Recently, as we headed towards the 40th Anniversary of Earth Day, the Wall Street Journal reviewed carbon offsets in its Cranky Consumer Column. In an article called “Reducing Emissions, and a Guilty Conscience” they reviewed five different companies selling carbon offsets. They evaluated the companies for price and the bells and whistles of their carbon calculators, social media savvy and general feel good aspects of their offerings. I question the actual effectiveness of the programs (not Nancy Matsumoto’s fun article). Many of these so called projects would take place anyway.
The world's biggest carbon offset market, the Kyoto Protocol's clean development mechanism (CDM), is run by the UN, administered by the World Bank, and is intended to reduce emissions by rewarding developing countries that invest in clean technologies. According to David Victor, of Stanford University, as many as two-thirds of the supposed "emission reduction" credits being produced by the CDM from projects in developing countries are not backed by real reductions in pollution. In fact, in the February 2010 Harpers’ Magazine spelled out inconsistencies, questionable practices, and potential fraud in the CDM market raising the possibility emission reductions credits are increasing CO2 emissions behind the guise of promoting sustainable development. Even when a CDM credit does represent an "emission reduction", there is no global benefit because offsetting is a "zero sum" game. Voluntary Carbon Standard or Climate Action Reserve are two of the certifications utilized for carbon offsets. This verification utilizes the CDM standards as the underlying structure to certify that the carbon reductions are“additional and real.”
Buildings, both residential and commercial, account for about 40% of primary U.S. energy consumption, 72% of U.S. electricity consumption, 55% of U.S. natural gas consumption, and significant heating oil and propane consumption in the Northeast. According to the Department of Energy, while industrial use of electricity has been flat for about 15 years, electrical use to power commercial and residential building has grown by more than 50% since 1985. U.S. resources and investment have been deployed to build the infrastructure required to generate, transmit, and distribute electricity to serve that growth. Reducing the peak electricity demands for air conditioning and heating could alleviate peak demand on the electrical grid, potentially without the need for a smarter grid. Buildings present one of the best opportunities to economically reduce energy consumption and reduce green house gas emissions. A recent study by McKinsey & Company study performed for the Department of Energy found that reducing the consumption of energy in buildings is the least costly way to achieve large reductions in carbon emissions.
What I think the United States needs is a new way to think of reducing our nation’s energy use. I propose forming a series of local not for profit corporations to educate and facilitate all homeowners achieving the easiest steps: Installing an energy saving thermostat, replacing incandescent light bulbs with compact fluorescent bulbs and the most effective improving the home insulation. This should be performed according to the guidance from the Oak Ridge National Laboratory Building Envelop Research performed for the US DOE Department of Energy Efficiency and Renewable Energy. This guidance recommends additional insulation in most the attics, crawl spaces, eves, and duct work. In addition, there are recommendations for insulation under floors, of pipes, end caps, knee wall, sump pumps and other areas. The insulation needs to be installed correctly, but is one of the most effective energy saving steps a homeowner can take. If every home and building in the United States were properly insulated and sealed we could significantly reduce the national energy use. These steps reduce energy consumption immediately and more or less permanently. The final steps in home conservation; the replacement of single pane windows or the addition of storm windows, and the replacement of inefficient furnaces and air conditioners and old refrigerators and other appliances with energy efficient models can be accomplished with incentive programs or loan programs. The cash for clunkers program attempted to remove from the roads the oldest and most inefficient cars, and now there is the energy star appliance program, but like many government programs they are blunt instrument and with unintended consequences. Mostly only people intending and able to afford these purchases are encouraged to move forward. Yet the cheapest of the strategies insulation, sealing a home, and installing an energy saving thermostat and compact fluorescent bulbs is the most underutilized.
As Ms. Matsumoto points out it is difficult to assess the quality of projects funded by these carbon offset firms as well as determine with any consistency the size of a personal carbon footprint which in the case of Ms Matsumoto ranged from 7 to 23 tons depending on whose tool she was using and what assumptions the models used. All the carbon offset retailers evaluated in the article were verified by a third-party either the Voluntary Carbon Standard or Climate Action Reserve. This verification helps ensure that the initiatives are "additional," meaning the carbon reduction would not have occurred without the project, and are "real," meaning the emissions reductions are properly quantified and audited, however, these certifying organizations suffer from the same problems as the CDM since they use the CDM as the underlying structure to determine the assumed carbon savings based on various models and assumptions. What you are doing with your carbon offset dollars is making these projects more profitable for the project owners, paying fees to brokers, project auditors and marketing people. Really, I would rather my money and efforts go to supplying education and low or no interest loans to homeowners to reduce their energy consumption. Insulation projects have a very short payback period and could be financed by a not for profit who takes half the energy savings until the project is paid for. The homeowner gets part of the savings, a more comfortable home and we all reduce our national energy consumption. Instead of paying for farm and landfill methane capture projects with our carbon offsets we would be better served to spend our dollars to reach down to make home insulation desirable and affordable to all homeowners. Let the large farm and landfill projects which would probably get done anyway, find other sources of financing and lets tackle educating and funding through loans and grants the insulation and sealing of all homes in the United States.