Are carbon offsets worth the money?

Recently the former leader of the Australian Greens, Christine Milne, complained bitterly about a lack of commitment by the Australian government to emission reduction. She had issues with the targets set (too weak), the mechanisms to achieve abatement (offsets for offsets), and the increasingly believable claim that Australia is “increasingly being seen as cheating the process with rubbery figures” in the national carbon accounts.

Few would deny the lack of commitment to emission reduction at Federal level in Australia. Perhaps not even the ministers responsible. The political thinking is still that climate change is not worth the fuss either because it is a furphy or because it is not our fault or because even if it happens it is not that significant.  And, of course, any intervention would be bad for business.

Global politics is giving these views renewed vigour.

Except that Alloporus doesn’t buy these excuses for inaction, we never have. And it would seem that business doesn’t either with company directors on notice that they are liable for any climate-related losses. But we still take issue with Christine Milne — on her intent more than her content.

Her specific criticism is sound. Giving carbon payments to farmers for retaining vegetation that would otherwise be cleared (sometimes called avoided deforestation) or for revegetation of farming land as offsets, are just passing emissions around. It is a core problem of any offset policy if an offset here allows the activity to continue over there.

In the carbon case the government buys credits in vegetation that help balance emissions in other sectors as a way to balance the emission books and claim targets are met.

Milne rightly points out the flaw in this approach. The Emission Reduction Fund has spent “over $1 billion paying farmers not to clear or to regrow forests so polluters can keep on polluting”.

In a trading scheme, offsets work as part of the ‘avoid-reduce-offset’ hierarchy. Any emitter with an obligation to pay compensation for any emissions should first avoid emitting. However, if energy is needed to power the smelter so emissions are simply a cost of doing business, then take actions to increase energy efficiency. If this fails to bring emissions below any allowance, only then should the company pay for emissions directly or buy offsets.

So long as the offset purchased is genuinely additional — the removal of greenhouse gas from the atmosphere is real and would not have happened without financial intervention — the net effect is a lowering of emissions because there is a financial incentive to do so.

The monies paid through the ERF are not offsets in this sense. They are mostly opportunistic land management changes that could easily have happened anyway. Many are not even in the spirit of additionality.

Then there is the question of the value for money. In the last round of the ERF the average price per credit was over $13 tCO2e — more than 4x the international market price. There are not many situations where rational buyers pay more than double for the same product, unless you know something about the version you are buying. Say, for example, that you quite like the bloke selling them to you.

Milne’s piece actually says a lot about Australian politics, perhaps even politics globally. Negativity as the only response to obviously flawed policy and policy implementation.

There is little value in a splurge of negativity. Just to say that a policy position is wrong is not that helpful. Former politicians need to be more constructive and at least offer an alternative solution.

Remember that nobody believed Henny Penny.

Alloporus suggests that some agricultural activity changes — such as maintaining ground cover or altering grazing management or using biochar supplements — will either reduce emissions or sequester carbon in soil or both. And it is easy to ensure these activities are additional.

It is easy to make carbon offsets worth the money. But in Australia, thanks to the politics, they are not.

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