Speaking of zero-emissions, the WSJ describes how "carbon neutral" is misleading, e.g., Dell is carbon neutral as a company, but "neutral" doesn't include supplier and user carbon impacts. Put differently, people who buy Dell products (and companies who sell to Dell) need to take care of their own feet if those product are going to be truly carbon-neutral over their lifecycle. Try this:
Dell officials estimate that the emissions produced by its suppliers and consumers each amount to about 10 times the footprint Dell has defined for itself. That means the company is only neutralizing about 5% of the greenhouse gases that go into the making and use of its products.While I appreciate the accounting justification and agree that Dell is doing all it can, this story highlights a bigger problem:
Moreover, while Dell is improving its energy efficiency, it is claiming carbon neutrality mostly by purchasing environmental "credits." These are financial instruments that bankroll environmental improvements made by others, such as running wind turbines or planting forests. Dell reasons that these credits cancel out the bulk of its carbon footprint.
Yet some of those improvements would have occurred whether or not Dell invested in them, according to some of the companies involved. That suggests Dell isn't ridding the atmosphere of as much pollution as it claims.
"Carbon-neutral" is an empty fad
In the big picture (world wide), carbon neutrality is impossible while we are creating more carbon (e.g., breathing) than we are removing (e.g., reforestation).
Just because carbon neutral is impossible doesn't mean that it is not popular or that it will end. Just as ethanol has made many people rich (see next post), so too have carbon credits been a useful source of income for "green power" (e.g., windmills) and "green" workers (e.g., consultants certifying that such-and-such a project or company is carbon-neutral). All of these people prefer that the carbon-neutral
The customers of carbon credits (Dell, Dell's customers, celebrities, et al.) also like carbon neutral credits because the credits are a cheap indulgence that allows them to live as they like for a few dollars/megawatt hour without worrying about the damage their lifestyle inflicts on the planet. (That's nothing. Last month, we paid $36 for 0.24 mwh of electricity; the carbon offsets would have cost about $0.50 more.)
So this load of hogwash will continue until people realize that they are hypocrites. Sometimes that takes awhile -- Catholic indulgences lasted over 300 years!
(By hypocrites, I mean that the "saving the planet" people are actually (1) maybe doing some good with credits and (2) not making any financial or material sacrifice to hold such a position. Real action would mean donating all wealth to reforestation and committing suicide. To not be a hypocrite merely requires that one admit to harming the planet -- even after buying offsets.)
Bottom Line: The best way to tackle carbon emissions is to reduce carbon emissions, and the best way to reduce them is through a carbon feebate: Tax emissions and use the revenue to compensate the poor and pay for projects that protect and restore forests.
12 comments:
If I can buy true carbon offsets, credibly vetted, for a cheap price, I may appropriately view that as a good use for my charity dollars. As the price goes up, it becomes less relatively attractive, both compared to other charitable (i.e. social good not internal to the regulated market as it currently exists) purposes and compared to other consumer goods and investments. On a different note, a socially minded individual should curtail carbon emissions when their value is exceeded by their cost. People seem to confuse the virtues of a cap-and-trade system in internalizing costs with the notion that, at any given price level, the optimal level of charity should be equal to the optimal level of one's individual carbon emissions, which is frankly just bizarre. If it keeps you honest that the carbon emissions are really worth what you're paying for them, where you wouldn't be likely to make that assessment properly if you hadn't committed yourself to buying carbon credits for your emissions, I suppose that your public swear jar helps you to carry off the second social obligation, just as a superficially similar cap-and-trade system would, and that's a good thing. There's no sensible economic reason, though, that you shouldn't buy more or fewer credits than you actually "use".
dWj: I *think* you are saying that carbon credits are a good way to get cheap reductions (by paying for those reductions elsewhere) -- until the price rises far enough that you'd rather reduce your own footprint (a classic application of comparative advantage).
That's a good point, and it holds as far as "credible" (and additionality -- the point of the Dell article) stretches.
What? You mean there are no more indulgences?
Seriously - great post. 'Carbon neutral' is as bad as companies who claim to be 'green'. And Fiji Water claims it will soon be 'carbon negative':
http://aquadoc.typepad.com/waterwired/2008/04/is-fiji-water-g.html
Duhhhh...
Do you think that the quest for a public image of carbon neutrality never encourages efficiency measures, which usually have a payback (unlike carbon offsets/green tags)? Although installing an efficiency measure with a payback would seem like a no-brainer, it is obvious that we have a long way to go in the US. If reaching for a carbon-neutral image encourages efficiency at all, I'm all for it as a small step in the right direction. Many worthy goals are unattainable but a good direction to head. I wrote this on my blog (ecolandlord.wordpress.com) last month:
I have used one of the plethora of online carbon footprint calculators to find that my building accounts for 28 tons of CO2 emissions per year. My personal footprint is about 7.3 tons (almost half of which is from my share of the building energy use assuming (simply and not totally true) that each resident uses an equal amount of energy). I buy greentags to offset about 8.3 tons per year. I would rather not cause those emissions in the first place. My greentags support wind development. I know of others for other renewable energy development and for tree planting. Anybody know of greentags to support efficiency measures? Of course, no reason to buy those until I’ve already spent the money to upgrade my own life as much as possible! Which is an argument against the wind greentags in the first place until I’ve done everything I can in my own life. I’m contemplating a plan to be carbon neutral in 10 years or somesuch, like various other entities. Such a plan would be fairly easy if I let myself off the hook by buying greentags. Instead I’d like to concentrate on my own efficiency first.
