November 10th, 2009:

via Laurie Williams and Allan Zabel – Democrats’ climate bill failure – washingtonpost.com

Supporters of the climate bill passed by the House and the similar bill under consideration in the Senate — including President Obama and Democratic congressional leaders — say that the cap-and-trade approach would guarantee greenhouse-gas reductions. But this claim ignores the flaws inherent in both bills that would undermine even their weak emissions-reduction targets and would lock in climate degradation.

Wind turbines near Aalborg, Denmark. Renewable energy projects are the most common source of carbon offsets.

WTF is a carbon offset? Simply, one carbon offset equals one metric ton of carbon dioxide or some other greenhouse gas. If you have a guilty conscience about how much carbon you are dumping out of your minivan you can buy an offset to tell your friends that you live a carbon neutral life. But where do these offsets come from?

Companies or governments, and even private persons, who voluntarily reduce greenhouse emissions beyond the mandated caps can have those efforts certified as carbon offsets by one of the various sanctioned entities such as the Clean Development Mechanism (CDM) established by the Kyoto Protocol. The carbon offsets can then be traded on the market, thus establishing the cap-and-trade system. If you install solar panels on your house you can apply to have the resulting reduction in kilowatts counted as carbon offsets and then sell them.

Coal burning electric plants and others who cannot reduce their greenhouse emissions to comply with mandatory caps set by Congress can buy these offsets to counter the amount of carbon dioxide they pump into the atmosphere above and beyond the cap. It is sort of like the minivan. The coal burning electric plant doesn’t have to reduce emissions as long as they can purchase carbon offsets. You don’t really have to stop driving the minivan, or purchase a more clean burning vehicle when you can just buy an offset and keep on polluting.

In the case of the coal plant, the offsets they purchase are much cheaper than experimental carbon dioxide scrubbers and brings them into compliance with the law. Perversely, the coal plant could actually increase the amount of gasses released as long as they have access to affordable credits.

This economic activity creates a huge, and sometimes fraudulent, market.

Suppose, for example, that a landowner is paid not to cut his forest so that it can continue capturing carbon dioxide from the atmosphere. Purchasing this offset allows owners of a coal-fired power plant to burn extra coal, above the cap.

But if the landowner wasn’t planning to cut his forest, he just received a bonus for doing what he would have done anyway. Even if he was planning to cut his forest and doesn’t, demand for wood isn’t reduced. A different forest will be cut. Either way, there is no net reduction in production of greenhouse gases. The result of this carbon “offset” is not a decrease but an increase — coal burning above the cap at the power plant.

Or consider the refrigerant HCFC-22, the manufacture of which creates an extremely powerful greenhouse gas as a byproduct. This byproduct is relatively easy and cheap to destroy, and governments could require refrigerant manufacturers to do just that. But offset investors have persuaded regulators to approve destruction of the byproduct as a carbon offset, making it twice as profitable to sell byproduct destruction as it was to sell the refrigerant.

Some have even fought to keep release of this byproduct legal because, otherwise, destruction of the byproduct would no longer produce offsets as it would no longer be “additional.” The situation also creates incentive for some to make unneeded refrigerant to profit from byproduct offsets.

In other words, the greenhouse gasses you reduced by trading in the minivan for a Prius is sold as carbon offsets by the auto manufacturer to the the coal burning electric plant so it can dump the difference you saved back into the atmosphere. The end result is no actual reduction of pollutants.

The real answer lies in tough regulations. Instead of a cap-and-trade system, Congress should provide incentives for the the coal fired electric plant to invest, not in tradable offsets, but in wind and solar power that leads to the dismantling of the coal fired plant and the elimination of the pollution altogether.

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