The Case of Carbon Neutrality

By Mark Jaccard

Originally published in Alternatives Journal, 2011

Starting with a commitment at a G7 meeting in 1988, the world’s most powerful political leaders have frequently acknowledged the urgency of reducing greenhouse gas emissions, yet over two decades later, an effective global effort has not materialized. Political leaders talk about the need for an international agreement, but have failed to achieve it. They have set ambitious targets and implemented long policy lists, but these have been largely ineffective. 

Over these past two decades, political scientists and economists, among others, have offered explanations for our inability to take effective action to avert climate change. I have focused on our propensity to implement policies that are less effective in reducing emissions than we tell ourselves. In particular, we frequently rely on voluntary approaches, such as information programs and subsidies that try to convince firms and individuals to change technologies or behaviour. Canada’s Voluntary Challenge and Registry, for example, asked industry to record all of its voluntary actions to reduce greenhouse gas emissions. Since firms frequently take actions that inadvertently reduce emissions, such as acquiring more efficient devices, it is no surprise that industry produced long lists of emissions reductions. Governments happily trotted them out for the media, downplaying the fact that, at an aggregate level, emissions were still rapidly rising.

The latest fad is “carbon neutrality” – paying someone to reduce their emissions by an amount that equals your emissions. Since their emissions reduction “offsets” your emissions, you become “carbon neutral.” Carbon neutrality is now big business, with millions of dollars in subsidies passing from individuals, firms and governments to companies that claim to cause emissions reductions that would otherwise not have occurred. Offset companies, which make a commission on the exchange between offset buyers and sellers, are highly motivated to ensure that everyone sees carbon offsetting as an effective means of reducing emissions.

Buying your way to innocence sounds too good to be true. It probably is.

The offset industry tells us it provides emissions reductions that would not otherwise have occurred – in essence, “verified additionality.” But we cannot be certain what would have occurred in the absence of an offset subsidy. Since we cannot run history twice, the best we can do is examine past subsidy programs. 

This has led researchers such as me to focus on the subsidies for energy efficiency and fuel switching offered by some utilities and governments. This hindsight research has generally found that many of these subsidies, sometimes more than half, went to individuals and firms that would have acquired the more efficient devices anyway. Even subsidies to plant trees on agricultural land (to store carbon) are suspect, since analysts assessed that shifting land away from agriculture can increase the price of agricultural land, thereby inducing some forest owners to switch their land back to agriculture – in effect offsetting the offset.

So if carbon neutrality is one more policy delusion, what should we do instead? It is not a surprise that the answer is simple, albeit one we prefer to avoid. We need to prohibit emitting greenhouse gases or make it expensive. This requires pricing emissions (carbon tax or cap-and-trade) and/or strict regulations on technologies such as cars and electricity plants. And we need to apply these policies to activities that are now the focus of offset activities, such as energy efficiency, fuel switching, afforestation, agriculture, and capturing emissions from urban landfills and industrial processes.

Will we do this? Maybe. But if the past two decades are a guide, we are more likely to stick with policies such as offsets, which have minimal impact and cause little offense. This is a key reason why it is a long shot that humans will act in time to avert serious disruption to the planet.