Carbon Offsets: To Buy or Not To Buy? A Short Guide

Three 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’m having difficulty reducing my thoughts to a text.Screen Shot 2019-07-25 at 10.05.12 PM

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. Screen Shot 2019-07-25 at 10.06.24 PM 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 Josie Wexler of Ethical Consumer’s “A Short Guide to Carbon Offsetsbecause she emphasizes some DIY offsetting options and also reminding us that the most important thing is to reduce our own emissions.

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?

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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 weScreen Shot 2019-07-25 at 10.04.37 PMre 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? Screen Shot 2019-07-25 at 10.04.43 PM

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.

Democratizing Economics: I believe

I believe our economics can embody a greater democracy.Screen Shot 2019-02-02 at 11.17.46 AM

I believe our economic institutions can be more democratic and fair.

I believe the plurality of thought in economics would bring great benefit to society.

 

I believe in culture and that our culture is the sum of the ideas floating around inside of it.

We all know it’s much easier to take in others’ ideas than it is to create and share the unique combination of ideas your experiences bring to bear.

Screen Shot 2019-02-02 at 11.28.26 AMI believe we need to be talking more about certain ideas.

I believe George Saunders rightly characterized our media situation with his essay, “Braindead Megaphone”.

 

I believe our most important work is really matters.

I also know how easy it is to be distracted.

I believe that you spending more of your time on your most powerful work will change you.

 

I believe that creating tension is essential to producing work and creating change.

In organizing, we call it an “agitation”.

Agitation is the art of challenging a person to be true to their values, true to self and to act on those values out of their own self-interest. It is the art of pointing out the contradictions between what a person professes and how she or he acts.” ~Gameliel National Training Manual

I also believe new kinds of connection are possible.

New curated cohorts learning together can cement new relationships that move us deeply.

I believe in coaching, good feedback, holding up a mirror, reflecting back to each other what’s most important and what we see.

 

This is the heart of it: Learning to see.

Learning to see inside ourselves.

Learning to see beyond the next turn.

Learning to really see the other. Be with them and help them see themselves.

Is that a gift you are ready to give?

 

I think our economics needs it.

I think our economy needs it.

Will you join me?