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The Complexity of Carbon Neutrality

I have recently been put in charge of identifying carbon offset options for our firm’s carbon neutral initiative. Consequently, I have been doing a lot of research on carbon offsetting in my spare time.

The basic idea behind Carbon Offsetting is that it is difficult to completely reduce one’s carbon footprint down to zero. So, instead of continuing to beat down the path of diminishing marginal return (less bang for your extra effort), Offsetting allows you to pay someone else to reduce their emissions by however much you have left to go before you get to zero.

This is a very interesting idea, and one which is particularly applicable on a corporate setting where some footprint must always happen (i.e. consultants flying to the client site). But, of course, there are at least 5 issues that offset purchasers should consider:

  1. Verification – This is a major issue. As one can imagine this is very difficult to do. Nothing about Carbon Dioxide molecules makes it easily identifiable who “produced” which molecule (and if you’ve had a basic science class, the idea of the Carbon Cycle will also explain that such an idea is meaningless). There have been numerous cases of Carbon Offsets firms which have been revealed to be completely bogus. It’s thus important to find an offset provider who has been audited and accredited.
  2. Type – Not all methods of offsetting are created equal. Convincing a factory to produce less does not have the same “good” impact that encouraging a local utility company to switch to solar or wind power has. The former reduces emissions. The latter reduces emissions and leads to a reduction in emissions in the future. When possible, offsets should preference those projects with greater “good” impact.
  3. Locality – Despite China’s protests that clean emissions is too expensive for a developing country, the fact that the developing world lacks a good deal of the clean technology employed by richer countries makes emissions reduction in developing countries much cheaper than emissions reduction in the United States. Different offsetting firms will have different portfolios of projects in different sorts of countries with different types of emitters.
  4. “Originality” – This is something that I’m not sure how to define or even call, but it is quite possibly a major issue. An “original” (for lack of a better term) carbon offset is an offset where you pay someone to not emit. An “unoriginal” offset is one where you pay someone who was already going to reduce his emissions, even without the payment, to go through with reduction. This is an issue, as it is essentially a waste of money and effort to encourage someone who was already willing to reduce their carbon footprint — from a strictly utilitarian standpoint, that money should have gone to an oil company or factory which did not intend to. This is an issue that I’m not sure can be solved except through diligence, but it is an issue to consider, nevertheless.
  5. Moral – While there is a clear practicality benefit to Carbon Offsets, there is also a distinct moral issue. Harvard professor Michael Sandel noted that fees/offsets are morally distinct from outright bans and limits. The latter of which are a formal moral censure against the behavior (e.g. if you emit more than X tons of Carbon dioxide then you have done a moral wrong). The former of which is a light slap on the wrist (e.g. oh go ahead and emit X tons of Carbon dioxide, just pay a fee). I think in general one ought to side with practicality in an issue with as great of an impact as climate change, but there is a clear issue in that the availability of offsets is moral permission to pollute. One can imagine a “nightmare” scenario whereby a company actually increases its emissions and then purchases offsets which are not verified or well targeted or original.

Its all remarkably complex for what is a simple issue at its heart.

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