. This would include afforestation, 

reforestation, and reduced deforestation. This could become a revenue stream for 

stakeholders that control timberland including Alaska’s native corporations, private 

landowners, the state of Alaska, and possibly the federal government. However, 

it is important to understand that Alaska timberland owners would also face high 

operating costs and relatively slow growth rates for afforestation and reforestation 

projects. Therefore, the price of carbon offsets would have to be at a level to offset 

the operating costs and provide a reasonable return on investment. 

Table 9—Small-scale offset mechanisms

Carbon offset

organization	 Project type	 Independent certification/verification entity

Versus Carbon Neutral Various Chicago Climate Exchange (CCX)

E-Blue Horizons Renewable energy, reforestation CCX, Environmental Resources Trust (ERT)

Carbonfund.org Renewable energy, energy ERT, Climate Community and Biodiversity Standards, 

efficiency, reforestation CCX, Kyoto Protocol Joint Implementation 

Liveneutral.org Energy efficiency CCX
21

Cap and Trade: Offsets and Implications for Alaska

In addition to afforestation, reforestation, and reduced deforestation, the KerryLieberman Bill addresses harvested wood products. In its current form, the bill 

states that forest management activities that result in “an increase in forest carbon 

stores, including harvested wood products” would qualify as offsets (Pew Center 

on Climate Change 2010). The incentive for Alaskan forest landowners under this 

scenario would be to harvest timber, manufacture wood products, and replant the 

timber. This is due to the additional offset credits that are offered for extending the 

carbon sequestration period by continuing to sequester the carbon within the wood 

products. Because the wood supply from federal timberland is constricted, this 

would have the largest impact on state and native corporation timberlands. 

The future of a cap and trade system in the United States is uncertain. As of 

this writing July 2010, the Senate is trying to gather the 60 votes required for the 

passage of a climate change bill. One key factor that will impact the passage of a 

climate change bill is the November 2010 mid-term elections. If a cap and trade bill 

does not pass, the United States can still pursue GHG emission reductions through 

regional agreements such as the WCI, RGGI, and the Midwestern Greenhouse Gas 

Reduction Accord. Forest-based offsets will play an important role in these regional 

agreements. Another pending issue is what global climate change agreement will 

follow the Kyoto Protocol and to what extent will the United States participate? 

Without a climate change bill, the one tool left to the administration to negotiate 

a global climate change agreement is regulating emissions through the EPA. In 

conclusion, emission reductions are a global priority, and it can be expected that the 

United States will play a role in these efforts. 

Acknowledgments

This report is based upon work supported by the U.S Forest Service, University of 

Washington, University of Alaska, and Cooperative State Research, Education and 

Extension Service, U.S. Department of Agriculture, under Agreement No. 2008-

34158-19474. Any opinions, findings, conclusions, or recommendations expressed 

in this publication are those of the author(s) and do not necessarily reflect the view 

of the U.S. Department of Agriculture. 

English Equivalents

When you know:	 Multiply by:	 To find:

Hectares 2.47 Acres

Metric tons or tonnes 1.102 Tons or short tons

Teragrams (Tg) 1.101 x 106 Tons
22

GENERAL TECHNICAL REPORT PNW-GTR-836

References

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countries in the Kyoto period and the potential role of sequestration in postKyoto agreements. Washington, DC: Resources for the Future. 59 p.

Bowyer, J.; Bratkovich, S.; Howe, J.; Fernholz, K. 2010. Recognition of carbon 

storage in harvested wood products: a post-Copenhagen update. Minneapolis, 

MN: Dovetail Partners, Inc. 20 p.

Brown, S. 2002. Report of leakage analysis for the Noel Kempff averted 

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change. Arlington, VA: Winrock International and Ecosecurities Ltd. 16 p. 

Cairns, R.D.; Lasserre, P. 2006. Implementing carbon credits for forests based 

on green accounting. Ecological Economics. 56(4): 610–621.

Capoor, K.; Ambrosi, P. 2007. State and trends of the carbon market 2007. 

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Center for Climate Strategies. 2009. Final Alaska greenhouse gas inventory and 

reference case projections, 1990–2025. 92 p. http://www.akclimatechange.us/

ewebeditpro/items/O97F21897.pdf. (April 2010).

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4ac005f1e40/08d11a451131bca585257685005bf252!OpenDocument. (April 2010).
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downloads/vcm_report_final.pdf. (April 2010).

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Cap and Trade: Offsets and Implications for Alaska

Glossary

Carbon dioxide equivalent (CO2e)—The universal unit of measurement used to 

indicate the global warming potential of each of the six greenhouse gases regulated 

under the Kyoto Protocol.

