The danger (and cost) of carbon markets

This post at Triple Pundit notes that a study of the largest carbon market, the Kyoto Clean Development Mechanism, finds that most of the carbon offset money is being sent to coal and oil companies and that "much of the market does not reflect actual reductions in emissions."

This is why a world offset market - as opposed to a local offset market - is a really bad idea. And why we shouldn't be giving carbon emissions credits away for free.

Business School Dean discusses a carbon tax

Why carbon "offsets" aren't the answer to global warming

David Morris of the Minneapolis-based Institute for Local Self-Reliance writes on the increasing interest in carbon offsets - essentially paying someone else to reduce carbon emissions that you generate. In examining the role of other pollution-reduction techniques and the results of some of the early carbon trading schemes, Morris concludes that:

• Buying carbon offsets is like buying indulgences for sins - it just makes people feel good. In particular, the monitoring of offset programs is so lax there's no way to know if emissions are truly offset
  
• A global carbon offset market discourages people from taking responsibility for the local impacts of their behavior. Local offsets, on the other hand, mean that polluters have to do something in their community to improve their climate impact.
• A cap and trade market seems very capitalist and efficient, but evidence shows that good old regulation or a carbon tax could reduce climate change emissions far faster than a market mechanism. (Note: the much heralded success of the US-based sulfur dioxide cap and trade market owes much to the cost estimates of the polluters that proved to be massively inflated.)
  

Morris envisions a more stringent and accountable carbon reduction regime, where carbon emitters have to actually reduce their own emissions or offset them within their local community and where polluters can't simply buy a cleaner conscience on a world market.

I think a smaller-scale cap and trade (e.g. local offsets) could prove very effective, but only if the policy is set at a national scale and it sets stringent carbon reductions (no generous baselines, please).