The wildfires that have raged across Oregon and Washington this year burned millions of acres. But beyond the immediate destruction, the fires have destroyed something less visible: tens of millions of dollars in California carbon credits, paid for by businesses and consumers under the state’s climate mandates.
The fires have scorched tens of thousands of acres enrolled in forest-carbon projects under California’s cap-and-trade program. The system allows companies to meet part of the state’s climate rules by purchasing credits from forest owners who promise to keep carbon locked away in trees for at least 100 years, sometimes in forests hundreds of miles outside of the state. The destruction is the latest evidence that California’s forest-offset program is ineffective at best, counterproductive at worst.
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California is home to some of the nation’s strictest climate mandates. Its cap-and-trade program mandates that large emitters obtain allowances for each ton of carbon they emit. They can meet part of that obligation with carbon offsets, including credits generated by forests that purportedly store carbon over long periods.
Over the program’s history, California companies have spent billions of dollars on these carbon offsets, the vast majority generated by forest projects. The state’s logic is that a company can continue emitting carbon so long as it pays someone elsewhere to keep enough carbon stored in trees for up to a century. That assumes the forests don’t burn up in the meantime—and this summer, many did.
At the Opal Mountain site in central Oregon, more than 85 percent of the 14,000-acre forest-carbon project burned in a wildfire this summer. The project has generated over 500,000 carbon credits, purchased by companies including Southern California Gas, Shell, and Pacific Gas and Electric. Elsewhere, in Washington State, fires this summer burned tens of thousands of acres at the Colville forest-carbon site, an enormous project whose credits have been bought by Chevron and other major firms.
Altogether, nearly 80,000 acres of land set aside for California carbon banking have burned in wildfires this year, according to data compiled by the climate-focused nonprofit CarbonPlan.
Some of these projects commanded high prices despite significant fire risks. The Opal Mountain project has been marketed as a “premier carbon forestry investment,” with millions of dollars of value tied to its carbon credits. In 2024, California regulators gave the project a “Direct Environmental Benefits in the State” designation, making its credits especially valuable under state rules. California regulations require that at least half the offsets used by a regulated company come from projects deemed to provide direct environmental benefits within the state.
Why would protecting trees in Oregon provide a direct environmental benefit to California? The owners of the Opal Mountain site claimed their fire-management activities would reduce the risk of wildfire smoke drifting into California. The approval for its special designation claims that its “forest management plan will reduce the risk of wildfire.” Many of those measures were still being planned or considered, yet California regulators nonetheless approved the designation. Now, less than two years later, a wildfire has burned most of the project—including a fire lookout cited as evidence of its wildfire protection.
This isn’t the first time California’s carbon forests have burned. A carbon-offset project on the Warm Springs Reservation in Oregon burned so badly in 2020 that it was retired this year after repeated wildfire losses. The project had generated about $25 million for the tribe, though the surrounding forests had a substantial history of fires.
California has tried to account for wildfire risks by establishing a “buffer pool,” to which each project is required to contribute as a kind of insurance policy. When a fire destroys a forest-carbon project, credits from the pool are canceled to cover the loss. But this approach has proven inadequate. A 2022 study found that fires had already consumed at least 95 percent of the credits set aside to cover wildfire losses for a full century. Subsequent research found roughly 10.7 million credits lost to wildfire, far more than the amount reserved for fire risk.
Opal Mountain illustrates the problem. State records show that the project contributed roughly 80,000 credits to the buffer pool. Yet CarbonPlan estimates that the recent wildfires could result in the termination of the project, which would wipe out all of its roughly 500,000 credits—more than six times what it contributed to the pool.
Such difficulties have long plagued California’s program. A recent analysis by UC Berkeley researchers criticized the state for spending heavily on what they call “highly dubious” offsets from out-of-state projects. The researchers concluded that the program has produced “little-to-no actual climate benefit.”
The program may even be deepening the region’s wildfire problem. Western forests need periodic thinning, brush removal, and controlled burns to maintain healthy conditions and reduce extreme fire risks. But forest-carbon projects often get less active management because landowners can make more money if they grow more wood on each acre. The result, as wildfire news and analysis site The Lookout recently reported, is forests that are often “overstocked, prone to insects, drought, and disease, and flammable.”
At Warm Springs, much of the burned land had been kept from active management in favor of conservation and carbon revenue. “It burned hot because we weren’t able to get in there and treat it and manage it,” the natural resources manager for the Confederated Tribes of Warm Springs told the Bend Bulletin.
California shouldn’t need more lessons in wildfire risk. The state has endured some of its most destructive fires in recent years. Yet it has built part of its climate policy around the assumption that carbon stored in fire-prone forests will remain there for a century. Instead, the forests are going up in smoke—and Californians are left paying the price.