Carbon offsets and the reality of the fight against climate change

10/11/22

Nine Spahr

Climate change is accelerating, and its consequences are starting to be felt by the world. The need for action is now.


From that state of urgency, arises an interesting question as to whether this crisis can be solved with actions taken within our mainstream economic framework. Can following neo-classical problem-solving truly be our way out of this?


In response to this question, ecological economists have argued that ultimately there exists a breakage between traditional economic thought and the need for immediate action to solve the climate crisis. They argue this by acknowledging an intrinsic link between ecosystems and our economic system. This is a definite contrast to our current economic paradigms which are heavily influenced by the concept of indefinite growth and that any problems caused by growth would inevitably be solved by even more growth. For instance, all sustainability issues would ultimately be solved by some kind of profitable market solution.


Hence, some free-market ideas to help fight climate change have started to pop up. For example, recent years have seen the appearance of a new corporate buzzword: Carbon neutrality. Carbon neutrality can be achieved through the purchase of carbon offset credits. So, what exactly are carbon offset credits? Offsets are financial instruments companies invest in to reduce future emissions. They invest in environmental projects, to balance out their carbon footprint. If their investments in carbon-negative projects hold the same weight as the greenhouse gas they emit, then the company can pat itself on the back as it is officially “carbon neutral”. They have supposedly removed as much carbon from the atmosphere as they have added. In all appearance, carbon offsets seem somewhat also cohesive with ecological economics goals. The global market has recognized its negative externalities, understood the limitations of its carbon production, and has now ensured to compensate for its CO2 emissions. Although fitting with some ecological thoughts, carbon offsetting works perfectly within more traditional economic models.


In our current political climate, the imminent threat of the devastating effects of climate change looms over everyone. So, there is a demand from consumers to feel better about their carbon footprint, and the market supplies it by, for example, allowing buyers to participate in carbon offsetting. When buying a plane ticket to visit the other end of the world, you can now have a guarantee (for a little extra money!) that the aviation company will invest in projects that render your trip carbon neutral. More than simply responding to market demand, carbon offsetting also presents a perfect opportunity for companies to continue their profit growth plans within the new, more constraining global carbon rules and benefit from the glowing reputation the carbon-neutral stamp provides them.


However, the benefits are not all that they are cracked up to be. The now expansive and global offset market also makes it easier for companies to carry out climate fraud. For example, companies will invest in protecting land already deemed as a conservation area. This in turn allows them to claim reduced total greenhouse gas emissions as they are helping to preserve carbon-absorbing land. But really, they’ve simply protected the land from non-credible threats, lands that would have remained carbon negative regardless of their investment. Their acquirement of these cheaper and fraudulent carbon credits helps them to continue emitting positive amounts of CO2 into the atmosphere.


Even in legitimate offsetting projects, offsets credit creates different issues. Any tree planting project suffers from a 20-year delay, the time for the new trees to start catching a non-negligible amount of CO2. And that’s while discounting the very real possibility of future droughts, giant wildfires, and tree diseases. It seems that planting trees does not have quite the same effect as not emitting massive amounts of carbon to begin with.


The most basic solution we have available to correct inflated carbon credits would be to create stricter offsetting rules and better control, but that could result in reduced incentives to invest in any sustainable projects. Working within our current system does not resolve the apparent scale issue of our current economic framework. We simply do not seem to recognize the finite nature of earth’s resources. The economy just like any natural ecosystem cannot continuously expand; we have a pressing need to create a space where clear limits to profit growth are defined. Cheating the system can only happen so long as there is still a system to cheat. There will come a time when our planet makes clear the limits of economic expansion. But for now, what matters to corporations is the appearance of doing what's right without the cost of doing it.