‘No good deed goes unpunished’ seems to be the theme of the dubious and largely unregulated world of carbon offsetting. The House of Representatives is the most recent carbon offset customer to learn this lesson. In November of 2007 the House purchased $89,000 worth of carbon offsets through the Chicago Climate Exchange (CCX) to offset their half of the Capitol’s carbon footprint, according to the Washington Post. However, critics now question whether these taxpayer-financed offsets are actually facilitating new carbon abatement. Too often money from carbon offset purchases pay for projects that would have happened regardless of carbon offset money.
The problem of carbon offsets is centered on the idea of “additionality.” The purchase of a carbon offset should fund additional offsetting projects that would not have happened otherwise. The problem is that the necessary regulatory and certification infrastructure to verify these projects doesn’t exist. With little regulation on carbon trading and offsetting, the American carbon market is the Wild West of cleantech.
The issue of additionality plagues the emerging international carbon market as well. Around the same time Congress was purchasing these offsets, the World Wildlife Fund released a report denouncing 20 percent of the UN’s certified emissions reduction credits, as facilitated through the controversial clean development mechanism, as bogus.
Another problem with the American carbon market is the offsets are massively undervalued. While a metric ton of carbon trades for over $30 on the much more tightly regulated European Climate Exchange, Congress purchased 30,000 metric tons of offsets at about $2.97 per metric ton from CCX. This price point does not serve as a serious incentive for new offsetting projects to be undertaken.
Perhaps Congress’s good intentions were not all for naught. The taxpayers dollars have been spent and now Congress is accountable for the authenticity of their offsets. Now that Congress has funded the carbon market they need to make sure they are getting their money’s worth.