NCPA - National Center for Policy Analysis


August 16, 2007

The market for "voluntary carbon offsets" now encompasses dozens of sellers and thousands of buyers, including individuals and corporations.  But a closer look reveals an unregulated market in which some improvements bought by customers are only estimated, extrapolated, hoped-for or nil, says the Washington Post.

In many cases, customers may be buying good feelings and little else, says the Post:

  •, for example, has advertised offsets that finance wind farms and tree-planting projects.
  • But some wind farms said the donations haven't led to anything new; and the benefits from some tree projects were unclear enough that no longer uses them to back offsets.
  • Some offsets support projects that would have gone forward anyway; others deliver results difficult to measure.
  • For example, Carbonfund donated $16,249 to the National Arbor Day Foundation, which promised to plant trees in U.S. national forests; but officials at the foundation said it would be difficult to know exactly how much carbon the trees, $1 each, would offset.

Even more head-spinning are the questions about "renewable energy certificates" from wind farms and solar plants, certifying that they made a certain amount of clean energy:

  • Offset companies buy these pieces of paper, then, they use them to claim credit for pollution "avoided" -- reasoning that they helped produce energy that would otherwise have come from a polluting coal or natural-gas plant.
  • Some of the money paid for these certificates stays with the offset vendor or with a middleman; the rest usually winds up with the energy project's builder or the utility that buys its electricity.
  • In some cases, this can amount to something like a donation to a for-profit company: American Electric Power, which sold an undisclosed amount of certificates from wind farms last year, earned more than $1 billion in profit.

Source: David A. Fahrenthold and Steven Mufson, "Cost of Saving the Climate Meets Real-World Hurdles," Washington Post, August 16, 2007.

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