Monday, August 13, 2012

Controversial Carbon Offsets

The New York Times ran a front page story (8/9/12) on the paradox of carbon offsets. Offsets, which are supposed to help lower carbon footprints, actually spurred the wrong reaction. Refrigerants have a very high carbon footprint. For every 1 ton of carbon, a refrigerant is 11,000 time stronger which means it can trap heat and negatively impact global warming far worse than carbon dioxide. Businesses realized they could profit by not simply phasing out refrigerants but producing more refrigerants to destroy as carbon offsets. This is the exact opposite purpose of offsets. Offsets were originally intended to help lower carbon footprints. If it is difficult for  customer to lower their own footprint--say giving up commuting and bike to work--they can decide to spend money and buy offsets to offset the carbon footprint of their commute. The money spent funds a project elsewhere--say a project at a farm to lower the methane emissions from cows. Nevertheless, greed took the best and businesses realized a way to profit. Rather than just phase out refrigerants, they can produce more refrigerants, destroy the refrigerants' "waste byproduct," claim that the destruction is an offset helping to lower carbon footprints, and get paid for it. The article, written by Elisabeth Rosenthal and Andrew Lehren, mentions that some companies earn $20 to $40 million a year just by destroying waste byproducts from coolants.

I love this article because it reveals the unenvironmental paradoxes and "green" efforts like carbon offset programs. Carbon markets are complicated and when ill-designed or "gamed" in some sort, they fall apart from their original intent to clean up the environment. As David Doniger of the NRDC said in the story, "It turned the economics of business on its head."