Why Carbon Offsets Are a
Failure as a Concept
& How Offsets can Lock in Climate
Degradation
By Laurie Williams
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Speaking out as Parents & Citizens
Since 2008
Education and Work
Experience
This Presentation Provides
My Personal Opinions Only
• Laurie - B.A. Yale University, J.D.
UC Berkeley
• Allan – B.A. UC Santa Cruz, J.D. UC
Berkeley
• Environmental Enforcement
Attorneys for 25+ years at US EPA
Region IX, San Francisco
• Allan has worked extensively on
Cap-and-Trade and Offset issues.
Disclaimer –
My presentations provide our
personal opinions only and
does not reflect US EPA or U.S.
government position
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Cap
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TRADE
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WHAT ARE CARBON OFFSETS?
• An offset is a GHG emission reduction that is
(1) not legally required, and
(2) occurs in a non-capped sector.
• Example: A Power Plant owner can purchase a
forestry or agricultural offset and use it as a
permit to burn additional fossil fuels above
the cap.
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WHAT IS ADDITIONALITY?
• An “additional” carbon offset is a GHG
reduction that is (1) not legally required, and
(2) would not occur but for the incentive of
an offset payment.
• Existing & Ongoing - All offset categories
• Critical Question – can we segregate those
that would have happened anyway?
• Or are we just paying a bit more to pretend.
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The Impact of Offsets
on Cap & Trade
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Three Primary Flaws of Offsets
• 1. Demand Shift – An activity, such as logging,
is avoided in one location, and counts as an
offset, but the same amount of logging still
happens somewhere else.
• 2. Uncertainty – It is unknowable whether an
activity that counts as an offset would have
happened anyway, absent an offset payment
• 3. Perverse Incentives – Once an activity is
paid for as an offset, those benefiting from the
payments will resist regulation.
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Carbon Offsets - Flaw No. 1 – Demand Shift
Forestry Preservation Example
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Bonus for What You Would Have Done Anyway
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A Different Forest is Cut
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Carbon Offsets - Flaw No 2 Uncertainty vs Additionality
Group 1 – Perform Activity
Anyway, without Offset Payment
Group 2 – Perform Activity
Because of Offset Price
Group 3 – Will not Perform
Activity even with Offset Price
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Uncertainty
2012 Prices of European Offsets
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Carbon Offsets - Flaw No 2 Uncertainty – U.S. GAO agrees it is impossible
to know if any given offset it additional
Group 1 – Perform Activity
Anyway, without Offset Payment
Group 2 – Perform Activity Because of
Offset Price
Group 3 – Will not Perform
Activity even with Offset Price
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Carbon Offsets - Flaw No. 3 Perverse Incentives
Increased pressure to keep polluting activities
legal (and in some cases to increase those
activities):
Example:
Destruction of HFC 23, a refrigerant by-product,
in China, was an offset in the European Trading
Scheme
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HFC 23 - Refrigerant By-Product Offset
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Carbon Offset is Twice as Profitable
As Refrigerant
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Conclusions
• Carbon Offsets - failure as a concept.
• Fatal Flaws - include (1) demand shifting,
(2) uncertainty and (3) perverse incentives
• Climate Cap-and-Trade Programs to date allowed
offsets to be a large % of reductions (CA - 85%.)
• Non-Capped Sectors – use regulation or independent
incentive programs, not offsets.
• Powerful interests support offsets. Without Citizen
engagement, offsets are unstoppable. We support a
ballot initiative to ban offsets in California in 2020.
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Contact Information
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Laurie Williams
[email protected]
(510) 390-4224
Volunteer Citizens Climate Lobby
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