Yves here. Calling carbon offset a “distraction” is charitable. Scam would be a better word. There’s no assurance that the offset activity was actually performed or done as well as promised, or alternatively, not sold many many times. But Chowshury and Sundaram offer a more basic critique: even if carbon offset programs operate as promised, they do not deliver good outcomes.
By Anis Chowdhury, Adjunct Professor at Western Sydney University and University of New South Wales (Australia), who held senior United Nations positions in New York and Bangkok and Jomo Kwame Sundaram, a former economics professor, who was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. Originally published at Jomo Kwame Sundaram’s website
Carbon offset markets allow the rich to emit as financial intermediaries profit. By fostering the fiction that others can be paid to cut greenhouse gases (GHGs) instead, it undermines efforts to do so.
Committing to achieve ‘net-zero’ carbon emissions has become a major climate change policy goal. But most climate scientists agree the target is dangerously misleading. Ostensibly promoting decarbonization, it actually allows carbon emissions to continue rising.
On 28 January 2021, two High-Level Climate Action Champions, the COP25 and COP26 Presidents, and the United Nations Framework Convention on Climate Change (UNFCCC) Executive Secretary launched the Davos’ World Economic Forum’s ‘Race to Zero Breakthroughs’ initiative.
More than 130 countries pledged in Glasgow to reach net-zero carbon emissions by 2050. Despite well-known setbacks, the COP26 Glasgow Climate Pact has been hailed as a breakthrough on the “path to a safer future”.
Before COP26, many cities, regions, businesses, investors and higher education institutions joined the 120 countries already committed then. Achieving net-zero via offset trading has thus become the main climate action distraction.
Following difficult, protracted negotiations after the 2015 Paris Agreement (PA), Article 6 was the last of its 29 Articles agreed to. Article 6 unifies carbon offset trading standards in order to minimize ‘double counting’.
Offsetting allows countries and companies to continue emitting GHGs instead of cutting them. Buying offsets lets them claim their emissions have been ‘cancelled’. Thus, offset markets have slowed climate action in the rich North, responsible for two-thirds of cumulative emissions.
Clearly, Article 6 does not stop emissions of carbon dioxide (CO2) and other GHGs. The Kyoto Protocol’s Clean Development Mechanism (CDM) also enables not cutting GHG production by paying others to do so. Thus, offset markets enable the wealthy to avoid cutting GHG discharges at little cost.
But why pay for emission cuts which would have happened anyway, even without being paid for via offset sales? At best, net-zero is a zero-sum game maintaining atmospheric GHG levels. But progress requires CO2 reduction, i.e., being net-negative, not just net-zero.
Many carbon credits sold as offsets do not additionally remove carbon as claimed. For example, J.P. Morgan, Disney and BlackRock have all paid millions to protect forests not even under threat. A CEO agreed its offset – buying into a Tanzania forestry programme – “is cheating”.
The Economist sees carbon offsets as “cheap cheats”. By ramping up the supply of offsets, prices were kept low. Much scope to game the system remains. Energy-intensive companies collude and lobby against high carbon prices, insisting they damage competitiveness.
Often buying in bulk, they pay too little for carbon credits to incentivize switching to renewable energy. Averaging only US$3 per tonne of CO2 in 2018 cannot accelerate desirable energy transitions.
Less than 5% of all offsets actually reduce CO2 in the atmosphere. A 2016 European Commission study of CDM offset projects found 85% provided no environmental benefits.
Making Money Instead
The Glasgow Financial Alliance for Net Zero (GFANZ) – a US$130 trillion investor club of over 450 financial firms in 45 countries – was launched at COP26 in Glasgow. It is chaired by former Bank of England Governor Mark Carney, now UN Special Envoy for Climate Action and Finance.
The GFANZ claims to be leveraging the power of big finance to innovatively achieve the PA goal of keeping the temperature rise over pre-industrial levels under 1.5 degrees Celsius.
Advocates claim this will unlock trillions of dollars to protect forests, increase renewable energy generation and otherwise mitigate global warming. But GFANZ does not even seek to cut finance for GHG-intensive industries.
GFANZ members pay ‘experts’, non-governmental organizations (NGOs) and governments to achieve net-zero ‘pathways’. Offset markets have enabled environmental NGOs to make money from supposed climate mitigating projects or by certifying other schemes.
Meanwhile, big businesses burnish their green credentials with offset purchases. After all, there are no agreed metrics to ensure portfolio alignment with the PA. Unsurprisingly, the Marshall Islands’ climate envoy urges remaining “vigilant against greenwashing”.
Touting market solutions, the World Bank has noted a recent surge in demand from major financial investors, including Goldman Sachs, Morgan Stanley and Lansdowne Partners. But much goes to profits from arbitrage, speculation or trading for third parties – not decarbonization or net-zero.
