Carbon Credits... Scam?

More and more often I’m seeing articles about carbon credits and offsets. If you’re not familiar, here’s the deal…

Throughout the day, each of us creates a certain amount of pollution. We drive cars, heat and cool our homes and offices, all the while creating greenhouse gases. Trees and plants absorb lots of those greenhouse gases, keeping them from floating up into the upper reaches of the atmosphere. The more trees and plants, the more carbon is sequestered from the air. Conversely, less vegetation means less sequestering.

In their attempts to save the planet, some environmentalists have come up with a scheme by which people and companies can offset the pollution they create. By paying money to people who grow trees and plants, they feel that their carbon “footprint” can be counteracted. Best I can figure, proponents of these carbon credits believe the cash payments will lead to more land being left undeveloped, more forestland being allowed to stand uncleared. Perhaps more land will be planted in trees, to take advantage of the payments.

Put more simply… we pollute, but we can write a check, assuage our guilt and continue polluting guilt-free.

I can’t say the idea is completely without merit, but I do have some very serious doubts. First, the environmental projects the credit payments go to would be undertaken anyway. For example, land enrolled in the Conservation Reserve Program (CRP) is eligible for carbon credit programs. These landowners are already being paid by the government for keeping this land in long-term conservation. Tree farmers are eligible for carbon credit programs. They grow trees and care for the forests already. Again, being paid for doing what they would do otherwise. Carbon credit money going to these growers is accomplishing nothing, aside from helping clear someone’s conscience.

Another problem I have with this scheme: who’s checking all these projects to ensure that the emission reducing steps are actually taking place? Is there any oversight?

These carbon credits are traded like a commodity on the Chicago Climate Exchange. Credits are traded in Exchange Traded Funds (ETFs). ETFs are essentially mutual funds for the masses. They allow an average individual investor to buy into a diversified pool of assets in small amounts and with minimal cost. Carbon credits essentially give companies the right to pollute and their value will almost certainly go up as governments of all major economies will eventually have to tax corporations for environmental damage. As investors buy up carbon credits, the cost to pollute will rise. The value of the international carbon market was reportedly about US$60 billion in 2007.

An investigation by Financial Times last year uncovered worthless credits that yielded no reductions in carbon emissions; little or no verification of supposed emission reduction projects; companies making big profits from carbon trading for very small expenditures and in some cases for clean-ups that they would have made
anyway.

I guess my biggest concern about the idea could be summed up with one question... how can there be specific proof that the money going into credits is actually providing a meaningful step? I've seen estimates of as much as $70 billion in carbon credit sales by 2010. I'd gladly wager that no more than a tenth of that amount will actually be spent on new carbon offsetting programs. Paying people to do what they would have done anyway... that doesn't count. Wasted money.

Hypothetical: As an individual, say I want to buy carbon offsets to make up for my family's polluting. What guarantee do I have that the money will go anywhere but some speculator's pockets? Say it actually makes it to someone raising forestland for carbon sequestering. Will my money make any difference in the future of that forestland? Or would those trees be there for years and years regardless? Did my money just go into that tree farmer's gas tank?

To me, the idea of carbon credits is just too "pie in the sky" for me. To see if something sounds like a good idea, I've always believed in actually saying it out loud. How does it sound then? I think I'll try it now. Say it aloud with me, if you'd like.

"I may be producing too much greenhouse gas. To offset the pollution I'm creating, I'm going to give away some of my hard-earned money. I won't have anything concrete to show for it. Just a piece of paper saying I've offset my fair share. Oh... and a clear conscience!"

One word comes to mind: naive

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To read more on carbon credits

Carbon Credits Were a Great Idea, But the Benefits Are Illusory

National Farmers Union Talks About Credits

Creators of carbon credit scheme cashing in on it