Doubts about the validity of carbon offsets

A just-released report from Greenpeace seems to confirm the suspicions of many that the concept of carbon offsets is too complex and contains too many potential loopholes to be an effective tool for mitigating climate change. For many, red flags shot up when it became clear that corporations were all too eager to enter into carbon offset schemes. It was an easy way for them to put on a public 'caring' face when in fact they were creating all sorts of escape hatches.

The moral of this story? Keep it simple. What's really needed are a carbon tax and increased support for renewable energy technologies. (GW)

Forest Offsets Scam Exposed, Not a Strategy to Mitigate Climate Change

Breakthrough Institute
October 16, 2009

Serious doubts about the efficacy of carbon offsets projects to produce real, verifiable emissions reductions have been validated by a Greenpeace report, released this week, that exposes a prominent sub-national forest offset project as a "carbon scam."

The Noel Kempff Climate Action Project (NKCAP) has been underway in Bolivia since 1997 thanks to a coalition that involves the Bolivian government, concerned environmentalists and sponsorship from oil major BP and U.S. utilities American Electric Power and PacifiCorp. Originally designed to protect a 6,000 square mile section of the Bolivian rainforest while simultaneously allowing its sponsors to offset carbon emissions, the project was supposed to be a win-win-win for the rainforest, climate change advocates, and private utilities.

But according to the Greenpeace report, entitled Carbon Scam: Noel Kempff Climate Action Project and the Push for Sub-national Forest Offsets, the original goal to avoid emitting 55 million metric tons of carbon has not been met. The project had to recalculate its estimates, concluding it will prevent just 5.8 million metric tons from entering the atmosphere - an order of magnitude less. Furthermore, Greenpeace uncovered evidence that the project sponsors - AEP, BP and PacifiCorp - misreported the project's efficacy to the EPA, telling the agency it kept 7.4 million tons from entering the atmosphere between 1997 and 2009.

Recent Washington Post coverage of the report points out that regardless of intentions, the Greenpeace findings add further support to doubts about the validity of carbon offsets:

The mix of pragmatism and idealism -- providing powerful financial incentives to encourage influential companies and poor countries to work together to slow global warming -- shows the complexity of a much-heralded approach that Democratic lawmakers and international negotiators are trying to write into law.

As the Post suggests, the report has critical implications for the pending House-passed climate and energy bill that is awaiting Senate consideration, as well as forest conservation efforts in general.

At their core, offsets projects are a cacophony of too many combined interests vying for attention, which precludes actual, measurable, efficacious action to limit carbon emissions, preserve forests, or create opportunities for sustainable economic development. On one hand, there are those intent on preventing deforestation and degradation for the sake of biodiversity, as well as those concerned with the associated carbon emissions that result from such destructive practices. On the other hand, there are the citizens of developing countries who illegally deforest and degrade their indigenous rainforests in order to make a living and who will not be motivated to stop without significant social and economic reform on the part of their national governments.

Finally, there are large corporations and firms who want a cost-effective way to offset their carbon emissions without actually cleaning up their business practices. As AEP chief executive, Michael G. Morris' response to the Greenpeace report makes clear, these companies are primarily concerned with their own bottom line, not the fate of rainforests, developing countries, or climate change:

"When Greenpeace says the only reason American Electric Power wants to do this is because it doesn't want to shut down its coal plants, my answer is, 'You bet, because our coal plants serve our customers very cost-effectively."

Thus, there are three major implications of such projects for U.S. and international climate policy, particularly in developing nations. First, forest offsets project are difficult to count and monitor accurately thus restricting the ability to be certain the carbon emissions are actually being reduced. In terms of the NKCAP project alone, Greenpeace found that leakage from the project - the portion of logging that is displaced and simply occurs elsewhere as a result of protecting a particular section of forest - was estimated to be as high 42-60% in just the area near the project site. According to the report, other locales were not monitored for leakage at all, meaning that potentially millions of tons of carbon emissions have gone unaccounted for and that the project sponsors have not been offsetting their emissions at all. This problem is inherent to forest offset or preservation projects: while a particular piece of land may be preserved, without fundamentally changing demand for forestry products or offering local economic reforms that provide alternatives to logging, deforestation simply migrates to other forests, and there's basically no way to guarantee any net reduction in deforestation.

Second, the offsets provisions in both House and Senate versions of the bill will allow firms to rely heavily on carbon offsets and continue with business-as-usual activities while remaining within the confines of the greenhouse gas emission "cap" - even if that is only true on paper. So, not only is it almost impossible to tell whether additional carbon is being offset, but firms delay or avoid implementing more efficient practices and investing in cleaner, more innovative technologies. In actuality, offsets are illogical because they support an "either/or" approach to climate change mitigation, not a "both/and" approach - one in which we work towards a clean energy future by transforming the global energy system to low-carbon technologies, with developed economies taking the lead, and protect and strengthen natural carbon sinks. Both steps are critical to mitigating climate change, and the pursuit of forest offsets should not delay the transition to a cleaner energy system.

Third, the fundamental problems inherent in sub-national forest offsets projects like NKCAP have implications for policy directed towards assisting developing nations. While rainforest degradation and deforestation is a serious concern, efforts aimed at protecting tropical forests from deforestation must be carried out alongside modernization efforts in developing nations. Instead of imposing additional limits on nations whose citizens are struggling for survival and who will not realize the benefits of conservation efforts, rich nations must provide direct assistance to help developing nations pursue sustainable economic development and modernization plans. The results of these sustainable development efforts will not be calculated in precise terms or lend themselves to the use of offsets and other accounting tricks, but the real progress towards both greater economic wellbeing and stronger systems of forest preservation will be far more tangible than an offsets-driven forest strategy.

In sum, the complexity of deforestation and degradation of forests makes carbon offset projects an approach to climate change mitigation that is entirely too indirect to succeed. The Greenpeace report concludes with a call for negotiators at climate talks in Copenhagen to set up a global fund of $40 billion per year to protect tropical forests, with large contributions flowing as a result of auctioned emissions allowances, however this only addresses the offsets-related portion of the problem. It does not address the fundamentally flawed environmental approach that emphasizes conservation and limits to the development of already poor countries, an effort that is misguided and - evidently - not working. In addition to directly funding the protection of tropical rainforests, we must also embrace the challenges of global development by helping developing nations grow strong economies that are fueled by low or zero-carbon sources of power, are highly energy efficient, and offer their citizens means of making a living instead of degrading their indigenous tropical forests in order to survive.

Climate change is a global problem that affects developed and developing countries, alike. If developed nations aspire to mitigate climate change and enjoy the rewards of a clean energy future, they cannot do so at the expense of developing nations. In order to protect tropical rainforests and other critical carbon sinks, the richest countries must ensure that all nations have the resources to improve their quality of life through the development of robust, clean energy economies.