Carbon Offsets: Better than Critics Think?

“Humanity is sitting on a ticking time bomb.”

So begins the about-the-film section of the website for Al Gore’s 2006 Academy Award winning documentary, “An Inconvenient Truth.” The description continues with these ominous words: “If the vast majority of the world’s scientists are right, we have just ten years to avert a major catastrophe that could send our entire planet into a tail-spin of epic destruction involving extreme weather, floods, droughts, epidemics and killer heat waves beyond anything we have ever experienced.”

But as Mr. Gore explains in the film itself, there is hope. By taking prompt action to reduce greenhouse gas emissions, we can escape disaster.

Many have rebuked the former vice president for failing to heed his own message. For example, his 10,000-square-foot Nashville mansion used 221,000 kWh of electricity in 2006, more than 20 times the American household average.

In response, Mr. Gore’s spokesmen say he has recently installed solar panels and has purchased more than enough “carbon offsets” to make the house’s carbon footprint negative. That is, he has paid one of the dozens of companies around the world that specialize in helping people neutralize the environmental impact of their consumption by replanting forests, say, or by investing in renewable energy sources.

From the beginning, critics have lampooned carbon offsets, likening them to an obese person paying others to lose weight for him. Others complain that offsets allow rich consumers to pollute with impunity while posing as friends of the earth. To dramatize its claim that offsets are a moral travesty, one group has even created a web site that promotes the opportunity to enjoy guilt-free extramarital affairs by paying third parties not to commit infidelities they otherwise would have.

The fact that offsets have been such a ripe target suggests that Mr. Gore may have compromised his advocacy for greenhouse gas reduction by building such a large house. He could have built a smaller one, after all, and used the money he saved to buy even more carbon offsets.

Yet carbon offsets make more sense than critics think.

Among the myriad ways in which problems like obesity are different from global warming, one in particular is economically salient. Whereas the damage caused by obesity is specific to each overweight person, the damage caused by global warming depends only on the total emissions of greenhouse gases. Paying someone else to lose weight does nothing to improve an obese person’s health. In contrast, a reduction in total CO2 emissions, no matter where it comes from, helps reduce global warming.

The question of which appliance to choose is a case in point. Suppose you live in a northern city with normally mild summers and are considering buying a bedroom air conditioner to ease you through the occasional brutal heat wave. Your choices are between a highly efficient model that sells for $500 and a less efficient one that sells for only $300. Because you’re concerned about global warming, you feel obligated to buy the more efficient model. But because you use your air-conditioner so infrequently, buying that model won’t actually help much. You’d do much more to curb global warming if you bought the cheaper model and used the money you saved to buy carbon offsets.

By themselves, they cannot solve the problem of global warming. For that we need sterner measures, such as carbon taxes or cap and trade. But offsets can help. They should be part of the mix.