Why are environmentalists at war with each other over carbon offsets?

by Matthew Carpenter-Arévalo

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At this point, we we have all of the data required to understand the dire consequences that await us if we do not take immediate actions to reduce the amount of carbon dioxide in the atmosphere and stabilize the global temperature.

Many environmentalists see carbon offsets as playing a key role in the fight against climate change, yet others of a similar ilk claim that offsets are a distraction at best and a scam at worst.

Given that we’re late in the game and the score is against us, why are environmentalists at war with each other over carbon offsets?

We have to begin our exploration of this question noting that at least part of the division within the environmental movement comes from mis-information.

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Recently I wrote about the problems with John Oliver’s coverage of carbon offsets.

Part of Oliver’s work was based on reporting by the Guardian in association with Greenpeace, the emblematic pro-environment NGO.

The Guardian/Greenpeace piece was extremely problematic for a number of reasons, including the fact that the two organizations depended on faulty science, a topic discussed at length in this article.

Greenpeace has been emphatic in its opposition to carbon offsets, including calling for “the end of carbon offsets,” which the organization portrays as a “license to pollute” extended to companies that aren’t taking the climate emergency seriously.

I should begin by stating that I cannot speak for Greenpeace, nor do I wish to build a strawman argument based on a flawed interpretation of the organization’s position.

I will though attempt to explain what I see as the principle difference between the well-meaning environmentally conscious people who oppose carbon offsets, and the well-meaning environmentally conscious individuals who work diligently to make carbon offsets a reality.

Top-Down Versus Bottom-Up Environmental Change

My personal belief is that the primary difference between environmentalists in favor and those against carbon offsets is the theory of change each employs to construct its vision of a balanced planet.

More specifically, if you believe the planet can stave off wide-scale environmental destruction and biodiversity collapse, you probably envision change as happening through a top-down or bottom-up means. Let’s examine what both models represent.

In a top-down model of environmental management, governments will take action to stop harmful gasses from being emitted into the atmosphere.

In the most draconian version of top-down climate policy, governments would enforce the reduced use of hydrocarbons.

In least draconian version of top-down change, governments will create cap-and-trade regimes in which polluters will be held responsible for the cost of their emissions. In a cap-and-trade model, each country has an emissions allowance that decreases over time, and internal markets will determine who can pollute and how much.

Polluting companies will have to compensate for their emissions by buying credits from those organizations that reduce their emissions beyond their designated quota. In this model, often referred to as cap and trade, governments set the standards and the rules for the market.

So if cap-and-trade is the most common form of top-down environmental management, what’s the bottom-up model?

A bottom-up model of environmental management is what we’re seeing in the voluntary carbon market (VCM): a community based approach based on evolving scientific criteria and managed through a mostly decentralized structure.

Companies set their own goals for carbon reduction, usually a net-zero commitment by a certain date, and then take two courses of action: they first measure and plan to reduce their own carbon emissions, and then purchase offsets for the emissions that cannot be feasibly reduced with today’s technology.

Despite its decentralized and voluntary nature, in the VCM standards for offsets are not determined by governments but instead by NGO registries such as Standard Verra and Gold Standard. These registries develop their standards through public consultation and expert input. That’s not to say international governance is not involved. As Joanna Durbin (Phd) writes,

Going forward, all forest carbon credits traded internationally will need to meet requirements agreed under the U.N., including use of a national baseline against which deforestation rates are measured to ensure that emissions are being avoided; a national forest monitoring system so that changes against that baseline can be accurately measured; a national strategy for avoiding leakage; and adherence to safeguards that ensure permanence and documented participation of local stakeholders, including indigenous peoples.

The standards approved by registries are improved over time as technology improves and more data becomes available. These evolving standards represent a double-edged sword.

On the one hand, over time the criteria for approving carbon sequestration projects becomes more rigorous. With that, we can expect that projects that were approved in the past might not receive approval under the most recent standards.

As a result, the bottom-up model is vulnerable to flashy headlines because of its iterative process.

“Look! They admit they failed last year when they approved project X” sounds like a scandal, but the truth is that, just like Moore’s Law sets the speed through which computer processing power improves, so too does scientific and economic advancement make the old absolute, until the new becomes old and the process repeats itself. Instead of saying, “wow, it’s great that we’re better at evaluating projects,” the headline becomes, “it’s unacceptable that we didn’t know last year what we know this year.”

