Is all CO2 Equal? - Part 6, Are Offsets the Right Investment?

So we’ve been looking at Dell’s Plant a Tree for Me program (last post is here), and see that a) it is doing most of its good far out in the future, versus now, when it is needed, and b) can’t scale to the size of Dell’s business at the current price of carbon offsets.

This leads to the obvious question: instead of planting trees, why not do something that scales and that will offset the carbon this year? I’ve looked at this question a lot over the last few months, and my conclusion is that there is no scalable, timely way to take CO2 out of the atmosphere for $3.95/ton (current price on the Chicago Climate Exchange). Here’s some possible things that might meet the criteria: invest in home wind or solar power, purchase green power through the grid, upgrade to a more energy efficient appliance or car, or pay your share of an investment in a CO2 scrubber for a coal plant. Any data I’ve seen for these suggests that they would cost a lot more than $4 per ton of CO2.

My timing of writing this today couldn’t have been better, as the NY Times wrote about offsets, and elicited a response from Terrapass. The Terrapass argument is that we are “Making the perfect the enemy of the good”. There are aspects of this I agree with; as I said in the very first topic on this, planting trees is a good thing to do, and I don’t want to discourage it. But Adam’s missing the point. The problem is that ‘the good’ is marketing itself as perfect. Buy these offsets and you’ll be “carbon neutral”! Wow! What could be better than that!

So the issue isn’t that the offsets are used as an excuse to cover up bad behavior, its that they may act as a disincentive against other investments which could potentially have more immediate and lasting effect. I’m not claiming that every other investment would have a larger impact than offsets for a given amount of money. But right now offsets are cheap and are claiming to be the end-all solution, so no one is having the debate. Just like Adam wants someone to measure consumer attitudes, I want someone to study these offsets as one of a number of environmentally impactful investment options. For example, is it better for me to use $100 to plant trees, or invest in solar energy for my house? This analysis will require some kind of net present value of CO2, which is missing from today’s discussion.

So to make this concrete, I’ve come up with an Eco Challenge Question. Take a look at it, and let me know what you think! I’d be interested in input on the parameters of the question, as well as an analysis of the answer.