In March 2007, Alan Simpson, a member of the British House of Commons, stood up to criticize carbon offsets, arguing that they had no place in an agenda that sought to deliver actual carbon reduction. "Anyone who needs to understand this [should] consult a Web site...called CheatNeutral.com," he said. "It invites you to offset your infidelity. Does it reduce the sum total of infidelity in society? No, not a jolt. But it makes you feel better."
A satire of carbon offsetting, CheatNeutral.com, the brainchild of two young English wags, pretends to make it possible for the unfaithful to offset the harm caused by their infidelity by paying others to be faithful. Make no mistake, the guys behind the site are serious about global warming; They just don't take carbon offsets seriously as a way to solve the problem. That may be unfair to the companies developing or selling offsets in projects that will either reduce the amount of CO2 in the atmosphere or that produce energy without adding to the problem. However, the site is emblematic of the public relations problem the fledgling offset industry is experiencing, and it raises some questions your clients should answer before they invest their hard-earned money on a solar cooking oven project in India.
"It's the 'wild west' out there; there's a complete lack of any government oversight," says Frank O'Donnell, president of Clean Air Watch (www.cleanairwatch.org), a non-profit environmental group based in Washington D.C. "And a lot of people are out there offering various offsets and deals, and some of them are fine, and some may not be so fine."
Unlike the more familiar emissions trading that takes place between businesses in a highly regulated environment, carbon offsets are bought and sold in a voluntary, unregulated market that attracts both individuals and businesses. The basic idea is that the carbon you emit driving cross-town or flying across the country can be mitigated by purchasing an offset. Then the company that sells you the offset will invest the proceeds in a project that ultimately will reduce the amount of carbon in the atmosphere. Delta Airlines, for example, recently announced an offsetting program where customers could "choose to contribute $5.50 for domestic roundtrip flights and $11 for international roundtrip flights to be used by The Conservation Fund (www.conservationfund.org) to plant trees throughout the U.S. and abroad," which in turn are supposed to capture and store carbon.
Offset critics use former vice president and Nobel Prize-winning environmentalist Al Gore as the poster child for what's wrong with the offset equation. Gore, they say, justifies consuming 221,000 kwh--nearly 20-times the national average--by purchasing offsets and neutralizing his huge footprint. But in the end, he is still consuming 20-times more than the average, even as temperatures rise beneath his critics' collars. Tyler Cowan, a professor of economics at George Mason University and a critic of carbon offsets says, "Gore, who genuinely cares about the problem, has to do something for public relations reasons, so he buys offsets. And so the idea circulates because everybody wants to be criticism proof."
If that's your client's goal, then read no further. There are plenty of companies out there ready to take her money in return for some warm fuzzies and a certificate she can hang in the window of her Hummer. However, if she takes climate change seriously, there are some things she can do to make sure that her offset dollars are well spent. "The basic promise of an offset is that the emissions reduction will be exactly the same as if the purchaser of the offset had reduced his own emissions," explains Mike Burnett, executive director of The Climate Trust (www.climatetrust.org).
However, industry experts say that the first step is to do what you can to actually reduce your carbon footprint: Use more efficient light bulbs, drive a hybrid, fly less, take mass transit for example. "Don't just buy offsets and keep living your life the way you have been living it," says Bill Burtis, communications manager at New Hampshire-based Clean Air-Cool Planet (www.cleanair-coolplanet.org). "Figure out what your footprint is, come up with a plan to reduce your carbon, and then offset what you can't reduce."
At CarbonCounter.org, you can do that--simply or exactly. I chose the simple route: An average size home in Utah apparently generates 8.36 tons of CO2 per year, compared with the national average of 11.16 tons. My Acura and small Dodge truck generate another 9.41 tons--4.39 tons more than the average--and the few hours I spent in the air last year generated another 4.91 tons, well above the 0.46 national average. That's a total of 22.68 tons. Let's assume that I've done all I can to reduce my footprint. Well, at the going price of $12 dollars a ton (buying from The Climate Trust), I need to fork over a tax-deductible $272.16 to offset the damage my family and I do each year. "As a trust, we then use that money to expand existing or to fund new high-quality environmental projects," Burnett says.
Of course, there's the rub: In the absence of certifiable standards, what qualifies as high quality? No promoter worth his weight and no matter his intentions would ever sell you an offset that was not of "high quality," would he? A quick Google search using the terms "carbon offset fraud" will answer that question in the affirmative: "Yes, some would." What is high quality to one promoter is apparently just a sales pitch to another.
To your client, high quality should mean three things: The offset must represent additionality; that is, the underlying project would not have happened without the offset. The project's benefits should also be quantifiable and verifiable. And finally, the projects should be of the right type. Frankly, some projects are better than others. "And you want third-party verification," says Brian Jones, senior consultant at M.J. Bradley, an environmental consulting firm. "It's much like a company's financial statement: Is what they're saying an accurate representation of what's going on?"