David Zetland: "The best way to tackle carbon emissions is to reduce carbon emissions, and the best way to reduce them is through a carbon feebate: Tax emissions and use the revenue to compensate the poor and pay for projects that protect and restore forests."
Vote for the various FeeBates, or suggest a new one, at:
http://feebates.uservoice.com
People of a modest means must reduce their footprint through lifestyle modifications since they have no disposable income at all to buy offsets. Surely the peasants couldn't afford a papal indulgence to offset their "sins" either, but just tried to be good instead. According to the carbon calculators out there, our footprint mainly comes from consuming meat and dairy from the grocery store. Producing more our own meat and dairy would greatly reduce this (but keep in mind dairy goats and cows must be milked twice daily and the processing requires equipment, hot water, and elbow grease twice daily--not exactly what wage earners find time to do...). But we have just discovered a way to build cheap wind generators from existing junk and auto parts to supplement our electricity. But in the PNW our biggest challenge lies in transportation. No public transportation gets out to the country, and human powered travel to town would take all day. After we reduce everything we can, we've actually contributed little to offset the problem. A carbon tax makes more sense to spread the burden according to the actual consumption that produces greenhouse gasses.
(Wow, been a while since i posted here!)
Good post, David_Zetland. In order to appropriately internalize the costs of CO2 emissions, they must show up explicitly in transactions. It's pointless to try to estimate your total marginal contribution (i.e. additional carbon emitted solely because of your actions) in the absence of such a price, for much the same reason that a central planner can't predict the number of bicycles that will be demanded in a year.
This complexity is the problem with proposals by "libertarians" that people can just buy from "green" corporations and the problem is solved. At best, consumers can get a very blurry signal (for the reasons you gave), and they are effectively rewarded for ignoring the signal entirely.
The post right before this one is about ethanol, which was touted as a way to reduce global warming. The Kennedys and other environmentalists stopped a wind power project because it would have been bad for the environment.
Rushing into solutions is a bad idea. To the extent that something(s) should be done, I'd say follow Bjorn Lomborg's advice and focus on preventing disease and poverty and providing the poor with clean water.
Being GHG-responsible is crucial, and the idea that changing light bulbs and small-efficiency gains qualifies as a corporate climate strategy is misleading to stake holders. If the corporate goal is more holistic, then the business is more inclined to develop a comprehensive business strategy. Carbon is a great proxy for organizations to measure embedded fossil fuel costs and the environment. Integrating direct and indirect GHG metrics into the corporate decision making process produces positive impacts such as cost savings and brand development. Enterprise Carbon Accounting is fundamental to knowing the whole picture. ECA is the foundation for the creation of a highly flexible carbon footprint models, scalable to the most complex supply chains and designed to support multiple detailed iterations of winning climate strategies.
David, I'm a bit surprised by your tone regarding the evolving market for carbon offsets. While it's helpful to point out that offsets may be of limited effect, those spending money on them are in fact making a voluntary financial contribution to carbon mitigation efforts.
Accordingly, the "fad" as a whole is a healthy one, even if a cynical eye is useful to spot dubious claims.
I am not in favor of government-run carbon "feebates", as they leave a large pool of funds for government to provide to friends. Far better simply to tax carbon upstream, provide direct pro-rata rebates to citizens, and allow carbon tax-payers to offset their tax payments with sequestration projects.
Finally, in the "big picture" the carbon that we create comes from our use of fossil fuels, not from breathing (in which we are merely carbon recyclers, like other animal life).
@ all -- great comments.
@ TokyoTom -- I agree with your method of addressing carbon, but I am worried that people will stop at carbon offsets ("done, now what?") when offsets are of dubious quality and theoretically ineffective.
Unfortunately, the government needs to get involved (via taxes, I hope) because the free-rider problem is significant.
I agree that dealing with offsets is tricky (there is the question of how "permanent" the offset needs to be, and an inescapable political aspect that invites rent-seeking in preferred offsets and in avoiding taxes).
The way to deal with offsets is not to allow any at all initially, but (i) to allow the limited number of payers (if the tax is captured upstream where the fossil fuels enter the economy) (ii) to make claims for them that would initially be vetted by a science-heavy process, but (iii) with taxpayers remaining liable for unpaid taxes (and interest) in the event of leakage (and give citizens and prosecutors the right to keep revenue collected in the event an offset does not actually work.
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