So – people are familiar with carbon offsets right? Basically – the general idea is that all carbon dioxide emissions are equal – and it doesn’t matter if emissions come from New York or in Russia. While there are arguments to be made how that is a horrible way to view it – it’s largely the accepted view right now. So if I pollute when driving my car, but make sure someone else doesn’t pollute the same amount that otherwise would have – it all balances out right? Or as is commonly done in with popular carbon offset schemes – if I build a dirty coal-fired power plant, but pay someone else to plant some trees elsewhere that theoretically absorb the same amount of carbon – then it’s all hunky-dory. That’s the basic concept – though it gets a lot more complicated and questionable the moment you start asking questions.Somewhat related to carbon offsets, is emissions trading. Under the Kyoto Protocol’s Clean Development Mechanism (CDM), big Northern countries with Kyoto commitments are allowed to decide if it’s cheaper to reduce their own emissions, or invest in projects elsewhere (namely, developing nations) that would still reduce global emissions. While maybe this is nice in theory (less cost, and has the theoretical potential of helping developing nations build a clean-energy infrastructure), CDM projects have been marred in controversy over exaggerated reduction claims, double-counting of emissions reductions, and gross inflation of the costs involved.
Inspired (oddly enough) by Kyoto and the largely-failed European Emissions Trading System, there is a big push in the US for a cap-and-trade system around carbon emissions. While it’s not set in stone exactly how it will function – basically heavily-polluting companies will likely be given some sort of “carbon credits.” These credits they can either be used to keep on polluting, or if they can reduce their emissions, they can trade or sell the excess “credits” to another company so someone else can keep on polluting. Essentially, companies can decide if it is cheaper to reduce their emissions, or maintain business-as-usual and buy credits from other companies. The idea is that the overall levels of pollution can be lowered without a big economic burden – but what it really does is give corporations the “rights” to our atmosphere.
Making our air into a commodity (which corporations control) is expected to grow to a billion (or even trillion) dollar industry, so every company is lobbying hard to make sure they get a good piece of the pie. Who decides how many credits go to each company? Do we give credits just to big power companies, or chemical companies, or industrial manufacturers? Should companies that are the heaviest-polluters get more credits than companies that don’t pollute so much? Or should companies that have taken pro-active stances to reduce their emissions get extra credits because they are doing a better job? What about emissions from cars – who is responsible for that? Drivers who buy the gas? The gas station that sells the gas? The car company that made the gas-guzzler? The Senator who lowered fuel economy standards?
Not only are big polluters like power plants and automakers lining up in Washington DC to make sure they have friends in the right places, but timber companies are making sure they get in on the action. Since trees absorb carbon as part of their lifecycle, timber companies are arguing they should get credits for the emissions their trees (you know, the ones on land we gave to them that they clear-cut?) absorb, which they can then sell to polluters as offsets.
But wait – they aren’t just saying forests they own should get credits. They are trying to argue that something that USED to be a forest should also get carbon credits – since carbon will be safely stored inside the lumber for decades. They even say that the value of carbon stored in dead trees may be greater than living trees! So that means they want carbon credits for your house, Al Gore’s new book, Barry Bond’s baseball bat, and yes. Your sofa.
The logic follows – that if they simply log more (and leave some seeds behind after the clear-cut) they can just keep creating more and more carbon storage! The past couple million years haven’t done such a good job to balance carbon levels in the atmosphere, but thankfully we can trust timber companies to fix everything. And really, shouldn’t they get credit for all the carbon stored in every piece of wood they’ve logged for the past, oh, 200 years?
Giving carbon credits away to corporations is a recipe for disaster. Not only is the very principle of giving away our common resources (our atmosphere) to corporations wrong, but the potential for corruption and delayed action on climate change is overwhelming. Corporations shouldn’t be spending money on lawyers and lobbyists so they can make money trading carbon emissions credits – they need to be kicked into gear to actually reduce emissions.
It’s time that we stood our ground as activists, environmentalists, and people who simply care about our future. Global warming is real, it’s happening now, and fossil fuels are the biggest cause of it. Creative accounting, slick marketing, or token offerings will not get corporations off the hook. We have to stop using oil, keep coal in the ground, and keep our trees standing (not with cushions on them).
