As Waxman-Markey, the sweeping legislation that tackles America’s greenhouse gas emissions, is making its way through Congress, one of the biggest sticking points and an issue we’re wrestling with ourselves here at Sightline Institute is its proposed use of large amounts of “offsets” to meet emissions goals.
In short, the bill says that polluters can pay for both pollution permits and offsets to help them meet the cap that limits how much greenhouse gas they can release. A cement company in Seattle, let’s say, that is going to produce 100 tons of carbon dioxide could pay for 90 tons of permits and 10 tons of offsets, perhaps from a dairy farmer in the Midwest who’s going to install a system for capturing methane from cow manure.
Sounds like a good idea. The cement company cuts its pollution, and helps the farmer—who otherwise doesn’t come under the bill’s emissions cap—cut his pollution, too. Yeah! Emissions go down all over the place.
But it’s so not that simple. Whether you love, hate, or merely tolerate offsets can lead you to wildly divergent conclusions as to whether their use means the planet will sizzle or only warm by a couple of degrees (which still is not nice). Here’s how it breaks down:
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1. I (heart) offsets: By some calculations, the offsets in the legislation mean not only could we meet, but we might also beat the emissions targets in Waxman-Markey (the goal is to cut CO2 17 percent below 2005 levels by 2020, and 83 percent below 2005 levels by 2050).
In an analysis by World Resources Institute, a DC environmental think tank, John Larsen looks at reductions from the legislation’s cap and the offsets, as well as its requirements for CO2 reductions for uncapped sources and from forest preservation overseas. He concludes:
“(Greenhouse gas reductions) could reach up to 33 percent below 2005 levels by 2020 and up to 81 percent below 2005 levels by 2050, depending on the quantity of offsets used.”
The big unknown here is the quality of the offsets. There’s a serious risk of shams that don’t make long-lasting, meaningful cuts in pollution, but we’re getting ahead of ourselves.
2. Offsets are the Styrofoam peanuts in the climate package—a filler that shouldn’t break stuff but still kinda messy: Others take a less sanguine view of offsets without damning them entirely. Joe Romm of the liberal blog Climate Progress is highly skeptical of offsets but asserts that they won’t make a huge difference in reaching the carbon targets.
In posts here, here, and here Romm considers the effect of domestic and international offsets (the legislation allows for 2 billion tons of offsets split evenly between projects here and abroad, though the amount of international offsets can increase to 1.5 billion and the amount of domestic shrinks commensurately if domestic offsets are in short supply, which they almost certainly will be).
Citing research from the EPA, Romm argues that only a small amount of domestic offsets will actually be used. He asserts that they’re going to be in such short supply that they’ll cost so much that it’ll be cheaper to just cut your own emissions. Says Romm:
“(N)o one’s going to waste much money on expensive offsets when the 2020 target is so straightforward to meet with the cheap, clean energy strategies that some of us have been arguing for decades are available in abundance.”
3. Offsets are the spawn of Satan: We arrive at the haters. International Rivers and the Rainforest Action Network did this analysis predicting that thanks to offsets, US emissions could actually keep rising until the mid 2020s. The Breakthrough Institute comes to a similar conclusion here. How’s that possible? Here’s the recipe we’re working with:
- Take about 6 billion tons of greenhouse gases, the current level of US emissions for regulated sectors of the economy
- Set the 2020 goal at about 5 billion tons
- Add to that 2 billion tons max of offsets (note that foreign offsets are worth slightly less than domestic ones, so that number is probably closer to 1.8 billion tons or less)
- Mix well and in effect you’re able to release close to 7 billion tons of greenhouse gases in 2020, dropping to below 5 billion tons in the early 2030s
Again, keep in mind there are many presumptions in play. This scenario assumes a maximum use of offsets each year. It also doesn’t account for the emissions reductions that the bill calls for elsewhere as the WRI analysis does. And if the offsets are poorly conceived—the reductions would have happened anyhow or are short lived—the end result could be even worse.
What will the offsets do? It depends on how well the EPA oversees the program and what sort of offsets were allowed. Offsets that provide dollars for investing in sound projects where pollution cuts absolutely would not have been made otherwise could be really beneficial. Unfortunately, there are countless examples of bad offsets, leaving us to believe that ideal legislation probably would have no offsets at all but would use revenue from the program to invest in pollution reductions in the sectors not covered by the cap.
But realistically, legislation like Waxman-Markey will include offsets—they make lawmakers happy by making voters happy. What we can do is remain vigilant in protecting the strength of the pollution cap, which already slipped from a 20 percent reduction in emissions in the early form of the bill to a 17 percent reduction in what was passed by a House committee.
Kitty in peanuts photo courtesy of Flickr user appaloosa under the Creative Commons license.
Offsets are indeed complicated. On the one hand, offsets are nothing more than a cost containment mechanism for achieving THE SAME AMOUNT OF REDUCTIONS more cheaply outside the cap. (A ton is a ton is a ton after all!) The cap is set on particular industries because they are easier to regulate. Does that mean they should shoulder the entire responsibility for reductions? It is extremely important to see major reductions from the capped entities but any and all reductions are good, right? The big question is whether offsets are actually equivalent to reductions from capped entities. Do they meet the same measurement and verification requirements? There are also secondary benefits from offsets which will follow the offset projects. It could be local air quality, fuel savings etc. If we “offshore” our offsets, those benefits go elsewhere.I, for one, am ok with a minimum amount of offsets if they are strictly regulated and the regulatory costs are covered in the offset price. But I could do without them altogether too. If we allow them, I fully expect there will be a learning curve and mistakes along the way that will always be a political hassle.
I may have more to say myself about offsets some day, but here’s one wonder.Are we holding capped sectors to a lower standard than offsets? We rightly expect offsets to prove utterly that they are additional.But I wonder. Capping the fossil fuel sector in the US will likely have the effect of reducing global oil demand somewhat, for example. And that will induce some extra oil consumption outside of the United States—everywhere carbon from oil isn’t capped.My point is not to wring my hand about the futility of action. To the contrary, we need to do everything right in North America and also negotiate strong international agreements to spread the clean-energy revolution.My point is to make sure we calibrate safeguards for offsets properly.