Lynne Kiesling
Yesterday’s New York Times had an article about voluntary purchases of carbon offsets and their efficacy. Importantly, this article points out that private options exist for those who want to negate the carbon effects of their behavior.
The couple highlighted in the story used Climate Care. Other organizations that provide carbon offset purchase opportunities are listed in the right margin of this NRDC story on carbon offsetting. You can even give carbon offsets as gifts!
See also this Wikipedia entry on carbon offsets for more background. Both the NYT article and this Guardian article from last year talk about transparency problems and the difficulty of monitoring the offsetting activities in some areas and with some organizations.
The NYT article contains a logical slipperiness that it’s important to recognize:
Yet another perverse effect, say critics, is that some types of carbon-offset initiatives may actually slow the changes aimed at coping with global warming by prolonging consumers’ dependence on oil, coal and gas, and encouraging them to take more short-haul flights and drive bigger cars than they would otherwise have done.
Climate Care, for example, has linked up with Land Rover, a maker of sport utility vehicles, to help the company offset its own emissions. As part of a promotional program, Climate Care also helps purchasers of new Land Rovers offset their first 45,000 miles of driving.
In that way, the program may actually help sell “larger cars with higher emissions” and thus contribute more to global warming, according to Mary Taylor, a campaigner with the energy and climate team at Friends of the Earth.
Ummm … if we are talking about static efficiency, the only way Ms. Taylor’s statement can be true is if the offset is calculated and/or implemented inaccurately. Carbon offset transactions provide a voluntary, contractual way for the two parties involved (and the broker organization, e.g. Climate Care) to pursue the things they want to pursue. If I do indeed buy a larger car, but I buy a corresponding offset, then there’s no perverse effect. And the magnitude of the dynamic perverse effect requires a complicated counterfactual argument: at the margin, what size of car would I have bought if I had not bought a carbon offset, and to what extent does that purchase delay the implementation of non-fossil-fuel technologies? That analysis requires careful market analysis of the substitute brands that compete with Land Rover. It’s very likely that consumers would have bought a large vehicle anyway, because of their planned uses of the vehicle, and at the margin the offset induces them to choose Land Rover over a different, similarly-sized vehicle.
Here’s another piece of poor logic in the story, a version of the broken window fallacy:
Climate Care, the company that Mr. Grover used to offset his and his girlfriend’s carbon footprint, also undertook a project to finance the distribution of tens of thousands of low-energy fluorescent lights in South African townships.
Shortly after the program got under way, however, a state energy utility distributed millions of similar bulbs free. That meant that the “so-called reductions that Climate Care is selling to its customers arguably would have happened anyway,” said Larry Lohmann of the Corner House, a campaign group for environmental and social justice based in Britain, citing evidence from investigators in South Africa.
Grrrr. If private parties are willing and able to pay for the private, voluntary distribution of CFBs, then that is an expenditure that the South African government would not have to undertake, thus freeing those tax revenues to be spent in some other way that would benefit South Africans. So why is the private action the one that Mr. Lohmann considers superfluous? In reality, it’s probably the case that the light bulb purchase had been budgeted, the producer had a friend in the government, and there was some lobbying and rent seeking involved. But the underlying point holds: if private actors are willing to pay for so-called public goods and the government does it anyway, that’s called crowding out, and it’s an inefficient, distortionary act.
Why do I support the development of carbon offset transactions and their brokers? Because it’s a Coase-style private, voluntary, transaction-based approach that enables private parties to achieve mutually beneficial outcomes.