Carbon offset companies using Enron style accounting
While the UK Parliament’s Environmental Audit Committee inquiry into the carbon offsets industry hears it first evidence today, a new report by Carbon Trade Watch shows that the carbon offset industry is using the same sort of ‘future value accounting’ that caused the collapse of energy giant Enron.
When companies like Climate Care and the Carbon Neutral Company sell the public carbon offsets, carbon savings expected to be made in the future are counted as savings made in the present. This is known as ‘future value accounting’ and is the same technique used by Enron to inflate its profits with such disastrous consequences. Offset companies give the idea that emissions are instantly ‘neutralised’ when in fact the supposed ‘neutralisation’ can take place over periods of up to a hundred years. Regular offsetting worsens the problem because the rate at which carbon emissions are ‘neutralised’ is far slower than the rate at which they are generated.
The Carbon Neutral Myth – Offset Indulgences for your Climate Sins , launched today by Carbon Trade Watch, a project of the Amsterdam-based Transnational Institute, draws on extensive research and case studies to argue that:
* Offset companies breed complacency by selling ‘peace of mind’ to consumers, offering up a form of ‘greenwash’ that distracts from the serious task of tackling unsustainable consumption patterns and business practices
* Limited research on the climate benefits of tree plantations into the carbon cycle is sold as fact while the offset companies quantify this supposed benefit into a sellable commodity.
* Tree plantations marketed as beneficial for the climate have seen people in the South expelled from their lands.
* Projects that look great on the website or in the leaflet are often, in practice, mismanaged, ineffective or detrimental to the local communities who have to endure them.
The report’s author, Kevin Smith, said that ‘The only effective way of dealing with climate change is to dramatically decrease our current rates of fossil fuel consumption. Offsets are providing a justification to maintain our carbon-intensive lifestyles, and delaying the profound changes we need to make in our societies.’
Jutta Kill from the organisation FERN, who is today giving evidence to the UK parliament Environmental Audit Committee said that ‘Government proposals to regulate offset companies misleadingly give the impression that there are bad offsets and good offsets. The fact is that all offset projects are sanctioning further fossil fuel use, and in doing so are a dangerous distraction from tackling climate change.’
For more information:
Kevin Smith, Transnational Institute, +44 207 700 7972 kevin [at] carbontradewatch.org
Jutta Kill, FERN, +44 7931 576538 jutta [at] fern.org