Climate Progress

I’m going to (try to) coin a new term here, “rip-offsets,” since I can’t think of a better word for the rip-off offsets the Chicago Climate Exchange is peddling to a gullible public and media.

The Washington Post has a front-page story, “There’s a Gold Mine In Environmental Guilt Carbon-Offset Sales Brisk Despite Financial Crisis,” that echoes articles written a few years ago on the mortgage industry. Sales are way up. Price are rising. Everybody is jumping in. Oversight all but nonexistent.

Yeah, a few of those pesky “Watchdog groups say offset vendors sometimes do not deliver what they promise,” but for most people it’s just one big party:

At the Chicago Climate Exchange, where offsets are sold like pork bellies or stocks, Sept. 23 was the second-busiest trading day in the four-year history of the market.

Buried at the very end of the article is a description of just how worthless many Chicago Climate Exchange offsets are. The article describes an offset so pathetic, so questionable, that it shocked even me, and I already thought most offset are no better than mortgage-backed securities:

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A: Lipstick.

Carbon offsets and mortgage-backed securities are quite similar in that is impossible for the vast majority of people, even experts, to know what value they have, if any.

In the case of the securities, before paying good money for them, you have to figure out what the value of the underlying mortgages are. Oftentimes they are almost worthless. In the case of carbon offsets, before you pay good money for them, you have to figure out the value of the underlying projects they fund. Oftentimes they are almost worthless.

The only difference between the two is one of perception. Most people now realize how dubious the securities are. But most people apparently don’t realize how dubious the offsets are, because sales of offsets keep rising. So I repeat, the only difference is “lipstick” — the offsets look on the surface to be more attractive.

At a policy level, offsets can destroy the environmental value of climate legislation (see “Boxer bill update: Probably no U.S. CO2 emissions cut until after 2025” and “McCain speech, Part 2: Relying on offsets = Rearranging deck chairs on the Titanic“). Indeed, at a large scale, offsets are probably worse than the securities, because even if the mortgages are underwater, you know the houses aren’t valueless. But as a major 2008 analysis from Stanford found

… “between a third and two thirds” of emission offsets under the Clean Development Mechanism (CDM) — set up under the Kyoto treaty to encourage emissions reductions in developing nations — do not represent actual emission cuts.

And this led to the study’s stark conclusion:

… any offset market of sufficient scale to provide substantial cost-control for a cap-and-trade program will involve substantial issuance of credits that do not represent real emissions reductions.

Talk about your sub-sub-sub-prime loans.

Yet even at an individual level, lots of vendors are selling very dubious offsets, including the Chicago Climate Exchange, as many journalists have found when they examined the underlying projects (see here and here and here).

In particular, I have argued that the most popular offsets are the most dubious:

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Carbon Retirement — you read it here first (or maybe second).

I don’t normally endorse individual companies. But I have long thought European allowances were the best alternative to offsests and am delighted someone has made a business out of it.

The business opportunity is clear — offsets suck. At a policy level, they can destroy the environmental value of climate legislation (see “Boxer bill update: Probably no U.S. CO2 emissions cut until after 2025” and “McCain speech, Part 2: Relying on offsets = Rearranging deck chairs on the Titanic“).

At a personal level, lots of vendors are selling very dubious offsets, including CCX (see here and here and here). I can’t imagine why you would waste your money on the most popular offsets, trees (see no trees and certainly not a Northern forest — heck, even offset seller Terrapass disses trees). And don’t get Climate Progress started on the other popular offset, RECs (see “Schendler Part II: Good RECs vs. Bad RECs“).

But I know some of you out there really want to be carbon neutral, and while you have bought 100% renewable power for your superefficient home that uses a geothermal heating and cooling system to replace natural gas, and you bought a Prius for the family car and you telecommute, you just haven’t figured out how to avoid some driving and flying.

What to do? Buy real emissions credits from the European market and retire them permanently! Now that is the best idea since solar baseload.

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The Presidential Climate Action Project (PCAP) recently completed the first of four polls it has commissioned from Harris Interactive to track public opinion about the presidential candidates and global climate change.

The results so far (here): Nearly half of the people likely to vote in the presidential election aren’t sure which of the candidates has the strongest policy. Twenty-two percent think it’s Obama; 21 percent think it’s Clinton; and 8 percent think it’s McCain. Forty-nine percent have no idea.

In other words, a big part of the voting population is waiting to be impressed. Their votes are a prize waiting to be won.

It’s not that the “don’t knows” are indifferent to the issue. The poll found that 63 percent of likely voters believe it’s important for the next president to address climate change soon after taking office. Forty-one percent believe that presidential action is “extremely” or “very” important.
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If want to reduce your carbon footprint, what should you do about your air travel until we have carbon-free jetfuel?

The Stockholm Environment Institute and the Tufts Climate Initiative has a good handout on the subject, “Flying Green.” They note

… the average American is responsible for the emissions of about 20 tons of CO2 annually…. If you fly to Europe and back from the US, you’ll add about 3-4 tons to your (already large) carbon footprint. With one flight you will have caused more emissions than 20 Bangladeshi will cause in a whole year. Unfortunately they are the ones who will lose their homes and livelihood once sea level rise inundates their low lying country.

