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Offsetting problems …

September 10th, 2009 · 3 Comments

Carbon offsets should trouble anyone concerned about climate change.  Whether on a personal, business, or community/nation level, even when they work, they act almost as a form of indulgence: paying someone else resources as a means to make up for your own failures and problem creation.  As we consider climate change challenges, this sort of ethical and moral challenge really should be a secondary issue. If offsets can manage to work, to help hasten reductions in global pollution levels such that we can avoid a massive crash in the global system’s ability to support modern human civilization, then this is a moral and ethical issue worthy of debate and discussion in philosophical circles rather than a functional reasoning to fail to exploit any and all effective measures to turn the tides of Global Warming’s rising seas.

The real challenge when it comes to “offsets” is a functional one:

Do international carbon offset programs work well today to help reduce carbon emissions cost effectively?

Should we have confidence that that they will do so into the future?

A pause for a brief definitional item:  Carbon Offsets, as referred to here, are really an international issue. In other words, moving resources across international boundaries to support emissions reductions in one country to ‘offset’ emissions in another. Currently, the European Union’s cap and trade scheme allows significant credits (in essence, 50% of a nation’s targeted reductions) for international offsets. The Waxman-Markey American Clean Energy & Security (ACES) bill, that passed the House earlier this year, has significant provisions for international offsets. (Enough, in fact, that they could, in theory, displace any direct US carbon emissions for decades into the future.)

Friends of the Earth just published A Dangerous Distraction: Why offsets are a mistake that the US cannot afford to make.  This report provides significant documentation to answer the two functional questions. And, that material should give us great pause because the answer to both questions, based on this work, is a very resounding:  NO!

Do international carbon offset programs work well today to help reduce carbon emissions cost effectively?

As for today, there are multiple ways in which the current offsets systems are gamed and some serious functional problems in the offsets’ processes, leading to uncertain results and uncertain effectiveness as to actual carbon emissions.

  • There is, at best, uncertainty about whether programs would have gone forward without offset investments. In a large number of cases, the programs are already under construction.  To give a rather large example, hydropower is a Chinese government priority: basically every single building PRC hydropower program has applied for (and, normally, received) offset certification.  Would China have no hydropower without international offset investments?
  • There are limited resources for true auditing of claims in applications and for auditing actual programs.
  • The baseline are “Business as Usual” for pollution. What that “BAU” might be, without the offset investment, is somewhat like voodoo economics and, as per bullet above, there are limited resources for actual analysis as to that BAU’s actual validity.
  • Resources from the current programs are going to many questionable programs, including significant investments in fossil fuel energy systems rather than energy efficiency and clean energy.

Should we have confidence that that they will do so into the future?

Sadly, the situation looks grim on this account. With tightening carbon restrictions, there is mounting pressure for increasing offset availability, with little action seen to deal with the fundamental challenges

It is suicide to base our future on offsets. Offsets provide the illusion of taking action to stop global warming when in fact they often allow emissions to rise,” said Michael Despines of Friends of the Earth, one of the authors of the report.  “People need to realize how dangerous offsets can be—they provide a false sense of security because they often do not deliver as promised.”

Some additional thoughts

There are reasons to look to international offsets, at least in theory, as part of real climate change solutions. If $1 can achieve X reductions in carbon emissions in country A, but 2X emissions in country Y, then it would be a more efficient use of resources to secure that 2X emissions levels with that $1 as quickly as possible.   The challenge, however, is that we would not truly secure a 2X reductions, as the emitter in country A would expend enough resources to meet their X reduction requirement, pocketing the difference in the interim. This is, however, assuming that the system works well, honestly and efficiently.  As A Dangerous Distraction documents, however, the CDM mechanisms look to be riddled with quite serious problems and those problems might just increase, rather than be constrained, with growing demands for international offsets with a tightening EU program and the creation of a US Cap & Trade system.

There are those who advocate strongly and passionately for the value of offsets, for their value as a core part of any cap & trade regime.  They argue that the US system would have significant safeguards as to actual programs that would be authorized (with tighter controls, they assert, then seen with current CDM processes) and that the actual availability of affordable carbon offsets would be far lower than the levels ACES authorizes.

We need a fundamental and thoughtful lay down of the varying arguments on ‘both sides’ of this discussion, with a focus on the actually effectiveness of offsets to the achievement of emissions’ reductions.

As a regret, A Dangerous Distraction has a strong focus on the morality and ethics issues related to offsets. And, some of this is misplaced. Consider this paragraph on page 5

there are severe equity impacts for developing countries if developed countries offset even part of their emission reduction targets. offsetting deepens inequality in per capita carbon consumption between developed and developing countries.

Those writing this report almost certainly believe (understand), as I do, that a clean energy future will be a more prosperous one for a wide set of issues.  Why would helping Developing Countries achieve that cleaner energy future faster, quite likely at the expense of more rapid movement in the Developed World, create “severe equity impacts”?  Helping developing countries leap frog past 19th and 20th century energy efficiencies and polluting energy systems would boost their competitiveness and create better living conditions for their populations.

While there are moral and ethical issues that can (and should) be part of the discussion, the fundamental issue is one of effectiveness. If international offsets are, today, an ineffective use of resources in face of our climate challenges (and the opportunities these challenges create) and there are uncertain, at best, prospects for making them effective into the future, these morality and ethical issues become moot.

