Offset Buyers Beware
ENVIRONMENT, 26 Apr 2010
Even though climate legislation is stalled in Congress, the business of voluntary carbon offsets is thriving, thanks to the abundant guilt and concern of the world’s most wasteful consumers. Not only does Al Gore pay to counteract his heat-trapping gases; so do Hillary Clinton, Arnold Schwarzenegger and high-profile gatherings including the Oscars. Companies have formed mostly in the United States, Europe and Canada to sell the notional product that is offsets. Now it seems easy for celebrities, businesses and regular consumers to neutralize the damage from burning electricity, hopping a plane or hitting the highway.
Carbon-offset firms have no storefronts; they promote themselves and sell their wares on the Internet. Visit one of their sites, calculate your emissions, fork over a fee via credit card and the firm will send a portion of your payment to an earth-friendly project. Greenhouse gases released in high-consuming Western countries can be balanced out anywhere; as they say in the industry, the atmosphere isn’t picky about where carbon is cut. Using cheap land and labor in developing countries offers more bang for the buck, so that’s where most efforts are carried out. China and India have the vast majority of offset projects, with the latter hosting nearly a quarter of all such ventures globally.
Offset companies’ web pages typically feature photos of deep blue skies, towering windmills and banks of resplendent solar panels–the antithesis of pollution. On its site, the trusted Swiss offsetter Myclimate reassuringly tenders “climate protection.” Among its clients the company counts Coca-Cola, Ben & Jerry’s, Unilever and Virgin Atlantic. Another big offset player, The CarbonNeutral Company, has serviced the likes of Brad Pitt and the Rolling Stones, Coldplay, Jake Gyllenhaal and Sky, the UK-based television and communications firm. The CarbonNeutral Company posits that settling one’s carbon debt is relatively simple. Its site states the CO2 offsetting promise: “Buying one tonne of carbon offsets means there will be one less tonne of carbon dioxide in the atmosphere than there would otherwise have been.” Paying to restore carbon balance, an act of consumption itself, signals that we can keep consuming and save the planet.
But carbon offsets are a dubious enterprise. To begin with, they don’t cut greenhouse gases immediately but only over the life of a project, and that can take years–some tree-planting efforts need a century to do the work. And a project is effective only if it’s successfully followed through; trees can die or get cut down, unforeseen ecological destruction might be triggered or the projects may simply go unbuilt. As for keeping track of all this, although many retail offsetters choose to get third-party certification to assure quality, they are not obliged to do so, because the voluntary market is largely unregulated. These projects aren’t required by law to meet any standards or have follow-up assessments to ascertain their efficacy. (Offsets under the Kyoto Protocol are regulated, but inspectors charged with this oversight don’t always maintain the highest standards.)
So what’s actually going on in the places where these guilt- and carbon-scrubbing projects materialize? What impacts are offset ventures having on local people and the regional environment? I visited the state of Karnataka in southern India to better understand what transpires after a consumer sitting at her computer in New York City, Toronto or London clicks the Offset My Carbon Now button and pays with a credit card.
Among its various projects on Myclimate’s website, I find two green energy ventures the offsetter is helping to finance. Instead of burning fossil fuels, these operations run on organic material such as dead palm fronds, sugar cane leaves and rice straw left in the fields after harvest. Unlike coal, oil and natural gas, which release concentrations of carbon stored up over millenniums when organic matter is burned, it emits no more CO2 than the plant took in while growing. Biomass energy, as it’s referred to, is carbon balanced from the start.
One of Myclimate’s projects is with a Bangalore-based company called Decentralized Energy Systems India, or DESI. Myclimate is contributing to DESI’s effort to install biogas power plants (a variation on biomass) in 100 villages–a major undertaking. According to DESI, each power station costs about $200,000 to build, which means the 100-village project will run a hefty $20 million.
When I go to DESI’s office I ask for information on the venture. The woman I talk to, who is in charge of the project’s social programs, tells me DESI has no literature. She also claims the only photos of this three-year-old endeavor are on the computer of DESI’s chairman, and he’s not here. What can she tell me about the social programs that DESI claims have created scores of new jobs? She can’t recall any specifics. “I’ll have to get back to you with that information.” (DESI now posts on its web page information on the project and photos it claims are of project sites.)
What I do find out at DESI’s office is that the offset venture is a family affair. DESI is chaired by K.S. Sharan, whose brother and nephew run the firm that makes the biomass units. Another brother heads up operations on the ground–in a region where the family originates from and on land the family owns. And, despite DESI’s evasiveness about the workings of its project, the company has a third-party certifier to guarantee quality: Sharan’s daughter.
