NCPA - National Center for Policy Analysis


March 9, 2009

While much media attention has been paid to "cap-and-trade" schemes as a way to prevent global warming, there is a second path to "global warming" salvation -- carbon offsets.  But it's all just smoke and mirrors, says Sterling Burnett, a senior fellow with the National Center for Policy Analysis.

Under a carbon offset scheme, a country (or company) can meet its emission targets by paying others to reduce their emissions.  To facilitate this process, the United Nations created the Clean Development Mechanism (CDM), an international market where buyers who need to offset their emissions can purchase carbon credits from developing countries. 

Unfortunately, proving that emission cuts are reductions that wouldn't have occurred absent the offset payments is proving difficult, says Burnett:

  • Almost three-quarters of CDM registered projects were already complete at the time of approval, and thus, didn't need carbon credits to be built.
  • An estimated 40 percent of CDM projects registered by 2007 represented "unlikely or at least questionable" emission cuts.
  • Between a third and two-thirds of CDM offsets don't represent actual emission cuts.

And even when CDM certified projects do cut greenhouse gas emissions, the system is inefficient, says Burnett:

  • Nearly 30 percent of carbon offset credits currently pay for capture and destruction of trifluoromethane (HFC-23), a greenhouse gas byproduct of manufacturing refrigerant gases.
  • The carbon offset credits that sold to reduce HFC-23 at current demand are twice as valuable as the refrigerant itself; HFC-23 emitters could receive as much as $7.15 billion from the sale of carbon offsets through the CDM.
  • By contrast, if companies paid plants directly, the cost would be less than $155.4 million.

It's debatable whether Congress should even take up climate legislation.  However, if Congress does act, it should be skeptical of the merits of carbon offset schemes, warns Burnett.

Source: H. Sterling Burnett, "Carbon offsets scam," Washington Times, March 8, 2009.

For text: 


Browse more articles on Environment Issues