Frank on Offsets

Robert Frank's op-ed on carbon offsets in the NYT (and his follow-up blog post) were really disappointing. He's an excellent economist, but his defense of offsets skirts the most important questions surrounding their use, instead focusing on comparatively trivial aspects.

Most of his argument is addressed to those who think, like the proprietors of cheatneutral.com, that buying offsets is essentially a way for people in wealthy countries to shirk their responsibility to reduce their output of carbon emissions. To an extent, this is true: the principle of common but differentiated responsibility dictates that we in the developed world need to take the lead in heading off the rise in global warming pollution — even if China, India, et al. are poised to overtake us this century (indeed, China is already there). But, as Frank rightly notes, it doesn't matter whether a ton of CO₂ is released in Shanghai or in San Francisco; so it makes sense to look for the most cost-effective means of reducing emissions — and often this means promoting clean energy projects in developing countries instead of in developed countries.

But as Brad Plumer points out, the real problem with offsets isn't one of morality or distribution of responsibility, but of simple logistics: To date, offsets providers have done a rather poor job at quality control, i.e., making sure that offsets are funding actual emissions reductions, not wasting money on projects that would have happened anyway. Frank mentions in passing that more stringent standards are gaining ground; however, there's reason to believe that better standards could act as a bottleneck for the expansion of the offsets market.

Then there's the question of whether offset programs, as currently designed, are an effective way to fund emissions reductions in the first place. It may make more sense to do something like just giving money to developing countries to finance clean energy development, as Daniel Hall notes here and here. After all, what developing countries, in general, are looking for is a clear path to economic development; which, they fear, restrictions on carbon emissions would hamper.