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Understanding carbon offsets

External Reference/Copyright
Issue date: 
June 2, 2009
Publisher Name: 
The Guardian
John Vidal, environment editor
Author e-Mail: 
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Common talking points(TP)  and replies(R)

TP) Cap-and-trade will be too expensive if we don’t do offsets. And then we need a higher cap!

R) Counterfeit carbon credits are just a back door way to raise the cap. It is prioritizing the number printed in the law over actual emission reductions.

TP) Offsets aren’t counterfeit credits. Offsets rock!

R) Offsets are inherently counterfeit. An offset compares the results of a project against what a consultant guesses would have happened if it had not occurred. The higher the guess (the “business as usual scenario” or BAU), the higher the profit an offset project makes.  Because offsets substitute for government issued credits, they serve as permits to emit.  To the extent the BAU scenario is too high, (to the extent the consultant overestimates what emissions would have been without the offset), the offset is counterfeit an increases emissions compared to doing the project. International rivers has documents how most existing offsets (both approved and in the pipeline) under Kyoto are doubtful. For example, credits are granted for hydro power world wide, in spite of the fact that hydro power is something likely to be built anyway.  Hydro power is valuable. It can be used for baseload, peaking or load following. Depending on turbine design, in some cases it can be combined with super-capacitors to provide spinning reserve.

TP) Waxman-Markey offsets are different. WM offsets must be existing, additional and permanent!

R) Saying it does not make it happen.  Additionality is still based on a guess. What is worse, that guess is still made by consultant hired by the offset project. Regulators only review the consultants estimate, just as they do in CDM.

TP) We shouldn’t worry about offsets. There won’t be that many of them anyway.

R) Waxman-Markey offers lots of ways to create new offset. The argument that there won’t be many new offsets depends on the assumption that a consultant based system won’t find ways to get bogus ones past reviewers.

TP) We need offsets for forestry and agriculture.

R) If we could measure agriculture and forestry precisely and accurately enough to serve as more or less exact counter-balances to lumps of coal, we could include them in cap-and-trade (or levy a carbon tax on land use emissions).  Living ecosystems constantly breathe and absorb carbon. So even with precise, accurate continuous measurement that would limit the precision and accuracy with which we could measure change. Because we would have to use some sort of estimate to decide how to average data and over what period to create a baseline, and over what period and by what formula to average multiple increases and decreases to measure changes.  But measurement is NOT that precise or accurate. We can use satellite data, which is indicative, but not at all precise or accurate on a per forested or farmed area basis. We can use direct soil measurements such as Laser-Induced Breakdown Spectroscopy (LIBS). Note that even with such advanced technology, the samples themselves measure carbon within an area at a particular point in time with between 3% and 14% accuracy, depending on various factors including how many samples are taken from a given area. But since they are not taken continuously, they are applied as corrections to remote sensing. If we are lucky we end up with total accuracy over the course of the year for the area measured as a whole of 10% to 25%. Note that actual changes in soil carbon may vary by less than the 3% which is the bottom range of accuracy for a one-day result. Given the greater inaccuracy over the course of a year, it seems likely that on a year-to-year basis it is possible for carbon measurement to get the sign wrong, let along the quantity change.

TP) Sob, you don’t care about the rainforests and the topsoil, sob. Sniffle, without offset credits what oh what is left?

R) Note the hidden assumption here, that solving global warming equals cap-and-trade (or if you are a DFH a carbon tax). If it is priceless, it is hopeless. But of course measuring soil and biomass carbon even with a 25% accuracy is quite good if you move beyond cap-and-trade to actually worrying about emissions. We know how to preserve soil and biomass carbon.  Build rather than destroy soil. Disturb soil (and especially roots) as little as possible - consistent with other good soil management practices. Practice biodiversity rather than planting just one or a few crops.  Use water efficiently. Minimize runoff. Use organic or ultra-low input agriculture. And as reinforcement, to make sure all this is working, 25% accurate measure will be quite useful. Establish a rough baseline over the course of years. Take measurements four times a year, year after year. The results won’t give you good enough numbers to trade for lumps of coal, but they will be good enough to tell you every few years or so whether your soil conservation practices are working. And they will be good enough to tell you whether they are working (or failing) by a lot or a little.  You can build standard based regulations on that level of measurement. For that matter you can take some of the money used for current agricultural subsidies, and use it to provide positive incentives based on that type of measurement. Its good enough for a lot approaches, just not good enough for carbon trading.

TP) Are you saying offsets can never ever do any good?

R) Oh no, they can accomplish quite a lot. They make profits for large corporations and revenue for governments and consultants. They provide employment for public and private jugglers of red tape. They let politicians make weak climate bills look stronger than they really are.  They help build self-esteem among mainstream environmentalists.  They just don’t lower greenhouse gas emissions or help solve the climate crisis. 



Glen Hurowitz, Understanding Offsets, Grist, 31-May-2009

International Rivers, Rip-Offsets: The Failure of The Kyoto Protocol’s Clean Development Mechanism,  November 2008

David A. Cremers, Michael H. Ebinger, David D. Breshears, Pat J. Unkefer, Susan A. Kammerdiener, Monty J. Ferris, Kathryn M. Catlett and Joel R. Brown; Measuring Total Soil Carbon with Laser-Induced Breakdown Spectroscopy (LIBS) ;Journal of Environmental Quality; pp 2202-2206;Vol 30; Nov-Dec 2001


Understanding offsets

As the struggle to pass the Waxman-Markey climate-energy bill showed, there is a certain price any political system is willing to bear for climate action. In China, that price is low. In the United States, it is medium. And in Europe, it is relatively high.

