Does This Mean We Should Give Up on Voluntary Carbon Offsets?

December 17, 2015, by Mark Trexler

Planet Money is a popular economics podcast from National Public Radio boasting 11.8 million listeners. It covers a wide range of topics, generally trying to personalize what can seem like complicated economic questions (e.g., the work of the Federal Reserve). It receives great reviews.

On Nov. 13, 2015, Planet Money did a podcast entitled “Money Trees,” tackling the topic of carbon offsets. NPR reporters, recently back from a trip to Brazil to report on deforestation, felt guilty about their flights and the resulting carbon emissions. They went to the Planet Money team and asked, “should we buy carbon offsets?”

In the podcast, reporters track down two people involved in the first carbon offset project, a forestry project initiated in 1988 in Guatemala to voluntarily offset carbon emissions at a coal-fired power plant being built in Connecticut. The podcast spends a lot of time on the history of the carbon offset concept, and explores the thinking behind the project in Guatemala.

The podcast falls short of a ringing endorsement of carbon offsets. In fact, the Planet Money hosts come across as rather ambivalent about offsets. Their thinking ultimately ends up going like this: 1) offsets are not that costly; 2) trees are good; and 3) buying offsets will make the reporters feel better. So the podcast concludes that the NPR reporters should spend the $50 it would take to offset their air travel.

Good, simple story, right? The brief history of the Guatemala project provided is accurate. But having worked on that 27 year old offset project myself, the Planet Money story gave me real pause. In simplifying the topic, the reporters omitted fundamental information that a practical discussion of offsets, especially one focused on economics, should have covered. Here is what Planet Money failed to mention:

There is often a fine line between providing “useful simplification” and contributing to “active misunderstanding” of a complicated topic. I would argue that the “Money Trees” podcast ignored that line. My suspicion is that the Planet Money team simplified the discussion down to the level they felt the audience could tolerate. That’s what I’m afraid of. If the “Money Trees” podcast episode represents the degree of complexity an NPR audience (which is undoubtedly highly educated) can understand, then we have a problem.

The reality is that in “commoditizing” the idea of voluntary carbon offsets we’ve incentivized a lot of smart people to try and “game” the system with “fake” offsets. And after 25 years of carbon offset experience we’ve learned how hard it is to distinguish between a “good” offset project that contributes to climate change mitigation, and a “fake” offset project that doesn’t. Imagine if there were no way to distinguish between real gold coins, and copper coins covered in gold leaf. Real gold coins would soon disappear from circulation. Voluntary carbon offsets face a similar challenge, even with efforts by reputable offset developers and brokers to implement “quality standards.” Poor quality offsets drive down offset prices and put enormous pressure on offset providers trying to take the high quality road. If consumers don’t understand that, it’s very hard to combat offsets’ “race to the bottom.”

Advising the public to buy carbon offsets simply because “it’s not that expensive,” and “it makes you feel good,” as opposed to “it makes a difference for climate change,” is not the message to send if we want do something about climate change and differentiate good actors and good projects in the carbon offset market. “Feel good” measures may be cheap and easy, but they don’t help with the actual problem, and can distract us from truly effective solutions.

27 years after the first voluntary carbon offset project, it makes me wonder whether it’s all worth the trouble. Regulated carbon offsets will no doubt be part of many policy efforts aimed at climate change, simply because of the economic efficiencies they can generate. But maybe the take-away of “Money Trees” is that we should give up on voluntary carbon offsets, and redirect those efforts in directions where message simplification doesn’t so quickly lead to active misunderstanding.

[This post was submitted by guest author, Dr. Mark C. Trexler, The Climatographers.]

3 responses to “Does This Mean We Should Give Up on Voluntary Carbon Offsets?”

  1. An excellent post Mark – I think you have hit the nail on the head in a number of areas. Both the Media and, sadly, some professional colleagues in the GHG space, are all to willing to ‘actively misunderstand’ both

    1) the role of offsetting as a mechanism – allowing people/organisations to take full responsibility for unavoidable emissions whilst they continue to make incremental internal reductions.

    2) the very real emission reductions contribution that some carbon finance makes on the ground.

    Just because either of these does not work/is not a viable solution in one case does not, of course, mean that we can deduce that ergo all such projects and/or offsetting in every situation is not a viable option.

    It is tempting sometimes to throw your hands up in the air in exasperation and go and do something that is more ‘accepted’… but you know what – there are plenty of people doing that already… and someone needs to continue to get the point across. This is not a ‘zero sum game’. The alternative to Corporates taking full responsibility for their residual emissions is not that they will magically become climate neutral, or even hit their science based targets, through internal emission reductions overnight. The reality is, that in many cases – even the leaders are likely to continue on an incremental internal reduction glide path which will be insufficient to combat climate change… and the lack of a real offset price or price on carbon in their business will mean that their emissions have no real cost signal within that business – retarding the urgency for change.

    At the project end – those vital funds which do find their way to quality offset projects will not only achieve real, verified emission reductions (usually verified to a much much higher level than internal reductions) but often deliver real measured impacts in health, adaptation, economic and gender empowerment.

    So don’t give up Mark – its always been the right thing to do, its still the right thing to do – now more than ever… we just need to get better at explaining ourselves…

    • Mark Trexler says:

      Edward, thanks for the comment. I do think it’s more than explaining ourselves better. There is now an entire industry in the form of voluntary Renewable Energy Certificates being sold as carbon offsets that contribute not at all to climate change mitigation objectives. And if only a fraction of the other carbon offsets being sold actually contribute to climate change mitigation, is it worth the trouble? I think we risk having carbon offsets increasingly viewed as simply a “philanthropic” contribution to an organization we “like.” That is not what carbon offsets were supposed to be!

      As you well know, however, I am not arguing against carbon offsets per se – having spent many years developing such projects. But if the “good guys” in this space are unable or unwilling to point out that the Emperor has no clothes for a substantial fraction of the voluntary offset market, who will?

  2. Nick Blyth says:

    Mark – thank you for a very helpful and thought provoking piece.
    One of the big challenges with offsets has of course been the big question around equivelance. This is implicit in the very name and for many this causes a real tension.
    Another angle though is how overly strong standards might be a barrier to the growing market.
    From years of wrestling with equivelance, permenance, additionality, perceived double counting, real double counting ex ante, ex poste etc etc — I have ended up thinking “if only we used the word compensate instead of offset”
    Dodgy offsets are a concern but do we spend too much on trying to evidence equivelance..? Could there be an alternative approach based on making valuabl compensation rather than attributing equivelance on a tonne for tonne basis?

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