Thursday, May 03, 2007

Good Offsets and Bad Offsets

It is becoming increasingly evident that a variety of prominent media outlets, with views on climate change that range from deep skeptic to true believer, are broadly unconvinced of the merits of consumer-level greenhouse gas emissions offsets. The latest shots across this nascent sector's bow were fired by the New York Times and the Financial Times, joining earlier articles from the NYT and Newsweek. Because of the absence of a common ideology, I have to conclude that journalists are finding their way to this position with the help of experts who have an ax to grind against the concept and its practitioners. The exception to this is those who have turned up genuine cases of fraud and deceptive practices. In any case, the debate must leave consumers with serious doubts about the benefit of spending good money to reduce their climate footprint this way.

First, let me state that I have no dog in this fight. Although I've periodically mentioned a particular marketer of offsets, TerraPass, my only interest in their business is as a satisfied customer. With regard to offsets in general, all I have at stake is my sincere--and I believe well-informed--conviction that they create a useful means for harvesting some inexpensive first steps toward dealing with climate change, which I regard as a very serious problem.

Objections to the practice seem to fall into three main categories:
  • Offsets are illusory, providing no meaningful reduction in actual emissions, and thus have no impact on climate change.
  • Offsets make it easier for consumers to ignore and perpetuate the real emissions that result from their actions and choices.
  • The sector is new and unregulated, so you can't tell if you are paying a fair price for offsets, or if your money is going into a black hole, buying emissions reductions that would happen anyway or funding a clever scam.
I have the most sympathy for the third point, which is the main subject of the Financial Times' investigative report on offsets. Anyone buying emissions offsets needs to do enough research into the vendor's bona fides and track record to ensure that they are doing real things in the real world that are truly "additional" to the status quo. The second argument has some merit, too, but it ignores what I see as a likelier outcome: that as a consequence of their efforts in selling offsets, these marketers are raising consumers' awareness and providing measurement tools, the use of which will result in direct emissions reductions over and above any offset transactions.

As to the first argument, in many cases it reflects more on those making it than on the subject at hand. The comparison of offsets to papal indulgences, cited in the NY Times article, smacks of a puritanical strain of environmentalism that can't encompass any contribution from human ingenuity or market economics. For these folks, less is more, especially when it's your less. It must be galling to them that the exact equivalent of the annual CO2 output of a typical American car can be eliminated for about 1% of the cost of operating it, instead of through a draconian hike in fuel taxes or a radical vehicle redesign. And that's precisely why their arguments are misplaced: climate change is fundamentally different from any other environmental issue we've ever dealt with, and unless we approach it with minds that are open to novel solutions, our efforts to slow its progress will be much less effective than they might be. The world will be both poorer and warmer, if the critics of offsets have their way. Expect to hear a lot more about this issue in the years ahead.

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