A few days later I see an article in a local newspaper that quotes DESI’s chairman saying the company secures 50 percent of its investments from selling carbon credits. The project’s next phase entails installing twenty new plants in the coming eighteen months–that’s $2 million in offset money. The 100-village project is a serious windfall for the Sharan clan.
I find another biomass energy project on Myclimate’s site. The station is called Malavalli Power Plant Ltd., or MPPL, and in addition to funds from Myclimate the project has received money from several other offset entities based in the United States, Canada and France. I visit MPPL’s website. There I read that the 4.5 megawatt facility’s green electricity is distributed to surrounding underserved villages and delivers social benefits, including new jobs for locals. Among the positions MPPL claims to have created are those inside the plant as well as metering, issuing and collecting bills, “complaints recording” and processing and selling compost made from the facility’s waste ash. According to the company, some of these jobs go to village women through empowerment self-help groups.
The project bears the approval of the most highly regarded third-party certifier of voluntary offsets, Gold Standard. A Gold Standard case study of MPPL states that the power plant “provides reliable energy for 18 hours per day and with improved voltage.” My translator and I drive two hours southwest of Bangalore to the region of Malavalli, where MPPL is located, to see how the project’s going.
The tiny villages and shantytowns of Malavalli dot the lush farmland, which surrenders to the swell of granite hills in the water-rich region. Canals and rutted roads cut through a patchwork of small plots chockablock with sugar cane, rice, millet, peanuts and coconut palms. Women float in brightly colored saris along narrow mud paths to work in the rice paddies. Crews of landless laborers cut sugar cane with slick machetes while white cows decorated with tassels languorously heave wooden carts freighted with the stalks onto the road.
The village of Heggur is about 1.5 kilometers from the MPPL plant. On one of its dirt lanes I meet a woman I’ll call Manini. As is true of most villagers, her family shares one room with a small alcove for a kitchen and has almost no furniture or indoor plumbing. That evening, as she builds the fire to cook dinner, the power goes out. The mother of two teenagers feels with her hands for a kerosene lamp fashioned from a glass flask and twine. The match pops when it lights and gulps brighter when it touches the wick. Manini resumes her work in the kitchen; the homemade lamp doesn’t emit much light, but she knows where everything is; she’s done this countless times before.
Her brother and some friends who have gathered after a day laboring in the fields tell me the electricity supply hasn’t improved since MPPL came. They get at most twelve hours per day riddled with blackouts, pretty much what they had before. The villagers say that the Indian government installed transmission cables in the region in the 1970s, but the power supply has always been unpredictable. They also tell me (and I later confirm) that the energy produced at the plant isn’t sent by special lines to nearby villages but instead goes right to the central grid, which feeds electricity-hungry Bangalore, a booming city of more than 5 million and India’s information technology hub.
As for jobs, MPPL insists it runs a composting operation in Heggur, but no one I talk with knows of it, and I see no trace over the two days I’m there. A woman who runs various self-help groups in the Malavalli region and Manini, who is active in one such group, both say they’ve never heard of any bill collection or customer service jobs. In fact, household power bills are ascertained, issued by and paid directly to the state government, the same system they had before the biomass power plant arrived.
The jobs that have materialized are delivering fuel to the power station and at the plant itself. The biggest gains seem to be in hauling combustibles, according to private contractors who have expanded their businesses and hired scores, perhaps hundreds, of new laborers. At its facility, MPPL created fifty-six administrative positions–filled, according to everyone I meet in the surrounding villages, by outsiders with more education. MPPL has hired local men for the gritty jobs in the boiler room. Workers at the plant say they take home about $2.50 a day, while management claims these unskilled laborers earn about $3 a day. By comparison, I’m told by villagers that men who work as field laborers earn $2 a day, and women are paid half that.
In Heggur I meet two men who work in the boiler room. They recount stories of dangerous labor conditions, including a lack of basic protective gear and no safety guards on fuel processing equipment. The workers pull branches and leaves from outside into the fire with their bare hands (few can afford gloves) and often suffer bites from the numerous snakes in the region, including cobras. The men tell me of a co-worker who died from a bite on the job. They also mention another co-worker, who lost a hand to the facility’s giant wood chipper. As we talk about precautionary measures at the plant, one of the workers explains that basically there are none. “What goes on in the factory is a hush-hush thing,” he says. “When Westerners come, you don’t let them into the factory.” Indeed, MPPL denied my request to see the power station.
