I have noticed a slew of websites appearing on the net that sell carbon credits to people that want to offset the carbon emissions produced as a by-product of the goods and services they consume. Thanks to former Vice President Al Gore’s eco-documentary An Inconvenient Truth — and I say this with tongue in cheek — we are now all aware of the climate change effects of carbon dioxide emissions. Maybe it is this new awareness (or guilt) that encourages us to open our wallets and purchase these carbon credits.
But what do you really get for your carbon credits? Web sites like greenpig, Climate Friendly, and Carbonfund charge about $25 to offset 1 tonne of carbon emissions, and you get a nice little certificate to certify your purchased carbon credits. You can then hang that certificate on the wall and feel good about yourself.
It is worth noting that you can purchase 1 tonne of thermal coal for about $70. Roughly 1 tonne of coal produces about 2 tonnes of CO2 emissions. So if you bought half a tonne of coal for $35 and stashed it somewhere so that it is never used, then you are effectively sparing the Earth of 1 tonne of CO2 emissions for the cost of $35. So maybe these carbon credits are cheap by comparison. It will certainly save me from stockpiling coal in my backyard.
So where does your money go? Well they go to environmental projects such as tree planting and wind farms. As to how much of your money goes directly into these projects is another question. I am highly sceptical of these carbon credit businesses (if you can call them a business). They are probably more like charities where about 15% of your donation actually goes directly to helping people in need, and the rest of your money is wasted on expensive overheads like the CEO’s salary.
Buying half a tonne of coal and stashing it in your backyard is sounding like a more effective strategy. If everyone did this then coal prices will increase due to a reduction in supply of coal on the open market. Energy becomes more expensive as a result, and economists would lead us to believe that consumers will demand less energy as a result. Consuming less energy will mean less CO2 emissions.
Also why would I want to give my hard earned money to these businesses so that they can then invest in wind farms that will eventually make them more money? Where is my cut of the money from these wind farms? You would be better off investing your money directly into a renewable energy company that is listed on the stock exchange. At least then you become a shareholder in the wind farm and can earn dividends and capital growth from your investment, and still feel good about yourself for saving the planet.
The only benefit I can see from purchasing carbon credits as an individual is that I will effectively be giving up a proportion of my income. By giving up a proportion of my income I will therefore have less money to consume carbon dioxide producing goods and services. Although at the same time I will probably be making somebody else rich, presumably the owners of the carbon credit websites, and thus enabling them to purchase more carbon dioxide producing goods and services than me. So at the end of the day this notion of carbon credits will simply redistribute carbon emissions amongst society with a bias towards the rich.
I will never opt to buy carbon credits as there is no clear way of measuring the effectiveness of the individual’s contribution. I will however endeavour to become more eco-friendly by continuing to buy energy saving light bulbs, powering down my workstation at the office over weekends, and petitioning Google to change the background colour of their search page to black.