Carbon Offsets: Buying Your Way Out of Responsibility

By Dara Colwell, AlterNet. Posted April 11, 2007.

Presidential hopefuls do it, celebrities do it, educated CEOs and even Swedes do it -- it's carbon offsets, the market-based solution to global warming that's currently grabbing column inches and investment bankers' lips. A booming multimillion-dollar market that's expected to more than quadruple within the next three years, the industry has garnered as much criticism as feel-good hype. Its detractors, mainly in Europe, remain unconvinced the system actually works, claiming its impact is unclear at best, and that it creates loopholes that lets polluters do business as usual.

"It's buying your way out of responsibility," says Kevin Smith, a researcher with Carbon Trade Watch, a project of the Transnational Institute, an academic think tank based in Amsterdam, Netherlands. Smith, who also co-authored "The Carbon Neutral Myth," believes that free-market environmentalism is a gimmick that appeals to an increasingly carbon-conscious public. "It's a technological quick fix that's deeply flawed and used more as a means to absolve climate sins rather than tackle the actual issue," he says.

Carbon offset credits is essentially a market that helps consumers or corporations reduce or neutralize the impact of their net carbon dioxide emissions -- from flights, commuting, hefty utility bills or shipping online purchases -- through cost-effective alternatives. The system is based on carbon emissions trading, aimed at governments, industries and corporations that cannot meet emission targets set by the Kyoto Protocol, and in turn, buy or trade credit from those that beat theirs. In both cases, the polluter pays.

Since Kyoto came into force in 2005, the nascent, and potentially highly lucrative, emissions market has steadily increased. In America, which has refused to sign on to the Kyoto Protocol, much growth has been geared instead towards the voluntary offsets market. One such example is the Chicago Climate Exchange, the world's first greenhouse gas reduction trading system, which was established in 2003.

More recently, forerunners in the consumer market such as TerraPass, Native Energy and DriveNeutral have become high-profile, thanks to Al Gore, the Oscars and celebrity spin. Europe also boasts its share of offset companies. Germany's AtmosFair, Oxford-based Climate Care and the Dutch GreenSeat have joined the ranks of the carbon revolution.

Much of the criticism aimed at the voluntary market is what opponents claim is its seductive sales pitch: Just buy back your pollution and click, and the provider takes care of the rest, whether it's buying emission trading credits, planting a tree -- meant to absorb carbon from the atmosphere and by far the most popular, if controversial offset method -- or investing in renewable energy sources.

But there's a huge, immediate glitch: the current offsets market, an industry that has mushroomed only in the last several years, is unregulated and no universal carbon-offset standard exists. As carbon is an intangible commodity, companies can sell what they want, claiming its carbon neutral and "carbon calculators" and costs fluctuate widely, making what consumers are buying unclear.

"It's selling hot air and susceptible to fraud," says Oscar Reyes, Transnational Institute's communications officer, who cautions that all trading schemes are "ineffective as a means to stimulate cuts in carbon emissions."

"There is a lot of scope for 'cowboys' to cash in, and the supposed climate benefits are impossible to measure," says Smith, noting that offsets don't actually remove the tons of carbon dioxide currently in the atmosphere, and trying to guess how it will involves so many variables that working it out is almost impossible.

While Smith believes many people genuinely buy offsets out of concern for climate change, he sees businesses using them in a more cynical and calculating way. "It gives them a sophisticated veneer of environmental sensitivity they don't deserve," he says, referring to British Airways, one of many airlines that now encourage customers to buy carbon offsets for their flights.

See more stories tagged with: global warming, climate change, al gore, carbon offsets, carbon emissions

Dara Colwell is a freelance writer based in Amsterdam.

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