Carbon Offsets vs. Clean Energy Onsets

A few years ago, I had the opportunity to work in Western Kenya for the summer. That summer gave me a new life perspective in many ways, but one way that it continues to influence me is in how I think about carbon offsets.

Deforestation is a major issue in Kakamega, Kenya and the NGO I worked for had a number of different initiatives to alleviate poverty and perserve the Kakamega rainforest. Together, we initiated a pilot biodigester project to help communities around the rainforest utilize energy from animal waste and other organic materials as an alternative to harvesting wood from the rainforest.

We undertook a series of interviews to gauge consumer interest/needs, and then designed and built a few low-cost biogesters. Our product worked and consumers were interested, all we needed was funding. I proceeded to blow my small stipend at internet cafes writing grant proposals, all to no avail. Finally, we had the idea of selling carbon offsets to fund our work since we were both preventing methane from entering the atmosphere and decreasing deforestation.

I researched the Clean Development Mechanism, a part of the Kyoto Protocol that allows emission reduction projects in the developing world to sell carbon credits to developed countries. We diligently filled out the lengthy application and even contacted Kenya’s Environment Minister to get his support. And then, nothing.

As I later discovered, most small carbon offset projects don’t stand a chance due to the high costs of verification. Instead, as a recent New York Times article pointed out, perverse economic incentives have increased the production of HFC-23, a coolant gas that is 11,700 times more potent a greenhouse gas than CO2.

Hence, projects that reduce HFC-23 are extremely valuable and far more cost competitive than carbon reduction projects. Consequently, CDM credits made capturing HFC-23 more valuable than the production of the refrigerant gas that creates it. As a result, there is a strong incentive for manufacturers to produce more HFC-23 simply for the carbon offsets, even though there is limited demand for the refrigerant gas itself.

Upon returning back to the U.S., I decided to undertake a thorough analysis of the carbon offset market, culminating in my senior thesis that explored how colleges and universities committed to carbon neutrality could sponsor local energy efficiency projects as a more tangible and locally-benefical means of offsetting their carbon emissions.

I began thinking of these emission-reduction projects as “onsets” rather than “offsets.” To me, an “offset” is a guilt-driven purchase similar to the sale of a Medieval church indulgence–you’re paying to offset a sin. Investing in tangible clean energy or energy efficiency projects, on the other hand, is a way to onset a world where everyone can thrive.