One example, as mentioned in the John Oliver piece, are carbon credits for renewable energy projects. Ten years ago, renewable energy projects that received funding from carbon credits did represent additionality, because the cost of staging a renewable energy project were extremely high. Today, the economics of renewable energy means that they’re oftentimes cheaper than other forms of energy. Such an evolution does not represent a failure of carbon markets, but a victory for the planet.

Even the name “voluntary carbon market” sounds like a half-measure and an affront to taking climate change seriously, but a closer examination reveals both problems with the top-down approach as well as unexpected consequences of its application.

The Problems With a Top-Down Approach

A lot of people in favor of a strict top-down model of environmental protection read “The Ministry of the Future” by Kim Stanley Robinson and loved it. I did not (I much preferred The Overstory).

In the book, (spoiler alert), the planet is saved from the worst consequences of climate change thanks to the ingenuity of a UN diplomat and the cooperation of governments across the world, all finally convinced of the need to take serious, coordinated action.

I didn’t like the book either as fact or fiction, but if we leave the literary critique aside, my biggest problem with The Ministry of the Future is its assumption that public policy inputs equals public policy outputs.

In other words, the book assumes that if a government creates a law with a specific intention, that intention will be fulfilled and there won’t be any unintended negative consequences that won’t accidentally work against the spirit of the law. Anyone who watches policy gets made knows that initiatives can be sabotaged by the legislation designed to elevate them.

What’s more, the book, in my opinion, puts faith in a model that hasn’t worked for a long time, which is the model of international cooperation through global institutions.

I don’t mean to knock the UN: it’s served an important purpose. My point is merely that the model hasn’t produced wide-scale global change for a very long time; indeed, the private sector has taken the baton for driving global change and enhancing global freedoms.

We now have new means to express leadership and coordinate global action which can displace the model that was built for an age of much more limited telecommunications technology, so it seems silly to think the old model would suddenly awaken and move us to action, when recent history would suggest its design prohibits exactly that outcome.

So the first question we have to ask about the top-down model is whether or not it can manage a process as complicated as tackling climate change.

The truth is that top-down change obeys political, rather than scientific imperatives, and within those political imperatives can lay the seeds of self-sabotage.

We’ve seen this already: Germany turned off its nuclear reactors not because they were unsafe but because they were perceived to be unsafe. Then, when Russia invaded Ukraine, Germany turned on harmful coal-burning power plants. Not even the hyper-rationale Germany can escape the gravitational pull of political imperatives.

Even the recent US groundbreaking legislation, The Inflation Reduction Act, ties the success of decarbonization to a lot of other initiatives, including quotas for potentially infeasible domestic manufacturing, that are pet projects of the law’s sponsoring party. It’s darn-near impossible for top-down models to operate within political imperatives in mind.

What’s more, top-down systems, once written into law, become very difficult to reform.

As a result, bugs in legislation can perpetuate themselves throughout time because their reform depends on displacing the current legislative agenda, which can sway with the wind.

We should point out, as well, that top-down systems are limited to jurisdictions, whereas bottom-up systems can encompass players across the globe, including the world’s leading polluters, often operating across jurisdictions.

For top-down to work, we need wide-scale intergovernmental cooperation across the globe, which in turn depends on aligning political will across nations. For bottom-up to work, we need the largest polluters to agree to stick to a set of rules, regardless of jurisdiction.

We then must address the question of what’s better: a limp and badly designed top-down system, or a constantly reforming but difficult to enforce bottom-up system?

Finally, the assumption we need to question when considering a successful top-down system is whether or not governments can successfully impose their will over actors and territories.

As someone who has spent the past 10 years living in the global south, I see arguments that assume states have an enforcement capability as contrary to existing evidence in most countries. If you believe that governments in the global south can effectively police their vast territories, you probably live in the global north.

The truth is that of the 9 countries that host the Amazon within their territory, all have experienced deforestation during environmentally-friendly governments. The simple reason is that environmental destruction operates through decentralized and distributed systems, and governments express power through centralized and often corrupt and inefficient systems.

Whether it be warfare or environmental control, centralized systems struggle to control often uncoordinated and agile distributed agitators.

