Why Carbon Offsets Are a Failure as a Concept

& How Offsets can Lock in Climate Degradation

By Laurie Williams

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Speaking out as Parents & CitizensSince 2008

Education and Work Experience• Laurie - B.A. Yale University, J.D. UC

Berkeley• Allan – B.A. UC Santa Cruz, J.D. UC

Berkeley• Environmental Enforcement Attorneys

for 25+ years at US EPA Region IX, San Francisco

• Allan has worked extensively on Cap-and-Trade and Offset issues.

Disclaimer – My presentations provide our personal opinions only and

does not reflect US EPA or U.S. government position

This Presentation Provides My Personal Opinions Only

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Cap

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TRADE

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WHAT ARE CARBON OFFSETS?

• An offset is a GHG emission reduction that is (1) not legally required, and

(2) occurs in a non-capped sector.• Example: A Power Plant owner can purchase a

forestry or agricultural offset and use it as a permit to burn additional fossil fuels above the cap.

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WHAT IS ADDITIONALITY?

• An “additional” carbon offset is a GHG reduction that is (1) not legally required, and (2) would not occur but for the incentive of an offset payment.

• Existing & Ongoing - All offset categories • Critical Question – can we segregate those

that would have happened anyway?• Or are we just paying a bit more to pretend.

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The Impact of Offsets on Cap & Trade

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Three Primary Flaws of Offsets• 1. Demand Shift – An activity, such as logging,

is avoided in one location, and counts as an offset, but the same amount of logging still happens somewhere else.

• 2. Uncertainty – It is unknowable whether an activity that counts as an offset would have happened anyway, absent an offset payment

• 3. Perverse Incentives – Once an activity is paid for as an offset, those benefiting from the payments will resist regulation.

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Carbon Offsets - Flaw No. 1 – Demand ShiftForestry Preservation Example

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Bonus for What You Would Have Done Anyway

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A Different Forest is Cut

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Carbon Offsets - Flaw No 2 - Uncertainty vs Additionality

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Group 1 – Perform Activity Anyway, without Offset Payment

Group 2 – Perform Activity Because of Offset Price

Group 3 – Will not Perform Activity even with Offset Price

Uncertainty2012 Prices of European Offsets

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Carbon Offsets - Flaw No 2 - Uncertainty – U.S. GAO agrees it is impossible

to know if any given offset it additional

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Group 1 – Perform Activity Anyway, without Offset Payment

Group 2 – Perform Activity Because of Offset Price

Group 3 – Will not Perform Activity even with Offset Price

Carbon Offsets - Flaw No. 3 -Perverse Incentives

Increased pressure to keep polluting activities legal (and in some cases to increase those activities): Example:Destruction of HFC 23, a refrigerant by-product, in China, was an offset in the European Trading Scheme

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HFC 23 - Refrigerant By-Product Offset

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Carbon Offset is Twice as Profitable As Refrigerant

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Conclusions• Carbon Offsets - failure as a concept.• Fatal Flaws - include (1) demand shifting, (2) uncertainty and (3) perverse incentives• Climate Cap-and-Trade Programs to date allowed

offsets to be a large % of reductions (CA - 85%.)• Non-Capped Sectors – use regulation or independent

incentive programs, not offsets.• Powerful interests support offsets. Without Citizen

engagement, offsets are unstoppable. We support a ballot initiative to ban offsets in California in 2020.

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Contact Information

• Laurie Williams• williams.zabel@gmail.com • (510) 390-4224• Volunteer Citizens Climate Lobby

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