Personally, I have cut back air travel a great deal to reduce emissions, to spend time with my daughter, to spend more time blogging, and, of course, to spend less time flying, which just isn’t very pleasant anymore.

The handout has a number of good suggestions and factoids — why should flying economy be considered better for the environment than flying business class?

Also, while I’m not a big fan of carbon offsets, the handout offers some good principles for such purchases and then recommends a few offsets companies.

If you want to learn more about the controversial issue of just how much damage to the climate air travel does, you might read this. If you want to know more about offsetting air travel emissions, read this.

If you must buy carbon offsets, caveat emptor — in particular, don’t buy them from the Chicago Climate Exchange (CCX). That is the point of a terrific front-page article in today’s Washington Post “Value of U.S. House’s Carbon Offsets Is Murky, Some Question Effectiveness of $89,000 Purchase to Balance Out Greenhouse Gas Emissions.”

Yes, it is nice to be quoted above the fold in any major newspaper — the quote in the headline is from me — but the reason I think the article is important is that the reporter took the time to track down the offset projects the taxpayer money went to. The results are not encouraging. I am not a fan of offsets (see my many posts dissing “Offsets” under that category on this blog’s side bar) — and certainly wasn’t a fan of the House buying offsets from the CCX in the first place.

But I was surprised by the overall lameness of the specific projects and utterly shocked to read the words of CCX CEO Richard Sandor (a man I have a fair amount of respect for):

It basically rewards people for having done things that had environmental good in the past and incentivizes people to do things that have environmental good in the future.

Shame on him for having this policy, and double shame if he actually believes it is the right thing. Offset money is supposed to cause carbon emissions reductions that would not otherwise have happened without that money (the so-called additionality criteria), in order to offset our own emissions (which we have first worked hard to reduce). We are most certainly not expecting our money go to rewarding people for having done things that had environmental benefit in the past. Geez — I’ve done a whole bunch of things that had environmental benefit in the past — see list here — does that mean I’m entitled to some of Sandor’s CCX money? Absurd!

An old friend of mind, consultant Mark Trexler, put it well in the article when he said,

If you don’t have additionality, you know what you’re getting. You’re getting nothing.

Kudos to uber-capitalist Sandor. He has proven you can get nothing for something.

Well, Lawrence Berkeley National Laboratories has collected many of the most popular carbon calculators — including their own — and compared their features here. Pick one and go for it!

As E&E News (subs. req’d) reports today:

An industry group released standards yesterday for carbon dioxide offsets in the hopes of attracting existing and still-forming emission-trading markets.

The Voluntary Carbon Standards (VCS) are aimed at evaluating clean-energy projects in developing countries that are used to offset industrialized nations’ emissions of greenhouse gases under the Kyoto Protocol’s Clean Development Mechanism.

You can read all about the new standard on their website. I am not terribly impressed with this new standard. Among other things, it allows tree projects (no! and no!). They also didn’t consult with a lot of environmental groups, and as I pointed out to E&E News and WWF, their website has this bizarre and I think inappropriate listing under Board members:

James Leape, WWF International (invited)

Seriously. How do you list an invited — but not accepted — Board member on your website? Especially from an organization that seriously criticized the previous draft of your offset standard.

The rest of the E&E article, with quotes from me and WWF, is below:

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Perhaps not the best strategy:

The House purchased these carbon credits to offset the impact of 30,000 tons of carbon emitted by the U.S. Capitol’s coal-burning power plant each year. The funds will be used on carbon reducing measures, such as planting trees and underground storage of carbon dioxide, as well as green technologies like wind and solar power. The auction was oversubscribed with a weighted average clearing price of $2.97 per ton.

I hope they didn’t plant a lot of trees — they aren’t the greatest offsets (see here also). And I really hope the underground storage carbon dioxide isn’t used for enhanced oil recovery — a very dubious offset.

I personally wouldn’t recommend the Chicago Climate Exchange for offsets– too many environmental groups have doubts about it, and I have heard some serious concerns directly from people involved in their offset projects.

At least the House is cleaning up its own act first:

The House will become carbon neutral by purchasing wind power for the electricity it uses, and by substituting natural gas for coal to generate the House’s portion of the electricity produced by the Capitol Power Plant. To offset the carbon emitted from burning natural gas, the House will purchase carbon offsets.

That’s much, much better than just trying to offset coal power with, say, trees.

In my second of three blogs (Part I here) in response to the Businessweek article about Aspen Skiing Company’s work (”Little Green Lies“) I’ll expand on the article’s discussion of renewable energy certificates (RECs).

While the article justifiably criticized many RECs, it failed to make the point that there are good and bad RECs. (A REC represents the environmental attributes of one megawatt-hour of renewable energy.) The contrast between the two is stark. Bad RECs don’t do anything to drive new renewable energy development. A bad REC costs about $2 (though the price has gone up) and comes from, say, a wind farm that has been already developed. Your purchase may be a nice bonus for the wind farm developer (and for the REC broker you bought it from) but it didn’t do anything to change carbon dioxide emissions in the world.

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