How carbon offsets are making us take our eye off the ball

Carbon offsets, like emission trading schemes, are sold as a way of reducing emissions. Small offsets can be purchased from commercial organisations (like banks and airlines) not known for their embrace of a low carbon green economy) or from businesses created especially to sell carbon offsets. However most offsets are operated by international companies under the various incentive and regulatory requirements of the various carbon trading schemes and the United Nations’ Clean Development Mechanism, which together provides not only a requirement to reduce greenhouse gas but incentives for businesses so to do.

The underlying thinking behind offsets is that it all right to emit carbon, provided that you offset it in another way.

Most carbon offset projects involve planting trees, building factories to burn up certain greenhouse gases created in the course of industrial production or even build hydro electric dams. These are important projects and it is claimed that these offset projects will result in less greenhouse gases being released to the atmosphere than would otherwise be the case.

Energy companies release a great deal of carbon dioxide into the atmosphere from the generation of power. The quickest and simplest way to reduce carbon dioxide from energy companies is to require them to invest in renewables, rather than build new fossil fuel generating plants. This would significantly reduce their carbon emissions, but this will be expensive leading to higher energy prices that their customers will have to bear.

Although the energy companies do make investments in renewables the amounts invested are very small and are usually financed partly by the tax payer or the energy consumer, with in the case of the United Kingdom direct grants from the state and the Renewables Obligation which adds around £11 a year to the consumers energy bill and which sum will rise around £15 to it in the next six or so years.

Using the system of carbon offsets European energy companies, for example, invest in projects to destroy nitrous oxide in Egypt and South Korea. Under EU rules they will be entitled to “offset” 25% of their own carbon dioxide emissions by claiming the reductions created by investment in projects outside the European Union. The United Kingdom would like energy companies to wholly offset their emissions using savings outside the United Kingdom.

Using the United Nations Clean Development Mechanism the energy companies can get carbon credits for projects which comprise destroying greenhouse gases in various manufacturing processes. It is important to destroy greenhouse gas emitted in manufacturing, but these kind of projects should be mandated separately, and not confused with the need for nations to reduce their domestic greenhouse gas emissions.

In other words my fear is that offsets would simply reinforce fossil fuel dependency in the highly developed nations, which are responsible for most of the greenhouse gas emissions. We ought to be setting the developed nations on the path of developing a significant renewable energy industry; if they want to profit from carbon offsets elsewhere, fine, but not at the cost of keeping their own emissions higher than they should be.

At the moment it seems to me that offsets, along with carbon trading, operate as a disincentive for energy companies to invest in the more expensive renewable industry, which Gordon Brown claimed he wants to encourage and bring millions of new jobs to the United Kingdom.

We can and should do both; we should invest in projects outside our own country that reduce greenhouse gas emissions in those countries. That should be a separate “target” or requirement from a nation’s own moral requirement to reduce its greenhouse gas emissions at home.