One of my best friends from college just texted me telling me they’re planning to buy carbon offsets and wanted my two cents. The problem is I have so many feelings, I’m having difficulty reducing my thoughts to a coherent response. Here’s why.
A little more than 10 years ago, my work as a climate change and clean energy consultant led me to writing a paper on Greenhouse Gas (GHG) Offsets. The more I learned, the more I realized the complexity inherent in trading money for “emissions reductions” in other places. The problems begin with the complexity of the basic criteria for what makes up an offset (additionality, measureability, complete accounting, verifiability, enforceability, permanence).
Here is an excerpt from my 2010 IHS CERA Report where I explain these 6 criteria.
Assuming you’re looking for a less technical response, I like this below excerpt from A Short Guide to Carbon Offsets” because she emphasizes some DIY offsetting options and also reminding us that the most important thing is to reduce our own emissions.of Ethical Consumer’s “
Recommendations from Ethical Consumer
We recommend offsetting at the level of individual projects (rather than just giving to a company’s whole portfolio) because this is the level at which there is most information available. Accordingly, most of this feature deals with how best to choose such a project. In the process it also looks at criticisms of specific types of offsets, and of the whole concept.
If you want to buy official offsets, we recommend giving to Gold Standard-approved wind or solar energy projects. You can find Gold Standard VER projects on the Gold Standard website and you can buy Gold Standard CERs directly through the UN’s platform.
Alternately, if you fancy DIY offsetting and want to give to educational projects, the fantastic website Skeptical Science (which largely tackles climate sceptic misinformation) lists some that are crowdsourcing.
Lastly, you should always take promised emission cuts with a pinch of salt, bearing in mind that independent research has cast doubt on them, even in the case of the most reputable standards.
The best thing to do is reduce your own emissions in the first place.
Does it matter if it’s less than a drop in the bucket?
Voluntary vs. Compliance
One of the biggest problems I have is that individual purchases of carbon offsets are like a fraction of a fraction of a contribution to what’s needed.
Carbon offsets were created under the Kyoto Protocol’s Clean Development Mechanism as a way for countries to comply with their emissions “cap”. Because entities in the EU and in other places have had to comply with these regulations, its created a need for offsets for “compliance” purposes. The vast majority of offsets are purchased from “Compliance” buyers.
The rest of us are “voluntary” buyers — including companies and universities and others.
Then of the “voluntary” buyers, companies buy 98% of the market and individuals (like you and me) buy less than 1%.
Again, to quote the Ethical Consumer:
Corporations, mostly multinationals, bought 98% of voluntary carbon offsets in 2015. Individuals bought less than 1% of them, and their share has been shrinking.
Despite the impressive growth of the voluntary offset market, its current effects are not even drops in the bucket of what is necessary for meaningful climate-change mitigation.
But something is still something, right?
Well, if you want the mainstream, neoclassical economic analysis on carbon offsets, here’s an articulation of the public good and the free rider problem by Matthew J. Kotchen in the Standford Social Innovation Review “Offseting Green Guilt.”
His conclusion is as follows:
My own view is that purchasing carbon offsets is better than nothing, assuming that you are careful about where you buy them. Yet when considering ways to reduce your own carbon footprint, you should compare offsetting to the more certain alternative of directly reducing your own emissions. As offset provider Carbonfund.org states, your motto should be, “Reduce what you can, offset what you can’t.”
If I wanted to encourage you in purchasing offsets, I’d sign off here, given that I like Carbonfund.org’s great tag line.
However, I’ve become quite a skeptic and I believe it’s important to also read through the critique of carbon markets and offsets in particular. The Corner House in the UK provides one of the better critiques on carbon trading.
The report describes the financial aspects of carbon trading and how the carbon market has changed over the past few years as new interest groups and complex financial arrangements have become involved. As a result, carbon quota prices have become more volatile, speculation in the carbon market has increased, and the market is increasingly delinked from its original objective of providing an effective cost-management tool to reduce carbon dioxide emissions.
Their synopsis document is called, “Designed to Fail“. Here’s an excerpt from page 7:
Advocates of the offset system point to the many world-wide carbon-reduction projects that are funded by the system; the savings to industry (and thus consumers and society at large); the flow of money from North to South; the export of new technologies to developing economies; and how innovation in low carbon technologies has been incentivised. FERN [the author] believes that these claimed benefits very rarely exist in reality, and are heavily outweighed by the significant, systemic failure of offsetting to reduce emissions at all, which we discuss in the last section of this paper.
Another point they make is that “of the US $ 144 billion carbon market, only US $ 3,370 million goes to project developers and only a fraction of that will go to communities who host projects.”
I think some of their critiques help remind us that fundamentally carbon offsets were created to make it easier for us to do more “cost effective” emission reductions. The reality is also that emissions reductions may be cheaper in other places in the Global South.
Thanks to our mainstream neoclassical economic theories and practitioners — with our focus on markets, free trade, individuals, & utility maximization — we’ve created a carbon trading market allowing us to continue doing what we’re doing with our fossil intensive energy infrastructure and pay others to make reductions.
The challenge is: can we create a commodity from a reduction in emissions?
This brings us back to the point of what are the 6 criteria for offsets: additionality, measureability verifiability, complete accounting, enforceability, permanence.
Is our money well spent investing in the financial markets creating these offsets projects, the financiers, administrators, marketers, developers, and verifiers?
Is it better spent on a specific project you do in your house to reduce some of your emissions? Or a project with somebody you know? In your city or in a community you have relationship with and an understanding of abroad? Or might our money be better spent on advocacy or organizing? If we could pass climate policy — with a cap on emissions — on state or federal levels — that would do the most good. What about giving $10 to the Chesapeake Climate Action Network — they’re one of the local groups who I most respect in their organizing and advocacy work. On a national & international level, I believe 350.org has done and continues to do some incredible work. For me it comes down to building power and better vehicles for change. So that’s where I’m investing my money. What are the vehicles I believe are capable of building the power needed to help people, institutions, systems make the hard decisions/investments to decarbonize? And what are the paths to getting states, regions, countries to implement the policy and regulatory changes we need to decarbonize our electric & transportation sectors?I have a few ideas… but I’ll leave that for another post.