Carbon offsets: A small price to pay

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ROBERT H FRANK

05:55 AM Jun 05, 2009

They are intended to reduce the environmental impact of consumption. Travelling by plane, for example, causes carbon dioxide to be emitted into the atmosphere, so travellers can pay a specialist to offset those emissions some other way - perhaps by planting vegetation or installing renewable-energy technologies. It all sounds reasonable.

Yet carbon offsets have drawn sharp criticism, even ridicule. A British website called Cheat Neutral (www.cheatneutral.com) parodies the concept - by offering a service under which someone who wants to cheat on his partner can pay someone else who will refrain from committing an act of infidelity. The site's founders say they wanted to use humour to demonstrate why the market for carbon offsets is a moral travesty.

But the criticism is misguided. If our goal is to reduce carbon emissions as efficiently as possible, offsets make perfect economic sense.

Consider someone who wonders whether it's okay to eat foods grown far from home. A New Yorker may worry, for example, that the diesel fuel burned to ship California-grown tomatoes to him in winter will accelerate global warming.

But suppose he would be happy to pay US$10 ($14.40) more than the cost of shipping those tomatoes rather than eat locally-grown root vegetables nine months a year. That would buy more than enough carbon offsets to neutralise the greenhouse gases emitted by shipping the tomatoes. So it would be much better, for him and the planet, if he bought offsets and ate winter tomatoes.

Of course, carbon offsets alone won't eliminate global warming. People also need stronger incentives to take into account the environmental consequences of their actions.

President Barack Obama has proposed attacking the problem with a carbon cap-and-trade system. The government would first set a limit on annual carbon emissions, then auction emission permits to the highest bidders. Companies could still use processes or sell products that emit carbon, but only by first buying a permit for each unit of carbon released. If the government wanted to limit carbon emissions to 5 billion tonnes a year, for example, it would auction that many tonnes of annual carbon permits.

This approach was first used in the United States to address acid rain, when the Clean Air Act established a market for permits to emit sulfur dioxide. Compared with more traditional regulatory measures, the auction method substantially reduced the cost of achieving the law's air-quality target.

As people learn more about such an approach, they seem less likely to oppose it.

Although several environmental groups once bitterly opposed pollution permit auctions, they now endorse them enthusiastically.

A carbon cap-and-trade system is functionally similar to a carbon tax. Both approaches would raise the cost of activities that generate carbon dioxide emissions, giving people a powerful incentive to reduce their carbon footprints.

Carbon offsets are no substitute for the stronger incentives inherent in carbon taxes or cap-and-trade, but they can reinforce their effects. Both carbon taxes and permit auctions would also generate revenue that could be used to buy additional carbon offsets.

Dozens of companies, non-profit and for-profit, sell carbon offsets, and some critics question how their work can be verified. But with various certification programmes now in place - including the Gold Standard and Green-e Climate, to name two - there is no reason that fraud should be harder to curb in carbon-offset markets than in other domains.

At last count, Cheat Neutral, the British infidelity neutralisation website, said it had offset 65,768 cheats, and had recruited a roster of "9,002 faithful people ready to neutralize your misdemeanours." The website draws out the parallel this way: "When you cheat on your partner you add to the heartbreak, pain, and jealousy in the atmosphere". Cheat Neutral claims that its plan "neutralises the pain and unhappy emotion and leaves you with a clear conscience".

Actually, no.

Only you will know whether your conscience is clear, but it is certain that higher rates of marital fidelity in London do nothing to eliminate the anguish caused by straying spouses in Manchester. In contrast, one person's reduction in carbon dioxide emissions anywhere on the planet fully offsets anyone else's contribution to the total.

Carbon offsets, though much maligned, are an excellent idea. If you want to help reduce carbon emissions, consider buying some.

The New York Times

From TODAY, World – Friday, 05-Jun-2009; see the source article here.

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