Debate: Créditos de Carbono desestimulam mudanças de base

Na revista online Economist, um debate me chamou a atenção e vou repassá-lo aos leitores.

Ambos argumentos são valiosos e se sustentam muito bem, no entanto o propósito é provocar o pensamento e o exame da questão.

Será mesmo que o sistema de créditos de carbono é um atenuador da consciência e provoca uma atitude passiva dos inspetores, provocando um descaso nos grandes emissores de carbono e desestimulando mudanças de base? Mr Michael Wara acha que sim.

Ou será que o sistema de troca é realmente eficiente e as acusações de que os relatórios de alguns países são fraudulentos são suposições infundadas? Mr Henry Derwent apresenta uma forte introdução ao defender sua posição, embora pragmática ao fazer frente aos argumentos de Wara.

Para entender o debate:

A Economist argumenta que acredita que o sistema de créditos de carbono é ineficiente. Isto é o que se chama em inglês de Proposition. A pessoa que defende a proposta Defends the proposition. A outra pessoa, que acredita que a proposta está errada, isto é, entende que o sistema de créditos de carbono é uma ferramenta real e eficiente é Against the proposition.

Alimente seu pensamento.


Rebuttal statements

Michael Wara
Defending the proposition
Mr Michael Wara
Assistant Professor at Stanford Law School
Human institutions, and their limits, matter. We need strategies that dramatically reduce greenhouse gases (GHGs) and that are possible to implement effectively. Carbon offsets fail this test.

Henry Derwent
Against the proposition
Mr Henry Derwent
President and CEO, International Emissions Trading Association
Many of the arguments against carbon offsets derive from an assumption or a set of evidence that some emissions reductions from outside the jurisdiction of a cap-and-trade system, used to offset emissions within that system, are fraudulent.

Emma Duncan
The moderator’s rebuttal remarks
Dec 9th 2008 | Ms Emma Duncan

You can tell from the statements so far not only that we have two top-class brains applying themselves to the problem, but also that both men believe passionately that their argument, if fed into global policy, will help avert serious climate change. And you can tell from the number and quality of comments that there are a lot of other clever people out there who mind a great deal about the issue too.

Michael Wara’s case is based largely on what he regards as a conceptual problem with offsets: that, in order for them to reduce emissions efficiently, they must represent a reduction over and above what would anyway have happened. Avoiding what he calls the “anyway” credit is known as the additionality principle. He reckons that the additionality principle is impossible to implement because it involves knowing the counterfactual—what would have happened otherwise.

Henry Derwent initially makes a largely theoretical case for offsets, but subsequently counters Mr Wara with pragmatism. He accepts that there are difficulties in the design and implementation of offset systems. The reliance on an absent counter-factual is a problem, but that arises in all sorts of areas. Any government grant, for instance, relies on the assumption that the firm would not have put up the factory otherwise. And, he says, there is no greater reason to assume that foreign reductions will be impossible to monitor than there is to say that the foreign operations of companies will be inherently unreliable.

Mr Derwent has some support among the audience. Sliptitin, for instance, is something of a pragmatist. He is not entirely convinced by offsetting, but he reckons that paying developing countries to cut emissions will have long-term benefits. “Luring China and India in through a system that does some good (albeit with defects),” he says, “ultimately gets these major emitters on the hook for a genuine cap.” Shankarkv takes the broad view that, although the system may have flaws, “trying to perfect a system is easier than trying to start a perfect system.”

So far, however, most of the audience is with Mr Wara. The general view is that the system is too susceptible to fraud. Joaquin Gutierrez makes a point which will resonate with anybody, like me, who has developed a deep loathing for the Common Agricultural Policy: “Have not we, Europeans, learnt enough of market mismanagement and corruption with agricultural goods” to be sceptical of any system that is designed and implemented by governments?

To my mind, Mr Derwent’s strongest argument is that abandoning offsets will mean higher costs, and higher costs mean less emissions reduction. Those who decide, in the end, to support the motion need to satisfy themselves that not just offsetting is flawed, but also that there is a better alternative.