Carbon emissions trading could play out to be the biggest corporate give-away in our history. Just as we gave away our forests and land to timber, mining, and railroad companies – we are now posed to give away our climate to the very corporations responsible for its peril.
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Thanks for bringing this issue up. The debate on how we will address global warming is vitally important. Unfortunately I disagree with many of your points and will be posting a detailed response soon. However, I first wanted to express my appreciation for your work as I agree with the primary call: stop using oil, keep coal in the ground, and keep our trees standing. This is a solid argument and one I completely endorse. Hopefully we can get genuine debate rolling on some of the other details. Thanks again!
Since the very beginning of the idea of Carbon Trading has been attacked by social justice activists and by some environmentalists for discouraging the comprehensive structural changes needed to stop climate change, for being scientifically dubious, for exporting environmental problems onto communities without the political power to fight them, for being susceptible to ENRON-style market manipulation and accounting schemes, and a host of other concerns.
Despite this, the market in Carbon Trading has grown astronomically: $30 billion in Kyoto-regulated carbon trading took place in 2006 and the “voluntary market”, which includes individual and campus campaigns, has been growing steadily as well.
Now, even mainstream economic publications such as the Financial Times of London and the Economist are joining a growing consensus of voices is warning that Carbon Trading, and in particular the idea of offsetting carbon emissions, may be hurting, as opposed to helping efforts to ensure a safe climate future.
Most advocates of Carbon Trading, as well as most of the “Carbon Neutral” campaigns that have been springing up around campuses around the US and Canada, include the use of “Carbon Offsets” as part of their overall strategy. (Offests are one type of Carbon Trading)
With new campuses going Carbon Neutral everyday, and with new climate legislation and international treaty negotiations likely to propose “cap and trade” schemes that will dwarf Kyoto by several orders of magnitude, it’s critical that activists for climate justice understand the deadly serious, devils-in-the-details, business of carbon trading.
I strongly suggest everyone learn about and understand the issues around Carbon Trading before speaking in favor of it. And yes that includes even really green “offset” projects like solar, which still share some of the same problems: solar should be built for it’s own right, not to neutralize and therefore *allow* a coal plant to continue standing.
I suggest checking out the links Matt listed above…(which were actually mislinked – see if you can fix it matt!) as well as the definitive book on the problems of carbon trading, “Carbon Trading: A Critical Conversation on Climate Change, Privatisation and Power” by Larry Lohmann (editor).
The ENTIRE BOOK is online here: http://www.thecornerhouse.org.uk/summary.shtml?x=544225
Thanks so much for posting this. I agree that carbon offsetting is a terrible idea and not going to stop dangerous climate change. That was my initial reaction when I first started to learn about the idea in 2005, but I wanted to know more before I gave a full verdict. So I spent three months of my life working at a corporate law firm doing carbon trading under one of the top carbon trading lawyers in the world (he is actually a really lovely guy), and learning more than I ever imagined there was to know about Kyoto’s CDM, the EU ETS, the NSWGGAS and more. After doing this and learning more my opposition to carbon trading was even more entrenched. I will try to post something more comprehensive in a week or so.
Remember there are two types of carbon trading systems – simple cap and trade, and offset-credit systems. Kyoto’s CDM is a hybrid scheme. I’d be interested to know which one(s) you support, Matt, and why.
Thanks for the insightful aricle. I’m actually writing my psychology thesis on carbon credits. I’ve yet to see anything done on this subject in my field so it’s sort of exciting to be working on something “new” (especially for an undergrad).
As an allowance for carbon consumption, there are some interesting psychological ramifications. One environmentalist that has been featured on this blog before, George Monbiot, compared carbon offsets to the practice of purchasing Indulgences during the Middle Ages, where people with money could purchase forgiveness for their sins (instead of actually repenting and not sinning anymore). Essentially, he beleives that carbon offsets are an excuse for business as usual with regards to pollution.
