What are offset projects?

Although it is technically possible to have a carbon trading scheme that does not include carbon offsets in its architecture, all existing and planned carbon trading schemes include the option to offset rather than reduce emissions. But what is meant by offsetting emissions?

Reams have been written in response to this question, but probably the best place to start is with voluntary offset schemes and the Clean Development Mechanism, both of which have the same main flaws.

Voluntary offset schemes allow companies and individuals who have not yet had their emissions capped (e.g. airlines & car makers) to gain green credentials by paying someone else somewhere else to reduce their emissions while the companies or individuals continue their business as usual activities. Typically this someone else is located in the global South and often the offset projects that claim to reduce emissions benefit some of the largest polluting conpanies in the Global South.

The Clean Development Mechanism (CDM) part of the Kyoto Prot and is run under the auspices of the UN to allow countries or industries who have signed up to emissions reductions targets to offset rather than reduce their emissions.

Generally, the CDM process works such that the polluter buys the right to continue to emit above the limit that is set by the Kyoto Protocol. The CDM projects that generate these rights to pollute are located in the Global South and they offer a way to reduce emissions cheaper than the polluter can reduce its own emissions in the industrialised country. If the project meets the CDM criteria, the project is registered in the CDM database. The project is then monitored to see it complies with emissions cuts it claims to make in the project documents. Credits in the form of Certified Emission Reductions (CERs) – each one equivalent to one tonne of CO₂ reduction – are then awarded to the project and these credits are then sold on to the polluter in the industrialised country. Increasingly, the trade involves middlemen such as investment banks or carbon offset consultancies.

The theory of the CDM, one of the main components of the Kyoto Protocol, is that it is a “win-win” solution to climate change problems. Developed countries who find it difficult or too expensive to cut back on their emissions help developing countries cut back on theirs: money and technology are transferred from rich to poor and, in the process, developing countries become engaged in the climate change issue. Unfortunately this has not turned out to be the case.

Instead of the win-win promises,

• carbon offsets have shown to distract from the need to drastically reduce emissions, particularly in industrialised countries;
• communities have seen their rights curtailed and pollution rise as a result of carbon offset projects. For documentation of such projects, see the Indian grassroots magazine Mausam as well as www.sinkswatch.org, www.redd-monitor.org, www.carbontradewatch.org and www.thecornerhouse.org.uk.
• because it is impossible to prove that any emissions reduced are truly additional to those that would have been reduced without the money provided by the offset scheme, CDM projects have been issued carbon credits for reducing emissions they would have reduced anyways. As a result there is no extra reduction for the the excess emissions such carbon offsets justify.

More information about these problems is available in 'Trading Carbon. How it works ad why it is controversial' and 'Designed to Fail'. Also check out the SinksWatch website for information specific to carbon offset projects involving tree planting and forests.