Certified emission reductions (CERs)—A unit of greenhouse gas emission 

reductions issued pursuant to the Clean Development Mechanism of the Kyoto 

Protocol, and measured in metric tons of carbon dioxide equivalent. One CER 

represents a reduction in greenhouse gas emissions of 1 metric ton of CO2e.

Clean development mechanism (CDM)—The mechanism provided by Article 12 

of the Kyoto Protocol, designed to assist developing countries in achieving sustainable development by allowing entities from Annex I Parties (industrial countries) to 

participate.

Emission reduction units (ERUs)—A unit of emission reductions issued pursuant to Joint Implementation. One ERU represents the right to emit 1 metric ton of 

carbon dioxide equivalent.

Global warming potential (GWP)—A measure of how much a given mass of 

greenhouse gas is estimated to contribute to global warming. It is a relative scale 

that compares the gas in question to that of the same mass of carbon dioxide (whose 

GWP is by convention equal to 1). A GWP is calculated over a specific time interval and this time interval must be stated whenever a GWP is quoted or else the 

value is meaningless.

Greenhouse gases (GHGs)—Both natural and anthropogenic, GHGs trap heat in 

the Earth’s atmosphere, causing the greenhouse effect.

Kyoto Protocol—An international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is 

that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas emissions. This amounts to an average of 5 

percent against 1990 levels over the 5-year period 2008–2012.

Joint implementation (JI)—Mechanism provided by Article 6 of the Kyoto 

Protocol whereby entities from Annex I Parties (industrialized countries as defined 

by the Kyoto Protocol) may participate in low-carbon projects hosted in Annex I 

countries and obtain emission reduction units in return.
26

GENERAL TECHNICAL REPORT PNW-GTR-836

United Nations Framework Convention on Climate Change (UNFCCC)—The 

international legal framework adopted in June 1992 at the Rio Earth Summit to 

address climate change. It commits the parties to the UNFCCC to stabilize humaninduced greenhouse gas emissions at levels that would prevent dangerous manmade 

interference with the climate system, following “common but differentiated responsibilities” based on “respective capabilities.”
27

Cap and Trade: Offsets and Implications for Alaska

Appendix: Examples of Kyoto Protocol Clean Development Mechanism 

(CDM) Offset Projects

Date

registered Title Host parties Other parties Reductions

Million metric 

tons CO2e

11/10/06 Facilitating Reforestation for Guangxi Watershed China Italy, Spain 25 795 

Management in Pearl River Basin 

1/30/09 Moldova Soil Conservation Project Republic of Sweden, 179 242 

 Moldova Netherlands

3/23/09 Small-Scale Cooperative Afforestation CDM India N/A 11 596 

Pilot Project Activity on Private Lands Affected 

by Shifting Sand Dunes in Sirsa, Haryana

4/28/09 Cao Phong Reforestation Project Viet Nam N/A 2665

6/5/09 Reforestation of Severely Degraded Landmass India N/A 57 792 

in Khammam District of Andhra Pradesh, India 

under ITC Social Forestry Project 

6/11/09 Carbon Sequestration Through Reforestation in Bolivia Belgium 4341 

the Bolivian Tropics by Smallholders of “The 

Federación de Comunidades Agro-pecuarias 

de Rurrenabaque (FECAR)” 

8/21/09 Uganda Nile Basin Reforestation Project No. 3 Uganda Italy 5564

9/6/09 Reforestation of Croplands and Grasslands in Low Paraguay Japan 1523 

Income Communities of Paraguarí Department, 

 Paraguay 

Under review Reforestation as Renewable Source of Wood Brazil Netherlands 75 783 

Supplies for Industrial Use in Brazil 

11/16/09 Afforestation and Reforestation on Degraded Lands China N/A 23 030 

in Northwest Sichuan, China 

11/16/09 Reforestation, sustainable production and Peru N/A 48 689 

carbon sequestration project in José Ignacio 

Távara ́s dry forest, Piura, Peru 

12/7/09 Humbo Ethiopia Assisted Natural Regeneration Ethiopia Canada 29 343 

Project 

1/2/10 Assisted Natural Regeneration of Degraded Lands Albania Italy 22 964 

in Albania 

1/15/10 The International Small Group and Tree Planting India U.K. and 3594 

Program (TIST), Tamil Nadu, India Northern Ireland

Requesting Forestry Project for the Basin of the Chinchiná Colombia N/A 37 783 

 registration River, an Environmental and Productive 

Alternative for the City and the Region 

N/A = not applicable; CO2e = carbon dioxide equivalents. 

Source: UNFCCC 2010.

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