However, it may be too much to say carbon offsets are only bad.
NPR discussed the issue here: ‘Carbon Offset’ Business Takes Root’
http://www.npr.org/templates/story/story.php?storyId=6548098
The biggest problem would be if offsets lulled people into a false sense of security. At the same time, it seems equally plausible that buying offsets could arouse people’s appetite for action and lead them to bigger, more ambitious PEBs.
Some studies have shown that post-offset behavior includes:
· Installation of CFLs
· Lowering thermostats in winter
· More organic purchases
· Reduced meat consumption
· Driving more conservatively
· Planning a different car purchase
(note: correlation does not equal causation though, so these ‘results’ may be problematic)
Also, from Grist: http://gristmill.grist.org/story/2007/4/28/23366/3312
One user from the website Grist.com noted that:
“I think offsets are problematic, but I know from experience and training in behavior change that offsets are unlikely to cause the response cited–rather, as others have noted, doing something (even just making a choice to have offsets) INCREASES the likelihood that you will then do more.
Many environmentalists have a faulty model of human behavior change in their heads–they think that you have to change peoples’ whole orientation or else they won’t do anything.
That’s not accurate. Humans are self-justifying and self-reinforcing–that means that if you can get people do take just a single step —and THEN REINFORCE THAT STEP and encourage others — you can get an amazing amount of change accomplished without ever really forcing a wrenching change onto anyone or triggering their “dig in the heels” response.”
Global warming will not be solved by carbon offsets alone. It’s important to realize that they are not a magic solve-all. “At best, offsets are a piece of the carbon-reducing lifestyle puzzle; at worst, they are a placebo, enabling pollution-creating behavior while not fully doing the job they are intended”
Before I started seeing some of the criticisms of carbon trading schemes, I thought it sounded like a good idea. But now I’ve become skeptical. They do seem to be among the quick techno-fixes which appear to do little more than distract from the things we really need to do. It seems corporations like carbon offset schemes…That alone should make one skeptical, I think.
Although at the same time, I have seen a lot of criticism of carbon offsets from neocons as well. They care nothing about being carbon neutral, but use the problematic nature of offsets as means to mock progressives. It seemed like every other website on the subject I found was conservative backlash.
One last concern:
http://www.sundancechannel.com/blogs/treehugger/390201631
There is also a lack of governmental oversight or standardization for the process. Just about anyone can start a “carbon offset” program. Too, “one company might offer to offset a ton of CO2 for $8 and another for $12 — what’s the difference, and, perhaps more importantly, where does your money go?”
Sorry for the long post! I’ve spent way too much time on this.
Let me first say I support Cap and Trade, but believe there are many ways to do it wrong. I also support certain types of offsets, but there are many ways to do this wrong as well. The CDM Gold Standard is the best way to approach offsets and has tangible benefits.
Unfortunately, I disagree with a large portion of this article and must challenge certain assumptions.
Getting people to admit global warming is a problem was the easy part, now we have to decide how to deal with it. Though united in a common goal, I doubt there will be a consensus among our youth movement as the lines of “good” and “bad” have been completely blurred. Below I’ll pose a different side to the argument.
I’ll go in chronological order:
“The general idea is that all carbon dioxide emissions are equal – and it doesn’t matter if emissions come from New York or in Russia. While there are arguments to be made how that is a horrible way to view it – it’s largely the accepted view right now.”
-I’m curious why you say this may be a horrible way to view it. There are certainly bad offset projects, but (in terms of chemistry) the concept of offsets is sound. It doesn’t matter where CO2 is emitted. Provided additionality and sustainability are satisfied, offsets can make a legitimate difference.
“CDM projects have been marred in controversy over exaggerated reduction claims, double-counting of emissions reductions, and gross inflation of the costs involved.”
-I admit, there are huge problems with CDM, but “marred in controversy” may be a bit strong. The sometimes severe, the cases of failure have been isolated and are being addressed. I favor a restructuring of CDM, but not a complete removal. Right now there aren’t any other practical alternatives.
“Inspired (oddly enough) by Kyoto and the largely-failed European Emissions Trading System, there is a big push in the US for a cap-and-trade system around carbon emissions.”
