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• GS 3 || Environment || Climate Change || Tackling Climate Change

Why in the news?

Russia wants to use a forest bigger than India to offset carbon

What is a Carbon Offsetting? ​

A carbon offset broadly refers to reduction in GHG emissions – or an increase in carbon storage (e.g., through land restoration or the planting of trees) – that is used to compensate for emissions that occur elsewhere.

What is Carbon Trading?

• It is a market-based system aimed at reducing greenhouse gases that contribute to global warming, particularly carbon dioxide emitted by burning fossil fuels.
• The process involves buying and selling of permits and credits to emit carbon dioxide, it uses the Cap and Trade mechanism to achieve the reduction in Emissions.

Carbon Offset Projects:

• Carbon offset credits can be produced by a variety of activities that reduce GHG emissions or increase carbon sequestration. In most cases, these activities are undertaken as discrete “projects.” A carbon offset project, for example, may involve:
  • Renewable energy development (displacing fossil-fuel emissions from conventional power plants);
  • The capture and destruction of high-potency GHGs like methane, N2O, or HFCs; or
  • Avoided deforestation (which can both avoid the emission of the carbon stored in trees, as well as absorb additional carbon as trees grow).

Carbon Offset Programs:

• Offset programs perform three basic functions:
  • they develop and approve standards that set criteria for the quality of carbon offset credits;
• they review offset projects against these standards (generally with the help of third-party verifiers); and
• They operate registry systems that issue, transfer, and retire offset credits.

Common criticisms of Carbon Offsets:

• How offset credits are used
  • Examples of criticisms:

1. “Carbon offsets allow polluters to go on polluting” (i.e., they are a form of “greenwashing”)
2. “Carbon offsets are not a long-term solution and can ‘lock in’ high-carbon infrastructure”
3. “Carbon offsets create an incentive to avoid regulating certain sectors and industries”

• These kinds of criticisms are not so much about whether carbon offsets are a valid form of climate change mitigation, but rather whether they create “perverse” incentives
• Carbon offset quality:
  • Examples of criticisms:

1. “Carbon offset credits do not represent valid GHG mitigation; if they are used as a substitute for real climate action, they only make climate change worse.”
2. “Carbon offset projects have adverse impacts on local communities and may make other environmental problems worse.”

• These criticisms are probably the most immediate concern for most offset credit buyers. Carbon offset credits are of little use in mitigating climate change if they are not a valid substitute for an organization’s own internal GHG reductions

What are the main concerns with carbon offsets?

Concerns with carbon offsets can be broken down into several categories:

• Concerns with the quality of the offsets—that they are fraudulent or in some way don’t deliver the promised reduction in emissions
• Concerns that carbon offsets don’t do enough or make things worse—that they avoid or even hinder more substantive personal or policy choices necessary to reduce emissions.
• For instance, purchasers might avoid taking steps to reduce their own emissions by buying their way out, in the process propping up older, fossil-fuel-based infrastructure. In a worst-case scenario, carbon offsets arguably could result in more carbon emissions, as purchasers actually over-emit due to having purchased offsets (a “rebound” effect).
• Concerns with fairness—that they are a means to shift emissions reductions from the developed world to the developing world, or that in some cases (some fraudulent, but not necessarily so), they end up paying polluters
• Concerns with unanticipated side effects—that carbon offsets might perversely incentivize behavior that increases carbon emissions (such as building a nitrous-emitting plant, then selling off carbon offsets to capture the nitrous before it’s released into the air); that carbon offset projects might have unintended environmental or economic effects or might be simply be unconcerned with such effects; or that carbon offset policies could be used to justify (and fund) land grabs or similarly exploitative actions
• Concerns with moral hazards—the “buying indulgences” issue Specifically, the concern is that carbon offsets are a way to avoid the “sinful” behavior of emitting carbon while paying others to avoid emissions for you, and that this avoids taking real responsibility for one’s own emissions. Proponents of this argument might characterize purchasing offsets as inherently wrong or misguided, in addition to being harmful for the planet long-term

Way forward:

• Offsets typically support projects that reduce the emission of greenhouse gases in the short- or long-term. A common project type is renewable energy
• The Kyoto Protocol has sanctioned offsets as a way for governments and private companies to earn carbon credits that can be traded on a marketplace.
• The protocol established the Clean Development Mechanism (CDM), which validates and measures projects to ensure they produce authentic benefits and are genuinely “additional” activities that would not otherwise have been undertaken.
• Organizations that are unable to meet their emissions quota can offset their emissions by buying CDM-approved Certified Emissions Reductions (CERs)
• Offsets may be cheaper or more convenient alternatives to reducing one’s own fossil-fuel consumption. However, some critics object to carbon offsets, and question the benefits of certain types of offsets.
• Due diligence is recommended to help businesses in the assessment and identification of “good quality” offsets to ensure offsetting provides the desired additional environmental benefits, and to avoid reputational risk associated with poor quality offsets
• Offsets are viewed as an important policy tool to maintain stable economies and to improve sustainability.
• One of the hidden dangers of climate change policy is unequal prices of carbon in the economy, which can cause economic collateral damage if production flows to regions or industries that have a lower price of carbon—unless carbon can be purchased from that area, which offsets effectively permit, equalizing the price.

Additional info:

• The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change (UNFCCC), which commits its Parties to setting binding international emission reduction targets.
• The Kyoto protocol allows countries with emission units to sell this excess capacity to countries that exceed their targets.

Mains oriented question:

What is carbon offset what are issues associated with it? How it is relevant in stopping carbon emission in future? (200 words)