Environmentally, the one indisputable success of the carbon-offset project is that it generates energy without burning fossil fuels. However, this has created a booming local market for combustibles. Consequently, whereas before families such as Manini’s could gather dead cane leaves and branches free, now they must often buy wood. The effects on the poorest are substantial because they make many fires a day for cooking and washing. And with more people buying firewood, vendors are felling increasing numbers of trees to meet demand. What’s more, one of Manini’s friends tells me he cuts trees on his land to sell directly to the power station to earn extra money. He knows others who do the same. The people gathered at Manini’s house attest that since MPPL arrived, they’ve seen an uptick in tree clearing.
I ask the head of MPPL, K. Krishan, about the discrepancy between what I found and the company’s claims. He assures me MPPL “does not at all contribute to residents cutting down trees.” Regarding worker safety, he claims the facility provides hard hats and goggles, which are required in the boiler feeding area. (Photos of the facility posted on Myclimate’s website show laborers who do not wear hats or eye shields.) As for the rural distribution of electricity and the women’s jobs described on its website, Krishan says these were part of a pilot project, active for less than a year between 2004 and ’05, but the firm has been “remiss” in keeping its website current.
When I contact Gold Standard, the representative says what I found at MPPL was “alarming” and that “this project in particular has been subject to extensive reviews, research and monitoring both by the carbon community and independent groups.” Despite how good they may sound on paper, in reality these projects inevitably entail complexities that arise in situ. These can range from lazy, incompetent or corrupt inspectors to opportunistic businesspeople like those running DESI and MPPL, both of which are certified to sell credits on the lucrative Kyoto-sanctioned carbon market. And like DESI, MPPL is expanding; it is building additional biomass plants using offset money based on the “success” of its Malavalli facility. Unexpected outcomes like the felling of trees for extra income and to make up for a shortage of wood for domestic consumption present other obstacles to a healthy climate. Maybe carbon offsetting–trying to stuff the global-warming genie back in the bottle–is a job that simply can’t be done.
Building renewable energy systems needed to leapfrog dirty energy is a much larger and politically complex undertaking than CO2 neutralization suggests. This transformation requires a far-reaching, well-funded program–something carbon offsetting can actually frustrate. The offset mechanism hinges on “additionality,” meaning that a carbon-balancing project must not duplicate what would have otherwise happened. If the financing for, say, a biomass power plant was already lined up, or if the government required such a facility as part of its energy policy, then CO2 money would be off limits. In reading MPPL’s most recent validation form, I come across a line confirming the project’s additionality: “It can also be concluded that there are no new policies or regulations, which would mandate the implementation of the project activity.” In other words, keeping its energy system dirty allows India to boost the value of its carbon market. If the government mandates green energy, not only will it have to pay more for high-tech hardware, since fewer projects would be deemed additional but also the rich offset market would flee to competitors such as China. Indeed, a week after I went to Malavalli, the state of Karnataka announced the approval of two new 600-megawatt power stations that will run on fossil fuels.
In Bangalore I meet a man who owns a small solar-panel company. He tells me the city has the highest concentration of solar panels in India. Amid the city’s birth as a tech haven over the past decade and a half, its population has mushroomed, stretching its power supply beyond the limit. In response, the city began encouraging residents to install solar water heaters. Almost everyone I meet in Bangalore has them; washing with water warmed by the sun has become a mundane part of life. These people have shifted to solar, but they didn’t do it for carbon credits or with an eye on potential offset money. They heat their water with solar rays instead of fossil fuels because it delivers heat to the faucet, which alleviates demand for power. This initiative doesn’t require wading into the morass of establishing additionality, no certification agent must be brought in, there is no abstract swapping of pollution for offset credits.
The problem isn’t just that the offset mechanism lacks transparency and consistency; it’s also that addressing those issues can easily distract from more meaningful solutions. Offsets are a way to make global warming fit the needs of the market instead of a way to truly solve climate change. They signal that it’s OK to keep devouring energy even though we know it’s not. What if we just cut emissions here in the West? What if we start figuring out how to consume less? And what if the West authentically supported developing countries in creating viable, integrated renewable energy networks instead of encouraging them to seek offset money? This direct approach would bring real development, not the market growth (even the “green” kind) that only continues fueling climate change.
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This article appeared in the May 3, 2010 edition of The Nation.
This article is adapted from Heather Rogers’s new book, Green Gone Wrong: How Our Economy Is Undermining the Environmental Revolution (Scribner). Research support was provided by the Investigative Fund of The Nation Institute.
Heather Rogers, author of Green Gone Wrong: How Our Economy Is Undermining the Environmental Revolution (Scribner), is a senior fellow at Demos.
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