With feathers adorning his head and red paint decorating his face, Haru Kuntanawa hardly looked like a potential business partner for California’s oil industry when he addressed the crowd gathered last week in a Sacramento conference room.

But under a plan state air regulators are considering, industries that emit greenhouse gas pollution in California could form multimillion dollar relationships with indigenous communities like Kuntanawa’s by paying them to preserve trees deep in the Amazon rainforest of Brazil.

It’s part of a proposal to expand California’s cap and trade system, which is designed to encourage companies to reduce climate-warming pollution by making them pay for it. Businesses can comply, in part, by buying credits to support environmental projects that offset their carbon emissions in California.

Oil companies and other polluting industries in California have been buying offset credits for projects across the United States that preserve forestland, capture methane from pigs and cows and destroy gases that deplete the ozone layer. Now state officials are evaluating whether to expand cap and trade by including offsets for preserving forest in Brazil. A decision is expected next year.

The proposal has touched off a debate that is dividing environmental advocates as Gov. Jerry Brown works to build a legacy of action combatting climate change in his fourth and final term as governor.

Supporters say preventing deforestation in tropical regions will have huge climate benefits for the entire globe while keeping costs down for Californians. Critics say the plan doesn’t do enough to fight pollution in California and puts the state at risk of facilitating business with unstable regimes. Brown, who was heckled by opponents after meeting with governors of tropical rainforest regions last year, has not yet taken a position.

“It’s a very fascinating political moment,” said Daniel Nepstad, an ecologist who heads the Earth Innovation Institute, a major proponent of the plan.

“I’m confident that when the governor sees through some of the political risk issues that he will make this happen. It is such a big positive thing to do.”

Cap and Trade in Two and a Half Minutes

Nepstad’s group, with funding from the Gordon and Betty Moore Foundation, brought Kuntanawa and five other indigenous leaders from tropical regions of Peru, Ecuador, Mexico and Panama to Sacramento recently. They met with government officials to express support for the proposal and describe how their communities benefit from forest preservation.

“When we look at the forest we don’t just look at it as carbon,” Kuntanawa said through an interpreter at a meeting organized by the Air Resources Board.

Indigenous people in his state of Acre, Brazil, harvest nuts and tap rubber from the trees. Participation in California’s cap and trade market would provide them with a huge boon – likely between $50 million and $200 million from 2017 to 2020, Nepstad said.

That sounds like a lot of money moving out of the California economy and into the Amazon rainforests. But for businesses that must participate in cap and trade, it’s a relatively cheap option. Which is why California’s oil industry supports the proposal to create offset credits in Brazil.

“This is a global problem that needs a global solution,” said Catherine Reheis-Boyd, president of the Western States Petroleum Association.

“If you continue to just do it in California, you will continue to raise the costs for Californians – for energy and everything else – and you will do little to affect climate change.”

Others say the state should focus on tackling environmental problems at home. Many Californians suffer from air pollution because they live near freeways, refineries and other industrial plants.

“What we all need to do to reduce climate change right now is stop fossil fuel emissions,” said Amy Vanderwarker, co-director of the California Environmental Justice Alliance.

“These complex systems – saving carbon there while it’s coming out here – we don’t feel like those are good solutions.”

Her group and others are lobbying air regulators not to approve a partnership with Brazil. They point to human rights problems triggered by a forest preserve in Nigeria, and brought an environmental activist from that country to the recent meeting in Sacramento.

Nigerians who relied on the forest for picking fruit and gathering wood for their cooking were banned from entering it after officials signed a conservation agreement, said Fyneface Dumnamene Fyneface. And the conservation money never made it to local communities.

California officials acknowledge problems with the Nigerian forest preserve but say they would plan safeguards to prevent anything similar in Brazil. One difference is a plan to work with regional governments instead of private companies. California air regulators have already visited the forest in Brazil and would expect to continue monitoring it if the plan moves ahead, said Dave Clegern, spokesman for the California Air Resources Board.

California’s decade-old global warming law “charges us with finding ways to interact with the national and international communities on climate change,” Clegern said.

“This is a mechanism for doing that (which) seems to us to have strong possibilities.”


A reader is concerned about the way California grants carbon credits for preserving forestland. Read his letter here.

Another reader responds, saying carbon credits are essential to the fight against climate change. Read the letter here.

Who’s covered by cap and trade?

About 600 industrial facilities in California are subject to the state’s cap and trade program. Many of them are oil companies or electricity providers, but other kinds of manufacturers are also included. Here are some surprising ones:

Anheuser-Busch – Los Angeles
Campbell Soup – Dixon
Del Monte – Hanford
E&J Gallo Winery – Fresno
Foster Poultry Farms – Livingston
Frito Lay – Kern
Hilmar Cheese Company – Hilmar
Land O’ Lakes – Tulare
Lockheed Martin – Palmdale and Sunnyvale
Miller Coors – Irwindale
United Airlines Maintenance Center – San Francisco

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Laurel covers California politics for CalMatters, with a focus on power and personalities in the state Capitol. She's been included in the Washington Post’s list of outstanding state politics reporters...