It is no surprise that carbon offsets were concocted during the era of irrational exuberance. They are a low-cost, free-market way of assuaging guilt about global warming. Need to pump hydrocarbons into the air? No problem. You can buy a piece of a green project somewhere else in the world to offset the damage. Happy Earth Day.
Businesses, governments, and individuals buy carbon offsets every day. It's a $700 million global business. At San Francisco International Airport, travelers can walk up to an ATM-like kiosk and purchase an offset for the emissions from their flights.
But many carbon offsets are empty promises and some are outright scams, according to the findings of a six-month investigation by reporters for The Christian Science Monitor and the New England Center for Investigative Reporting. Like the financial derivatives they are cousin to, there's little oversight of carbon offsets. What you are buying may help you feel good, but they may do little to compensate for global warming.
"I think you are looking at 75 percent of them as garbage, at least," Rolf Skar, a forest conservationist and senior investigator for Greenpeace in San Francisco, told our lead reporter, Doug Struck.
Until someone investigates, there's no way of knowing where the money is going. A wind-generation project in India, for instance, has produced much less electricity than expected while displacing a lot of local people. In Panama, at what was promised as the nation's largest reforestation project, reporters saw few plantings. At least trees were going into the ground in Israel, but this 60-year-old arboricultural project is now simply marketing some of its saplings as carbon offsets.
With the once-popular concept of "cap and trade" now facing stiff opposition in Washington, the dubious nature of carbon offsets raises new questions about the use of market mechanisms to regulate pollution. Under cap and trade, a government limits the amount of pollution, then allows utilities and other hydrocarbon emitters to buy and sell pollution permits. Carbon offsets, by comparison, are voluntary ways of compensating for pollution. Both try to turn pollution into a swappable commodity.
Like Moody's in the credit world, there are certification agencies in the carbon offset world. But certification is voluntary, and much of the oversight is only on paper, not via physical inspection. If you take a look for yourself, as our reporters did, you encounter more smoke and mirrors than green and growing things.
In short, reducing greenhouse gases isn't going to happen via the "free-to-choose" route. You may feel better when you buy a piece of paper that claims you are helping an earth-friendly project somewhere. But in most cases, all you have is the piece of paper.