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April 04, 2007
Carbon Offsets: Modern-Day Indulgences to Assuage Carbon Guilt or Market Mechanism for Supporting Clean Energy
    by Bill Baue

Even as they gain popularity as a climate change solution, carbon offsets have come under considerable criticism for diluting action on global warming--the truth likely resides between these extremes.


Are carbon offsets modern-day indulgences that assuage the guilt of our continuing energy over-consumption instead of encouraging reduction, or a modest market mechanism to address climate change by supporting the transition to a cleaner, renewable energy-based economy? Passionate proponents abound on both sides of the debate, though it may not be an either/or proposition, but rather a both/and. To address the question first requires a brief primer on carbon offsets.

Fossil-fuel energy consumption, which all of us participate in, emits copious amounts of climate-changing carbon dioxide and other greenhouse gases. Companies such as NativeEnergy, TerraPass, and CarbonFund sell certificates that link specific carbon-polluting activities (such as an airplane trip or a year's car use) to specific carbon-mitigating projects, such as renewable power, energy efficiency, or reforestation. Simply labeling these certificates "donations" in support of carbon mitigation--which they essentially are--would reduce the debate significantly.

The linkage introduces the problem. The terms "carbon offset" and "carbon neutral" create both the appeal--the idea of "erasing" the negative impact of our carbon emissions drives the carbon offset market--and the controversy.

"My resistance to carbon offsets pertains to how they are framed, as, morally and practically, offsetting isn't really occurring," said Michael Kramer of Natural Investment Services, a socially responsible investing (SRI) advisor, who does not currently advise his clients to buy offsets. "You can't make up for the use of carbon by buying your way to a position of freedom from responsibility for emitting it in the first place--once the damage is done, it's done."

The Carbon Neutral Myth: Offset Indulgences for Your Climate Sins by Amsterdam-based Transnational Institute, which borrows its title from George Monbiot's October 2006 Guardian article likening offsets to Medieval indulgences, advances three similar critiques of offsets. First, carbon offsets dilute the more radical action necessary to adequately address the climate crisis, in part by diverting what could be collective political action that addresses systemic root causes into personal market transactions within the very economic structure that created climate change.

Second, offsets can amount to "carbon colonialism" whereby privileged Northern hemisphere consumers impose the consequences of their carbon emissions in the guise of "assistance" to Majority World nations that absorb negative impacts (such as mismanaged monoculture tree plantations).

Third, the report claims offsets warp the temporal realities of the carbon cycle, claiming to counterbalance present emissions with sequestration and substitution that actually spans far into the future. In the report's appendix, researcher Jamie Hartzell calculates arboreal offset rates at 0.3 percent per year (thus taking more than a century to reach completion), while scientists predict the next decade will be decisive in determining the trajectory of the climate crisis. In other words, if you emit carbon today and plant a tree it will take the tree a hundred years to absorb the carbon emissions….in the meantime the ice caps are melting.

"The reason why the offset companies can argue for carbon neutrality is they are using a carbon calculation method that is best termed ‘future value accounting,'" Hartzell writes. "Carbon savings expected to be made in the future are counted as savings made in the present. This is the same technique used by Enron to inflate its profits--and sooner or later I expect, just like Enron, the house of cards will come tumbling down,"

A recent BusinessWeek article advances a separate line of critique--namely, that offsets often support projects that would have happened anyway, though it used the unscientific method of simply asking the projects if they would have happened anyway. This notion, called "additionality," preoccupies discussion amongst offset companies. They have developed intricate (though also unscientific) methods for assessing whether their projects and renewable energy credits (RECs--or subsidies that support electricity generation by renewable energy sources such as wind) "add" to the climate solutions menu.

"The issues surrounding quality and additionality are at the heart of our business, which is why we designed our model to fix a major flaw in the market: projects need long-term commitments, but energy consumers won't agree to long-term commitments," said Billy Connelly, director of marketing and communications at NativeEnergy. A majority Native-American owned company that supports mostly Native American projects, NativeEnergy was one of only eight companies singled out for best practice by Trexler Climate and Energy Services in a recent consumer guide to offsetters by Clean Air-Cool Planet.

"We effectively fix that market failure by purchasing upfront the entire expected lifetime output of RECs and/or carbon offsets the project will generate, and our support represents as much as 25 percent of the total construction cost, which makes a very real difference in bringing a project on line," Mr. Connelly told SocialFunds.com. "Sure those RECs and/or offsets are generated over time, but that is certainly better than having them not be generated at all,"

The Carbon Neutral Myth author Kevin Smith counters this line of reasoning.

"To pose 'doing nothing about climate change' against offsetting is a false opposition," Mr. Smith states. "It is more a question of choosing from the rich array of effective and empowering opportunities that there are to take action while ignoring bogus 'solutions' like offsets from the very outset."

Mr. Smith's solutions prioritize what could be called "subtractionality," or the reduction of carbon emissions at their source, over "additionality," or the assessment of whether offsets and RECs add to existing support for renewable solutions.

From a mathematical perspective, it seems wisest to subtract from the problem while simultaneously adding to the solutions. In other words, framing reduction and offsets not as "either/or" but as "both/and"--while critically assessing best practices on both the subtraction and the addition sides of the equation--holds the most promise for effectively addressing climate change.

 

 
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