Michael Wara
The proposition’s rebuttal remarks
Dec 9th 2008 | Mr Michael Wara

Human institutions, and their limits, matter. We need strategies that dramatically reduce greenhouse gases (GHGs) and that are possible to implement effectively. Carbon offsets fail this test. That is the essential rejoinder to Henry Derwent’s defence of them. Mr Derwent makes a largely theoretical case for the value of carbon offsets. Where emissions reductions occur does not matter; emissions reductions are expensive; there are low-cost options in developing countries that can be accessed by offsets, therefore we should use them. This ignores the substantial and compounding evidence of very real problems in the practical implementation of carbon offset programmes. These problems of the real world, as opposed to the theoretical, sharply cut the benefits that carbon offsets provide and dramatically increase their uncertainty. This is unacceptable both because we need to think big with our climate mitigation and because we cannot afford to fail.

In addition, Mr Derwent, to the extent that he does discuss the issues related to real-world offset programmes, misses the point that the problems with offsets occur because the conceptual design of a carbon offset requires something like mind-reading, or more charitably, is extremely subjective and information-intensive. He seems to think that problems crop up because of “monitoring, reporting and verification.” In order to decide whether to allow an offset to issue, the regulator in charge, whether the United Nations Framework Convention on Climate Change (UNFCCC) or someone else, must decide what business decisions the applicant would have made in the absence of the incentives, financial and otherwise, created by offsets. Thus, the question is whether the regulator can, in practice, tell the difference between an offset-driven change in behaviour that leads to a GHG reduction, and behaviour that would have happened anyway. If not, then reductions that can only be accessed by carbon offsets, be they local or far afield, are not worth the investment of scarce climate funds.

The difficulty of this determination is made clear by an example. Imagine a large developing country where most electric power is mostly produced by burning coal. A state-owned company, which essentially all power generators are in this country, proposes to construct a wind farm and argues that the decision not to build a coal plant was driven by the ability to produce carbon offsets. The company happens to build lots of coal-fired power plants as well. The national electricity regulator sets the feed-in tariff (the wholesale price of electricity that the wind farm will get from the grid) in such a way as to encourage wind farm construction, but not to make it as profitable as the alternative of cheap, dirty coal. Finally, this country has announced that its national energy policy is to build not only lots of wind farms but also a domestic wind turbine industry. The country has a history of accomplishing its national policy goals. The net effect of this factual setting is a wind farm that is profitable, but less so than a coal-fired power plant would have been. When the sale of offsets are added to the balance-sheet, the project becomes a slightly better investment than a coal-fired power plant, although with greater risks because the generating company has far less experience with wind turbines than it has with coal burning. A final complication: it is totally unclear what the cost of capital is for the generating company because it can and does obtain loans at a wide variety of interest rates from the government, and regularly gets direct cash transfers as well. So now, can the regulator decide, can you, the reader, decide, whether carbon offsets tipped the balance for the wind farm or just sweetened the deal?

It is virtually impossible for the regulator to tell whether the wind farm would have been built without the incentives created by carbon offsets. If this situation were exceptional, one might argue not to throw the babies out with the bath water. Unfortunately, this type of story is increasingly the norm, especially in China, India and Brazil, the countries that supply the vast majority of carbon to the international offset market. This is not a situation that can be solved by better rules, as Mr Derwent seems to suggest. Rather, it is a situation ideally suited to fraud. So long as a carbon offset must represent a change from business as usual, the problem occurs to a varying degree for each and every credit issued. For that reason alone, we should look to other strategies to both fund sustainable development and lower the costs of limiting carbon at home.

Two final points merit emphasis: first, cap-and-trade programmes that do not include offsets, carbon taxes and more traditional command-and-control style regulations, do not share the fatal defect. All of these systems do require well designed monitoring, reporting and verification schemes but they do not require an understanding of what would have happened in their absence. For that reason, a mix of these policies is likely to produce an effective climate policy.

Second, because we give up carbon offset schemes does not mean that we leave the lowest cost emission reductions on the table. In fact, work last year by the McKinsey Global Institute shows that the lowest cost reductions—reductions that actually pay for themselves (now that’s cheap!)—exist mostly in improving the energy efficiency of developed-country buildings and the fuel economy of commercial and passenger vehicles. Most of both of these opportunities are still, although not for ever, in the developed world. Further, most of these reductions have been judged ill-suited to carbon offset schemes because of accounting issues. We would do well to expend the efforts we now direct towards offsets on these alternatives.

In the end, while there are some carbon offsets that can be shown to be sound, far too many elude this certainty. We should not make the approach central to our effort to avoid dangerous climate change. Instead, we need to focus our efforts on market-based policies that work and other effective approaches to low-cost GHG reductions.


