Carbon Offsetting: Problems and Alternatives

Large coal-fired power station in North Yorkshire UKPhoto: thewritingzone

Carbon offsetting has become an attractive, celebrity-endorsed, political and social priority. Its absence in high profile lifestyles is an invite for social disgrace, while its presence paints a picture of deep personal responsibility in shades of placating green. It has become a viable way for a regular person too busy to accompany Greenpeace to the North Sea, to try and amend the environmental implications of their consumerism.

There is no shortage of companies willing to grant your carbon sins a pardon in exchange for an investment, which is reassuringly placed in effective, emission compensating projects. Since the inception of the carbon offset scheme, its credibility has repeatedly come under fire. Is it possible for a market based on indulgences to ever be about conservation and not about capitalism?

The modern carbon offset system is comprised of two distinct markets. The first is the compliance market. Under the Kyoto protocol, all large-scale industries and governments have limits to the amount of polluting gases they can produce; these are called caps.

Any given institution is issued with permits to produce carbon dioxide or equivalent green house gases (GHGs), and if they wish to exceed these caps, they must purchase additional permits from entities that are not using them. One carbon offset equals one metric ton of carbon and by trading, large-scale polluters can nullify the excess pollution they have created. This ‘cap and trade’ system creates a financial reward for those who actively reduce their emissions.

British Airways Boeing 767 takes off from London Heathrow AirportPhoto: Adrian pingstone

The second market is the voluntary market. This represents the individual company or person who, for whatever reason, feels inclined to make an effort to mitigate their environmental impact. Here we find numerous ways in which someone can offset their relative emission measurement (conveniently calculated on the website of the chosen company) by investing in a variety of carbon mitigating projects.

These can include anything from planting trees to building wind turbines to distributing long-life light bulbs to impoverished communities. An offset can be most easily described as financial support for a long- or short-term CO2-reducing project. Air travel has become somewhat synonymous with carbon offsetting and opportunities to neutralize your air miles have become vital PR for an industry which has received attention for its obvious environmental implications.

The climate emergencyPhoto: Takver

In 2007, global emissions were measured and found to have increased by 3.1%, compared to 3.5% in 2006. In 2009, global emissions were reported to be down by 1.9%, but this has been attributed to the recent economic crises. These results are tentatively positive, but both markets share innate problems that make the overall effectiveness of carbon trading questionable. Key problems within the system are:

  • A lack of regulation: The measurement of GHG emission and offset are uncertain and based on variable, inaccurate data, thus making any calculation dubious and any benefit associated with an offset ambiguous. Misrepresentation and exaggeration of expected offset project returns are common, and often based on Enron style “future value accounting.” A lack of regulation and standards has resulted in a voluntary market rife with fraudulent operators peddling unrealistic and misleading projects, and a compliance market consistently under scrutiny.
  • An unpredictable future return: Carbon offsetting falls victim to additionality. This describes an event in which carbon offsetting takes place regardless of active market-based efforts. An example being the distribution of power-friendly light bulbs in South Africa by UK based Climate Care, which was later made redundant by the distribution of similar light bulbs by the local energy authority.  Any claim made regarding the short- or long-term value of carbon offsetting initiatives must take into account the variable, unforeseeable nature of future events and thus be rendered fundamentally flawed.
  • Dislocation of responsibility: The system is not designed to tackle and reduce emissions, but works to compensate for them, thus removing the responsibility for their creation in the first place. Rather than motivating individual people or corporations to make fundamental changes to the causes of energy consumption or encouraging public action to address the social, economic and political failures attributed to climate change, we are being lulled into an erroneous belief that by making a payment we can eliminate the consequences of our energy indulgences. Carbon offsetting can be criticised for redirecting the effort needed to combat climate change from systemic, community-based initiatives to ethereal, non-distinct economic tools endangering the imperative public realisation of personal responsibility for excessive GHG emissions.
  • Poor Prioritisation: Both markets are driven by economic and not environmental incentives, making contraction and reduction counter instinctive.

countries by carbon dioxide  emissions in thousands of  metric tons, based on List  of countries by carbon dioxide  emissions as of March 2006Photo: Roke

Proposed alternatives for the traditional carbon offset model need to address the need for global reduction in GHG production and prevent investment into projects that fail to conclusively promote that reduction. In terms of the compliance market, an entity that exceeds its designated cap should have a reductive effect on the market as a whole, as well as receive a penalty representative of that excess.

