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> Transactions like this undercut the basic concept behind carbon offsets—that they should fund green projects that wouldn’t be possible without the additional

> Transactions like this undercut the basic concept behind carbon offsets—that they should fund green projects that wouldn’t be possible without the additional cash they bring. Is this really the basic concept? I thought it was meant to deliver carbon cutting at the cheapest cost. Redesigning a Delta airlines jet to be electric or make the engine more fuel efficient is $$$$. Now, there is a village in India that uses a coal power plant. It's cheaper for Delta to build a solar power plant in India, shutdown the coal plant, and claim all the carbon output they've reduced in India then to try and build a new airplane. Capital is therefore efficiently allocated to whatever carbon cutting project is the cheapest, therefore maximizing carbon reduction per dollar spent.

opportune 4y ago
Since delta is paying to convert a coal plant to a solar plant, carbon offsets create perverse incentives like allowing you to “sell” or hold hostage something you were going to do anyway, keep inefficient things around so you can sell offsets lager, or start off doing something inefficient or bad so someone can pay you to stop. For example, as a fisherman it might be cheaper for me to buy some old, shitty, super-polluting boats, run them around for a bit generating huge amounts of emissions, and then go shopping for offsets. With the offsets I buy nicer boats that don’t pollute as much. But without the offsets I might have either not been fishing at all or gone straight for the nicer boats. Basically, carbon offsets in theory allocate carbon savings where they are most effective financially, but in practice create structural inefficiencies (incentivized to start polluting to fix it). Also, they are prone to double counting. If I open a wind farm partially funded by carbon offsets, if I claim that the farm is removing as much CO2 as it actually saves, I’m double counting along with whoever paid for the offsets to be “carbon neutral” when there is indeed still a net amount of carbon being put in the atmosphere
- crackercrews 4y ago
  Like the Great Hanoi Rat Massacre. [1] You get what you pay for! 1: https://www.atlasobscura.com/articles/hanoi-rat-massacre-1902 https://www.atlasobscura.com/articles/hanoi-rat-massacre-190...
  - andai 4y ago
    Other examples include India had a bounty for snakes, so people started snake farms. My favorite one though is about the British paying China for dinosaur fossils, but they paid per fragment, so (naturally!) entire fossils were smashed into many small pieces.
    - zibby8 4y ago
      The Mexican government paid for the ears or scalps of Apache Native Americans. A gang of marauders called the Glanton Gang went around murdering anyone they encountered to take their ears/scalps.
- beambot 4y ago
  You need to maintain a separate set of accounting books alongside all assets to track net carbon offsets. E.g., in your boat example: The negative carbon offset balance needs to get attached to the boat, so that subsequent owners cannot claim the same benefit. Then there should be a threshold date at which assets get their offset balance zeroed.
  - opportune 4y ago
    That sounds good but it probably wouldn’t work in the developing and undeveloped world. Also, it doesn’t stop the problem of new things being made because they have a floor price set by carbon offsets. A new polluting asset becomes more valuable when it has a fixed rebate for decommissioning it. You can scrap my old shitty polluting boat but I can probably just buy a new shitty polluting boat
  - njarboe 4y ago
    Let's just have a CO2 tax already. Revenues given back to the people directly split evenly per person.
    - samatman 4y ago
      No, put all of it into core decarbonization of (first) electricity. This is driven by policy goals, not market forces, and the gap between profitable behavior and ecological responsibility calls for money.
      - AnthonyMouse 4y ago
        The policy goals are better served by being aligned with market forces. A carbon tax which is fully refunded can be larger without causing economic damage, because it nets to zero for the average customer. Meanwhile you eliminate the overhead and corruption opportunity on the decarbonization side. If you have a meaningful carbon tax, the incentive to decarbonize exists in proportion to the size of the tax, but people can do it however is most efficient rather than according to the way specified by the companies with the best lobbyists.
- ajross 4y ago
  > perverse incentives like allowing you to “sell” or hold hostage something you were going to do anyway This is true, but it's a weird way to frame it. Yes, absolutely: carbon-sensitive regulation changes the market pricing such that less polluting activities and means of production are "worth more". So if you have some, you win. If you were planning on having some in the future ("were going to do anyway"), you likewise get a windfall. And thats... good? It's not perfect. But it produces the result we want. IMHO the much bigger problem with offset regulation is that it's likely to be nearly impossible to actually measure[1] and we'll be dealing with cheating and fraud for decades. But the incentives seem fine to me. [1] Vs. a carbon tax which is pure simplicity: $xxx per ton of carbon (for extra credit: a floating price based on a dynamic bid-based sequestration market) pulled out of nonrenewable sources, paid by the extractor at the time of initial sale, and let the market sort out how to allocate the overhead.
  - JacobThreeThree 4y ago
    Who gets to decide what the carbon footprint of every activity is? How is the surveillance of every activity performed? What is the performance metric to evaluate the success or failure of the system?
    - ajross 4y ago
      The third question has an obvious answer, so I'm not sure I get your point. The first two are just saying "regulation is hard", and I agree. But it's possible nonetheless, just like every other regulated industry. Recognize that all your questions could have been asked about, say, sulphate emission regulation in the 1970's. (Or CFC's in the 90's). And that worked out OK.
    - samatman 4y ago
      A tax on carbon is much simpler than a tax on carbon footprint. Corporations buy carbon, to a good first approximation, as coal, gas, or crude. That's what you tax. Plus a tarrif on countries which don't do likewise.
      - 4y ago
- gumby 4y ago