Even Larry Fink – CEO of Blackrock, the world’s largest asset manager – is sceptical, “We are lying to ourselves if we think we can do it just by conveniently asking banks and financial service companies, public companies, to conform to TCFD reporting. We are creating the biggest capital arbitrage of our lifetimes.”
Selling the Sky
Offset markets have meant new opportunities to create new tradable assets. By aggregating all GHG emissions – from fossil fuels, deforestation, landfills, agriculture, etc. – profitable new financial products have been engineered for emissions trading and carbon credits.
The implicit premise is that market-based approaches always work best to address problems, in this case, to reduce GHG emissions. They do not distinguish between ‘luxury emissions’ and those due to the poor’s livelihoods.
Meanwhile, the world’s wealthiest 1% produces twice the total carbon emissions of the poorest 50%! Worse, emissions from private jets, mega-yachts and space travel of the super-rich greatly exacerbate global warming.
As with CDM and voluntary offset markets, the burden of emissions reduction has been shifted from North to South. While rich countries continue emitting GHGs, developing countries are now expected to ‘come clean’!
But No Money for Poor
At the GFANZ launch, Mark Carney claimed, “Make no mistake, the money is here, if the world wants to use it”. But developing countries are still waiting to see the promised US$100bn yearly to help finance their mitigation and adaptation efforts.
Following strong US opposition at the Article 6 negotiations, developing countries failed to secure ‘international transfers of mitigation outcomes’, i.e., mandatory contributions to the Adaptation Fund from the proceeds of international emissions trading among parties to the PA.
The US and European Union also successfully blocked a ‘loss and damage’ fund to finance recovery and reconstruction after climate disasters. Thus, Glasgow failed to deliver any significant additional climate finance for poor countries – for climate change adaptation as well as losses and damages.
thought I’d drop this here:
I was listening to an interview on the THINK Radio Show out of Dallas on Cyber Monday.
I believe these ideas start to crack open and elaborate what elements of that elusive “Radical Conservation” should be.
I like his take on how the Economic System of Consumption can be undermined.
I think he was deft in handling the ‘but, but…’ BS.
fwiw, imo, a lot less complicated than the greenwashed ‘Carbon Offsets Market’ discussed above.
If people for stop-buying-so-much want to get other people to stop-buying-so-much , then people will have to model in public view their own personal stop-buying-so-much lifestyles. That way, they will at least earn personal credibility for “walking the walk” if/when they want to get a respectful hearing from other people.
And the stop-buying-so-much community will get a more respectful hearing if they can model an acceptable lifestyle still being possible while having stopped buying-so-much. Anyone can keep their house at 55 degrees all winter and 85 degrees all summer. That requires no intelligence and no creativity and no personal knowledge of how anything works. It will also get no respect from any onlookers.
Now . . . if those same people could keep their house at an acceptable 68 degrees for 25% as much energy-burn as everyone else uses to keep their houses at a lovely 72 degrees all winter, for example; then those same people might once again get a respectful hearing. Especially if coal, gas, oil and electricity go to ” $1,000 dollars a pound” in price. Then they will have a lot of their neighbors asking “how do you do it?”
So maybe those same people should work on learning how to live good enough on a quarter of the energy that the other people use to live truly wonderfully on four quarters of the energy. If those same people can learn that, and live it in public view, then they may well have a stop-shopping-as-much effect on their friends, relatives and neighbors.
Here is a little example of ” live smarter, not harder”. How to eat eggs using less energy? The “live harder” way is to eat all your eggs raw. That’s the way to achieve the totalist goal of not spending any energy to cook eggs. Or you can settle for the partialist goal of hard-boiling eggs for a fraction of the energy that all your Normie Neighbors use to hard boil eggs. And how is that? Put about a 1/5th of an inch of water in the bottom of the pot with the eggs and heat it till it just begins to visibly boil. Then put the lid on it. Then turn the heat down to where just a tiny bit of steam escapes from the pot. Then weigh the pot down with something like, say, a smaller upside down pot put on the potlid and a heavy weight on the up-facing flat bottom of the bigger-lid-weighting smaller-upside-down pot. This will trap steam in the pot. The trapped steam will dump its heat-of-vaporisation load of energy into the eggs as it condenses on them and drips down their sides back into the water at the bottom of the pot. And that will hard-steam the eggs for a tiny fraction of the energy it would take to boil the eggs the Normie way.
And then apply the very same kind of detailed smarter-not-harder approach to every energy-consumption system throughout the house.
If people for stop-buying-so-much want to get other people to stop-buying-so-much , then people will have to model in public view their own personal stop-buying-so-much lifestyles.
well that is what i got out of listening to that interview.
last month my KW consumption was 387.
Insumountable this is not, and with less obtuse examples.
Evaluate your transportation needs and condense 4 into 3 stands out.
Darn your socks at least once.
Planning is involved.
I am reminded of Andrew Yangs MATH–make americans think harder.
for about 20 years I heated with a wood stove, and boiled many an egg while simultaneously humidifying the house.
