Offsetting Programs: Struggling to Find an Equitable Solution Internationally
| Author | Silvia Fejka |
| Position | J.D. candidate, May 2013, at American University Washington College of Law |
| Pages | 38-39 |
38 SUSTAINABLE DEVELOPMENT LAW & POLICY
OFFSETTING PROGRAMS: STRUGGLING TO FIND
AN EQUITABLE SOLUTION INTERNATIONALLY
by Silvia Fejka*
Carbon offsetting can have some laudable goals, including
protection of the most pristine resources left on earth.1
As a category, however, carbon offsetting and markets
are inappropriate international solutions to climate change and
environmental degradation. The two current carbon offsetting
mechanisms have dubious environmental value and maintain
destructive behavior rather than addressing current emissions.
Climate change is an example of a collective action problem,
where benefits are diffuse, creating little incentive for indi-
vidual nations to act. This renders carbon offsetting programs
particularly susceptible to free riders.2 Further, carbon offset
loopholes weaken equitability in international negotiations and
allow developed nations to perpetuate wasteful behavior nation-
ally.3 Although critics have discussed these problems for years,
carbon offsetting programs continue in full force.4 A solution to
the problems of inequity and the lack of collective action in the
current scheme is to create a system of international obligations
that also allows each country to achieve these goals within its
own unique context.
Two prevalent types of carbon offsetting mechanisms exist:
project-based offsets and carbon markets.5 In the former case,
parties pay for-profit firms or nongovernmental organizations6
that engage in carbon offsetting activities, such as reforestation
or efficient energy.7 Individuals use these offsetting services
at their own discretion.8 The project-based carbon offsetting
market is expansive and one can offset virtually anything, from
driving to eating.9 The second model is increasingly common;
industry traders, states, or countries participate in a carbon trad-
ing market to meet reduction goals imposed through regulation.
Examples include the international offsetting scheme under the
Kyoto Protocol, the Clean Development Mechanism (“CDM”)
under the United Nations Framework Convention for Climate
Change,10 and the Regional Greenhouse Gas Initiative in the
United States.11 Similar mechanisms exist for offsetting different
pollutants as well.12 These mechanisms effectively create a right
to pollute that can be bought and sold as a commodity.13
Critics of carbon offsetting point to its scientific unreli-
ability and questionable environmental value.14 Carbon markets
alone do not reduce overall global carbon emissions, even at full
efficiency.15 The calculation of the reduction of carbon emissions
is based on uncertain projections and misevaluation of natural
resources.16 The dubious environmental value of carbon offset-
ting also stems from its nature as an ex post solution that does
not reduce consumption or the behaviors causing the harm.17
Carbon offsetting is more susceptible to this critique than
carbon markets, which may attempt to create systemic change,
but markets also contribute to the polluting behavior for which
they create a market, through the commoditization of a right
to pollute.18 Essentially, offsetting schemes skirt the need for
wider, structural change and an economy that does not depend
on carbon consumption.19
On an international scale, the need to allocate responsibility
for environmental degradation magnifies the disadvantages of
carbon offsetting. Offsetting carbon emissions reallocates the
burden to change behaviors between nations.20 Offsetting often
perpetuates environmentally detrimental behavior in developed
countries, and forces developing countries to either accommo-
date for less consumption or change behaviors on industrial and
individual levels.21 Environmental justice arguments against
offsetting encompass this issue and raise the fact that poor
communities are disproportionately affected by environmental
degradation and climate change.22 This is not to say that devel-
oping countries may disregard sustainability, but rather that all
countries, especially those with carbon-based economies, should
shoulder their respective burdens based upon their unique
circumstances.
