A unicorn.An endangered unicorn protected by one of the imaginary offsets created if Kerry-Graham-Lieberman raids funds for tropical rainforests.In the ongoing negotiations over the Kerry-Graham-Lieberman bill, different polluters are clamoring for cash to compensate them for not fouling the atmosphere quite so much. One of their targets: the legislation’s set-aside funds for reducing tropical deforestation, which is responsible for at least 15 percent of total carbon dioxide emissions (more than all the cars, trucks, ships, and planes in the world).

Outside of all the myriad benefits of protecting tropical rainforests for the planet, raiding this “Climate Forest Fund” seriously threatens the affordability, effectiveness, and political viability of energy and climate legislation.

Here’s why: one of the primary purposes of this fund is to help rainforest nations supply the international offsets needed to keep the bill affordable and end deforestation.

No set-aside, no offsets, no affordability: Climate legislation rightly includes strict requirements to ensure that offsets actually reduce emissions. Most international offsets are expected to come from tropical rainforest conservation. But right now, most rainforest nations can’t meet the legislation’s requirements to generate offsets — they don’t have enough trained people or good monitoring satellites to accurately track how many forests they have, how much they’re losing, how many emissions result, and how effective conservation projects are. Until these countries get the capacity they need through the Climate Forest Fund, all those offsets and the cost savings that come from them are pure fantasy.

With the help of my able associate Olivier Jarda, I’ve put together a graph showing what I mean:

Graph.

Joking aside, this is a real threat to the bill.

The EPA analysis of the House-passed American Clean Energy and Security legislation found that excluding international offsets makes emissions permits 89 percent more expensive.

Take a look at this actual graph from an excellent new study by Nigel Purvis and Andrews Stevenson at Resources for the Future quantifying, in unicorn-free terms, how much a small investment in the Climate Forest Fund actually saves Americans by bringing offsets to market.

Graph.

To summarize, setting aside five percent of the revenue from climate legislation for tropical rainforests saves U.S. consumers $9.6 billion per year, or a total of $421 billion over the life of the legislation, according to additional data provided by the study authors.

The Climate Forest Fund helps U.S. business and consumers in other ways: part of it will be dedicated to enforcing laws against importing illegally logged wood into the United States, where it undercuts more responsibly and sustainably produced American forest products.

Finally, by delivering very cheap (currently $5 per ton) pollution reductions beyond those mandated by the cap, it brings U.S. pollution commitments close to those of other industrialized countries — putting pressure on countries like China and India to reduce their own pollution.

Indeed, the only group likely to be happy about raiding the Climate Forest Fund are Chinese coal executives who will be thrilled that their own government will be freed from any pressure to take on tighter pollution reduction targets — leaving the Chinese free to out-pollute and out-compete the United States.