Governments have different properties and often can’t react to all of the threats that their territories face. As a result, Maslow dictates that they must focus on the most basic needs of their citizens. Let us also not forget the risk of regime change, nor the economic clout of sponsors/lobbyists.

In Brazil, 7 years of pro-environmental policies were succeeded by 4 years of state-approved environmental destruction. Without a decentralized model of environmental protection, the good work of one government can easily be undone by indifference of the next government.

The other system that works through a decentralized structure is corruption, and corruption, taking advantage of weak institutions, can sabotage any well-meaning government’s effort to enforce rules. One of the saddest parts of living in the global south is seeing how easily every layer of the justice system, from the police to the judge, can be corrupted. Impunity can be purchased.

A bottom-up approach to environmental management is based on a decentralized model that at least gives you the chance to to fight back against distributed actors bent on destroying natural resources for profit.

Some might argue that a bottom-up model exists to undermine the efforts of a top-down model, but the truth is that bottom-up models exist because of the failure of top-down models. For example, most companies that participate in the VCM do so without any regulatory imperative.

If efficient and effective top-down models existed, there’d be no need for a VCM. The truth is that the complexity of climate change exceeds governments’ ability to manage alone. Regardless of what regulatory regimes eventually exist to help reign in carbon emissions, they won’t be able to operate without the expertise and work already channeled through the VCM.

Lastly, maybe the most dangerous oversight of the top-down enthusiasts is the economic chaos that can ensue from poorly-conceived public policy that results in higher prices for everything, thus inflicting inflation, and hence the cost of fighting climate change, onto the poorest citizens.

All economic activity expends energy. Energy is the basis of our economy. If we make energy more expensive by, say, restricting its use, we create inflation. Inflation is a tax on the poor. Rich people have hedged portfolios managed by professional investors that are designed to produce returns in times of abundance and times of scarcity. Poor people do not; they’re locked into the consequences of their government’s economic management or mis-management.

If the cost of transitioning to a net-zero planet is passed onto the world’s poor, they may revolt and give rise to the anti-environment populists we’ve already seen in countries such as Brazil, thus undermining any effort to create international coordination. It’s naive to think we can reduce the use of hydrocarbons through draconian measures without adversely and drastically affecting the lives of the poor.

Whether we like to admit it or not, what has driven down the cost of generating and storing clean energy is market forces. Sure, in some cases government subsidies may have helped certain green technologies get off the ground, but those same technologies never would have made it to economies of scale if it weren’t for market forces that made them cheaper than existing energy infrastructure.

In other words, a bottom-up strategy has created the conditions through which governments can begin to feasibly transition to cleaner energy sources. A top-down strategy that creates scarcity of hydro-carbons would simply make everything more expensive.

What is the alternative to carbon offsets?

Finally, the question I have for those who insist in the supremacy of a top-model model is simple: what is your vision for saving the world’s natural systems? A Guardian Article puts the conundrum eloquently: Climate and nature crises: solve both or solve neither, say experts.

Without offsets, for example, we have no economic model to fight against deforestation.

Forests account for 50% of the world’s existing carbon storage. Half of all the planet’s species depend on trees to exist (source).

Even if direct carbon capture were able to pull all of our existing carbon out of the atmosphere in an energy efficient manner, a planet without forests would face a series of additional crises, including water shortages, that will be inevitable without a means by which to protect natural systems.

What’s more, a model of environmental salvation based entirely on direct-air capture fails to take into account that, even when you capture carbon dioxide, you still need to store it somewhere.

In an ideal world, we’d inject that carbon into things like cement so that it is stored for long periods. When that’s not feasible, we need to create carbon storage, often underground, which is not an easy thing to do. Direct carbon capture uses a lot of energy to capture carbon and then requires infrastructure and supply chains that don’t currently exist.

Natural systems, such as forests, soils, rocks, and oceans, on the other hand, are really good at storing carbon for cheap, though they can be difficult to measure. Also, their carbon storage is often not permanent, meaning they’re helping us “flatten the curve” while we race to defeat the climate doomsday device. That said, natural systems are currently the best means we have to scalably capture and therefore should not be left outside of the discussion around preventing climate change; they should be front and center.

Finally, throughout my argument so far, I’ve assumed good faith on the part of those who advocate for a strict top-down approach to fighting climate change, but I don’t necessarily assume there is good faith, because the issue is political.

