More of the Carbon Offset Folly

A while back, in relation to a company called Terrapass that sells carbon offset certificates (or smugness coupons, as I called them) I observed:

My guess is that TerraPass, when it sells the electricity from these
projects to customers, is selling it on the basis that it is
earth-friendly and causes no CO2 emissions.  This lack of emissions is
likely part of the "bundle" sold to electricity customers.  But note
that this would be selling the same lack of emissions twice -- once to
TerraPass certificate holders, and once to the electricity customers.
I am sure they are both told they are avoiding X tons of emissions, but
it is the same X tons, sold twice (at least).

We are starting to see this all over now.  From the WSJ, via Tom Nelson:

America's garbage dumps are reaping a windfall from the fight against
global warming. But their payday might not be doing much to reduce
greenhouse-gas emissions.

For more than a decade, the landfill
here has made extra profit simply by collecting methane given off by
rotting trash, and selling it as fuel. Last year, the landfill learned
that doing this also qualified it to earn hundreds of thousands of
dollars via a new program that pays companies to cut their
greenhouse-gas emissions.

Eliminating methane lets dumps sell
"carbon credits" to environmentally conscious people and companies. The
long-term goal of trading credits -- basically, vouchers representing
reductions in carbon dioxide and other greenhouse gases -- is to reduce
global pollution by encouraging others to cut emissions when the buyers
of the credits can't or won't cut their own.

"It seemed a little suspicious that we could get money for doing nothing,"
says Charles Norkis, executive director of the Cape May County
Municipal Utilities Authority, which has raised $427,475 selling
credits since February, or 3% of the authority's projected solid-waste
revenue for the year.

The sale of credits by these landfills
undermines a premise of the global fight against climate change. The
credit system was designed to encourage pollution cuts that wouldn't
have happened without a financial incentive. But the credits aren't helping the environment if they're merely providing extra profit for cleanups already made. And dumps already have an incentive to capture methane because selling it can be profitable.

More on this same carbon offset issue in the European / UN system here.

Why a carbon tax, if we really feel we must limit CO2, is better than cap-and-trade / offset system here.


  1. Raven:

    Carbon taxes are no pancecea either because politicians will tweek them to suit difference interest groups which makes then as bad - if not worse - than cap and trade.

    A couple examples:

    1) BC's premier recently annouced that municipalities would have the BC carbon tax refunded if they buy enough carbon offsets to be "carbon neutral". The implication is the cost of monitoring their carbon output and buying offsets would be cheaper than the relativelly modest BC carbon tax.

    2) The Canadian Liberal party went down to electoral defeat after proposing a carbon tax even though this tax exempted gasoline (but not diseal unless you are a farmer). Perhaps the most odious part of the "revenue neutral" plan was the tax breaks/credits were heavily weighted towards low income people which meant the plan was really a income redistribution plan in disguise. e.g. it shifted the burden of paying taxes to the well off and increased the number of people who would pay no tax at all.

  2. Anonymous:

    I wouldn't worry about Carbon taxes anytime soon...Our governments from the Federal to State to the local levels have spent themselves into a corner. We used to call it coffin corner in the flying business...Medicaid, Medicare, Social Security, Housing and Urban development, and hundreds of other programs are set to strangle what's left of government even as the Fed furiously prints money to prop up the nation's banking system. The democrats will almost certainly let the Bush tax cuts expire which will put even more enormous pressure on our economy and small businesses as governments try to stem the tide of red ink. They will learn the hardway that the other means of balancing budgets will be to reduce spending as finally they too will reach "capitulation" along with our stock markets of late. I don't think the most obtuse politician will have the guts to propose carbon taxes which would further enhance the misery factor of the nation...But, I've been wrong before and the Obama, Pelosi, Reid road show will likely surprise us many times with their need to do show progress on some front.