Carbon offsets: adding is not enough

Following a recent Cambridge Energy Forum meeting on carbon offsetting and a subsequent email dialogue between myself and Philip Sargent, I would like to clarify some terms and describe a critical problem with carbon offsetting.

The Gold Standard and other sets of rules for carbon offset projects rely on a test of “additionality”. This test basically states that, for a carbon offset project to meet the standard, it must be demonstrable that the reductions in carbon emissions would not have happened anyway. Examples of projects that would pass the additionality test are a wind farm in China that would not otherwise have been funded; energy saving light-bulbs in South America that would not otherwise have been provided; and projects to filter HFC23 from factory emissions that would not have happened otherwise. Critically, the test of additionality is only made within the scope of the carbon offset project.

The are various problems with the concept of additionality – such as the virtual certainty of moral hazard coming into play (e.g. wind farms might not be funded another way simply because China knows carbon offset money is available) – but I believe the most significant flaw is that the test is incomplete. The problem is that we are dealing with an open system – global energy production and consumption – and not a series of closed systems. The easyJet flight you offset, VAT free, for £1.77, and the Chinese windfarm are not the end of the story.

We need another test, which I term “subtractability”. That is, there needs to be an onus on the carbon offset provider to prove that the carbon emissions saved really are subtracted from total global carbon emissions. Several types of carbon offset project fail this test and must be consigned to the fig-leaf category.

Of the 3 examples I gave earlier, the first two both fail the “subtractability” test. They run into what I have previously termed “the displacement fallacy“. For example, China is using energy as fast as it can produce it. The wind-farm may simply mean they produce and use more energy than they would have done otherwise. Similarly, people given energy-saving lightbulbs may simply be able to afford more electricity for something else, or power cuts may become a little less frequent in their country. [Note that I am not arguing that such projects themselves are not worthwhile – I’m merely pointing out that they most likely will not successfully offset your carbon emissions].

Projects that directly remove or destroy GHGs, such as those to capture HFC23 from factory flues, pass the subtractability test, but may run into other problems, as we heard at last week’s Cambridge Energy Forum. In fact, since the types of project that pass the subtractability test – such as tree-planting – tend to fail in other ways, it’s difficult to see how carbon offsetting can do more than salve peoples’ consciences.