McCain speech, Part 2: Relying on offsets = Rearranging deck chairs on the Titanic

titanic_sinking-sm.jpgMcCain’s cost-containment strategy for his climate policy is a fraud. It substitutes a huge amount of low cost, phony emissions reductions both here and abroad — called offsets — for actual domestic emissions reductions. Offsets are “credits for reductions made from sectors of the economy outside the trading system.”

Such an offset strategy is little more than rearranging deck chairs on the Titanic, and wouldinvolve substantial issuance of credits that do not represent real emissions reductions,” according to a recent analysis by Stanford. Ironically, one of the carbon offsets that McCain explicitly cites, no till farming, does not actually offset carbon emissions, according to the latest science.


Every major cap & trade bill needs a strategy to keep the cost of the emissions permits as low as possible to minimize economic pain and to stop politicians from trying to undo the entire system, by, say … oh, just hypothetically now … demanding a carbon price holiday whenever prices get too high or the economy starts to slow (see “McCain reveals cynicism, hypocrisy with call for summer gas-tax holiday, energy budget freeze.”)

Progressives like Sen. Obama typically embrace aggressive clean energy deployment strategies as well as smarter regulations that promote efficiency (see “Could a President Obama or Clinton stop global warming?“). Sen. McCain, like most conservatives, does not support such strategies and indeed has routinely oppose them (see Part 1). Unfortunately, without such policies, the price for carbon could easily reach hundreds of dollars per metric ton (as I explain in “No Climate for Old Men“), causing economic harm and a political backlash.

Another strategy for cost containment is a safety valve, a ceiling on the permit price. A safety valid is a terrible idea that undermines the whole point of a cap & trade (see here and here). Fortunately, McCain opposes a safety valve, as he explains in the newly released “Q&A: John McCain’s Climate Platform.” You can also read his new talking points and fact sheet and the speech itself. But the “Q&A” is the most important of all those.

This leaves McCain very few options if he wants a bill that keeps costs low. Sadly, he takes absolutely the worst possible option — unlimited offsets.


A new report from Stanford, “A Realistic Policy on International Carbon Offsets,” quantifies what many of us have been saying for a long time — offsets are mostly junk. That’s why they are so much cheaper than real reductions. Coauthor David Victor, Director of Program on Energy and Sustainable Development, has explained the study shows

“between a third and two thirds” of emission offsets under the Clean Development Mechanism (CDM) — set up under the Kyoto treaty to encourage emissions reductions in developing nations — do not represent actual emission cuts.

The study’s stark conclusion:

any offset market of sufficient scale to provide substantial cost-control for a cap-and-trade program will involve substantial issuance of credits that do not represent real emissions reductions.

With that context, let’s look at McCain’s policy as elaborated in his Q&A:

Q: Your support of unlimited offsets in the early phases of required GHG reductions could be considered by some to be “cap busters” if they are not accurately measured and verified. With the difficulty in measuring things like soil carbon sequestration, will these credits be real?

A: Yes, the offset credits will indeed be real, measurable and verifiable — or they won’t be certified and allowed into the market.

  • The advances in understanding soil carbon content and new technologies that literally scan the soil and measure the baseline soil carbon content and any changes that occur over time provide the ability to measure and monitor soil carbon sequestration.
  • Offset credits from methane are easily measured. Methane is a greenhouse gas that is 21 times more potent in terms of global warming potential, than CO2. When methane is captured from manure — through an anaerobic digester or by burning it, it is ultimately turned into CO2 — a much less intensive GHG. Methane capture also allows for the creation of bio-gas, a potential alternative to natural gas — and an extremely low carbon fuel since it is generated from waste. Offset credits generated in this way are permanent and easily measured.

[Note: The fact that methane emissions reductions are easily measured are precisely why they don’t need to be offsets, but in fact can easily be made part of the actual cap & trade system.]

  • The issue of measurement, monitoring and verification of agriculture and forestry offsets has been worked on at great length and in cooperation with multiple universities. The research basis is there for recognizing these kinds of reductions — and we will continue to inform the policy of offset accreditation according to the latest agronomy and environmental science.

[Yes, McCain loves soil offsets. The feeling is not mutual, as we will see.]

Q: Why is Senator McCain proposing unlimited offsets in his climate plan?

A: Offsets permit significant reductions in compliance costs. In the past, it has been shown that unlimited offsets would reduce compliance costs by 71 percent. Offsets are a very important bridge, especially in the early years, to the time when we have lower-carbon technologies available on a commercial wide scale.

  • Unlimited offsets would not weaken the cap because the offsets will be certified, measured, and verifiable. The science of climate change supports the use of offsets.

[Uhh, note to McCain — not really. See Stanford report and below.]

  • John McCain’s plan would seek to establish a dedicated and focus plan to ensure that offsets are real, measurable and verifiable. We must ensure the public and the markets that a ton of carbon reduction purchased is indeed a ton of carbon reduction.

Q: A recent McKinsey report said there is very low-cost “low hanging fruit” that can be used to reduce green house gas emissions. Does your plan capture those reductions?

A: The “low hanging fruit” refers to those emission reductions that are easy and inexpensive to make. These reductions can be achieved by industry doing a range of things from tightening of valves and no till farming to changing to more energy efficient light bulbs.

