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Buying carbon offsets may ease eco-guilt but not global warming

Voluntary carbon offsets are a 'Wild West' market ripe for fraud, exaggeration, and poorly run projects that probably do little to ease global warming.

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The US Government Accountability Office (GAO) in 2008 found “limited assurance of credibility” in voluntary offsets. A parliamentary inquiry in Britain in 2007 found a long list of flaws with offsets and concluded that they have “no overarching, enforceable standards.”

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Australia takes the most vigorous stand: Regulators pounced on one company for selling offsets for renewable energy it did not have, they charged another with false practices; and they are investigating allegations that natives in neighboring Papua New Guinea were deceived into surrendering carbon rights for what the natives call “sky money.”

“This is a sector that’s starting to rear a couple of ugly heads,” says Graeme Samuel, head of the Australia’s consumer protection agency.

Many voluntary carbon offsets are sold online through retailers with eco-friendly names. Others are sold as add-ons: Travel companies allow customers to “fly green,” UPS customers can offset the cost of shipping packages, Ford car buyers can drive “carbon neutral” for $29.95 per year, and the Harvard Law School urges students to buy offsets when they travel for job interviews.

Greenpeace and other environmental organizations have been reluctant to completely reject carbon offsets, which are supposed to help achieve goals they support: drawing down greenhouse-gas levels in the atmosphere, protecting forests, promoting alternative energy, and encouraging individual action on the global climate problem.

Groups such as The Nature Conservancy, the Environmental Defense Fund, and the Sierra Club argue that some offset projects are run by well-intentioned developers and succeed in their claims. And offset retailers say they do good work.

“There is a great opportunity here to be able to subsidize the reduction of emissions,” says Pete Davies, president of the retail operations of Terrapass, a San Francisco offset provider that helps farmers pay for methane capture systems. “We see farmers being able to do the right thing that otherwise they wouldn’t be able to do. We’re excited to be a part of that.”

The appeal of doing something to help the environment has fed the rapid growth of offset sales.

“I buy them every time I fly,” says Matt Durden, a Reston, Va., attorney who figures he spends about $30 on carbon offsets through Expedia when he and his wife travel. He did not ponder the purchases long; they seemed a cheap and easy way to help the environment, he says.

Governments worldwide are contemplating mandatory offset programs, like that established in Europe under the Kyoto agreement. A top United Nations climate official predicted in 2006 that buying and selling carbon pollution reductions would become a $100 billion-a-year market, potentially the world’s largest commodities market.

Voluntary purchases are a small part of that, but even a small slice of such a big pie has created a burgeoning industry of offset developers, wholesalers, retailers, and promoters; the GAO counted at least 600 players in the US alone in 2008.