As I mentioned in one of my first posts, for some protestors their antipathy towards capitalism is greater than their sense of environmental urgency. They might hear “market-based approach” and assume a greenwashing mission designed by and for corporations. As Steve Zwick put it,

At the root of all the critiques (of carbon offsets) is a belief that hundreds of biologists, foresters, economists, anthropologists, indigenous leaders, and entrepreneurs have spent 40 years conspiring to create a rigged system that exists to give Big Oil a license to pollute.

The truth is that the VCM is not a market-driven approach but an imperfect community-based approach built primarily on the current state of scientific research.

A top-down approach assumes there can not be corporate allies, only corporate cheats. It assumes there can be no carrots because the world only understands sticks. The worldview also states that governments are supreme in their knowledge and their enforceable capabilities, and that only people who believe this truly understand the climate emergency; everyone else is a profit-driven libertarian disguising their free-market enthusiasm as climate concern.

The bottom-up approach to climate management is messy because it doesn’t assume we can solve climate change through government enforcement alone. The bottom-up approach accepts the world for how it actually works, and attempts to find solutions fit for it. What’s more, the bottom-up approach assumes it will be eventually brought into top-down, government-lead initiatives. Again, Steve Zwick:

From the start (of the VCM), it was clear that stand-alone projects are different from projects that nest in jurisdictional programs — largely because stand-alone projects address site-specific drivers of deforestation in areas where weak jurisdictional oversight is treated as a separate issue, while projects that nest in jurisdictional programs are designed to encourage systemic improvement by sharing risk between projects and jurisdictions.

In other words, the ability of the bottom-up approach to evolve towards increasing scientific certainty is what will allow for local and federal governments to design effective environmental schemes.

To conclude, then, we do ourselves a disservice as environmentalists to insist on the supremacy of either a top-down or bottom-up model of environmental protection, since in truth both are needed to create a balanced planet. We can’t forget that REDD+, the leading methodology currently used to protect forests, is a United Nations-derived framework which is currently implemented by private developers across the globe.

Nor should we assume that we can get to our climate goals without some elements of a top-down approach. Despite its flaws, the recent United States Inflation Reduction Act is a major boost for many different private initiatives fighting climate change, though notably it does not include a national cap-and-trade system. Without the US and Chinese governments taking climate change seriously, we’re cooked.

If we want to take climate change seriously, we have to depoliticize it. Ideology, the lens we apply to help us determine what is safe and dangerous in the world, serves us little in finding the fastest route to a balanced planet.

Carbon offset markets have problems and a lot of very smart people are working to solve them. In the meantime, sensationalist headlines may allow anti-carbon offset campaigners to win media battles, but if we don’t have a model to protect our natural systems while we defeat climate change, we ultimately will all lose the war.

So to go back to the original question, why are some people so opposed to carbon offsets?

I have a three theories: the first is that it’s easy to hold principled and unchanging positions when you don’t have to dive into the details of how we actually coordinate global action against climate change. If you don’t admit your worldview has problems, you don’t have to deal with those problems. In my opinion, refusing to recognize the role of nature-based systems in fighting climate change is another form of climate denial.

Second, some people believe you can solve climate change by shaming consumers into changing their habits. Without the word count to go into that argument, I’d suggest it’s simply far-fetched. Climate change gets solved on the supply-side of our economy; otherwise we’re left with the worst possible voluntary market.

Third, I think some people believe that if you discredit the efforts of others you can build a consensus by default around your own vision of how we solve climate change.

Ultimately, the best and fastest way for us to defeat climate change is by having lots of people working on different initiatives, some succeeding and some failing, until we find the right combination of initiatives to bring down our emissions and eventually achieve a carbon-neutral planet.

I, of course, am not neutral in this debate for a simple reason: bottom-up environmental change allows for multiple paths to exist, including top-down paths. The top-down model only allows for one path to achieving our climate goals, and if its fails, the planet fails will it. Personally, I’m not willing to take that chance.

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Please note that the opinions expressed here are my own and may not represent the views of my employer.

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Matthew Carpenter-Arevalo

Matthew Carpenter-Arevalo

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Ecuador/Canada. Working on Carbon Origination. Ex@Google, Ex@Twitter. Founder of @CentricoDigital. Contributor @TechCrunch @TheNextWeb.