In the minds of most environmentalists, additionality is the key to a quality carbon offset. If your offset money is paying the operating expenses of a methane capture project that has been operating for five years, there is no additionality. And the same goes for the proposed Wyoming wind farm that already has its funding in place. "But if the tower is only going to go up, and the rotors are only going to go on if the credits are sold, that makes them high-quality offsets," Burtis says.
If additionality is the definitional key to an actual offset, quantification and verification are the insurance that the offset's promised reductions take place. Unfortunately, the saying is much easier--and less expensive--than the doing. For example, that solar cooking stove project in India was an effort to reduce the environmental impact of cooking fires, apparently a major contributor to the poor air quality in that country. Additionality was not an issue because the project would not have happened otherwise. "It's not like the promoters were selling electricity to fund the project," Burtis says. "The difficulty came in quantifying how many of the stoves would actually be used and how much wood burning they would replace."
Even metered wind farms that sell a product present quantification and verification difficulties, Burnett says, because "what those farms mean in terms of carbon benefit requires a fairly subtle and complex calculation that people have debated for years."
Nevertheless, there are third-party verification firms with the expertise to do that math. One place to look is the California Climate Action Registry Web site (www.climateregistry.org), which features a long list of "certifiers" that have been approved by the California Energy Commission. "If I were a purchaser, I would want some sort of verification," says Gary Bryner, professor of political science at Brigham Young University. "Otherwise it is too easy to end up with a program that hasn't been scrutinized."
However, if you're simply offsetting your next flight to New York, you probably have neither the money nor the inclination to use a third-party verifier. If you still want to proceed, then at least do some research on your own. Clean Air-Cool Planet's "Consumer's Guide to Retail Carbon Offset Providers" is a good place to start. In the executive summary, you'll find a list of what the guide terms "Top Performing Retail Offset Providers," including Climate Trust, Native Energy and Sustainable Travel/My Climate, all from the U.S. In the appendix, you'll also find a list of questions to ask providers not on the list (See sidebar on page x). Even then, the guide warns, "It is not possible to categorically state that purchasing offsets from the top tiers of providers will render purchasers carbon neutral."
If the experts are that cautious, you should be, too. You might even wait until the industry announces its own "Good Housekeeping Seal of Approval"--the Voluntary Carbon Standard or VCS--in the next few months (See box above). But bottom line: Be careful. "If you give someone money to do something nice for the environment," says Tyler Cowan, "it's very hard to tell whether or not they have done it." Kind of like that nice couple who promised to be faithful.
Ask the Right Questions
The "Consumer's Guide to Carbon Offsets" suggests you ask the following numbered questions before you hand your money to an offset provider. (The additional lettered questions probe a bit deeper). But don't just ask the questions; expect some good answers in return.
Do your offsets result from specific projects?
If the project is a tree plantation, do you own the land? How long will the plantation be maintained? What will be the net carbon reduction of the plantation?
If the project conversion is from coal to natural gas, is the gas plentiful and available for the life of the project?
Why do you need money from offsets? Are banks or investors not interested in the project?
Is the project financially viable?
Do you use an objective standard to ensure the additionality and quality of the offsets you sell?
What are those standards?
Can you explain how the project I'm interested in meets those standards?
Where is the project located?
How can I monitor the project?
3. How do you demonstrate that the projects in your portfolio would not have happened without the GHG [greenhouse gas] offset market? In other words, how do you define additionality?
4. Have your offsets been validated against a third-party standard by a credible source?
a. What is that source, and can I have their phone number?
b. What other projects have they certified?
c. Whom are they certified by?
5. Do you sell offsets that will actually accrue in the future? If so, how long into the future, and can you explain why you need to "forward sell" the offsets?
6. Can you demonstrate that your offsets are not sold to multiple buyers?
7. What are you doing to educate your buyers about global warming and the need for global warming policy?
Third-party verification of carbon offsets may soon take a giant step forward with the announcement of the Voluntary Carbon Standard, or VCS, in late 2007 or early 2008, according to Michael Burnett of the Climate Trust and a member of the steering committee.
The VCS is the product of the International Emissions Trading Association, the Climate Group, the World Business Council for Sustainable Development and the World Economic Forum and has been in development since 2005. "It's an effort to come up with an international standard for what is a good offset that can be used in the voluntary market," Burnett says. "Once launched, it should have a positive impact on the market."
Among other things, the VCS promises to certify that voluntary offsets are "real, measurable, permanent, additional, independently verified, and not double-counted." That's a pretty tall order, but one that Burnett hopes will bring more credibility to the industry. "If you buy offsets from a VCS-certified project, you will know that it has gone through a rigorous review and third party validation." At least that's the hope.
Gregory Taggart (email@example.com), a former practicing attorney who has worked in insurance and financial planning, teaches writing at Brigham Young University.