NCPA - National Center for Policy Analysis


March 23, 2007

A growing number of organizations, corporations, cities, and individuals are seeking to protect the climate -- or at least claim bragging rights for protecting the climate, by purchasing carbon offsets; essentially paying to have someone else curtail air pollution or develop "renewable" energy sources, says Ben Elgin (Businessweek).

The 2007 Academy Awards essentially showed how this "checkbook environmentalism" works:

  • Oscar organizers paid Terrapass Inc. -- a carbon offset service -- to identify projects that reduce carbon dioxide.
  • Terrapass Inc. took a share of the money and passed along the rest to landfills and other projects that reduce greenhouse gases.
  • Presenters and performers at the awards show went home having been declared "carbon-neutral" for a year.

The market for carbon offsets in the United States could be as high as $100 million, according to researchers.  That's up from next to nothing just a couple of years ago.  One reason for this growth is that the United States hasn't ratified the Kyoto Protocol, meaning no mandatory national cap, leaving Americans to take action on their own.

Unfortunately, without any real regulation, carbon offsets amount to little more than feel-good hype, says Elgin.  When traced to their source, dubious offsets often encourage climate protection that would have happened regardless of the buying and selling of paper certificates.  Perhaps the worst danger of these largely symbolic deals is that they may divert attention and resources from more expensive and effective measures.

Source: Ben Elgin, "Another Inconvenient Truth," Business Week, March 26, 2007.

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