[Here is where McCain gets very confused. He mixes energy efficiency (tightening valves, better light bulbs) — a crucial cost-reduction strategy that can only be achieved at large scale with smarter regulations and technology deployment strategies that McCain does not support — with classic offsets (no till farming), a non-strategy.]

A: The voluntary carbon market in North America is continuing to grow and is now over $250 million according to a report from New Carbon Finance North America. The World Bank has reported that the global carbon market is over $64 billion. Needless to say, these are significant numbers.

[Yes, and the leader in the voluntary climate market, the Chicago Climate Exchange, itself uses no till farming projects as an offset — and their offset effort is very controversial, as this Washington Post article explains.]

A: It is in the best interest of the United States and industry itself to achieve any reductions possible. Achieving these reductions will only make the nation and industry more efficient which helps tremendously from a competitive perspective.

My policy would allow for unlimited use of offsets. Because many of these offsets are less expensive to achieve, they would be more cost effective than limiting the compliance options for industry in making their emission reductions. This flexibility is proving to be very effective in reducing the cost of the cap and trade program as well as providing us a bridge to the time when we can commercialize lower-carbon emissions technology, such as nuclear power and carbon capture and storage.

[Note to McCain: Uhh, this may come as a shock to you, Senator, but nuclear power is commercial. It ain’t low cost, but it is commercial! Was that a bizarre Freudian slip by the McCain team?]


What McCain fails to understand is that the reason offsets are so much less expensive than actual emissions reductions is because they are junk. Many if not most of the offsets don’t actually offset anything at all, as the Stanford report argues, and as I myself have repeatedly argued on this blog (see the many posts in the “offsets” category).

The perfect example of this is the offset that McCain himself touts the most — no till farming. Now while McCain’s imaginary questioner notes “the difficulty in measuring things like soil carbon sequestration,” the conservative nominee seems unaware that soil science has completely passed him by. Here is the abstract of a major review article from 2006/2007 in Agriculture, Ecosystems and Environment, Tillage and soil carbon sequestration–What do we really know?

It is widely believed that soil disturbance by tillage was a primary cause of the historical loss of soil organic carbon (SOC) in North America, and that substantial SOC sequestration can be accomplished by changing from conventional plowing to less intensive methods known as conservation tillage. This is based on experiments where changes in carbon storage have been estimated through soil sampling of tillage trials. However, sampling protocol may have biased the results. In essentially all cases where conservation tillage was found to sequester C, soils were only sampled to a depth of 30 cm or less, even though crop roots often extend much deeper. In the few studies where sampling extended deeper than 30 cm, conservation tillage has shown no consistent accrual of SOC, instead showing a difference in the distribution of SOC, with higher concentrations near the surface in conservation tillage and higher concentrations in deeper layers under conventional tillage. These contrasting results may be due to tillage-induced differences in thermal and physical conditions that affect root growth and distribution. Long-term, continuous gas exchange measurements have also been unable to detect C gain due to reduced tillage. Though there are other good reasons to use conservation tillage, evidence that it promotes C sequestration is not compelling.

Doh! In short, there is no scientific evidence that no till farming offsets carbon emissions. In that sense, I’m afraid, it is the definitive carbon offset.

If emissions reductions can be done through a rigorous and verifiable process, then they can and should be included in the overall cap. The probability that there are offset-like emissions reductions floating around the ether that are both abundant and cheap is quite small. That is why a major offset-based strategy would “involve substantial issuance of credits that do not represent real emissions reductions,” as the Stanford study concluded. That report’s policy conclusion:

We argue that the U.S., which is in the midst of designing a national regulatory system, should
not rely on offsets to provide a reliable ceiling on compliance costs….

Offsets can play a role in engaging developing countries, but only as one small element in a
portfolio of strategies….

The entire cost containment foundation of McCain’s climate plan is quicksand.

5 Responses to McCain speech, Part 2: Relying on offsets = Rearranging deck chairs on the Titanic

  1. Peter Foley says:

    If the carbon offsets are totally unnecessary, why would it hurt that they just shuffle imaginary Co2 around. Let the “kids” play while the adults get on with reality.
    What is sad is that soil chemistry is almost at the same level of voodoo science as climatology is. (Remember the Oxygen shortage in the biosphere?)
    Local tiled peat ponds are still “burning” during dry spells so they actually lose elevation–thus they get wetter during wet periods.
    It is counterintuitive that a little plowing actually increases that percentage of organic matter (Carbons for AGW faithful) long term, the trash left on the surface just oxidises (burns) when dry otherwise.
    Let actually prove carbon-forced AGW prior to starting another layer of tax structures.

  2. Paul K says:

    Offsets are superior to any other CO2 trading mechanism.

    They are the best unit of trade in Cap & Trade system. They would, in fact, be the currency of the CO2 market.

    Offsets alone allow maximum consumer participation in the CO2 market being created.

    Offsets can be created in alternatives, efficiencies, and land use across a wide range of activities micro and macro.

    Offset are not a tax grab. No auction is required

    An offset cap/trade law could pass and be signed this year.

  3. Bostonlee says:



  4. Do you guys have a recommendation section, i’d like to suggest some stuff

  5. I voted for McCain because of his stance on the war on terror. Frankly, I didn’t think that he had a good grasp on the economy.