  > For example, as a fisherman it might be cheaper for me to buy some old, shitty, super-polluting boats, At the level of an individual, yes.* However consider a fleet of cargo ships. They last, and depreciate, over about 20 years. Even if the owner buys newer, cleaner ones, they aren't throwing away the old ones, and the one bought today will stay in service until around 2042. It's not unreasonable to offset this ancient cap ex, especially if governments also ramp up regulation so the economics for the oldest/worst of continued use vs scrapping make them uneconomic. In a utopian sense this is clearly worse than just replacing all the polluting equipment, but in the real world a "big bang" solution can't work, not the least because there isn't enough shipbuilding capacity to replace the entire fleet overnight. The ethics of offset vs removal credits, and the whole offset credit market is a complex and sorry situation and this article just scratches the surface. OTOH one reason it's so marginal, despite the efforts of some people (including Verra and Gold Standard) to make it better, are largely because credits of any non-mandatory size are barely used (about $1B traded last year) so there's little incentive to clean it up. Hopefully that is in the process of changing; the market is growing and prices are rising faster than the market is growing indicating that demand is increasing. * At the consumer level this is all awful. Remember when Obama did "Cash for clunkers" to get polluting cars off the road? You couldn't get the credit unless you bored a hole in the block and injected some epoxy. In Germany they had a similar program, but just took the old cars and shipped them to LDCs in Africa where they could continue to pollute, just someplace else. Or for aging luxury cars, some nefarious companies would send them across the border into Poland and then smuggle them back in and get the credit another time.
  - upsidesinclude 4y ago
    Your point on depreciation is fair, but the 'cash for clunkers' program was nothing more than an economic subsidy. There were no reasonable electric vehicles at the time which would have reduced carbon usage and the newer improved efficiency vehicles available would never offset after accounting for the entire vehicle manufacturing process. The old car getting lower mpg was still less polluting than producing an entire vehicle with mpg better by 30%. Not only that, but it destroyed the secondary market by destroying all those vehicles, as you mentioned, requiring more production to make up for the short fall. Putting those second-life vehicles in other countries was a net benefit, reducing once again the new full production cost of vehicles there. In particular because less developed nations have historically been less accountable for pollution industrially by necessity.
- roenxi 4y ago
  If I look at a graph of oil discoveries vs oil production, negative incentives barely matter. Discoveries of oil are already lower than production! We're running down the available oil quickly and it is going to be come less economically competitive over time as we extract the cheap stuff. Natural gas is going to do something similar in the next few decades if it isn't already. The government needs to be focused on making it easy to build alternative energy sources.
russdill 4y ago
In theory, it's great. In practice perverse incentives and little to no regulation make it worthless. A John Oliver explainer: https://www.youtube.com/watch?v=6p8zAbFKpW0 https://www.youtube.com/watch?v=6p8zAbFKpW0
- gremlinsinc 4y ago
  Side tangent. John Oliver is amazing at using comedy to basically blow the whistle on a lot of shitty things happening in this country.. from the way truckers are treated and basically exploited, to drinking water crises, and everything in between. Jon Stewart did a lot of this too, and was great. I heard once people who get news from shows like the Daily show, Late shows or John Oliver type shows actually are more 'informed' about current events than those who watch Fox, MSNBC, CNN, or even just local nightly news on NBC or CBS.
  - uoaei 4y ago
    That's true, and popularizing knowledge is important. What's also true is you get only a specific worldview and consequent narrative from these kinds of shows. They have convergent ideologies and parrot a single, totalizing, pro-capital, -moderation, -individualist method for solving the problems stated as such. It's great if you've drunk the Kool-aid but it does paper over a lot of prescient issues (climate change, culture war, etc.) on the assumption that they will be solved by emphasizing politicking and de-emphasizing economicking.
  - ipaddr 4y ago
    No you are not more informed. Local news gives you a local len that presents different issues. National coverage on any news network will provide you more depth and you will be more informed (have more details) At one point most young people got there news from these sources. They do provide a point of view on an issue. By making someone else look stupid you as the viewer feel smarter and more informed even though you aren't.
    - benj111 4y ago
      I don't think you can singularify 'lense'?
hinkley 4y ago
When the Catholic Church did this in the Middle Ages, they were called 'indulgences' and they ended up being a license to sin, which it turns out is a very bad idea.
- russdill 4y ago
  I gotta say, the catholic church indulgence system would have been a lot more interesting if it were structured as offsets instead of just payments. It's a great way to explain how ludicrous the current system is though. You can pay me to promise not to cheat on my spouse for the next 3 years in exchange for you being able to cheat on yours. Catholic indulgences as they were actually structured would be more akin to just a carbon tax.
  - imtringued 4y ago
    Honestly the indulgence system is easy to game. Just buy an indulgence and kill the issuers of indulgences.
padjo 4y ago
Funny, I thought the basic concept was that they allow westerners to tick a box and mitigate the guilt they feel from living ludicrously unsustainable lifestyles.
high_byte 4y ago
the skeptic in me thinks if an engine is more fuel efficient they will not fly it with reduced carbon emissions, they will fly more and get same carbon emissions.
saurik 4y ago
Somehow none of the responses seem to say this explicitly: you didn't actually contradict the definition you quoted! The idea is that that solar power plant being built is a green project that wouldn't be possible without the additional cash from Delta... if that power plant was already able to happen without this money (which happened to be provided by Delta) then Delta didn't really buy anything and so shouldn't get any credit. And that's the issue people keep noting about these carbon credit projects: that the money spent on these credits often somehow isn't cutting emissions (as it is clearly intended to in your example, as that's the basic concept behind the market).