-The European Trading System, though not wildly successful, is far from a failure. The primary problem was an over allocation of permits, which is already being fixed. This doesn’t suggest cap and trade doesn’t work, only that we need to do it right. The US can learn from these mistakes and make sure we don’t repeat them. Also, much of the inspiration has actually come from the wildly successful US cap and trade system put on SO2. The program goal was achieved more quickly and at less cost than estimated, with near 100% compliance.
“Basically heavily-polluting companies will likely be given some sort of “carbon credits.” These credits they can either be used to keep on polluting, or if they can reduce their emissions, they can trade or sell the excess “credits” to another company so someone else can keep on polluting.”
-This section is what got me going, I complete disagree with your analysis. The key aspect you miss is the cap. Companies aren’t permitted to keep polluting; they are given allocations – which allow for a portion of their emissions. Companies will be lowering pollution due to cap, while the trade in “cap and trade” spurs the innovation. Cap and trade is command and control, but with technological incentives. Companies can either pollute less, or pollute even less and trade or sell the excess credits. In this way, companies are rewarded for going above and beyond – not true in a command and control situation. The company that buys them could, as you say, keep polluting; but the polluter pays. The cap ensures that the overall carbon emissions in the US will be going down. The youth movement needs to focus its energy on making sure the cap is both strict and worthwhile.
“The idea is that the overall levels of pollution can be lowered without a big economic burden – but what it really does is give corporations the “rights” to our atmosphere.”
-The rights to our atmosphere would go to the government, which would then decide how to distribute them to corporations. Right now, polluters control 110% of the atmosphere, cap and trade would put limits on how much they can pollute. Right now, the atmosphere is suffering from a “tragedy of the commons,” allocating it is the only way to ensure an environmental benefit.
“Making our air into a commodity (which corporations control)… every company is lobbying hard to make sure they get a good piece of the pie.”
-Again, the government will control it, not corporations (who control it right now). Check out the organization USCAP, a group of businesses and environmental organizations which have come together to support a cap and trade system. The people who are traditionally thought of as lobbyists are now working with environmental organizations toward a common goal. This is an amazing opportunity for enemies to join as allies.
“Who decides how many credits go to each company… Should companies that are the heaviest-polluters get more credits… Or should companies that have taken pro-active stances to reduce their emissions get extra credits… What about emissions from cars”
-This is exactly what we need to discuss. We need to focus out energy on making sure we do cap and trade right, because there are many ways to do it wrong. But again, it is the only politically viable option which will ensure a positive environmental outcome. Specifically addressing you question on cars, other standards can work in tandem with a cap and trade system, such as strong CAFÉ (fuel economy) or Renewable Energy Standards.
“Timber companies are arguing they should get credits for the emissions their trees absorb… But wait – they aren’t just saying forests they own should get credits. They are trying to argue that something that USED to be a forest should also get carbon credits…And really, shouldn’t they get credit for all the carbon stored in every piece of wood they’ve logged for the past, oh, 200 years?”
-This has more to do with offsets than it does with cap and trade. I wouldn’t support such efforts, and cap and trade doesn’t need to either. Such claims would not satisfy additionality, which is taken very seriously in policy negotiations and by the leading offset providers. The CDM gold standard (cdmgoldstandard.org), is the best way to make sure offsets are doing correctly. Even if lumber companies manage to argue they satisfy additionality, we need to look at the non-climate environmental repercussions. To solve global warming by causing other environmental catastrophes is hypocritical – we can solve this crisis without undue harm. This is why I oppose investment in the US nuclear and coal industry (though, I don’t oppose related research projects). Regarding offsets, we need to first change our lifestyle and energy infrastructure to the extent possible. Offsets can be a part of the solution, if well regulated, but certainly not the solution.
“Giving carbon credits away to corporations is a recipe for disaster. Not only is the very principle of giving away our common resources (our atmosphere) to corporations wrong, but the potential for corruption and delayed action on climate change is overwhelming… [Corporations] need to be kicked into gear to actually reduce emissions.”
