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Lars G. Josefsson
CEO, Vattenfall

Lars G. Josefsson

Lars G. Josefsson is president and CEO of Vattenfall, Europe's fifth largest generator of electricity and the largest generator of heat with operations in Denmark, Finland, Germany, United Kingdom, Poland, Netherlands and Sweden. He is also a member of the UN Secretary-General's Advisory Group on Energy and Climate Change. ALL POSTS

Offsets can build momentum for a global effort

Q: The idea of selling "offsets" for greenhouse-gas pollution seems to be losing some steam -- at least in the U.S. A recent media report said the demand for them is slackening, thanks to the economy, to the failed attempts at creating a sweeping international climate accord in Copenhagen, and to the gridlock on climate on Capitol Hill. Do you think offsets still ought to be part of wide-scale efforts to tackle climate change, either in the U.S. or around the world?

Carbon offsets are interesting for three interrelated reasons:

1. Offsets make combating climate change less expensive, by allowing resources to flow to projects that deliver the most reductions for the money.

2. Offset schemes help globalize the emissions reductions challenge, by giving countries and sectors that do not have their emissions capped an incentive to start taking action, thus building financial and operational capacity to reduce emissions around the world.

3. Offsets link together the 'carbon economies' of different countries, creating gradual convergence towards a global price on emissions. This gradual process is one of the keys to preventing carbon-based trade wars - if the value of reductions is converging across economies, interest in so-called 'border adjustments' for traded goods will decrease.

Investors already understood that a global price and a global market for trading reductions was some years away, and if demand for offsets is now weakening that may reflect pessimism about the pace of integration. But it would be a shame if policy-makers reinforced this momentum by abandoning efforts to link their climate efforts. Whether or not a country opts for a cap-and-trade system like the European ETS, there are ways to use offsets to link climate regimes at the national and industry level. The government of Japan, for example, has not used cap and trade, but has itself been a major purchaser of offsets to meet its Kyoto obligations. In the future, countries that opt for a carbon tax could also allow companies to receive credits for reductions abroad.

International offsets are not easy to implement. Their reductions need to be trustworthy, their overall availability has to be kept in line with domestic objectives, and they need to be a part of a broader political movement towards integration and collaboration. But the benefits of offset systems outweigh the risks.

By Lars G. Josefsson  |  March 19, 2010; 12:00 PM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Trading in offsets was halted last week in one European exchange. It seems the same offsets were sold more than once.

The statement that "International offsets are not easy to implement." is so true. You are selling something that is created out of nothing tangible or measurable (reduction in deforestation), can easily be faked, and after you collect all your deforestation credits some indirectly linked partners can cut the trees and sell them anyway. This will be worth millions to the insiders and the suckers who pay the utility bills will have nothing to say about it and probably won't even know how much of their money was stolen.

Carbon credits are mostly worthless now, as people with money involved have figured out that the human effect on global temperatures has been vastly overstated. The recent warming cycle will, sooner or later, turn into a cooling cycle and the same scammers will probably figure out a way to make money by encouraging utilities to produce more carbon in the hope of staving off the next ice age.

I have noticed that more and more of these carbon reduction schemes also include a 'burn less foreign' oil component, so they won' be completely without value when the AGW house of cards collapses. A lot of resources will have been wasted focusing on carbon rather than energy efficiency, but at least there is some value from reducing dependency on foreign oil.

Posted by: AGWsceptic99 | March 20, 2010 4:18 PM
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