Dear Umbra,
I don't understand carbon credits and how people can buy/sell/trade them. How is this good for our environment?
Elizabeth
Columbus, Ohio
Dearest Elizabeth,
I believe you speak of the carbon credit, rather than the carbon offset? The carbon offset is a consumer product that you or I could buy, enabling us to mildly compensate for our greenhouse-gas emissions by supporting renewable-energy projects. You know, "I'm sorry I'm repeatedly choosing to break your leg, let me apologize by funding medical training in Zimbabwe." The carbon credit, on the other hand, is an aspect of the industrial "cap-and-trade" program and works slightly differently than the offset. I'll tackle carbon credits today; if you find yourself thinking, "Dang that Umbra, I really wanted to know about personal carbon offsets," write again or visit my old column on that topic.
What? You want Yankees box seats
for two more credits?
The "cap-and-trade" system is one of two large-scale greenhouse-gas reduction schemes on the global table, and the more popular. The other is a carbon tax, which we can also discuss someday. One of the first cap-and-trade systems was established in the early 1990s in the U.S. to combat acid rain. It regulates sulfur dioxide emissions from power plants. In 2005, the European Union instituted a cap-and-trade system ("Emissions Trading System") to regulate greenhouse gases; it covers electric power plants and major energy-intensive industries.
Very broadly, the concept behind cap-and-trade is this: The government decides upon a "cap," a maximum amount of emissions allowed across an industry or sector. The cap should be lower than the status quo. Said government then issues permits to pollute, either by giving them away or by auctioning them off. Then the "trade" aspect begins. The permits each allow a certain amount of pollution. If a business can reduce its emissions and end up with extra permits, it can sell those permits for a profit to businesses that want to/must pollute more than they are allowed.
The polluters, for their part, can choose to pay for permits or find technical innovations that will bring down their emissions. Ideally, the market price of permits -- a desirable but limited resource -- rises and becomes increasingly prohibitive. In this dreamy scenario, buying a permit becomes more expensive than conservation, and businesses spend the money on retrofitting their systems instead.
Cap-and-trade has worked very well with acid rain. Power plants in the U.S. reduced their sulfur dioxide emissions more than was required, and the cost was lower than anticipated. There is also a successful multi-state collaboration that uses cap-and-trade to reduce ground-level ozone in nine states and Washington, D.C. The E.U.'s ETS started off with a few stumbles, but is working out the kinks. Now two sets of U.S. states and neighbors are in negotiation to start cap-and-trade systems for carbon dioxide: The Regional Greenhouse Gas Initiative involves 10 states in the East; the Western Climate Initiative currently involves seven Western states and three Canadian provinces. A federal attempt at cap-and-trade, which Bush would have vetoed, just died in Congress.
That is a very brief summary of cap-and-trade. Theoretically, it helps the environment through setting an absolute limit on a pollutant, within an economic system that encourages innovation. Industry, transport, and the commercial sector produce the bulk of our country's emissions, around 75 percent. We individuals have a valid and vital role to play at home and work, and through our personal transport, but industry needs to start reining in carbon production. Cap-and-trade systems are one way to get a group of businesses involved in bringing down our global emissions. May they continue to be one way among many, and may they be successful.
Fervently,
Umbra
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Comments
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rufwork Posted 11:06 pm
29 Jun 2008
How often does that happen? That is, and I ask this respectfully, was the above quote a political statement or an accurate rendering of how cap systems routinely work?
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texasjenny Posted 3:38 am
30 Jun 2008
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Kelii127 Posted 4:50 am
30 Jun 2008
This is incorrect. Voluntary carbon offsets are generated from projects that DIRECTLY reduce, destroy, sequester or avoid the emission of greenhouse gases, e.g. through the construction of anaerobic digesters at farms that reduce methane emissions from manure, or systems that capture landfill gas emissions.
The definition you provide above actually describes voluntary renewable energy certificates (RECs). RECs support renewable energy projects, which can result in INDIRECT emission reductions, since they generate essentially carbon free electricity.
RECs are sometimes appropriately used to "offset" indirect emissions from the energy we use, and sometimes they are used inappropriately to offset direct emissions. However, they should not be used to offset direct emission reductions (like those from your car). For those emissions, voluntary offsets should be used.
Of course, one should try to reduce their footprint as much as possible before offsetting.
Finally, inflammatory comparisons like "I'm sorry I'm repeatedly choosing to break your leg, let me apologize by funding medical training in Zimbabwe," are ridiculous and discourage conscientious people from engaging in a very positive, managable action that individuals can do to combat climate change. I offset because I know I can't live an entirely impact-free life. I address the impacts I do leave by doing something proactive about them.
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IHeartBiochar Posted 5:02 am
30 Jun 2008
http://www.grist.org/advice/ask/2007/10/15/index.html
Recently, a number of voluntary offset standards have been developed that certify carbon offsets for quality and, sometimes, additional social and environmental benefits. The Stockholm Environment Institute put out this report in March. Maybe it's worth a column?
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drosenblum Posted 11:36 pm
30 Jun 2008
1. Carbon taxes will lend predictability to energy prices, whereas cap-and-trade systems will aggravate the price volatility that historically has discouraged investments in less carbon-intensive electricity generation, carbon-reducing energy efficiency and carbon-replacing renewable energy.
2. Carbon taxes can be implemented much sooner than complex cap-and-trade systems. Because of the urgency of the climate crisis, we do not have the luxury of waiting while the myriad details of a cap-and-trade system are resolved through lengthy negotiations.
3. Carbon taxes are transparent and easily understandable, making them more likely to elicit the necessary public support than an opaque and difficult to understand cap-and-trade system.
4. Carbon taxes can be implemented with far less opportunity for manipulation by special interests, while a cap-and-trade system's complexity opens it to exploitation by special interests and perverse incentives that can undermine public confidence and undercut its effectiveness.
5. Carbon taxes address emissions of carbon from every sector, whereas cap-and-trade systems discussed to date have only targeted the electricity industry, which accounts for less than 40% of emissions.
6. Carbon tax revenues can be returned to the public through dividends or progressive tax-shifting, while the costs of cap-and-trade systems are likely to become a hidden tax as dollars flow to market participants, lawyers and consultants.
For details, see our issue paper carbon taxes versus cap-and-trade.
Dan Rosenblum
Co-Director
Carbon Tax Center
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wormmainea Posted 2:10 am
01 Jul 2008
Paying a measly sum to drive Hummer/Escalade/Yukon/[insert other gas pig here] back and forth to woek does not buy you credit, it only pays for you to feel better about your sin of hubris and stupidity!
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JohnS Posted 9:10 am
04 Jul 2008
I wish that we could get the trickle down benefits form this with say speeding tickets.. Gee ossifer my other car is home in the yard and I know the speeding credits are good on that car so I was only doing twice the speed limit one for this car and one limit for my other car so you can't give me a speeding ticket.
Do not these people realize that they are KILLING them selves as well as us!!
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