Carbon Offsets Scam

Article excerpt


While much media attention has been paid to cap-and-trade schemes as a way to prevent global warming, there is a second path to global warming salvation - carbon offsets. Indeed, the House Energy and Environment Subcommittee hosted hearings recently on how to use carbon offsets to reduce the costs of reducing greenhouse gas emissions - it promises to be more smoke and mirrors. Under a carbon offset scheme, a country (or company) can meet its emission targets by paying others to reduce their emissions. To facilitate this process, the United Nations created the Clean Development Mechanism (CDM), an international market where buyers who need to offset their emissions can purchase carbon credits from developing countries - effectively paying for emission reductions by others.

Typical emissions reductions include replacing old plant and equipment, adopting new agricultural practices, or sequestering carbon dioxide underground or in trees. The CDM converts proposed emissions reductions into tradable Certified Emission Reductions (CER) credits. The credits are issued only for emissions reductions that would not have occurred otherwise.

Unfortunately, proving that emissions cuts are reductions that would not have occurred absent the offset payments is proving difficult. For example, India's largest exporter of Basmati rice, KRBL, was set to receive several hundred thousand dollars' worth of CDM credits a year for installing a $5 million generator to produce electricity from rice husks, a renewable energy source. Though the company claimed the biomass generator would not have been installed without funding from the credits, the senior manager at the plant admitted to the British Broadcasting Corp. that KRBL would have done the project anyway.

In addition, research by the nongovernmental advocacy group International Rivers has found that almost three-quarters of CDM registered projects were already complete at the time of approval and thus did not need carbon credits to be built. And a report by Lambert Schneider of Germany's Institute for Applied Ecology found that 40 percent of CDM projects registered by 2007 represented unlikely or at least questionable emissions cuts. David Victor, the head of Stanford University's Energy and Sustainable Development Program, found that between a third and two-thirds of CDM offsets do not represent actual emissions cuts.

The voluntary offset market in the United States faces the same problem as CDM projects. …