“emissions from … space travel of the super-rich greatly exacerbate global warming”
Space travel by the super rich may be many indefensible things, but I doubt greatly exacerbating global warming is one of them.
Yet another carbon-offset “market”. What happened to the late, unlamented, Chicago Climate Exchange? It’s like wack-a-mole. Oh, and I love this bit…GFANZ members pay ‘experts’, non-governmental organizations (NGOs) and governments to achieve net-zero ‘pathways’. Offset markets have enabled environmental NGOs to make money from supposed climate mitigating projects or by certifying other schemes. It pays to get the non-profit PMCs to flog your lameo product with obscurantist word-smithing. File under The Bezzle.
A classic case of this is the Nature Conservancy, which gets more revenue than any other ecological non-profit in the US through selling carbon offsets for not cutting down trees that were never going to be cut down in the first place.
This is yet another reason to favor a carbon tax over cap and trade.
Something that I always thought was funky about the NC
In 1999, Nature Conservancy decided to permit new drilling close to primary breeding grounds on Texas land owned by the Conservancy. This has harmed the grouse and their habitat, according to the Wildlife Society. Drilling in sensitive areas is destructive and opposed by environmentalists. The number of Attwater’s prairie chickens nesting on the land owned by the Conservancy fell from 36 in 1998 to 16 in 2003. Analysis by Nature Conservancy’s Texas science director said that that new oil drilling project subjected the grouse to a “higher probability of death.” In 2007, Nature Conservancy issued new permits to drill a new oil well on protected land. Attwater’s prairie chickens have since disappeared from the site.
There is one of these nature trust donate-your-land outfits in my jurisdiction. I looked up the Board, pretty dicy including a lawyer for a national law firm. Hmm.
A woman donated some lakefront land to this outfit to be preserved. Later, the dogooders sold the land and she went ballistic. Their excuse was they needed the loot for other projects. I would love to see the contract for these trust sales.
It doesn’t take a Harry Markopolos to see the scams and cons that can be run in this land trust business. Caveat donor.
To be fair, in a properly regulated securities market, it should not take a Harry Markopolos to catch Madoff.
We are shitting on our dinner plates and have acquired a taste for it and the developing world sees no reason they should not acquire the same palate.
When will we simply admit that there is no way anything of substance is going to be done and get down to planning for…for what? And I think that’s part of it; planning and solutions are so overwhelming that lip service is as much as can be mustered.
God, I used to be such an optimist, and still start to fall back into it (young people can effect that) but then, ‘the News’.
Why shouldn’t I try to get my state’s Department of Natural Resources to produce non-tax revenue by selling the ecosystem services of not logging public land, though?
A modest proposal (in the Swiftian sense).
Maybe the USAF could use the carbon offset model when faced with unintended civilian bombing casualties such as the recent wrong car on the last days in Kabul and the “bad outcome” we just found out about from a Syrian bombing a year ago.
Accept that “these things happen” and offer to contribute to, for example, child nutrition programs in Afghanistan and breast cancer screening programs in Syria. Set the contribution so that ten lives will be saved for each life lost in the bombing errors. Since such payment will have to be approved by the US Congress, those recent examples can be included in the next budget cycle which, if I remember the usual program-lag, will be the 2024-5 budget cycle. A bit of a delay in the payout, but there isn’t much we can do about it. The time between the incident and the way to compensate for it is always measured in years and dependent on unforeseeable events like future Congressional Appropriations, forest management practices in Tanzania, and the nesting habits of grouse.
I’m sure the international press will applaud our innovative program to reduce overall deaths in combat zones.
This is why we do not want gas/oil/electricity to be “competitive”. A certain level of profit is required for the entire economy to operate if companies are competitive. Otherwise stuff gets priced too high for the market or too low to produce, etc. So maintaining the “market” at a steady pace is required and that steady pace supplies every industry with the energy, filtering through the system creating “profits”, to survive. And that’s a big problem. We have to slow everything down; stop some overuses of energy altogether. We have to nationalize and ration energy. Establish price controls. Establish CO2 limits, that if breached, put that corporation out of business. There’s no other way. Because the system as it is – at an unsustainable level of competition – is killing the planet. If the system as it is could be ratcheted down it would probably be more destructive, leaving too many destitute, than just cutting bait with the whole fantasy that we can keep doing the same old stuff. We cannot.
I remember reading an article from the Onion, something like: ” New finding. Middle Class people are just poor people with more stuff.”
If you want the self-avowed Middle Class people to live with less stuff, you will have to invent a way for them to self-present and self-comfort themselves as still Middle-Class , but with less stuff.
You may have to personally live a respectable-looking Middle-Class-presenting lifestyle with less stuff in public view to have the personal credibility to convince other “Middle-Class identified” people to consider living with less stuff. That is a challenge for the Global De-Warming wannabes in general. Are they up to the challenge?
Simple, they just vanish into the Metaverse and preen there.