Henry Derwent
The opposition’s rebuttal remarks
Dec 9th 2008 | Mr Henry Derwent

Many of the arguments against carbon offsets derive from an assumption or a set of evidence that some emissions reductions from outside the jurisdiction of a cap-and-trade system, used to offset emissions within that system, are fraudulent.

This needs to be broken down into three pieces. First, are there intrinsic flaws which mean that there will be an overwhelming motivation to cheat? Second, does the system controlling the authenticity of the offsets work? And third, what better way is there of achieving the original objective of an offsetting system?

These are questions that all need to be treated seriously. On the first, there is nothing particularly new in a situation where passing off cheaper, counterfeit goods would be financially rewarding if you could get away with it. Every time governments regulate, or introduce taxes, they set up motivations to cheat. And stripped of the market clothing, a cap-and-trade system is just a regulation. Convincing the regulator that you did not cause emissions is even more rewarding than covering those emissions by fake offsets. Yet we do not give up on the process of regulation. Perhaps the worry is that we should only on principle trust the regulators in our home jurisdiction. But in a globalised economy we should by now have come to accept that feelings of suspicion about foreigners doing the regulating are tinged—at least—with prejudice.

Another intrinsic flaw is sometimes said to be that offsetting usually—but not always—involves the construction of a counter-factual: coming to a decision about what would probably have happened anyway. This too is nothing new for governments and or regulators. If you set up a grant system, you invite people to claim the grant who really have no need for it. Finance ministries the world over gloomily accept that every new grant will have a certain amount of deadweight, just as companies accept that there are some people who would have paid a higher price for their product than the one at which it is sold.

Counter-factuals are particularly unavoidable in the global climate change regulatory system. It would be wonderful if we could proceed immediately to demand reductions in emissions by countries, and therefore by the companies in those countries, measured against a firm historic emissions total. But at this stage in the game we cannot, even for developed countries (or economic sectors in those countries): the shock would still be too great. So we ask for increased effort, a slower growth of emissions than would have happened otherwise. That requires a counter-factual, and that entails arguments about whether we got the counter-factual right. If we are going to help developing countries to cut their emissions, as common equity says we must, the question arises, “Would they not have done what we are helping them with anyway? “Anyway”, or “additionality” comes with the territory.

The second question is how effective the existing systems are at making sure the offset providers deliver reductions that are both genuine and additional. This turns into an argument principally about the Kyoto Protocol Clean Development Mechanism (CDM) and its regulatory systems, because none of the others are mature enough or large enough to have provided a body of evidence. However there is a mass of evidence about the CDM because the UN bodies have deliberately designed it to be very transparent and because it has attracted many academic and other studies.

Proving that a regulatory system works is always hard. Showing that it has rejected plenty of applications cuts both ways but at least shows that there is work and activity going on. The CDM passes that test: out of the total current “pipeline” of 4,359, 84 projects have been rejected, and 78 are in the review process. There was a recent high-profiile suspension of one of the biggest verifier firms for being caught out in a spot-check.

Another approach is to examine the architecture of the system and the number of checks, methodology analyses, balances and “multiple-signatures” required. Again, no problem with the CDM: the executive board, made up of people with very different backgrounds and all sworn to independence, decides many of issues on the basis of the very structured advice from the secretariat and separate decisions on methodologies. The board has the respect of the commercial verifiers because it can ruin their reputations. And there is plenty of opportunity, frequently taken, for project reviews and spot-checks. The more usual criticism of the CDM is for being too slow and painstaking, and lacking a sufficiently modern, executive, light touch and target-driven approach.

Of course some bad decisions will get through, and people will preen themselves on having outsmarted the regulator. But that again goes with the territory; there is no evidence of systematic fraud, nor that the CDM is worse than many other regulatory systems, though like all regulatory systems the task of improving it should be ongoing.

The third question is “So what else would you do?” The purpose of offsetting is to give companies and countries with emissions reduction obligations the motive to conduct the widest possible search for the lowest-cost means of reducing emissions. This is also important because getting developed-country companies to take responsibility for cutting emissions, though very effective, needs to be sold to them; and in principle the lower the cost, the less they will accept. Offset opportunities can be found in developed countries, but offsetting gives developing countries an economic interest in reducing their emissions at a point in time when forcing many of them to cut and absorb the cost is politically unfeasible. Developed-country carbon taxes do not do this, though in principle offsets which reduce domestic tax liability could be added to them. First-best is for all countries to take their own targets; but that is just unrealistic for now. We cannot afford to ignore the opportunities in those countries in the meantime.

Economist Debates: Carbon offsets: Statements.

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