opportune 4y ago

Since delta is paying to convert a coal plant to a solar plant, carbon offsets create perverse incentives like allowing you to “sell” or hold hostage something you were going to do anyway, keep inefficient things around so you can sell offsets lager, or start off doing something inefficient or bad so someone can pay you to stop. For example, as a fisherman it might be cheaper for me to buy some old, shitty, super-polluting boats, run them around for a bit generating huge amounts of emissions, and then go shopping for offsets. With the offsets I buy nicer boats that don’t pollute as much. But without the offsets I might have either not been fishing at all or gone straight for the nicer boats. Basically, carbon offsets in theory allocate carbon savings where they are most effective financially, but in practice create structural inefficiencies (incentivized to start polluting to fix it). Also, they are prone to double counting. If I open a wind farm partially funded by carbon offsets, if I claim that the farm is removing as much CO2 as it actually saves, I’m double counting along with whoever paid for the offsets to be “carbon neutral” when there is indeed still a net amount of carbon being put in the atmosphere

crackercrews 4y ago
Like the Great Hanoi Rat Massacre. [1] You get what you pay for! 1: https://www.atlasobscura.com/articles/hanoi-rat-massacre-1902 https://www.atlasobscura.com/articles/hanoi-rat-massacre-190...
- andai 4y ago
  Other examples include India had a bounty for snakes, so people started snake farms. My favorite one though is about the British paying China for dinosaur fossils, but they paid per fragment, so (naturally!) entire fossils were smashed into many small pieces.
  - zibby8 4y ago
    The Mexican government paid for the ears or scalps of Apache Native Americans. A gang of marauders called the Glanton Gang went around murdering anyone they encountered to take their ears/scalps.
beambot 4y ago
You need to maintain a separate set of accounting books alongside all assets to track net carbon offsets. E.g., in your boat example: The negative carbon offset balance needs to get attached to the boat, so that subsequent owners cannot claim the same benefit. Then there should be a threshold date at which assets get their offset balance zeroed.
- opportune 4y ago
  That sounds good but it probably wouldn’t work in the developing and undeveloped world. Also, it doesn’t stop the problem of new things being made because they have a floor price set by carbon offsets. A new polluting asset becomes more valuable when it has a fixed rebate for decommissioning it. You can scrap my old shitty polluting boat but I can probably just buy a new shitty polluting boat
- njarboe 4y ago
  Let's just have a CO2 tax already. Revenues given back to the people directly split evenly per person.
  - samatman 4y ago
    No, put all of it into core decarbonization of (first) electricity. This is driven by policy goals, not market forces, and the gap between profitable behavior and ecological responsibility calls for money.
    - AnthonyMouse 4y ago
      The policy goals are better served by being aligned with market forces. A carbon tax which is fully refunded can be larger without causing economic damage, because it nets to zero for the average customer. Meanwhile you eliminate the overhead and corruption opportunity on the decarbonization side. If you have a meaningful carbon tax, the incentive to decarbonize exists in proportion to the size of the tax, but people can do it however is most efficient rather than according to the way specified by the companies with the best lobbyists.
ajross 4y ago
> perverse incentives like allowing you to “sell” or hold hostage something you were going to do anyway This is true, but it's a weird way to frame it. Yes, absolutely: carbon-sensitive regulation changes the market pricing such that less polluting activities and means of production are "worth more". So if you have some, you win. If you were planning on having some in the future ("were going to do anyway"), you likewise get a windfall. And thats... good? It's not perfect. But it produces the result we want. IMHO the much bigger problem with offset regulation is that it's likely to be nearly impossible to actually measure[1] and we'll be dealing with cheating and fraud for decades. But the incentives seem fine to me. [1] Vs. a carbon tax which is pure simplicity: $xxx per ton of carbon (for extra credit: a floating price based on a dynamic bid-based sequestration market) pulled out of nonrenewable sources, paid by the extractor at the time of initial sale, and let the market sort out how to allocate the overhead.