The attempts of nations to reallocate their burdens reflect
that climate change is a classic collective action problem.23
This means that an international forum is absolutely necessary
because, in the climate change context, all nations benefit from
a reduction of greenhouse gas emissions whether or not they
assume the costs of that reduction.24 Carbon free riders are a
problem particularly in the CDM and Reducing Emissions from
Deforestation and Forest Degradation in Developing Countries
(“REDD”) programs.25 Although offsetting itself is technically
not “free” riding, its “business as usual” approach demonstrates
minimal effort in addressing the problem.26
This free riding problem explains the insufficiencies of
current international climate change negotiations, such as the
November 2011 Durban Conference.27 Without other incentives,
developed countries, including the United States, may hesitate
to act because climate change mostly affects the impoverished
and its benefits are diffuse.28 This may be why Durban delegates
failed to commit their countries to a binding plan.29 Even more
importantly, Durban negotiators seemed to have expanded
carbon trading mechanisms that could further exacerbate the
problem of “free” riders who may choose to buy credits instead
of changing their own carbon-emitting ways.30 The results
of Durban show the need for a new international approach that
creates obligations to promote internal changes in consumption
and behavior without offset loopholes.
* Silvia Fejka is a J.D. candidate, May 2013, at American University Washington
College of Law.
39WINTER 2012
Nations must recognize that while offsets can preserve
existing ecosystems and promote sustainable energy projects
that benefit local populations, they merely allow developed
countries to continue polluting at their given rate and prevent the
realization of an equitable solution to the collective action prob-
lem of climate change. Although the Kyoto Protocol allows for
lesser burdens on developing countries,31 developed countries
continue to find offset loopholes for their own commitments
through CDM.32 Developed nations should contribute to these
efforts separately from their own reduction obligations, such
as through the recently implemented Green Climate Fund.33
The global issue of climate change requires both a concerted
international effort and strong national action to move away
from carbon-based economies and effectively address climate
change.
Endnotes: Offsetting Programs: Struggling to Find an Equitable
Solution Internationally
1 See, e.g., ‘Gold’ Standard for REDD Forest Conservation Project in
Colombia’s Choco, MONGABAY.COM (Feb. 15, 2012), http://news.mongabay.
com/2012/0215-redd_choco-darien.html (describing a project to preserve
rainforest in Colombia’s Darien region, one of the most biodiverse ecosystems
on earth).
2 See infra notes 23-25.
3 See infra notes 19, 20.
4 See Carbon to Boom in Volume but Crash in Price, Say Analysts, BUSI-
NESSGREEN (Feb. 23, 2012), http://www.businessgreen.com/bg/news/2154348/
carbon-boom-volume-crash-price-analysts?WT.rss_f=Home&WT.rss_a=Carbo
n+to+boom+in+volume+but+crash+in+price%2C+say+analysts (revealing that
although carbon markets are set to crash in price this year, a break from previ-
ous trends, growing emerging carbon markets provide optimism for the long
term).
5 See infra notes 6, 9-11.
6 See generally Collin Dunn, Survey of Carbon Offset Services, TREEHUGGER
(March 21, 2006), http://www.treehugger.com/renewable-energy/survey-of-
carbon-offset-services.html (describing organizations that provide carbon
offsets).
7 See KEVIN SMITH, CARBON TRADE WATCH, THE CARBON NEUTRAL MYTH 5
(Feb. 2007), http://www.carbontradewatch.org/pubs/carbon_neutral_myth.pdf
(discussing a variety of offset mechanisms, including tree planting and distribu-
tion of efficient light bulbs).
8 See Dunn, supra note 6 (describing organizations that provide offsets to
individuals who can purchase an offset by metric ton of carbon).
9 See, e.g., Damian Kahya, Who pays and who gains from carbon offsetting?,
BBC NEWS (Nov. 26, 2009), http://news.bbc.co.uk/2/hi/business/8378592.stm
(describing the variety of offsets available, from flights, car journeys, and home
energy usage to food consumption and Christenings).
10 See Kyoto Protocol to the United Nations Framework Convention on
Climate Change, art. 12, Dec. 11, 1997, U.N.T.S. A-30822 (allowing CDM
countries with commitments under the Kyoto Protocol to implement emission-
reduction projects in developing countries to earn credits that can be counted
towards meeting Kyoto targets).
11 See generally Regional Greenhouse Gas Initiative, RGGI, INC. (last visited
Mar. 4, 2012), rggi.org (providing a portal for participation in the RGGI
market-based regulatory program).
