Orwellian Offsets
Stories of questionable "carbon offset" sales schemes keep blowing in. Here are articles on this hot global warming industry in The Sun, The Washington Post, The Kansas City Star and some discussion of the problems on businessGreenblog.
It's beginning to sound like multiple sightings of the emperor's lack of clothing. Perhaps one problem lies in the ambiguity of the term "carbon offset" itself -- which smells of an Orwellian pollution of the English language.
After all, when you buy "carbon offsets" that doesn't necessarily mean you're paying for a reduction in carbon dioxide pollution. You could be sending payments to a utility company that might (or might not) use your money to help build a wind turbine that might eventually generate a small amount of electricity -- as it continues to build more coal-fired power plants that spew even more greenhouse gases.
But that's the magic of the word "offset" -- it doesn't promise a reduction. It doesn't really promise anything. You are "setting" something "off" somewhere -- perhaps only setting off a migrane in customers trying to figure out where the hell their money is going.
As I reported in The Sun, a growing number of firms -- including the nonprofit group Carbonfund in Silver Spring, Md. -- are selling what is essentially an invisible balm to soothe people's feelings of guilt over global warming.
If you feel bad about the carbon dioxide generated by your driving and flying, you can type your credit card number in to the website of Carbonfund and for $99 get a "total carbon offset" for a whole year -- meaning a bumper sticker proclaiming that you are fighting global warming. In theory, that money could go to plant trees (which absorb carbon dioxide as they grow). But some critics argue that the real cause of deforestation is government land-use policies and development -- which won't be affected by a few hundred bucks donated to plant saplings.
Or the money you donate could go to buy "renewable energy certificates" (another wonderfully opaque term). These are essentially subsidies sent to utilies after they build wind turnbines to make the wind industry in general more profitable. But that doesn't mean the money is going to build new wind turbines. It could be going to build profit.
Or as David Fahrenthold and Steven Mufson of The Washington Post wrote in their Aug. 16 story: "The offset is among the most unusual of commodities. It's substance is intangible, the absence of something. Some pollution would have existed, somewhere, sometime, the seller says, and now it won't."
Businessgreenblog writes of the industry: "Several experts claim there are instances where the same carbon credit - representing a tonne of saved carbon - has been sold several times over. There are also concerns that calculations used to work out if a tonne of carbon has genuinely been saved are unreliable, with some critics suggesting credits are being sold on the basis of projects that may have gone ahead anyway."
Concerned? Here is a consumer's guide to buying carbon offsets.
Some carbon offset companies pay a fee to be able to display a "Green E" guarantee on their website -- which supposedly means that an independent firm has verified the offsets. But the Green E program told The Sun that they routinely let their clients display this logo for up to a year before they do any checking of anything -- and then it's only a paper check. Oh, and they don't actually certify carbon offsets -- just alternative energy projects. So the Green E is essentially a big green question mark.
A simple solution: stop calling them "carbon offsets." Instead, if you want to raise donations to plant trees, market yourself as a tree planting organization. If you want to build wind turbines, call yourself a wind power firm. That way, there would be no linguistic ambiguity -- and people could hold you responsible for doing exactly what you say you're going to do with their money.
Nobody would be left twisting in the wind.
I report on the environment and Chesapeake Bay. A native of West Virginia, I have focused mainly on Maryland's environment since moving here in 1983. Along the way, I've crewed aboard a skipjack in the bay, canoed under city streets up the Jones Fall from the Inner Harbor, and gone deep underground in a western Maryland coal mine. Recently, I have been covering the growth and development transforming the landscape. I love seafood, rambles in the country and good stories. I hope to share some here.
Comments
Thanks for the link to the study, Tom, and your good work on this important issue.
It's a little ironic that our study, which we did in order to help people understand and purchase good offsets, has been cited in so many stories about bad offsets. My fear, at this point, is that, while it’s clear that offsets are a good thing, and an absolute necessity if we are going to beat global warming, many people are being scared away from purchasing them even though they provoke and represent real reductions in greenhouse gas emissions.
Yes, there are folks out there who, for a variety of reasons, are selling things that are not offsets. Simply put, this means that a buyer cannot be sure that their purchase results in reductions in greenhouse gases that wouldn’t have happened regardless, whether they spent their money or not.
