History of Carbon Offsetting and Carbon Trading

History of Carbon Offsetting and Carbon Trading

Although "global warming" and "climate change" are relatively new phrases, meteorologists and lay people alike began to notice changes in weather trends as early as the 1930s. Winters, they noted, were starting later in the year and were generally becoming warmer. However, it was common scientific knowledge by that time that the earth went through periodic (and usually temporary) transitions in temperature.

As a result, there was no real concern over the phenomenon, which was believed to be natural, and no realization that it had anything to do with human activities. A British engineer named Stewart Callendar was one of the first people to recognize that these observed rises in temperature could be traced back to the increased burning of fossil fuels for industry and development. As the fuels combusted, they emitted carbon dioxide that prevented heat from the sun from escaping out of the earth's atmosphere and returning to space.

Callendar's ideas, though correct, did not become a significant part of the scientific conversation until several decades later, in the late 1970s and early 1980s. By this time, researchers gathering information on both global temperature changes and increases in carbon dioxide concentrations in the atmosphere had collected enough data to convince many that the problem of global warming was not only real, but rapidly accelerating. A 1979 National Academy of Sciences report advised urgent action on the matter, and in 1983 the United States Environmental Protection Agency (EPA) acknowledged that climate change could have a serious detrimental effect on the nation's agriculture and economy.

In 1987, scientists analyzing a 100,000-year-old core of ice from Antarctica found a tremendously extended and consistent relationship between temperature and the level of carbon dioxide in the atmosphere. By the early 1990s, the international scientific community was in broad agreement over both the fact of climate change and its root cause: increased carbon dioxide emissions. It was clear that in order to combat rising global temperatures, it would be necessary to somehow reduce carbon dioxide emissions.

Carbon offsetting represents one market-based means of accomplishing this goal. The idea is that if a tangible monetary value is attached to the use or abuse of an environmental resource, people and companies will have to take into consideration that value, or price, when they are making decisions about how to behave. In this way they will not be able to ignore the effects their activities have on the environment.

Supporters of carbon offsetting believe that it is the most efficient way of reducing carbon dioxide emissions. They explain that while a market-based approach makes it more expensive to produce carbon dioxide, carbon offsetting allows businesses to negotiate with each other by trading carbon credits to arrive at the cheapest, most effective solution. Using carbon offsets, a company that would have an extremely difficult time reducing its own emissions (for example, because doing so would require purchasing entirely new equipment) can pay another company to make the same reductions. Alternatively, a company can choose to invest in projects that aim to build more sustainable energy sources, creating a long-term solution to the energy crisis facing the world. In the same way, an individual who flies frequently and wishes to compensate for the extra carbon dioxide emissions, or who cannot afford to switch to solar power but wants to balance out their personal electricity usage can choose to buy carbon offset credits that do the job for them.

Offsetting schemes began appearing in one form or another as early as 1989. In that year, a U.S.-based company, Applied Energy Services, promised to plant millions of trees in Guatemala in exchange for permission to construct a large new coal burning power station. This project, they calculated, would absorb as much carbon dioxide from the environment as would be produced by their power station over the course of its lifetime. Tree planting is often involved in carbon-offset projects because trees absorb carbon dioxide from the atmosphere as they photosynthesize, and proponents of this type of carbon offsetting argue that increasing the amount of global forest cover represents one simple long-term solution to increasing carbon dioxide levels. However, scientists disagree about the effectiveness of this practice; many consider the absorption of carbon dioxide by future trees a slow and very inconsequential compensation for present-day carbon dioxide emissions.

This problem lies at the heart of most criticisms of carbon offsetting, especially those that involve projects like tree planting or investments in alternative energy sources. Firstly, opponents argue that it is extraordinarily difficult to calculate the real impact of such offset schemes. What may be considered an equivalent amount of reduction may not, in actuality, balance out the emissions it is being used to justify. This is especially problematic because there are many different organizations involved in making these calculations, and no real international standards for how to do so. Critics of carbon offsetting believe that instead of working toward a real global reduction in carbon dioxide emissions, carbon offsets encourage people and businesses to continue their environmentally destructive habits while creating the false impression that such activities can be neutralized by others, elsewhere.

Keeping track of these systems may also be difficult. In general, a conflict of interest may exist since both the buyer and seller benefit from the number of projects created. In addition, the auditors or inspectors are chosen and paid by the developer of the offset project and thus have a specific interest in making money.


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