The past few weeks I have been trying to wrap my head around the difference between compliance offsets (carbon offsets a company purchases in order to comply with carbon reduction commitments like Kyoto or AB32) and voluntary offsets. Aren’t they just the same product with different packaging and intention?
Not exactly. If you have been following any of the scoping plan discussions about AB32 implementation you’ll know that the role offsets will play is pretty controversial. To get the ‘why’ straight we’ve got to start at the beginning. AB32 is a piece of legislation that requires the state of California to reduce greenhouse gas emissions to 1990 levels by 2020 and it charges the California Air Resources Board (CARB) to figure out how to get there. We have this wonderful strong commitment, we know the state will be working hard to reach this goal, but the type of restrictions that CARB will select, which industries will be hit hardest, and how they will be required to meet the new carbon limits are all up for grabs.
There are many different types of plans on the table right now for AB32 implementation, and to be honest, they give new meanings to old fashioned words: “auctioning” “cap and trade” “upstream caps” all frequently heard plans or parts of plans. I could go on and on about what these different proposed plans mean (and I might in a future blog if Nick will let me!) but I mention them now just to point out that who will be affected by AB32 and how are still very much under discussion. One of the big topics of discussion is offsets- whether they will be “limited” or not, and if so, by how much. Limitation in this context refers to the question of how much of a company’s carbon inventory can be reduced through the purchase of offsets. In a scenario with unlimited offsets, a company could meet the entirety of its required carbon reduction by purchasing the requisite number of offsets. In an unlimited offset situation, that manufacturing firm does not have to make any efficiencies to their processes at all – they can just make some quick purchases and continue on with business as usual. This is problematic because whatever emissions that firm was producing are still going into the atmosphere. Offsets are probably going to be a reality of the plan CARB comes up with because it will just be too difficult and expensive for firms to meet the targets solely through reductions. But, we want them limited so that the way business is being done can be shifted to a new low-carbon business marketplace.
If offsets are a part of the solution, companies will likely have high restrictions on the type of offsets they can purchase (verified!) and the vendors they can purchase from. The offsets market for compliance offsets will hopefully be highly regulated and specific so as to avoid double counting, additionally, leakage and permanence issues that were discussed here.
Compared to all that controversy, voluntary offsets are pretty easy to understand, at least in terms of the who, what, why. Voluntary offsets are the ones you hear most about, the ones I’ve been yakking about these past few weeks. Voluntary offsets are the ones a person or a company might buy to offset a plane trip or an event. They are a goodwill purchase, borne out of the desire to do the right thing and go low carbon. They can’t really hurt anything, and they might actually help if the offsets you purchase are high quality.
In both consideration of both voluntary and compliance offsets we want the offsets to be high quality, but it is much more important that they be so in the compliance discussions because we have actual targets to meet, and we want AB32 to push us to a new way of doing business. That can only happen if carbon emissions get reduced at the source and those offsets are reliable.