But there are also companies doing the hard work of putting the money from offset purchases to use directly in the development of new, brand new, not-otherwise-built wind turbines, solar arrays, methane generators and other renewable energy projects. These offsets are legitimate, because the reductions would NOT have happened if these renewable energy credits had not been sold. The sale of the credits is the reason the turbines exist, literally. Same for other generating sources – or other reductions in GHGs.
So, to the extent companies selling credits make it possible for a potential buyer to see where the credits are coming from, and how the project was built and paid for (how your money is/was used), they are doing a service that is not just important, but crucial to the offsets market – because only then can you be confident that they are offsets resulting from actual reductions you’ve caused by buying them.
So, first, reduce your energy use. Then, look for good offsets for the carbon that's left in your footprint, and buy them.
Posted by: Bill Burtis | September 12, 2007 2:50 PM
Green-e has been certifying and verifying renewable energy sold in retail markets for ten years. It is the most rigorous and respected consumer protection program for renewable energy in the country, with a transparent standard and hundreds of stakeholders who participate in setting and revising that standard. The renewable energy that Green-e certifies goes through a thorough verification process documenting that it has not been double counted and that the environmental benefits associated with the renewable energy are real, and positively contribute toward resolving environmental issues. All Green-e requirements and auditing protocols are publicly available and can be found at www.green-e.org. It is not, as Pelton calls it, “a green question mark,” but the symbol of real, verifiable progress in the fight against climate change.
No matter what you call them, carbon offset projects done right can result in real reductions in greenhouse gas emissions, period. In order to be successful in reducing greenhouse gases, we need to transform the electricity industry to a cleaner sector. Renewable energy and energy efficiency are the most effective tools we have today to accomplish this. Moreover, there are other types of projects such as methane capture and some kinds of forestry projects that also reduce greenhouse gases. Offsets represent the specific amount of greenhouse gas emissions that are reduced as a direct result of that particular project. They are a financial instrument just like a security that allows these benefits to be sold in the marketplace. These zero emission projects displace greenhouse gasses that would otherwise enter the atmosphere—and buying carbon offsets is a way for the market to help pay for projects that might not have been built without this financial incentive and market support.
But the industry is new and largely unregulated, which is why by the end of this year Green-e will begin certifying GHG offsets being sold in the retail market that meet a strict set of standards. Only offsets from projects that result in real, verifiable greenhouse gas reductions will be eligible for Green-e certification, and projects that would have been built anyway, or carbon credits that have already been accounted for, won’t. This new program will include the same rigorous verification requirements and protocol as Green-e has used so successfully over the past ten years.
Posted by: Jan Hamrin; President, CRS | September 12, 2007 8:18 PM
The science behind many of the GHG offset projects is questionable, and the ability to tie specific dollars donated to a specific ton of GHG offset is impossible to do. It is largely unregulated, and the vast amount of GHG offsets are not recorded or inventoried in any type of actual carbon registry. There is no comparability between offset projects, and the dollars invested.
As the voluntary market increases, the overall dollars invested grows, sooner or later attorneys are going to get involved. At that point the rules will be interpreted, and they will be interpreted by attorneys, CPA’s and outside experts; legal liability will be assigned. Carbon credits will be tied to specific dollars spent.
Once it becomes a legal liability issue, you will see a lot of science based organizations trying to distance themselves from the verification of a specific GHG offset amount.
Is an expert in a field such as forestry sequestration projects actually going to put his signature on a report that could end representing millions of dollars of value, and be willing to defend it in court? Professional liability insurance is not something these individuals are familiar with. They will in the future!
It is the consistency and comparability standards that are lacking. Third party verification procedures and compliance testing are still not a requirement of non regulated projects.
Green- E is to be commended for attempting to bring some type of accounting protocols to the system. They are one of many GHG standards setting organizations that are trying to bring at least some order to a chaotic system. They are defining their own verification and accounting standards. As long as these companies are only “verifying” feel good type projects they will continue to operate. If they are asked to verify projects that have ended up in a civil law suit, or projects that are attempting to meet specific state or federal regulations, or a cap and trade type credit, they themselves are going to ask for outside rules.
Right now it is safe to assume that any company buying an offset credit is recording it as a public relations expense and is not attempting to recognize it as an asset on the balance sheet. Creating a financial asset on a company balance sheet is going to require a whole lot more rules than we have in place today.
Posted by: Chris Moran CPA | September 29, 2007 11:41 AM