Carbon Offsets, Contract, and Complicity
The Washington Post ran a front page story earlier this week on the wild and unregulated world of carbon offset markets. The basic idea is that one purchases some off set — either in the form of technological development or contracts not to emit — for one’s own carbon emissions so that one’s over all carbon footprint is zero. This is just the sort of environmentalism that makes my free-market-contracts-prof’s heart go pitter patter. The regulators, however, are now snooping around. As The Post reports:
Critics say that offset sellers usually have good motives. But the market is confusing enough that, this month, the Federal Trade Commission said it would look into whether consumers are being adequately protected.
“It’s just like the Wild West,” said Frank O’Donnell of the group Clean Air Watch. “There are no controls, no standards.”
Having grown-up in the West, I object to “Wild West” as a term of regulatory derision, but it strikes me that there is a deeper problem here, namely what exactly is it that a person is trying to get when they do a carbon offset.
Consider CarbonFund, a non-profit where one can make “donations” that are designed to offset one’s carbon footprint. What are they actually providing, however? According to their website:
Carbonfund.org supports three types of carbon offset projects: renewable energy, energy efficiency and reforestation. While each is different, they all play an important role in the fight against climate change. The projects Carbonfund.org support meet the same high standards relied on by thousands of companies, organizations and governments to ensure quality environmental protection.
As an example of their work, they point toward “The Chicago Zero Energy Solar Homes Project . . . [which helped] to reduce the costs of living in homes for low-income families by employing energy efficient and solar energy technologies.” As near as I can tell CarbonFund never claims to be offering an offset contract, only an opportunity for donations that are roughly calibrated to individual carbon emissions. At the end of the day, this strikes me as a fund-raising gimmick more than anything else. It may be a powerful gimmick but it is not quite the same thing as a real market in personal carbon emissions.
The Chicago Climate Exchange (CCX) strikes me as a different creature. For starters, it has a dot-com domain name rather than a dot-org domain name, which is a good sign. It bills itself as “North America’s only and the world’s first global marketplace for integrating voluntary legally binding emissions reductions with emissions trading and offsets for all six greenhouse gases.” A cursory bit of web-browsing was unable to turn up the actual text of one of its contracts, but in contrast to CarbonFund this seems to be more than a fundraising gimmick. They are purporting to offer a real contract for carbon reduction. (The devil — of course — is in the details of the contract itself.)
I suspect that what most of the individuals who use these markets want to purchase is freedom from complicity in global warming. Some no doubt want to change the world and are trying to do their part, but the mathematical reality is that any individual action is largely irrelevant on this front. The world is really big and despite what your high-school civics teacher told you, you are really small. This basic fact is the single most powerful argument for government action. (Although government is not the only way of overcoming collective action problems.) On the other hand, while the purchase of a carbon offset may be irrelevant on consequentialist grounds, purchasing the absence of complicity in what many see as a great global evil is not without its appeal. And here is where the issue get’s interesting.
The Sierra Club, for example, doesn’t much care for carbon offsets, arguing that people ought to concentrate on changing their lifestyles instead. Now it may be that the Sierra Club’s reticence is motivated by genuine skepticism about the value of carbon offsets, but I suspect that it isn’t. Rather, it seems to me that they are committed to a particular view of how one becomes complicit in global warming and how one avoids such complicity. The underlying notion of complicity is essentially centered on the idea of virtue. Personal abstention is important not simply because it is more effective, but because it implicates one’s personal virtue in a way that purchasing an offset does not. Lurking behind this attitude are ultimately ideas of virtue, sin, and redemption that are much older than debates over greenhouse gases and effective policy.
And here I wonder if perhaps CarbonFund and CCX aren’t actually providing very different things at a metaethical level. The CCX strikes me as offering a hard-edged, contractual approach that CarbonFund does not. They purport to be selling concrete reductions in emissions. CarbonFund does not. Indeed, by “donating” (CarbonFund) rather than “buying” (CCX) something deeper may be happening than a mere shift in tax status. CCX seems to be based on the notion that complicity really is a commodity that can be purchased in the market. CarbonFund strikes me as more ambivalent. Indeed, they insist taht you should “reduce what you can, offset what you can’t.” Personal virtue is front and center, and the offset not only is a donation rather than a contract but is a mere adjunct to “real” environmental action. The message seems to be that you can’t buy your way out of Hell, although you may be able to buy your way out of Limbo.
This may leave the FTC in a bit of a quandary. No doubt there are all sorts of issues of monitoring, reporting, standards, and consistency that are needed to make sense of what is or is not offsetting what. Maybe the FTC can help (although standards can come into existence without government). The deeper issue, however, is whether the FTC can get into the regulation of what really counts as complicity or its absence. I’m skpetical.