But in every system, there exist two primary ways to reduce the costs of climate legislation to align it with that politically-determined price. One is by weakening the pollution reduction targets – something which provides zero benefit to the climate. The other is by including offsets – making it possible for emitters to get credit for low-cost pollution reduction activities like tropical forest conservation and energy efficiency investments.

Offsets have come under fire from critics who wish all of our organizing and effort had produced a stronger bill. But those critics are aiming their fire in the wrong direction. The inclusion of offsets was critical to getting the cost of the bill to a level at which a majority of the members of the Energy and Commerce committee could support it – without excessively lowering the targets. If the offsets had been eliminated or diminished, the pollution reduction targets would have been weakened much further in order to get the cost of the legislation down to the price the majority would support.

Indeed, we can estimate about how much those all-important targets would have been lowered: according to the EPA analysis (pdf) of the original Waxman-Markey discussion draft, the international offsets alone lowered the cost of the bill by about half. Take out those offsets, and the targets would have been made drastically lower to get the majority support the bill needed. As a result, the bill would have fallen far, far short of what we need to do to avoid climate catastrophe.

For my fellow political science nerds lovers, I’ve written an equation to express this phenomenon below:

The Law of Offsets

C = T / P

Where C = the cost of climate legislation a given political system will bear

T = Strength of pollution reduction targets

P = Price of pollution reductions

Excluding offsets also would have meant excluding major sources of global warming pollution like deforestation (20 percent of climate pollution, more than all the world’s cars, trucks, and planes combined) and agriculture (which, with offsets and other changes, has the potential to sequester almost 40 percent of global emissions).

Of course, it’s essential that offsets, like other kinds of pollution reductions, be real – and the Waxman-Markey legislation did a good job of ensuring they are. In addition to establishing a rigorous scientific board to evaluate any proposed offsets, the bill also includes an essential requirement: in order for any offsets to receive credit, they must have already taken place. In other words, you can’t get credit for a plan to offset emissions, but only for verified emission reductions that have already occurred.

In addition, there are a variety of very strict requirements to ensure, for instance, that indigenous and forest-dependent people benefit from tropical forest conservation offsets (indeed, if a country doesn’t meet the bill’s standards for protection of indigenous people, they could be entirely shut out of the program) and that domestic reforestation activities use only native species and protect biodiversity. There are a number of other safeguards and protections you can read about in Part D of the bill.

Of course, there are not an infinite number of real offsets out there. Indeed, the EPA analysis of the Waxman-Markey draft suggested that there may only be several hundred million tons a year of legitimate domestic offsets. As valuable as offsets can be, it’s essential that we maintain their integrity by sticking to the high standards in the bill.

A final point: the use of offsets shouldn’t be conceived of as some kind of necessary concession.  They should be used in any climate legislation (or international agreement), no matter how strong, to make it even stronger. In essence, lowering the price of pollution reductions means more reductions are possible while staying within the politically achievable price.

Even if a political system will bear a relatively high cost for pollution reduction (as in Europe), you can still achieve even more pollution reductions through the use of low-cost measures like offsets. To sum up, in the words of climate economist Kenneth Chomitz, “cheapness is a virtue.”


UK carbon offset schemes 'failing to reduce emissions

June, 2nd 2009: Expansion of carbon offsetting and clean development mechanism is locking developing nations into a high-carbon path, report warns

Britain is the world centre of a multibillion dollar "carbon offset" industry which is failing to lower global greenhouse gas emissions, a major report from Friends of the Earth claimed today.

The authors urged governments meeting this week in Bonn for UN climate change talks to drop plans to expand offsetting schemes, which allow rich countries to invest in projects that reduce emissions in poor countries as an alternative to more expensive emission reductions in their own countries.

Offsetting is set to expand enormously if the 192 governments meeting in Bonn allow forests, nuclear power and other sources of "clean energy" to count towards emissions reductions as part of a UN climate treaty expected to be agreed in Copenhagen this December..

The problem, said the report, is that offset schemes are delivering much lower greenhouse gas cuts than the science says are needed to avoid catstrophic climate change. Offsetting supports the idea that the cuts can be made in either rich or in poor countries " ... when it is clear that action is needed in both," said the report. "Offsets are a dangerous distraction ... It is almost impossible to prove that offsetting projects would not have happened without the offset finance. Nor is it possible to calculate accurately how much carbon a project is saving," it added.

Offsetting has been promoted heavily by the UK government in Europe and the UN as a painless way of reducing global emissions. The idea has mushroomed in the last five years with the rapid growth of the UN's clean development mechanism (CDM) which attracts investment money to poorer countries in new projects. These are expected to deliver more than half of the EU's planned carbon reductions to 2020.

"The clean development mechanism is supposed to be a way of making the same level of carbon cuts as would otherwise happen, but more cost effectively. At best it shifts a cut in a developed country to one in a developing one. In practice, it does not even do this," said Andy Atkins, executive director of Friends of the Earth UK.

Moreover, said the report, the CDM is locking in poor countries to a high-carbon path, with some big CDM projects approved for even major fossil fuel power stations. "A large part of CDM revenues are subsidising carbon intensive industries or projects building fossil fuel power stations."

Two previous analyses of the CDM suggested that companies routinely abuse the UN-backed offsetting scheme, wasting billions of pounds.

The UK government has already used offsetting as a way to justify high carbon investments in major projects like the expansion of Heathrow, it said. "Offsetting makes it far more likely that developed countries will continue on a high-carbon path, choosing to buy cheap permits rather than invest in low-carbon infrastructure," said the report's authors.

Nearly 30% of the world's 2,500 CDM projects originate in London, although not all the projects offset UK emissions.

If you want to read further, have a look here...


Extpub | by Dr. Radut