- JacobThreeThree 4y ago
  Who gets to decide what the carbon footprint of every activity is? How is the surveillance of every activity performed? What is the performance metric to evaluate the success or failure of the system?
  - ajross 4y ago
    The third question has an obvious answer, so I'm not sure I get your point. The first two are just saying "regulation is hard", and I agree. But it's possible nonetheless, just like every other regulated industry. Recognize that all your questions could have been asked about, say, sulphate emission regulation in the 1970's. (Or CFC's in the 90's). And that worked out OK.
  - samatman 4y ago
    A tax on carbon is much simpler than a tax on carbon footprint. Corporations buy carbon, to a good first approximation, as coal, gas, or crude. That's what you tax. Plus a tarrif on countries which don't do likewise.
    - 4y ago
gumby 4y ago
> For example, as a fisherman it might be cheaper for me to buy some old, shitty, super-polluting boats, At the level of an individual, yes.* However consider a fleet of cargo ships. They last, and depreciate, over about 20 years. Even if the owner buys newer, cleaner ones, they aren't throwing away the old ones, and the one bought today will stay in service until around 2042. It's not unreasonable to offset this ancient cap ex, especially if governments also ramp up regulation so the economics for the oldest/worst of continued use vs scrapping make them uneconomic. In a utopian sense this is clearly worse than just replacing all the polluting equipment, but in the real world a "big bang" solution can't work, not the least because there isn't enough shipbuilding capacity to replace the entire fleet overnight. The ethics of offset vs removal credits, and the whole offset credit market is a complex and sorry situation and this article just scratches the surface. OTOH one reason it's so marginal, despite the efforts of some people (including Verra and Gold Standard) to make it better, are largely because credits of any non-mandatory size are barely used (about $1B traded last year) so there's little incentive to clean it up. Hopefully that is in the process of changing; the market is growing and prices are rising faster than the market is growing indicating that demand is increasing. * At the consumer level this is all awful. Remember when Obama did "Cash for clunkers" to get polluting cars off the road? You couldn't get the credit unless you bored a hole in the block and injected some epoxy. In Germany they had a similar program, but just took the old cars and shipped them to LDCs in Africa where they could continue to pollute, just someplace else. Or for aging luxury cars, some nefarious companies would send them across the border into Poland and then smuggle them back in and get the credit another time.
- upsidesinclude 4y ago
  Your point on depreciation is fair, but the 'cash for clunkers' program was nothing more than an economic subsidy. There were no reasonable electric vehicles at the time which would have reduced carbon usage and the newer improved efficiency vehicles available would never offset after accounting for the entire vehicle manufacturing process. The old car getting lower mpg was still less polluting than producing an entire vehicle with mpg better by 30%. Not only that, but it destroyed the secondary market by destroying all those vehicles, as you mentioned, requiring more production to make up for the short fall. Putting those second-life vehicles in other countries was a net benefit, reducing once again the new full production cost of vehicles there. In particular because less developed nations have historically been less accountable for pollution industrially by necessity.
roenxi 4y ago
If I look at a graph of oil discoveries vs oil production, negative incentives barely matter. Discoveries of oil are already lower than production! We're running down the available oil quickly and it is going to be come less economically competitive over time as we extract the cheap stuff. Natural gas is going to do something similar in the next few decades if it isn't already. The government needs to be focused on making it easy to build alternative energy sources.

