12 March 2010

Carbon additionality is stupid

Much ink has been spilt on the need to encourage projects that reduce net carbon emissions (with money) without paying people to do what they were already going to do.

The trouble with the requirement that people be paid for "additionality" is that it's too hard to separate real from imagined moves that improve the carbon balance.

This accounting and fraud problem is slowing or blocking a lot of projects, because buyers of carbon credits do not want to pay for projects that may not be certified as "additional."

This is stupid.

First, projects are not getting done (or, even worse, are getting credits for NOT happening), which means that the desired impact -- less carbon -- is even farther away.

Second, it's not morally defensible to exclude projects "that would have happened anyway" from receiving payment. If someone has a forest, why not pay them for not cutting it? Even if they were not going to cut it anyway, it seems nice to pay them for having such a useful asset.

The only reason that I can see for keeping additionality is that some bureaucrats or enviros want to maximize bang for their buck, to take the "free" stuff for granted and pay for additional stuff. This tightwad perspective sounds good on paper, but I don't think it's good, for the reasons I mentioned above. Further, I can tell you that the price of keeping something that you want to keep anyway is pretty low. With competitive markets and bidding for carbon sinks, it's a sure thing that the cost of carbon deterrence will be low.

Bottom Line: Pay people for doing things we like, even if they already want to do those things.
On a related note, read this excellent article on the value of ecosystem services, why we need to account for them and how much we should pay for them.

8 comments:

  1. Offsetting is riddled with these sorts of problems. It is not worth it.

    Just cap carbon emissions. It's a pollutant, an externality. Tell folks that A) we are going to cap the amount of carbon, and they can help organize how we are going to do it; and B) we will mitigate the disproportionate impacts of caps on poor people, (through rebate!).

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  2. I agree - I once spoke to someone running a composting project in Bali who was having trouble getting funding for this exact reason. The fact is that obviously people are going to try to use all the funding sources available to them - the "additionality" requirement forces projects to put all their eggs in one basket.

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  3. Have you looked into the varying valuation methods for ecosystem services?
    They are pretty fuzzy. Its a lot easier said than done.

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  4. @Justin -- agreed. Additionality just makes it worse -- by trying to understand people's actions -- ex ante -- with and without subsidies...

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  5. Justin, now just monetize one service - carbon sequestration - and see how skewed the whole thing gets...

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  6. I agree with Josh.

    Let's assume additionality can be assessed to a reasonable degree. Take the timber industry here in California for example. They have already been predicting growth models in board feet (sequestered carbon) and to put forth "unplanned" gain in growth as "additionality" seems like an easy process. Sierra Pacific Industries has enrolled 60,000 acres into a program in which they claim a total of 1.5 million metric tons of carbon sequestration over the next 5 years that wouldn't have occurred without the incentive of "additionality", (carbon credits to be sold to CO2 emitters).

    Two things need to be said.

    One, is that as far as trying to reduce the amount of CO2 releases into the atmosphere, this program doesn't reduce it. It just allows "additional" emissions under the guise of a zero net gain. No reduction of CO2 occurs. If one was to allow carbon credits for actions that would occur anyway, such as a timber company growing trees to be sold at a future date, you would be allowing the equivalent amount of CO2 to be emitted, increasing the CO2 levels in the atmosphere than would be if these timber holdings were not allowed to be given carbon credits.

    The second thing that needs to be said about additionality in terms of the timber industry is that CO2 sequestration is the only thing that is given value. It ignores the many varied detrimental affects of changing forests to tree plantations.

    I think it's folly for environmentalists to promote a system that will be controlled by derivative traders such as Goldman Sachs and others. We already know where that road can lead.

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  7. I agree with Josh and Larry re: skewed behavior. I've never thought that tree plantations should be used for carbon sequestration. Consider the WORST case: cutting down a rainforest and replacing it with palm oil. That would serve profits (trees and oil) while allowing "easy" quantification of carbon credit -- since palm is so homogenous. Better to pay to protect the rain forest, with all of its other services.

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  8. I agree with Josh and Larry re: skewed behavior. I've never thought that tree plantations should be used for carbon sequestration. Consider the WORST case: cutting down a rainforest and replacing it with palm oil. That would serve profits (trees and oil) while allowing "easy" quantification of carbon credit -- since palm is so homogenous. Better to pay to protect the rain forest, with all of its other services.

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