Climate Change: Carbon Offsets

Let’s make some assumptions to get to the point of this article.

Assumption 1: Global climate change exists; there is an overall trend toward melting polar ice, thawing permafrost, warming seas and overall slowly rising global average temperatures, in spite of variable seasonable cold weather.

Assumption 2: One of the primary causes of global climate change is the production of greenhouse gases by human activity on the planet, most notably carbon emissions.

Assumption 3: Since humans contributed mightily to this climate change trend, humans can work to change and/or reverse it.

That said, let’s talk about carbon offsets. A carbon offset is a financial instrument that targets a reduction in greenhouse gas emissions.

There are two markets for carbon offsets. In the larger scale compliance market, corporations, governments, or other entities buy carbon offsets in order to comply with caps on the total amount of carbon dioxide they are allowed to emit. In 2006, about $5.5 billion in carbon offsets were purchased in the compliance market, representing about 1.6 billion metric tons of CO2e emissions.

In the smaller scale voluntary market, individuals or companies purchase carbon offsets to offset their own greenhouse gas emissions from transportation, electricity use and other sources.

For example, an individual can purchase carbon offsets to compensate for the greenhouse gas emissions created by personal air travel, personal auto use or personal electricity consumption. Some eco-conscious companies even offer carbon offsets as an up-sell during the sales process so that customers can mitigate the emissions related to their product or service purchase. In 2008, about $705 million of carbon offsets were purchased in the voluntary market, representing about 123.4 million metric tons of CO2e reductions.

These offset funds are then used to financially support projects that reduce the emission of greenhouse gases in the short- or long-term. The most common project type is research or build out of renewable, green energy infrastructure, e.g. wind farms, biomass energy or hydroelectric dams. Other project types can include energy efficiency projects, the destruction of industrial pollutants, mitigation of landfill methane, and implementation of forestry projects.

I am not a fan of carbon offsets.

In both large and small scale, offset users are not directly reducing their carbon emissions. They are not using less, functioning more cleanly or complying with standards. They’re simply investing compensatory funds in a good cause to atone for a profligate operation or lifestyle.

At a corporate level, rather than meeting government standards for greenhouse gas emissions – and the USA’s are rather lax – they’re missing the target, and then buying themselves back under the cap with offsets, not unlike obtaining a papal absolution. Critics also claim that Industrial companies profit from doing very little to reduce their carbon footprint, or from gaining carbon credits on the basis of questionable efficiency gains from which they have already benefited substantially.

At a personal level, rather than buying offsets for the SUV they drive, or the 2,500 square foot house they heat with oil-generated electric heat, wouldn’t it make more sense to take mass transit, live in a smaller home and heat with solar and natural gas? Emit less carbon overall – benefit the planet directly – and live guilt-free rather than in perpetual propitation mode.

As I’ve mentioned elsewhere on this blog, I’m actually not a particularly strident eco-freak. I do believe, though, we should all live as cleanly and wisely as possible in our little corner of the planet, so we pass it on in a state we can be proud of to future generations.

This post is for Blog Action Day 2009.

6 Responses to “Climate Change: Carbon Offsets”

  1. Janiece Says:

    Drat. I missed Blog Action Day this year.

    Stupid job. It’s constantly interfering with my BLOGGING.

    Thought provoking post, BTW. Thanks!

  2. Bill Says:

    I’m not sure I like it either but it does do one important thing – put a dollar value on polluting. In business this is important because it gives decision-makers something to compare to when evaluating how to spend money.

    In todays world it is very hard if not impossible to put a cost on pollution. Therefore when a CEO has to make a choice about doing a project or changing the way they work that would cost money but reduce pollution, he has nothing to compare it to.

    Carbon offsets allow that CEO to answer the question “What is the ROI of not polluting?” As carbon offsets increase in price (as is planned) then more and more projects have a good ROI and will be done. Over time the cost of pollution becomes a natural part of internal conversation.

  3. Eric Says:

    Personally, the way I see it, anthropogenic global warming is actually one of those few things you can apply Pascal’s dichotomy to. After all, either AGW is occurring, or it isn’t.

    If it is, then reducing emissions mitigates the problem while not reducing emissions endangers us all.

    If it isn’t, then reducing emissions still has a variety of desirable effects, since most human carbon emissions are associated with problematic behaviors/phenomena: e.g. a reduction of fossil fuel reliance not only reduces carbon emissions, but also reduces other industrial pollutants, reduces the need to engage in mining or drilling that may cause pollution or wilderness damage, reduces the need to ship teratogenic/carcinogenic materials thousands of miles with attendant risks, neutralizes the leverage enjoyed by some of the least-stable and most-dangerous states on Earth, etc. Meanwhile, not reducing emissions still continues to subject us to all of the same attendant dangers referenced in the previous sentence.

    So it seems like reducing emissions is win-win whether AGW is occurring or not, see?

    Or that’s how I look at it, at least.

  4. Carol Elaine Says:

    Jeri, I’m with you – I am not a fan of carbon offsets either.

    If you’re going to spend money to make up for the fact that you went over your carbon allowance, why not just spend the money to revamp your company so that you don’t go over your carbon allowance? Sure, it’s more expensive in the immediate future, but will end up being cheaper in the long run and will reduce your carbon footprint.


  5. Eric Says:

    Well, sure, Carol Elaine, if you want to be all logical and exercise foresight and stuff.

    While I’m also not a big fan of the offsets, I think the theory is that you can wean companies off carbon to some degree by scaling back the available market for offsets over time. The benefit is that it allows companies to scale back emissions at a pace that’s reasonable for them–i.e. a lowered-emissions-by-flat-deadline may be achievable by some companies but not others, and thus may foster noncompliance or force closings. The offsets market allows more flexible companies to pick up the slack for those that will need to phase in changes over time. It’s also possible that some economic sectors will remain high-emissions for the foreseeable future by their nature, and so allowing them to shift the burden of controlling emissions to more flexible entities has the desired effect of reducing net emissions without hobbling industry.

    I’m not sure if I explained that very well. Sorry. Hope I did.

  6. Canada Guy Says:

    Yes, carbon offsets are BS. Lifestyle changes are good, but they can only slow emissions growth slightly, they will not reduce emissions. Personal lifestyle changes can only have an impact of a few percent at most. We cannot ignore the other 95 percent of the problem. Some have suggested that we can forget about caps and just focus on behavioural changes, which is insane.