-Corporatios already own our atmosphere, we don’t. The atmosphere is being poisoned with CO2 for the very reason that nobody owns it – there is nobody to tell polluters not to. Cap and trade can ensure a limit is put on CO2 pollution, but only if done properly. All that concerns me is a strict cap on emissions, if companies can make money from it that is fine – so long as we get our cap. There are few ways we would ever see a cap otherwise, certainly not one supported by business.
A quick note on why I support Cap and Trade (in case my above comments didn’t make it apparent)
There are two primary reasons:
1. It has a strict environmental outcome. By placing a cap on emissions, it makes sure we meet our goals. Other measures (tax, voluntary) can’t guarantee an outcome in the same way. What the youth movement needs to focus on is making sure the cap is strong. There is the danger that a safety valve (a max economic cost) will undermine the cap, we can’t let this happen. Cap and trade is the best way we can realistically attain our lofty, but necessary, goal of 80% by 2050.
2. It has political viability. This is often forgotten, but is of incredible importance. We can talk for years about how great it would be if we could have something better, but if it isn’t politically viable, it is a waste of time and energy. We need to focus our energy on something that is conceivable and has support. From there, we can make sure it is worthwhile. For the first time in forever, big business and environmental groups are on the same side. There is an amazing opportunity to change the dynamic in environmentalism. Business and environmentalists may have different motives, but when offered an olive branch, we should take it.
So in conclusion, support cap and trade and lobby your representatives to make sure it is done right.
Wow Matt Moairorana (And everyone) – thanks for the thoughtful responses. I think it’s great to delve into some of these deeper questions – and I encourage folks to get educated on these issues. The book Brian linked to is fabulous – I highly encourage folks to read it. I wanted to respond to some of Matt M.’s points quickly.
Matt M said:
“I’m curious why you say this may be a horrible way to view it. There are certainly bad offset projects, but (in terms of chemistry) the concept of offsets is sound. It doesn’t matter where CO2 is emitted. Provided additionality and sustainability are satisfied, offsets can make a legitimate difference.”
The biggest problem with viewing offsets as being equal under chemistry terms is that it ignores the much more important social, political, and economic conditions. Tree plantations may chemical absorb carbon – but do they displace indigenous communities, wreck havoc on surrounding ecosystems, encourage the delay of source-based reductions (which is really what we need), and discourage the much larger structural changes necesary to make serious emissions reductions? In theory – offsets could work. In the socio-economic-political world we live in – the growing consensus is that they are not effective. Proving additionality is complex at best – how we you safely say something wouldn’t have happened otherwise? Is the future pre-determined?
Matt M said:
“The European Trading System, though not wildly successful, is far from a failure. The primary problem was an over allocation of permits, which is already being fixed. This doesn’t suggest cap and trade doesn’t work, only that we need to do it right. The US can learn from these mistakes and make sure we don’t repeat them. Also, much of the inspiration has actually come from the wildly successful US cap and trade system put on SO2. The program goal was achieved more quickly and at less cost than estimated, with near 100% compliance.
I think the fact that the EU-ETS overallocated permits (2 years in a row, and it’s arguable that they have made anything more than modest improvements) – illustrates the points. Emissions INCREASED once they implemented caps! Lobbying and corruption is far more rampant in the US – and we can all agree our government has been a huge laggard (even that is being generous) in making substantive efforts to combat climate change. The big voices pushing for cap-and-trade are Big Oil and Big Coal/utility companies (See the US Climate Action Partnership) – and do we really believe they will promote anything that will hurt their interests? No! They know full well how to make sure that cap-and-trade allocations will be generously doled out to them, and we’ll see the same results as in ETS, though I suspect worse.
