Is offsetting merely a moral license to avoid a lifestyle change?
Offsets should not be made to avoid making efforts to improve energy consumption and reduce GHG emissions at source. However, the processes of offsetting and indeed carbon trading should not be underestimated in their role as efficient mechanisms of capital allocation.
Consider the following example of a hypothetical and admittedly oversimplified situation. House A and B have each identified various means by which to reduce their energy consumption by 1 tCO2e each. The reduction would require an investment in energy efficient lighting and a modification to the heating system costing $100 in each house for a total of $200 in both houses. House C is an older home and has an even larger reduction opportunity of 4 tCO2e but because of the older equipment will require a greater investment of $200. Unfortunately the owner does not have these funds available at the present time. From an overall perspective what is the most efficient way of proceeding?
- Do nothing, we should not be spending money on GHG reduction.
- Each individual should do what they can. House A and House B should spend $100 each for a total GHG reduction of tCO2e of 2.
- House A and House B should contribute $100 each towards funding the modifications in House C to for a total GHG reduction of tCO2e of 4.
If you answered C to this question you have understood the concept of offsetting and carbon trading. Offsetting and carbon trading ensure that investments materialize the largest GHG reductions at the lowest possible cost.