The Perverse World of Carbon Incentives

British Sugar, NewarkPhoto: Tim Heaton
Carbon Offsets as an Economic Strategy

Carbon offsets are an economic strategy meant to increase the market for green, sustainable and non-polluting energy even while competing with non-renewable, non-sustainable, polluting oil, gas, coal and nuclear energy. Essentially, for each carbon credit that is bought somewhere in the world an equivalent amount of carbon is being removed from the atmosphere.

As a first and somewhat tentative step to scaling back the usage of polluting, non-sustainable energy and increasing the market share of green energy, carbon offsets are an adequate effort. When a regulation board puts a cap on how many carbon emissions a given company may produce, anything produced beyond that cap may be dealt with by purchasing carbon offsets. The next step is to reduce the level of the caps, and make sure that the system is airtight, so to speak – that is, that every carbon producer worldwide faces regulation, and that enforcement is universal and mandatory.

The problems seep in when corporations are powerful enough to lobby for optional instead of mandatory enforcement and when corporations are wealthy enough to continue buying carbon offsets despite tougher regulations instead of reconfiguring their energy source and usage.

There are even reported companies where companies have set up entirely new lines of business to create pollution – in order to then claim offset credits for stopping the activity.

Carbon offsets are a crutch that should only be useful for the transition period between big oil and big green. Buying a carbon offset means that a company is polluting more than it ought to, and is paying a special green fine to do so. As helpful as the system may be in the end, when a company puts a positive spin on their polluting and advertises that they have bought so many carbon offsets, what they’re really saying is: ‘We’ve spewed entirely too much pollution into the environment, and now we’re paying a small tax.’