russdill 4y ago

In theory, it's great. In practice perverse incentives and little to no regulation make it worthless. A John Oliver explainer: https://www.youtube.com/watch?v=6p8zAbFKpW0 https://www.youtube.com/watch?v=6p8zAbFKpW0

gremlinsinc 4y ago
Side tangent. John Oliver is amazing at using comedy to basically blow the whistle on a lot of shitty things happening in this country.. from the way truckers are treated and basically exploited, to drinking water crises, and everything in between. Jon Stewart did a lot of this too, and was great. I heard once people who get news from shows like the Daily show, Late shows or John Oliver type shows actually are more 'informed' about current events than those who watch Fox, MSNBC, CNN, or even just local nightly news on NBC or CBS.
- uoaei 4y ago
  That's true, and popularizing knowledge is important. What's also true is you get only a specific worldview and consequent narrative from these kinds of shows. They have convergent ideologies and parrot a single, totalizing, pro-capital, -moderation, -individualist method for solving the problems stated as such. It's great if you've drunk the Kool-aid but it does paper over a lot of prescient issues (climate change, culture war, etc.) on the assumption that they will be solved by emphasizing politicking and de-emphasizing economicking.
- ipaddr 4y ago
  No you are not more informed. Local news gives you a local len that presents different issues. National coverage on any news network will provide you more depth and you will be more informed (have more details) At one point most young people got there news from these sources. They do provide a point of view on an issue. By making someone else look stupid you as the viewer feel smarter and more informed even though you aren't.
  - benj111 4y ago
    I don't think you can singularify 'lense'?

hinkley 4y ago

When the Catholic Church did this in the Middle Ages, they were called 'indulgences' and they ended up being a license to sin, which it turns out is a very bad idea.

russdill 4y ago
I gotta say, the catholic church indulgence system would have been a lot more interesting if it were structured as offsets instead of just payments. It's a great way to explain how ludicrous the current system is though. You can pay me to promise not to cheat on my spouse for the next 3 years in exchange for you being able to cheat on yours. Catholic indulgences as they were actually structured would be more akin to just a carbon tax.
- imtringued 4y ago
  Honestly the indulgence system is easy to game. Just buy an indulgence and kill the issuers of indulgences.

padjo 4y ago

Funny, I thought the basic concept was that they allow westerners to tick a box and mitigate the guilt they feel from living ludicrously unsustainable lifestyles.

high_byte 4y ago

the skeptic in me thinks if an engine is more fuel efficient they will not fly it with reduced carbon emissions, they will fly more and get same carbon emissions.

saurik 4y ago

Somehow none of the responses seem to say this explicitly: you didn't actually contradict the definition you quoted! The idea is that that solar power plant being built is a green project that wouldn't be possible without the additional cash from Delta... if that power plant was already able to happen without this money (which happened to be provided by Delta) then Delta didn't really buy anything and so shouldn't get any credit. And that's the issue people keep noting about these carbon credit projects: that the money spent on these credits often somehow isn't cutting emissions (as it is clearly intended to in your example, as that's the basic concept behind the market).