This Economist blog entry seems to be a good and simple explanation of why any carbon offset scheme is a very dubious exercise. The crucial paragraph:
When you donate money to build a new windfarm, you don't take any of the old, polluting power offline; you increase the supply of power, reducing the price until others are encouraged to buy more carbon-emitting power. On the margin, it may make some difference, since demand for electricity is not perfectly elastic, but nowhere near the one-for-one equivalence that carbon offsets would seem to suggest. Especially since the worst offenders, big coal-fired plants, are not the ones that renewables will substitute for; solar and wind power are not good replacements for baseload power. Instead, renewables are likely to take relatively clean (and expensive) natural gas plants offline, since those are the ones that provide "extra" power to the system. Similarly, by giving villagers in Goa energy-saving CFL bulbs, you do not lessen the amount of electricity consumed; rather, you make it possible for other people to purchase the extra energy freed up by more efficient lightbulbs. This may be excellent poverty policy, but it does not lessen the carbon footprint of your international flight.
The post is inspired by Al Gore's defence of his very energy hungry house by his use of carbon offsets.
No one has commented on the post at The Economist yet. I have no doubt there will be carbon offset defenders coming out in Al's defence, but it will interesting to see if they can counter the basic argument.
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