Saturday, February 9, 2008

Carbon Offsets as Personal Absolution and Environmental Policy

I am at the Bainbridge Graduate Institute, where last night I heard a presentation on the carbon offset market. Someone from the audience asked if this is really just a modern version of purchasing indulgences, salving the conscience of the sinner so he can go on sinning. This is a fair question, but it doesn’t dispel the confusion that now surrounds offsetting.

First point: it is an obvious fact that many if not most of the offsetting crowd in the US, the ones who seek to neutralize their carbon footprint, take a moralistic approach. In the end, purchasing offsets is about them and how they feel about themselves. I wouldn’t condemn this, since good intentions are, well, good (most of the time). But from time to time we should ask ourselves, what is the net effect of this business on actual carbon in the atmosphere?

This leads to the second point: carbon offsets mean entirely different things now and under a future regime of carbon permits. Today, if you buy a carbon offset, there is no particular social cost and probably some potential social gain. The offset doesn’t make you drive or burn fuel oil; you buy the offset because you do these things in the first place. Meanwhile, if the offset causes any improvement in the carbon situation somewhere else, even just a little, it is a plus. True, some offsets also make things worse because they take a tunnel vision to the problem and ignore other environmental and social effects, but these can be avoided with a little research.

Now think about the future. Suppose we institute a system of carbon permits, ratcheting them down each year to meet our long term carbon goals. In this hopefully not too hypothetical world carbon offsets become a threat. An offset represents the cancellation of some part of the permit framework: you get to emit more carbon because you bought an offset. In this case there is a clear and substantial social cost, measured against the same iffy social gain. The net effect is that carbon emissions are likely to go up.

Moral of the story: transcend moralism. Put some of your spare cash into carbon offsets, but do some digging into the practices of the offset providers. Support a national system of carbon emission controls that makes no room for offsets.

4 comments:

digamma said...

Wait, what's the difference between a tradeable permit and an offset? If you have a permit for X tons of CO2 and I buy it from you, I've just reduced the amount of pollution in the world by X tons. If I then go release X tons into the atmosphere, I come out even, right?

Peter Dorman said...

digamma: Absolutely. Anyone who wants to buy a permit and use it is entitled. And anyone who uses a permit to release a ton of carbon and then goes out and buys a second permit in order to retire it is better than that. I am cautioning against something else, the idea that instead of getting a permit you can simply dump the carbon with the promise that you will give money to some far-off project that will/may/is supposed to reduce emissions by an equivalent amount. Because such promises are iffy -- there is the problem of additionality (would the project have occurred without the offset payment?), the difficulties of measurement and monitoring, the problem of gaming the system to maximize whatever the imperfect certifiers designate as "carbon reductions" -- they will usually deliver less reduction than the permit would have enforced. In other words, this is really an argument for not increasing the number of permits in exchange for less effective promises to offset elsewhere.

Clear?

Anonymous said...

perfectly clear, almost a 'TerraPass'.

absolutely no need to restrict this trade to GHG:
http://www.cheatneutral.com/

Anonymous said...

Tax the gas. simple. effective.

if it "hurts the poor" give them money to move closer to work and/or build better houses.