Cap-and-trade is stalled in the US Congress and the Obama administration is backing off. China is not on board either – it´s unclear whether its opposition is on principle or a negotiating gambit to ensure US participation. The prospects for a true worldwide deal are slim for now. With conventional diplomacy blocked, what are the chances for unconventional, popular, guerrilla diplomacy? Can you and I, the many ordinary Invisibles Incredibles, defeat Senator Magneto and save the world?
Probably not, but it´s worth a shot anyway. Here´s my Plan B. Part 1 of this was to persuade developing countries that they should not wait for the US but join a coalition of the willing for cap-and-trade, on survivalist grounds. Neat, eh? But there´s no rush so far to take it up. Part 2 is individual initiative – you -, which I´ll take a look at here. I´ll get round to Part 3, corporate activism, later.
The question is not whether private inititiative can cover entirely for government inaction, especially in the USA: it surely cannot. But perhaps it can get things moving, change the political and corporate climate, isolate the opposition in their denialist garrisons, and make strong legislation inevitable to secure a level playing field. The practical aim is not really to save the world, but to make saving the world look the normal thing to do.
I won´t go here into the usual catalogue: home insulation, light bulbs, hybrid cars or public transport, denser habitats …. see the RBC archives. (Advert for an old post of yours truly on home electricity managers.) None of this is really controversial, though some changes are much more difficult and costly than others. But there´s an argument over voluntary carbon offsets that should interest the RBC community as obsessive wonkers. Are offsets worth doing, as Robert Frank said?
(I´ve made it green for contrast. Surely they could have taken a leaf from the bogus PhD industry and gone to more design trouble over this useless piece of wallpaper?)
My Certificate was issued by a unit of JP Morgan, which shows just how mainstream the game has become: an icon of Wall Street and high finance and one of the banks that did well out of last autumn´s débâcle.
Green purists scorn offsets as cheating. Adam Ma’anit of New Internationalist magazine:
Carbon offsets are one of the most scientifically and environmentally dubious industries emerging today. They merely provide moral cover for western middle-class consumers, governments and corporations for their profligate use of fossil fuels. No amount of carbon chicanery is going to adequately deal with the problem and it only delays more effective action while muddying the debate. Stop this insanity now.
This purist critique applies equally to government cap-and-trade schemes and carbon taxes, so if you accept either of these as good policy, you should be comfortable with the ethics of voluntary offsets. Under current technology, a carbon-neutral lifestyle just isn´t possible outside a green commune. We should all of course reduce our direct emissions anyway, but we do have a little time – perhaps two decades – to phase in the lifestyle changes, helped by bankable new technology. We are still going individually to be responsible for substantial carbon emissions for a while. The people I love are on three continents, so I for one am not ready to stop flying. Offsetting looks fine to me in principle as a second-best, complementary solution.
How about the practice? Critics have landed some hefty punches on the industry. It´s not transparent: different companies and NGOs use different calculators even for something as standardised as air travel, and it´s hard to compare overheads. The business needs stronger regulation, as with standards for calculating interest rates on loans: transparency and confidence are more important to consumers here than strict accuracy. A lot of the early projects were badly designed and ineffective – just planting trees without any maintenance and water does not work. But then, most business startups fail too. The successes are likely to have knock-on effects. Green dogoodery should not be held to a double standard of perfection.
The market is imperfect in another way: there are high overheads. A report last year on the offset business by a hostile British lobby (for European emissions trading) claimed that 30% of the money you donate to offsets is swallowed up by investment banks as market-makers and deal-brokers, the same amount as actually goes to the projects on the ground. Believe this or not, it´s certain that the administrative overheads under the Kyoto CDM are high. Stern (here, page 160) cites the cost of the 300-day paperwork to certify a single project as ¨easily reaching $500,000¨. (Update: sample CDM dossier here.)
This is annoying but basically good news: immature, under-regulated, fast-growing markets look like this. The invisible hand, the alliance of private greed and public good, has started to work. Morgan are presumably lobbying behind the scenes for cap-and-trade in Congress. Sigh, but the profit motive is the way the thing will get done or not at all. It´s striking how cheap my Kyoto CDM offset (correction: actually Kyoto-style, using a different but similar project methodology and certification) was: £9 a tonne, let´s say half of that on the ground. We can reasonably trust the CDM bureaucracy (update: and its clones) to get the carbon reduction numbers about right. There really is a lot of low-hanging carbon-saving fruit out there once capitalists really start hunting for it as opposed to whingeing it can´t be done. The CDM will be streamlined some day soon.
There are two rather more serious objections than being ripped off by JPMorgan and friends (for a change). The administrative barriers mean that the projects are overwhelmingly in middle-income, not really poor countries: Brazil, India and China account for most. Nice interactive map here for the CDM. (update: JPMorgan´s map is similar, minus Brazil.) These are precisely the countries with deep and sophisticated domestic capital markets that need the help least. In China´s case, the absurdity is to ship my widows´ mite to an economy that exported $284 billion of capital last year.
Within the target countries, the funds go (because of the administrative barriers) to already large enterprises, not small village co-ops. Big biofuel projects may displace politically weak small farmers. The schemes aren´t exactly progressive.
The other beef is that the projects are supposed to be uneconomic without the Kyoto etc top-ups. I just can´t believe that this can be done rigorously, the incentives to game are just too strong. How hard is it to pad a project cost using industry standards, keeping in your pocket the ways you actually plan to do it cheaper? It´s likely a priori that a lot of CDM money goes to finance wind farms and the like which would have happened anyway.
If you want to help the poor and secure clear additionality, you have to take greater risks and go outside the CDM. For my next trip, I´ll do it differently: use a mainstream Kyoto-type website to estimate the offset, and send the equivalent money directly to an NGO that runs its own projects on reafforestation or solar stoves or something in a real dump like Guatemala or Niger. There´s no doubt a greater chance the money will disappear entirely, but overall I´d be buying a higher probability of real impact on both climate and poverty. With luck, I can get a Spanish tax deduction. Suggestions please in comments.
We should I suggest all do this. Consider an annoying T-shirt to go with it.
PS: an incomplete list of airlines that offer carbon offsets at the point of booking: Continental, Cathay Pacific, Delta, Easyjet, Cathay Pacific, Qatar, SAS, and Virgin. Others will surely follow.