Finally … This is only the briefest first glance at A Dangerous Distraction.  This report merits attention, including future posts at this site.

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Tags: climate change · environmental · Global Warming

3 responses so far ↓

  • 1 Glenn Hurowitz // Sep 10, 2009 at 11:28 am

    This report is factually erroneous and conceptually tortured in some of the ways you’ve pointed out. Quick thoughts:

    One: this report conflates the CDM with future offsetting regimes, which, if Waxman-Markey is any indication, have little to do with CDM. This is not your daddy’s offsets.

    Two: Credible offsets allow countries to achieve far more ambitious cuts in greenhouse gas emissions than would otherwise be possible. There’s a certain economic cost to climate action any political system will bear. The more affordable reductions are, the bigger they can be. Removing offsets from Waxman-Markey would cause the targets to be dramatically lowered, which would help no one.

    Three: How does FOE propose to finance $40 bn a year in preventing destruction of tropical forests, what’s needed to end deforestation. FOE deserves significant blame for keeping incentives to protect forests out of the Kyoto Protocol, which resulted in the destruction of 300 million acres of tropical forests since then, releasing an amount of pollution equivalent to ten times the United States’ annual emissions. They do great work on some issues, but they should hang their heads in shame for all the species extinctions, climate pollution, and destruction of indigenous communities this giant mistake created.

  • 2 Michael Despines // Sep 10, 2009 at 2:59 pm

    A Siegel,

    Thank you for your insights and analysis of our report (I’m one of the authors). I’d like to address one point.

    You asked, “Why would helping developing countries achieve that cleaner energy future faster, quite likely at the expense of more rapid movement in the Developed World create ‘severe equity impacts’?”

    The problem is that offsets do not effectively promote a transfer to clean energy technology – a great deal of offset funding supports fossil fuel projects (like coal plants, yes, really) that use slightly improved technology. Funding for truly clean technology like solar projects is projected to represent only 0.1 percent of CDM funding by 2012. Also the weak emission reduction targets put forth by the US and developed countries, combined with the use offsets, shifts an unfair share of emission reductions requirements to the developing world. Even if the developed world achieves an emission reduction of 80% compared to 1990 levels by 2050, as recommended by the IPCC, which is far more ambitious than many current proposals, per capita emissions will still be much higher in the developed world than in poor countries.


    Thank you for commenting. Note that your comment goes back, quite directly, to my point. The issue begins with the ineffectiveness, inefficiency, and counter-productive nature of offsets. If (obviously, a big “if”) offsets were run well, were effective, would speed achievement of necessary emissions reductions, then the moral issue is a quite different challenge.

    A core point, to me, is that the offsets are (as you so well documented) not truly focused on emissions reductions programs, are inefficient use of resources, and will not (in part from putting off reductions in the Developed World) enable us to achieve necessary reductions.

    Would a well-run Offsets program, which truly was enabling energy efficiency, clean energy, better agricultural practices be immoral?

  • 3 Kate Horner // Sep 10, 2009 at 3:03 pm

    Thanks for your comments. Since you were critical of our report, I want to take a chance to respond.

    To make it clear, Kate is responding to Glenn’s comments above, not to the post itself.

    To portray organizations opposed to forest carbon offsets as opposed to forest protection is specious. One of Friends of the Earth’s biggest goals is to protect forests, and we have a lengthy record of achievements that have had and will continue to have lasting, positive impacts on the world’s forests.

    That said, we don’t support just any policy that purports to help forests. Instead, we focus on enacting policies that work. This includes tackling underlying drivers of deforestation, namely the persistent failures of governance in tropical forest countries as well as the surging demand for wood and agricultural products. For example, Friends of the Earth advocated for the recently passed amendments to strengthen the Lacey Act, which bans the import in to the US of illegally harvested wood products. This legislation leverages the US market as a powerful tool in the fight against deforestation. As you know, illegal logging runs rampant in many tropical forest countries, like Brazil and Indonesia which together account for roughly 10 percent of global emissions.

    We opposed the inclusion of forests in the Clean Development Mechanism and oppose the use of forest carbon offsets in climate legislation and an international agreement because of persistent issues associated with permanence and leakage. There’s a risk that CO2 sequestered in forests via offsets will later be emitted due to natural disturbances, like forest fires, and also due to political and economic volatility, like shifts in domestic subsidy priorities or shifts in international commodity markets. There’s also a risk that deforesting activity will simply shift to another area if an at-risk area is protected. Perhaps more importantly, if one really care about forests, we simply cannot afford to trade emissions reductions in the forest sector for emissions reductions in wealthy industrialized countries, as offsets would. We need both. If global temperatures continue to rise, the world’s forests are in dire risk of dieing. We need steep emissions reductions everywhere, especially in those countries most responsible for the problem, not tradeoffs that can let the biggest polluters off the hook.

    It should also be noted that we do strongly support fund based approaches to forest protection and have been strongly advocating for 5% of pollution allowances in the Waxman Markey bill to be set aside to fund forest protection in developing countries – that’s roughly $2.5 billion a year in 2012 and decreasing to approximately $1.5 billion a year in 2050.