More than 2 and half years ago I wrote:

“Mommy, where do carbon offsets come from?”

“Well, you see sweetheart, when a major polluter and a consultant love money very, very much, they express that love in a special way. Nine months later, the consultant produces an extremely large paper packet.”

Offsets, the idea that big corporations can pay someone else to cut emissions on their behalf still fails as badly today as when that was written. Polluters still pay money to an offset project. In turn the offset project pays a share of polluter money to a consultant who constructs a really convincing narrative explaining why that project emits fewer greenhouse gases than if the money had not been paid. The difference between the consultant’s story and actual emissions is the emissions reduction available for sale. The polluter buys this instead of actually reducing pollution. It is a difference between reality and what unprovably might have been.

The Friends of the Earth new report Offsetting: a Dangerous Distraction [PDF] documents that this continues to be true. Scientific American agrees. The Economist reports on a scandal in Papua New Guinea, which many offset opponents think is a good example of what we can expect should large scale forestry offsets be included in a trading scheme.

Offset supporters have new arguments:

One is that we need to support offsets as part of the total Waxman-Markey package, because Waxman-Markey is our last chance for a U.S. climate bill. But there is no reason to believe that this IS our last chance. McCain-Lieberman was beaten back, and this new bill is on the table around a year later.

Further, the current bill gives away one of the great levers to get a climate bill passed – the current regulatory authority of the EPA. While that authority is not structured optimally for greenhouse gas regulation, it is strong enough to allow regulations that will produce larger cuts sooner than this awful bill can net. If the EPA chose, these new rules could be a major inconvenience to the same forces who have extracted all sorts of concession in the current bill to win their support. That would put pressure on some of the utilities and industries to support a decent climate bill as an alternative. Giving up that leverage in return for a bill that may actually increase emissions is a really foolish and un-pragmatic choice. At least it is if emission reductions are the point.

Another claim is that we can count on the EPA, under the tougher offset standards Waxman-Markey requires, to only approve valid offsets. It seems unlikely, simply because the EPA does not have the resources to set up anything but a consultant based system. Under such systems the EPA only validates a project after most of the work of justifying it or not is done by consultants. And that same lack of resources will make the EPA no match for clever consultant narratives. Joe Romm gives an example of CH4 and N2O reductions in wastewater plants as difficult offsets to fake. However, states, counties, municipalities and special districts tend to regulate CH4 because methane stinks, and N2O because it increases eutrophication. It will be very tempting for regulators to let wastewater facilities informally know they face such requirements, but then hold off on formal rulemaking (or order-giving in the case of publicly owned facilities) to let the plants “voluntarily” set up reduction projects partially financed by selling offsets.

Recent domestic offsets convert Joe Romm has faith that offset use won’t be widespread in the U.S. because the Waxman-Markey climate bill sets standards so low industry won’t bother to buy offsets. They will just make cheap and easy cuts instead. This is not the most ringing endorsement of a climate bill I’ve ever encountered, but it also makes me wonder: why does Romm think even the cheapest real opportunity can be cheaper than the paper reductions counterfeit offsets represent? As my counterexample to Romm’s own chosen example above shows, there is no real way to guarantee this type of offset will be real. Also, why does he not remember the experiences he has described many times over the years about how difficult it can be to persuade companies to adapt money saving technology? Doesn’t it seem likely that the same irrationality that leads companies to miss money-saving opportunities now will also lead them in many cases to buy new cheap counterfeit offsets over technology purchases that cost more upfront, even if those real reductions save money in the long run? Romm is right that many cheap ways to comply with a tougher bill exist, let alone this one. But the same market failures that lead companies to overlook profitable energy saving opportunities now will lead them choose offsets over real reductions.

A last argument: the extreme right makes some of the same criticisms. The problem with this is that the really far right is opposed to doing anything about climate change. If mainstream environmentalists decide to require that everyone to drink their own unfiltered urine as part of the fight against global warming, both the loony right, and non-insane environmentalists will oppose this. Sensible environmentalists will be against this, because drinking unprocessed urine is a bad idea. Loony rightists will oppose this because it is not their idea. (If Rush Limbaugh advocates urine drinking, much of the far right will respond “mmm mmm good”.) But the loony right and sensible environmentalists are not forming a block. It just happens that the mainstream has decided to do something so nuts that people from very different parts of the political spectrum notice that it makes no sense. And if the Daily Mail opposes forcing people to drink their own unfiltered urine, it does not automatically become a good idea. I know that many who argue for offsets are deadly serious. But sometimes I can’t help but wonder if offset support is not some elaborate hoax, and offset supporters are just taking the piss.

References

Carbon trading: a carbon tax, blindfolded and handcuffed, with its shoelaces tied together. Grist, December 11, 2006 By Gar Lipow

Offsets are still counterfeit carbon credits: Clapping louder; Zcom; Gar Lipow, June 1, 2009.

Simon Bullock, Mike Childs, Tom Picken; A dangerous distraction:Why offsetting is failing the climate and people: the evidence. Friends of the Earth (England, Wales and Northern Ireland) June-2-2009

Madhusree Mukerjee; Is a Popular Carbon-Offset Method Just a Lot of Hot Air? A popular carbon-offset scheme may do little to cut emissions; Scientific American; June 2009.

Papua New Guinea and carbon trading: Money grows on trees. Irregular carbon credits cause upheaval in the government of Papua New Guinea. The Economist (economist.com), Jun 6th 2009.

Joe Romm; How I learned to stop worrying and love Waxman-Markey, Part 2: In praise of domestic offsets; Climate Progress. May 12, 2009.

Nadene Ghouri; The great carbon credit con: Why are we paying the Third World to poison its environment?; The Daily Mail; June 1 2009