How I learned to stop worrying and love Waxman-Markey, Part 2: In praise of domestic offsets
The two biggest concerns about domestic offsets in climate legislation — the possibility they will be riddled with fraud and/or that they will overwhelm the “genuine” emissions reductions — are I think, largely unwarranted. The fact that Waxman-Markey potentially allows a substantial amount of domestic offsets is no reason whatsoever oppose it.
I would not like them here or there. I would not like them anywhere. And, yes, I have a 2-year-old daughter who likes Dr. Seuss.
But, seriously, there are two fundamental reasons I urge people not to buy offsets:
- The market is unregulated, so you have no idea what you are buying. And most every time the media — or I — look into a specific offset, it turns out to be a project that would’ve happened anyway or, worse, had already been up and running for years. In short, your money is unlikely to be bringing about new emissions reductions. Thus you aren’t “offsetting” anything.
- This country has no cap on emissions. Therefore, offsets don’t add up to anything. They don’t assuredly take you off the business-as-usual emissions path. It is wonderful to promote new wind projects — although the vast majority of wind-related offsets probably don’t do that (see “Schendler Part II: Good RECs vs. Bad RECs“) — but absent a cap on emissions, that project doesn’t necessarily actually lead to any net emissions reductions.
If, however, we passed comprehensive energy and climate legislation like Waxman-Markey, we would immediately solve both of those problems. Yes, on paper, Waxman-Markey allows polluters to purchase some 1 billion tons of domestic offsets (see bill summary here), which is nearly 15% of total U.S. emissions. And that seems like it would vitiate the near-term target of a 20% emissions cut in 2020.
But the EPA, in its preliminary modeling of the bill (here), finds that only a small fraction of that billion tons of domestic offsets would in fact ever be used, as this figure shows:
Note how few offsets come from actual direct emissions of greenhouse gases. That’s because 85% of all emissions are directly regulated by 2020 under Waxman-Markey. And many if not most of the emissions that aren’t directly regulated aren’t regulated because they are too small and/or disbursed to easily regulate, which is precisely why they are challenging offset candidates.
That said, CH4 and N2O reductions at, say, a medium-sized wastewater utility plant are an easy to identify and certify offset, as my wife, who works in the industry, always reminds me. After all, wastewater utilities aren’t going anywhere (except the ones forced to move by sea level rise). All that is required is for EPA to come up with a rigorous protocol for wastewater utility offsets, pre-certifying major contractors capable of constructing those offset projects, and then having some independent auditing firms confirm that project was put in place.
Such reductions/offsets are more than just genuine reductions in U.S. greenhouse gas emissions. Remember, Waxman-Markey requires that you purchase five such offsets for every four tons of allowances you need. So such offsets projects are, in fact an eminently reasonable way to address the GHGs that are not directly regulated.
And yes, I am a tad worried about all of the forestry offsets from 2030 on. The EPA will need to come up with a rigorous protocol for such projects. But the reason I’m not more worried is that it is hard to quickly generate hundreds of millions of metric tons of offsets from forestry, so EPA will have time to get this right. Also, it is not terribly hard to use satellite-based monitoring to determine if, on net, the United States is adding trees or cutting them down. Indeed, that is precisely why we need to move away from project-based forest management to national-accounting-based forest management — you don’t want to pay someone to plant 1000 acres in one place and then have them cut down 2000 acres in some other place. And after all, if the United Nations can adopt that approach for poorer countries, with its Reducing Emissions from Deforestation in Developing countries (REDD) effort, then so the United States can certainly do so for its own forest management and afforestation efforts.
I will like offsets here and there — as long as they are regulated by the EPA, and we have a (shrinking) emissions cap.
Bottom line: The two biggest concerns about domestic offsets — the possibility they will be riddled with fraud and/or that they overwhelm the “genuine” emissions reductions — are I think, largely unwarranted. The fact that Waxman-Markey potentially allows a substantial amount of domestic offsets is no reason whatsoever oppose it.