Al Gore's Carbon Solution Won't Stop Climate Change

At the Oscars, former Vice President Al Gore and megastar actor Leonardo DiCaprio informed a billion viewers that this was the first "green Oscar," at least with respect to global warming. The hosts had purchased sufficient greenhouse gas offsets to allow them to free the event of any responsibility for increasing greenhouse gases.

Two days later, Al Gore and emission offsets were again in the news when reports circulated that his Nashville house consumed 20 times more energy than a typical house. His spokesman responded: The Gore family had purchased green electricity and carbon offsets in sufficient quantities to render the house's net contribution to global warming as zero.

Over the succeeding weeks, a flurry of articles appeared about the growing use of carbon offsets. According to USA Today, the market for voluntary offsets in 2006 was almost 20 times greater than it was in 2004. Dwarfing this market is the market for what might be called involuntary offsets -- that is offsets purchased as part of the mandatory emissions reductions program agreed to by the 38 industrial nation signatories of the Kyoto Protocol. Nicholas Stern, former chief economist of the World Bank and a major player in the global climate change game, estimates the value of carbon credits currently in circulation as $28 billion and predicts it will climb to $40 billion by 2010.

The shortcomings of current carbon trading systems are clear. As a piece in Newsweek concluded, "So far, the real winners in emissions trading have been polluting factory owners who can sell menial cuts for massive profits and the brokers who pocket fees each time a company buys or sells the right to pollute."

Currently, the link between the purchase of carbon offsets and the actual reduction of carbon emissions is highly controversial and almost impossible to verify. The process is easily manipulated. Measurement tools are remarkably primitive. Even the most basic calculations are subject to wide variations. The New Internationalist requested estimates from four reputable carbon trading companies for the number of credits a passenger would need to purchase to offset an around-the-world flight, starting and ending in London. The magazine received four answers: 4.3, 6, 8.68 and 11.63 tons.

Despite the criticisms, the concept of emissions trading continues to be vigorously supported by major U.S. environmental organizations. The Regional Greenhouse Gas Initiative, recently embraced by nine northeastern and mid-Atlantic states, allows for carbon trading, as does California's new global warming initiative. Emissions trading is at the heart of the European Union's strategy to meet its Kyoto Protocol goals. Several congressional bills embrace carbon trading to meet greenhouse gas-reduction goals.

Most environmentalists tend to agree with the assessment of Dan Esty, director of the Yale Center for Environmental Law and Policy: "Carbon trading is a promising strategy for reducing greenhouse gas emissions but the current structures have serious flaws."

In other words, the system is new. As with all new systems, carbon offset trading is working out the kinks. Carbon trading 2.0 will be much better than carbon trading 1.0. Give it a chance.

I disagree. Carbon trading is not a promising strategy. Its costs outweigh its benefits. We don't need carbon trading to reduce carbon emissions. Indeed, it is likely that we will reduce carbon emissions much more without carbon trading.

Unfortunately, policymakers and environmentalists have all but welded together the words, "cap" and "trade." They talk as if a cap cannot exist without a trading mechanism. That's not true. We can have caps without trade.

We should impose an immediate moratorium on carbon trading while imposing ever-more rigorous carbon caps. And stop the use of long-distance offsets. All offsets should be local or regional.