Offsets Allow Us to Go Further, Faster

• Author: Derik Broekhoff
• Position: Vice President for Policy at the Climate Action Reserve
• Pages: 50-50

Page 50 ❧ THE ENVIRONMENTAL FORUM Copyright © 2010, Environmental Law Institute®, Washington, D.C. www.eli.org.

Reprinted by permission from The Environmental Forum®, May/June 2010

Th e fo r u m

these three functions. And while

some programs, including the Clean

Development Mechanism under the

Kyoto Protocol, have come in for

criticism recently, most are uphold-

ing reasonable standards for of‌fset

quality when viewed objectively.

With any carbon of‌fset program

there will always be lurking ques-

tions: Would particular projects

that receive credit have been imple-

mented anyway? What level of

emissions would have occurred over

time in the absence of specif‌ic proj-

ects? ese are questions that can

never be answered def‌initively. For

of‌fsets to be valuable and ef‌fective

at achieving overall emissions reduc-

tion goals, however, absolute cer-

tainty is unnecessary. e Climate

Action Reserve and other carbon

of‌fset programs have developed tools

to answer these kinds of questions

credibly, analytically, and robustly

while recognizing the inherent un-

certainty.

It is a hard fact that the most

cost-ef‌fective near-term options for

reducing global GHG emissions

are likely to come from sources that

will not be covered by regulatory

emissions caps. Carbon of‌fsets allow

trading systems to take advantage of

these options, creating f‌lexibility, li-

quidity, and the ability to go further,

faster in reducing overall emissions.

e problem is not that we do not

know how to set ef‌fective standards.

Rather, the challenge is for policy-

makers to clearly and transparently

explain the need for of‌fsets, to con-

front the uncertainties and tradeof‌fs

involved, and to adopt rules accord-

ingly. It is only by demonstrating

this kind of leadership that we will

achieve the very signif‌icant reduc-

tions in global emissions that are

necessary to address the urgent chal-

lenge of climate change.

Derik Broekhoff is Vice President for

Policy at the Climate Action Reserve.

Why? Because

Of‌fsets Are

Important!

L H. K

O

f‌fsets make economic

sense for emitters seek-

ing to limit compliance

costs, particularly in the

near-term when they

could lead to stranded investments.

ose emitters have been seen as

key to politically acceptable climate

change policy, which is why of‌fsets

have grabbed such a high prof‌ile.

A well-designed of‌fset can be

characterized as a win-win. e po-

tential for advantage is particularly

true at the global level, where of‌fset

funding could provide revenues for

energy and natural resource pro-

grams in developing countries, sup-

plementing dwindling international

assistance.

is has become lost in some

recent debates — of‌fsets really can

make sense economically and envi-

ronmentally. Facts:

• e atmosphere doesn’t care

where emissions or reductions occur.

GHGs are the perfect tradable com-

modity.

• Since we do not have to worry

about pollution hot spots with

GHGs, there is no need for health-

based trading restrictions.

• e cost of achieving emissions

reductions varies by gas and region,

which increases the potential value

of market mechanisms in reducing

the cost of achieving targets. Reduc-

ing emissions at power plant smoke-

stacks is often far more expensive

than reducing methane emissions

from landf‌ills. We should not aban-

don technological solutions, but it

in the interim we need to push cost-

ef‌fective approaches.

What kind of numbers are

involved? $10–20 billion could

mitigate a gigaton of CO2 emis-

sions annually through international

Of‌fsets Allow Us

to Go Further,

Faster

D B

Carbon of‌fsets have been a

central element of nearly

every market-based

program for controlling

greenhouse gas emis-

sions proposed or implemented

around the world over the past 20

years. It is easy to understand why.

Of‌fsets help lower the cost of achiev-

ing GHG emissions reductions,

channel investment and resources to

countries (or sectors of the domes-

tic economy) that would otherwise

face no incentive to reduce emis-

sions, and, as a consequence, build

political constituencies in favor of

more comprehensive and aggressive

emissions targets. Yet despite their

embrace by policymakers, carbon

of‌fsets have been greeted with skep-

ticism by many critics of emissions

trading.

On one level, this skepticism is

understandable. Carbon of‌fsets are

the epitome of an intangible com-

modity. eir value and ef‌fectiveness

depend entirely on how they are

def‌ined, quantif‌ied, and guaranteed.

Such guarantees require the estab-

lishment of standards and a regula-

tory infrastructure to consistently

enforce those standards. What many

critics of of‌fsets overlook is how

robust these standards and infra-

structure are today, based on years

of work under both regulatory and

voluntary carbon of‌fset programs.

Programs like the Climate Action

Reserve, for example, have helped

set a high bar for the voluntary car-

bon of‌fset market, developing stan-

dards through public engagement,

overseeing verif‌ication activities, and

maintaining a publicly accessible

registry of of‌fset projects. Nearly

all of‌fsets openly traded today are

certif‌ied by programs that perform