Put-Off by Offsets

The idea seems simple enough:  reduce demand for dirty energy by raising prices while simultaneously increasing demand for clean energy with incentives and lower prices.  Yet upon further investigation, the methods of execution seem overwhelmingly complicated.  This week’s readings provided an in-depth look at the two most supported methods for achieving a drastic cut in carbon emissions: cap-and-trade and carbon tax.  While the articles gave good arguments for both sides, I was left wondering what the current situation is with regards to global policy;  the articles for this week were written from 2008-2010, which left me with a big question as to what the current state of our environmental laws and energy-policies were.  One reading in particular, Cap and Trade 101: A Federal Climate Policy Primer (Sightline, 2009) mentioned the proposed Waxman-Markey bill that was being considered by the House and Senate.  What is the current status of climate change legislation?  After further researching the bill, I learned that the Waxman-Markey bill never became law, as it failed to come before the Senate for a vote.

I initially struggled to fully understand and comprehend the in-depth logistics behind the cap and trade system and the carbon tax system.  Only having an introductory understanding of economics and financial markets, it was difficult for me to wrap my head around the idea of trading “credits” as a commodity in exchange for pollution outputs.  I found the Cap and Trade 101 reading published by Sightline to be the most informative in aiding my understanding of these strategies. The reading published in the Wall Street Journal, entitled “Can Countries Cut Carbon Without Hurting Economic Growth? Yes and No,” somehow aided my understanding in comparing the cap-and-trade system to that of purchasing air-rights for buildings.  In most municipalities, a building is regulated by zoning codes, which restricts the height and volume that a building may occupy on any given site.  Often, owners and developers may wish to purchase the air-rights of neighboring buildings, which effectively allows the developer to add additional height above the zoning height limit for a site.  By purchasing, or trading, neighboring air-rights, buildings can be built larger and taller than the original zoning code, or cap.  To others this may seem like a poor comparison to emissions cap-and-trade, but in order for me to better understand something foreign, I must relate it to something familiar (while evolving, this is my method).

One of the main problem areas I have with the cap and trade system is that of “offsets,” which essentially allow companies to pay for others to cut their emissions as a substitute for cutting their own.  I agree with the argument that it is a way of skirting the root of the problem.  Offsets allow for certain polluters to essentially avoid the responsibility of lowering their own emissions, legally enabling them to hide behind the successful actions of others by simply making a monetary payment. Does this not send a message that a company can avoid punishment by writing a check?  I worry about the extent to which this method may be abused, and it looks like several politicians, including our very own Maria Cantwell, would agree.  Paying others to lower their outputs but doing nothing to lower your own simply prolongs the problem and negates the large-scale efforts needed for a cap-and-trade to be successful.

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