For example, if a government overpollutes by 3% of its total cap, then it could be made to purchase an additional 3% of the total permits it needs to neutralize this excess. These additional permits could then be “retired” from the market. The government that sells the permits must also “retire” that 3%, encouraging trade between only those companies that mitigate their emissions the most. This “proportional retirement” would work to decrease the number of overall available permits and so also the amount of GHG pollution.

The voluntary market could also redirect its emphasis toward reducing emissions within the compliance market by similarly retiring unclaimed permits and reducing overall emissions. This would be a much more direct and far more effective way of offsetting an individual’s emissions, as well as removing middle men from the transaction that only serve to reduce the final worth of the payment.

Redundant cooling towers in SheffieldPhoto: Subterranean Tourist Board

The genuine goodwill of people to start addressing their carbon responsibilities is one of the most  important shifts in public opinion since  the acknowledgment of human-induced climate change. It has been irresponsibly squandered by fraudulent, unethical companies that have succeeded in creating doubt, associated with some of the more traditional carbon offsetting options, particularly tree planting.

When accepting the great range of uncertainty inherent within the system of emission/offset measurements, one is inclined to admit that investment in such projects is non productive and reckless. Therefore, it is prudent for individuals and corporations to consider alternative ways of taking responsibility for their carbon emissions. One such option is to support community-based movements that work to resist the growth of large-scale polluting industries, promote renewable energy provision and importantly, are additive to GHG reduction.

A redirection of investment away from corporate initiatives, towards non-profit, community-based projects ensures the entirety of the financial support reaching the intended organisation. For example, the Border Green Energy Team (BGET) works to provide training and financial support for small communities on the Thai-Burma border. They implement renewable energy technologies and provide technical support for non-profit organisations. One such organisation is Palang Thai, which has been instrumental in providing public opposition to increased emission proposals, including directly preventing the construction of two fossil fuel-based power plants.

The movement of small communities away from fossil fuels and toward renewable energy is as relevant in the US or UK as it is in Thailand. This kind of action serves to remove future need for emission-based power while building the strong social, communal foundation needed for continued change. It is preventative of emissions, not simply a treatment for them, which traditional carbon offsetting is at best described as.

Ratcliffe power plant, EnglandPhoto: Alan Zomerfeld

The compliant market is out of the control of the average consumer. International bodies must address and amend the problems within it by introducing more encompassing legislation on the amount of emissions an entity can produce, and the accuracy of how those emissions are measured. Concurrently, authorities should be enforcing the mitigation of excess GHG production by internal investment in renewable energy rather than acquisition of exterior emission permits.

The voluntary market is by definition one of choice, and we must start to make those choices more carefully. A shift of investment toward non-profit organisations, working to prevent GHG emission on a local scale, and a collective effort to remove excess emission permits from the compliance market, are effective ways to start dealing with the global issue of climate change and fossil fuel pollution.

Environmental recoveryPhoto: world360

The carbon offset market has demonstrated a clear public enthusiasm for saving the environment. Support and guidance must be provided to ensure that this commitment is channelled creatively into mechanisms for lasting change, and not exploited by capitalism. Failure to do so risks leaving the individual feeling disempowered and jaded.

The system should work to increase the personal obligation to take full responsibility for GHG emissions by providing direct, effective means to satisfy that demand. The revenue it provides should work to decrease emissions, not compensate for them, and support the transition to renewable energy at a grass roots level. While we must accept the economic validity of carbon offsetting, its environmental failures must also be addressed. In response to this recognition, improved legislation and stricter regulation must accompany a greater social impetus for change, encouraging a shift from corporate energy reliance to local energy provision, supported by the genuine, shared incentive of sustainability.


Sources: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10