The S02 system worked in many senses – but because it was a much smaller quantity, with much fewer emitters, and not the backbone of our entire economy. The fact that similar attempts with C02 have not worked (RECLAIM, EU-ETS
Matt M said:
“This section is what got me going, I complete disagree with your analysis. The key aspect you miss is the cap. Companies aren’t permitted to keep polluting; they are given allocations – which allow for a portion of their emissions. Companies will be lowering pollution due to cap, while the trade in “cap and trade” spurs the innovation. Cap and trade is command and control, but with technological incentives. Companies can either pollute less, or pollute even less and trade or sell the excess credits. In this way, companies are rewarded for going above and beyond – not true in a command and control situation. The company that buys them could, as you say, keep polluting; but the polluter pays. The cap ensures that the overall carbon emissions in the US will be going down. The youth movement needs to focus its energy on making sure the cap is both strict and worthwhile.”
Distribution of allowances is the key issue here – and past examples have shown that the the biggest polluters get the most allowances. It is strongly argued that companies delay emissions reductions today so that when cap/trade programs are enacted – they will have larger historical emissions and thus get larger allowances. And companies will only lower their pollution if the caps are set low enough – which failed to happen in Europe (emissions actually increased under cap-and-trade). Companies are only going to reduce emissions if it’s cheaper to do so than buy credits from an incredibly volatile market, or pay the fines for failing to meet caps (which in the US, likely won’t be severe), so innovation is not necesarily spurred. And since the cost of buying credits is on the market is volatile – companies are discouraged from many substantial infrastructure changes since they can’t do long-term cost analysis of their options. They are “safer” making small tweaks year-to-year since the price of credits can vary dramatically – in the Europe system prices have ranged from about EU $10 to EU $40 – quite a difference.
Matt M said:
-Again, the government will control it (our atmosphere), not corporations (who control it right now). Check out the organization USCAP, a group of businesses and environmental organizations which have come together to support a cap and trade system. The people who are traditionally thought of as lobbyists are now working with environmental organizations toward a common goal. This is an amazing opportunity for enemies to join as allies.
I think it’s incredibly dangerous for us to believe that corporate interests do not fully control our government. USCAP is very much a lobbying group – even if a few environmental/business-friendly NGO’s are a part of it. I think having NRDC on board will make a better system – but there were many NGO’s working with ETS and it still turned out to be inneffective.
Matt M said:
-Corporatios already own our atmosphere, we don’t. The atmosphere is being poisoned with CO2 for the very reason that nobody owns it – there is nobody to tell polluters not to. Cap and trade can ensure a limit is put on CO2 pollution, but only if done properly. All that concerns me is a strict cap on emissions, if companies can make money from it that is fine – so long as we get our cap. There are few ways we would ever see a cap otherwise, certainly not one supported by business.
Totally, respectively, disagree. Currently, legal ownership of our atmosphere is nebulous. We all dump into it – but by establishing the legal precedent of WHO controls that dumping is a big deal. Do corporations have control it (with caps that they help negotiatite to ensure they don’t suffer economically), or do people own it (and WE decide access, caps, controls, and costs to use it).
I still believe a carbon-tax, upstream (at the source of fossil fuel extraction ideally) is the best way to address this problem. This encourages keeping carbon in the ground and confronts the source of the problem (literally!). Cap/Trade is a nightmare to administer, creating an entire industry of commodity trading and corporate-led “verification” schemes, rife with room for corruption, dishonesty, and creative accounting. The Financial Times, Newsweek, Nature Magazine, The Guardian UK and many more have all recognized cap/trade as being hugely problematic.
This is a much larger discussion (that I’d love to have) – but typing more in a blog isn’t the best way to do it.
Thanks for raising excellent points everyone!
-Matt Leonard
Matt L,
I agree practically 100% with Matt M’s analysis of why a cap-and-trade system, if we focus on getting it done right, is our best – and probably only – shot at getting the US economy on a path to a low emissions future.
Your analysis of the problems with the EU ETS (over allocation), the threat of huge corporate givaways (giving allowances to polluters for free) and the unfortunate reality of business’s strong grasp on America’s political apparatus are all worthwhile considerations when we work towards policy solutions to the climate crisis. For me though, these simply point towards the importance of getting the job done right and avoiding mistakes. Luckily we can see some of the major pitfalls that we may run into (you’ve pointed out most of them!), and can therefore tailor our advocacy and grassroots efforts to push policymakers to avoid these pitfalls and ensuring we get the job done right.
