Carbon Offsets: the Whole Story

If you surf over to www.CheatNeutral.com, you can enjoy a giggle at the idea of paying someone else to remain faithful to their partner so that you can continue your philandering ways.

It's a spoof site, and the idea behind it is to raise some issues surrounding the idea of carbon offsetting, which has come under some fire recently. The accusation is that carbon offsetting allows us in the industrialised world to carry on with our carbon-intensive ways, and to just pay someone to salve our consciences.

Here's how offsetting works.

1. You need to calculate just how much carbon dioxide emissions you are responsible for: everything from your car, your gas or electrical heating and cooking, your business or holiday flights, everything.

2. Once you've added it all up and worked out your total CO2 emissions, you're encouraged to buy the same number of carbon "offsets" to effectively neutralize your impact on the planet. You can do this by paying for trees to be planted, or helping to fund an energy-efficiency project, for example.

3. Those projects will contribute to reducing CO2 emissions elsewhere. But since CO2 is a global problem, and our atmosphere doesn't obey national borders, a contribution in Birmingham is just as valid as one in Bali.

Sounds simple, right? And it is. Not just individuals but whole companies are offsetting their carbon "footprint". HSBC, for example.

But the opponents of carbon offsetting think it's all a scam. They think it's immoral to allow big business to continue to emit CO2 and simply pay someone to deal with the problem somewhere else.

And that's precisely where they're getting it wrong.

The whole point about offsetting is that you are investing in someone who can reduce their emissions more cheaply than you can. Let's use HSBC as an example. They've probably changed their electricity supplier to one that generates power using renewable resources like biomass or wind. They've probably maximised their recycling, and done any number of other things in order to reduce their carbon footprint.

But they're still emitting some CO2. And if you want to become carbon-neutral, you need to ensure you're doing something about every single tonne of CO2 that you're resopnsible for.

So HSBC has done as much as it can. And it still finds it's emitting however many thousand tonnes of CO2 a year. So, the next step -- apart from shutting down the entire business -- is to offset its remaining carbon footprint.

And here's the clever part. To be truly carbon neutral, you need to invest in something, some project or activity, that is reducing emissions compared to what would have happened, if carbon offsetting didn't exist.

To explain: imagine you're the government of Botswana. Your population is growing, energy demand is rising, and you need to build a new electricity plant. Your first choice is to use coal to generate power because it's cheap and plentiful. But coal is massively carbon-intensive and you're not keen to damage the environment.

So you look at alternatives. Natural gas would be good, as it's half as carbon-intensive as coal. but a gas-fired plant costs more to build. Wind power would be best of all, since it's completely carbon-free.

But thanks to this new-fangled carbon offsetting, you can build your gas-fired plant, you can calculate how many tonnes of CO2 your new plant saves compared with your original choice of coal, and you can sell that many carbon credits to foreign buyers.

So, in a nutshell, carbon offsetting does help cut carbon emissions. It cuts them compared to what they would have been without this whole new carbon market.

The problem that many environmentalists suffer from is their inability to see the wood for the trees. They want society to come to an instant solution. They're saying "carbon dioxide is bad, so we must all stop generating it at once." As if that's likely to happen.....

Sure, carbon offsetting isn't the total solution, but as we struggle to come to terms with our new responsibility to the planet, it's a pretty good way to get us all thinking about the subject. And it does work.