Do carbon offsets live up to their promise?
Consumers purchase them to relieve greenhouse-gas guilt, but there's no easy way to keep offset companies accountable.
In 2006, "carbon neutral" became the New Oxford American Dictionary's word of the year, evidence not only of the "greening" of our culture, but of our language as well. As scientists predict another bout of record-setting temperatures this year, climate concerns may soon "green" our wallets as well. By all accounts, 2007 is poised to see the industry of carbon neutrality – so-called carbon offsetting – grow dramatically.Skip to next paragraph
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In theory, the idea is simple. The consumer pays a third party to remove a quantity of carbon (in the form of a greenhouse gas) equal to what he or she emits. But how voluntary carbon offsets actually work is unclear at best, and potentially fraudulent at worst, say experts.
The problem: No current certification or monitoring system has any teeth, and there is no easy way to confirm that offsetting companies are doing what they promise. Now, various organizations are scrambling to provide standards for what experts call a fragmented market with a product of drastically varying quality.
The first-ever ranking of carbon offsetters recently released by Clean Air-Cool Planet, a nonprofit in Portsmouth, N.H., graded 30 companies on a scale of 1 to 10; tellingly, three-quarters scored below 5. Critics, meanwhile, question whether the carbon market might be a dangerous distraction at a time when decisive action is needed to avert climate catastrophe.
"On the one hand, there is the potential benefit of educating people through offsets," says Dan Becker, director of Sierra Club's global warming program. "On the other hand, if people view offsets like papal indulgences that allow you to continue to pollute, then it's probably not a good idea."
Many companies have nonetheless moved to make carbon neutrality part of their 21st-century brand identity. Travelocity and Expedia now offer customers the option of offsetting carbon emissions associated with their trips for a few extra dollars. In 2005, "Syriana" became the first carbon-neutral movie. In 2006, "An Inconvenient Truth" followed suit to become the first such documentary. With the purchase of 170,000 tons of carbon offsets, HSBC declared itself the first-ever carbon-neutral bank. Other companies, including Google and Ben & Jerry's – not to mention musical groups such as the Dave Matthews Band – are moving toward, or have arrived at, various levels of carbon neutrality.
And that's just the beginning, say analysts. The volume of metric tons of carbon traded on the voluntary market doubled last year over 2005. It's widely expected to double again in 2007. Of 92 companies polled by The Conference Board, a nonprofit business research organization, three-quarters were actively computing their carbon footprint. While only 15 percent were currently trading on the voluntary carbon market, 40 percent were considering it. Carbon was the topic du jour in more than two-thirds of the corporate boardrooms polled.
Carbon markets fall into two broad categories:
1. The cap-and-trade system. Countries that have ratified the Kyoto Protocol, an amendment to the global treaty on climate change, participate in this system by setting a limit, or cap, on greenhouse-gas emissions. Those companies that emit less than their allotment receive credits that they can sell on carbon exchanges. Those that emit more must purchase credits in order to avoid financial penalties. (The voluntary Chicago Climate Exchange also operates this way.) Proponents of this system trust the innovative power of the free market to promote energy efficiency.
2. The voluntary carbon market. In the United States, the market for carbon offsets is voluntary, driven primarily by corporations seeking to enhance their brand identity or to familiarize themselves with what they consider to be an inevitability.
Many offsets sold on this market are what Ricardo Bayon, director of Ecosystem Marketplace, a San Francisco-based information provider on ecosystems services, calls "gourmet." Their value lies not in the compliance, but in the prestige of achieving carbon neutrality. At first glance, this type of offset appears more straightforward: A consumer pays for a carbon-removal service.
Dig a little deeper, however, and it gets more complicated. There are many ways to remove carbon from the air, each operating on a different time scale and all of them of different "quality." You can capture greenhouse gases by planting trees. You can also prevent greenhouse gas from entering the atmosphere by burning methane released from animal manure and landfills. (As a greenhouse gas, methane is 23 times more potent than CO2.) Or you can preempt its release by building alternative-energy sources such as wind- and solar-power devices.