But I fundamentally disagree with your assertions that cap-and-trade is a terrible idea.
It’s not the only public policy solution we will need (it should be coupled with standards, incentives and investments in clean technology development), it can certainly be implemented poorly (as any policy can) and it won’t be easy to get enacted (nothing worthwhile is), but I challenge you to put forward a better, politically viable alternative, keeping in mind how pressing this problem is: it is my assertion (feel free to disagree) that if we don’t have comprehensive climate change legislation in place and aren’t leading an international Post-Kyoto effort to curb global emissions by the end of the next president’s term in office (2012), we’re basically toast! After that, we’ll likely have locked into too much warming, crossed too many tipping points and allowed our emissions to grow large enough to make changing course largely impossible without collapsing the entire economy; we can’t turn this ship of ours on a dime… implementing climate solutions and building a sustainable energy future takes time.
Carbon taxes may be another viable option, and you put them forward as an alternative to cap and trade, as many have. Policy-wise, they work alright: they are easier to administer than cap and trade but they also lack the certainty that we’ll hit a reduction target. A cap and auction scheme is my preferred approach. In a cap and auction you set mandatory reduction targets (1990 levels by 2020, 80% below by 2050) and let the market decide the cost of carbon allowances necessary to achieve that target through an auction of allowances (generating revenue for the government and avoiding giveaways to polluters). In a carbon tax, you set a price and let the market decide the emissions reductions to achieve under that price. Setting the right price is arguably just as hard (and probably harder) than setting the right cap/target, and that means we’ll likely have to fiddle with the price of the tax going forward, undoing much of the price certainty that is one of the major benefits of a carbon tax.
But politically speaking, a carbon tax is probably dead in the water. Political winds change, and the next president, if a sufficiently effective leader, could dramatically redefine what is politically possible. But we can’t count on that, and right now, cap and trade (or cap and auction, which I consider a kind of cap and trade) is simply the only politically viable path forward.
In my estimation, both cap and trade (with auction) and carbon taxes can get the job done well enough. I’m not interested in throwing out a viable policy that gets the job done in the name of the perfect, when we desperately need something that works to pass and pretty soon (ideally yesterday, by 2009-2012 at the latest).
I would also challenge you to keep a clear distinction between mandatory cap and trade schemes, voluntary retail carbon purchases and international offsets funding schemes (like the CDM). These are all inter-related markets, but each has it’s peculiarities and differences and can’t be lumped together into one category, “carbon offsets.” They can all operate independently of one another or in some combination.
I am actively engaged in a number of venues in which stakeholders are working to establish strong standards for voluntary carbon offsets and the marketing of offset products. Stakeholders are very well aware of the problems with the existing market and are working to solve them and develop strong industry best practices. It’s also worth noting that it is a very young market (only a few years old), and as expected, it is going through some growing pains as we try to work out clear standards, industry best practices and consumer protection guarantees. But we’re getting there, and I object to your assertion that voluntary carbon markets “are not effective.” Voluntary green power purchases in the Pacific Northwest (which I focus on in my work and although they are not explicitly carbon offset purchases, they are motivated by concerns about climate change) are currently supporting the equivalent of a 250 MW wind farm, roughly 1/6th of all installed wind power capacity in the four northwest states. That’s not an insignificant amount (on a regional scale), and voluntary purchases have helped drive forward the industry in the region. The same is true throughout the world.
And while some CDM projects have certainly been targets for corruption, the vast majority are driving forward clean energy investments in the developing world that would not have happened otherwise. I’ve got to ask you which scenario would you prefer: thousands of good offset projects are funded worldwide with a few bad apples or only a few completely untarnished projects are funded? In which scenario does the atmosphere win?
You bring up a lot of good points about things we’ve got to work on and avoid going forward in both the voluntary and mandatory carbon markets. These are all pretty valid critiques (and ones that stakeholders are clearly aware of). We’re also trying to solve them and I simply disagree that we should throw out both carbon offsets and cap and trade policies because of these problems (some existing and others potential).
Cheers,
Jesse