Are Carbon Offsets and Carbon Trading a Scam?

Will these schemes enrich a connected few and leave the planet worse off? Like many other things about climate change, yes, no, and it’s complicated.

These things have to be very transparent, or there is enormous potential for gaming the system or fraud. Given that enormous potential, you can bet that certain groups have been exerting pressure since the idea of carbon credits and offsets was first floated seriously. And they ain’t pushing for openness and fairness.

This is what set the European Union cap-and-trade system back years; the polluters wangled for so many carbon credits to be issued that their value plummeted. They then ceased to be much of an incentive to stop dumping carbon into the atmosphere.

In general, should polluters be allowed to pay for doing something that harms us all? Well, not really. Keep your waste to yourself. However, we have allowed large corporations to pollute in the past, to continue to do so, and our entire economy requires them to do so. How convenient for the polluters.

The next best thing is to tax them on their pollution, and combine that with a steadily reducing cap. Allowing them to trade under their cap creates double incentive for sellers to exaggerate their wares and buyers to underplay theirs. In fact, it creates pressure to collude to either delude the government (i.e. taxpayers) into paying something for nothing, or worse, to pay for pollution.

That said, something has to be done. Ideally, it would be carbon tax and cap, no trade, and with completely open oversight. Meaning, inspections are random and, if necessary, recorded live on YouTube. This makes it quite difficult for conscienceless polluters to hide or for collusion between inspector and polluter to occur.

Types of offsets or credits

Note that there is an underlying assumption that the offset or credit money actually goes to planting trees or green technology and so forth. It does not get siphoned off by crooks anywhere along the way.

Planting trees where something would grow anyway: Scam…maybe

• British Columbia, where I live, was once covered with rainforest, which we have cut almost all of at least once. In other words, logging was a major industry here, and is still substantial. So why should we get paid for planting trees? If we did nothing, forest would grow here.
• It’s complicated elsewhere. Many areas of the world are being clearcut, often illegally. Paying to prevent this or to reforest is worthwhile if the locals can then sustain that forest, and if the money actually goes to that. Deforestation is one of the largest contributors to global warming, and reforestation adds us a double bonus because it pulls carbon out of the atmosphere indefinitely.

Planting trees where none would grow: Depending upon the location, a very good idea

• It is in everyone’s interest that the deserts of the world don’t expand; planting trees along the edges is one of the best ways to stop desertification
• Greening the desert using methods that don’t rely on irrigation, like permaculture, is a also very valuable to locals and the rest of us.

Buying green technology for developing countries: Maybe ok

• If the polluter replaces a diesel generator with solar panels, and after subtracting the carbon footprint of the solar panels and their installation, this seems an excellent carbon credit/offset.
• Building new capacity where none existed…hmm. If green technology is not supplied, then will dirty technology be used? If the greentech is free, then of course that is what will be used. Carbon credits could be used to subsidise the greentech so that its price was comparable to dirtytech.

If the recipient is a very poor developing nation, they may not have money to industrialise in any way; they may be just scraping by. In that case, industrialisation is hardly the first priority, so their carbon credits should go to reforestation, organic farming techniques that can feed the nation securely (thus also eliminating fossil fuel inputs for fertilizer and pesticides, and pulling carbon out of the atmosphere), and carbon-sequestering housing. Build them up with the basics before putting up solar-powered shoe factories.

Unfortunately, Nike is much more interested in the cheap labour and lack of regulation for things like pollution in a third world country, than is Nike in paying locals to reclaim their land. The same goes for every large corporation. Monsanto is not in Africa and India to help farmers becomes independent; Monsanto is there to make money. Mining companies want ore; building up the community is not their concern. And so forth. So there will be a strong effort to game the system to allow paying carbon credits, essentially, to the payer. That is, Nike will buy credits or pay offsets to build themselves a factory in the Congo.

In summary, there are many ways and much incentive to game any system of carbon credits or offsets. Given the lack of transparency and level of honesty of our governments, gaming will certainly occur. At the same time, something must be done. We cannot continue dumping greenhouse gases into the atmosphere; we should have stopped some time ago, in fact, and are now facing a climate emergency.

Will the crisis be exploited by a connected few to enrich themselves on carbon booty? Likely. Will it also produce agreements that reduce carbon? Copenhagen did not, but almost everyone knows we must. The pressure is building. There will have to be caps, and almost certainly there are going to be trading and carbon taxes. Will these schemes all be scams? How much effort are you willing to invest to keep your government honest?