California’s Shell Game Begins
On September 17, 2013, the California Air Resources Board announced they would begin issuing offset credits as part of their cap-and-trade market, which launched in January 2013.
Under California’s cap-and-trade market companies can meet their pollution targets by directly reducing emissions at the source, updating technology to be more efficient, or by purchasing excess emissions credits from a company with a surplus of credits.
Each company participating in the market is allowed to emit a certain amount of pollution and allocated an equivalent amount of credits to do so. However, if they want to emit more than what they are allowed, the company must purchase “unused” emissions credits from other polluters. But, these companies can also purchase offset credits.
What is an offset and what does it have to do with emissions reductions? An offset credit allows a company in California to pay for an emissions reduction that can happen elsewhere in the United States, instead of reducing emissions at the source in California.
A polluter in California could pay a landowner in Oregon to preserve the forest on their land. This is considered an offset because trees take carbon dioxide (CO2) out of the atmosphere. When trees are cut down they release CO2 so, according to the general rules of carbon offsets, not cutting them down counts as a prevented emission, which allows the company in California to qualify for an emission reduction.
You might be asking yourself, “Why not just reduce emissions through improving technology and directly reducing it at the source?” That’s because offsets are sold at lower cost to the polluter than the cost of truly reducing pollution.
If all of this seems suspect to you, it’s because it is. Offsets are really just one big shell game.
In reality, offsets are a way for California companies to pay to pollute at a lower price, assuming that the emissions reduction elsewhere actually happens—if it doesn’t then there is a net increase in emissions and no reduction whatsoever.
Offsets go through a verification process, one that is laden with problems like fraud and corruption. Too often, offsets do not meet all of the requirements for verification, but they are still released into the market.
One scheme to generate offsets, in light of the fact that it could take several years to create them, manipulates the date from which an offset is considered additional—a kind of backward crediting. For an offset to be valid it has to fulfill an “additionality requirement”—it must be in addition to existing efforts or business as usual, and it cannot already be mandated by law.
Backward crediting allows a polluter to buy a credit for an “offset” that was done in the past. In some instances, a date several years back is chosen out of thin air. From that point onward, any offset that has since been created counts as additional—even if the offset is just being made official today. This kind of built-in, contrived additionality is not legitimate or additional. It’s a scam.
Offsets do not lead to real, permanent, or additional emissions reductions. They pose serious liabilities to real reductions and promise very little in return, except a cheaper price for polluters. Offsets must not be allowed in any emissions reduction initiative. The point of emissions reductions programs is to permanently decrease emissions, not to go easy on the companies that are responsible for creating the emissions and that continue to pollute on a daily basis.