Carbon Indulgences

Yesterday's Week in Review section of the NY Times had a great article on "carbon offsets," which supposedly atone for the sins of greenhouse gas pollution by paying for projects that reduce pollution elsewhere. This industry is almost completely unregulated, but it's worth $100 million and is growing quickly.

There's some question about whether the projects that these "offsets" finance are actually effective. There's also a more philosophical dispute over whether these programs are enabling our fossil fuel addictions: can we really ride a jet guilt-free if we pay someone else to plant some trees in Guatemala? The article quotes the president of an environmental foundation who compares some carbon-offset programs to " the Catholic Church’s sale of indulgences back before the Reformation... Instead of reducing their carbon footprints, people take private jets and stretch limos, and then think they can buy an indulgence to forgive their sins."

According to economic theory, putting a price on carbon should reduce carbon pollution. For example, if I look at a plane ticket and the price of carbon is too expensive, I'll opt for a train ride instead.

But offsets don't really work that way. For one thing, in the absence of global regulation, no one really knows what the price of carbon should be – and if you’re relying on voluntary schemes, the price is almost certainly way too low.

For another, the reasons that people purchase offsets seem to be more psychological (and perhaps psychotic) than economic. Instead of confronting consumers with an up-front price that reflects the environmental costs of their purchase, the offset salesmen usually jump in after the consumer has already made the purchase in order to capitalize on feelings of guilt.

Even an SUV owner or wanton jetsetter with an indulgence can't avoid guilt altogether: don't they realize that they could do twice as much to avert the climate crisis by buying their offsets and leaving the gas-guzzlers idle?