12 See CO2 Auctions, Tracking & Offsets, Offset Categories, RGGI, INC. (last
visited Mar. 4, 2012), http://www.rggi.org/market (citing methane and sulfur
hexafluoride as eligible offset categories).
13 See Smith, supra note 7, at 32 (characterizing a project to grow trees in
Uganda established by a Dutch organization as a project allowing pollution to
continue in the Netherlands, thereby creating a “right to pollute”).
14 See, e.g., Smith, supra note 7, at 19-25 (asserting that the link between
carbon offsetting and actual carbon reduction is tenuous at best); see also Elinor
Ostrom, A Polycentric Approach for Coping with Climate Change 25 (World
Dev. Rep. Policy Research Working Paper No. 5095, 2009), http://papers.ssrn.
com/sol3/papers.cfm?abstract_id=1494833 (describing the vulnerability of
offsetting to gaming, wherein offsetting credits become so valuable as to induce
pollution for offsetting).
15 See Jon Strand, Carbon Offsets with Endogenous Environmental Policy 2
n. 1 (World Dev. Rep. Policy Research Working Paper No. 5296, 2010), http://
www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2010/05/07/00
0158349_20100507104204/Rendered/PDF/WPS5296.pdf (stating the regulated
market assumes a limited pollution baseline under which pollution is permitted,
which creates value for the right to pollute).
16 See Smith, supra note 7, at 19-25 (noting the example of reforestation,
the carbon value of which is based upon the assumption that each tree will be
maintained for at least 100 years)
17 See Ezra Rosser, Offsetting and the Consumption of Social Responsibility,
89 WASH. U. L. REV. 27, 76 (2011) (arguing that while offsetting is an easy way
for consumers to make a choice about products whose production they cannot
otherwise affect, it is an imperfect substitute for reducing environmentally
destructive behavior).
18 See Strand, supra note 15, at 2 (positing that the existence of carbon mar-
kets may create perverse incentives to raise emissions in a variety of ways).
19 See Smith, supra note 7, at 10 (establishing that offsets provide an opportu-
nity to delay the transition to a low-carbon economy for as long as possible).
20 See generally Smith, supra note 7 (depicting a variety of offsetting projects
wherein organizations collect money to change environmental behaviors in a
different country).
21 See Smith, supra note 7, at 27 (describing the environmental burdens that
implicate social justice issues).
22 See, e.g., Intergovernmental Panel on Climate Change [IPCC], Climate
Change 2007: Climate Change Impacts, Adaptation and Vulnerability, Working
Group II Contribution Intergovernmental Panel on Climate Change Fourth
Assessment Report, 8 (Apr. 13, 2007) (prepared by Neil Adger, et al.) (conclud-
ing that Africa is especially vulnerable to climate change effects because of
“low adaptive capacity”); see also Eric Posner and Cass Sunstein, Climate
Change Justice, 96 GEO. L.J. 1565, 1581 (2008) (accepting that climate change
will especially affect Africa and India through climate-related diseases and
dependence on agriculture). Environmental justice issues stem from certain
countries being responsible for the majority of extracted resources and pollu-
tion, many of which are now better able to adapt to the impacts of their exploits,
while countries that have not contributed to environmental degradation to this
extent are in a vulnerable state. IPCC, supra.
23 See Ostrom, supra note 14, at 5-19 (stating that the collective action theory
holds that “no one will change behavior and reduce their energy use unless an
external authority imposes enforceable rules that change the incentives faced by
those involved”).
24 See Ostrom, supra note 14, at 2, 5 (emphasizing that no one country can
solve a problem of the magnitude climate change, where a concerted effort is
necessary).
25 See Ostrom, supra note 14 (describing CDM and REDD, a Kyoto Protocol
initiative to fight deforestation, as especially susceptible to free ridership).
26 See Smith, supra note 7, at 9 (asserting that the “business as usual”
approach manifest in carbon offsetting is corrosive to the climate change
debate).
27 See infra note 29.
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