In a recent proposal, the New South Wales government will enable drivers to buy $80 (US$55) worth of carbon credits when they pay for their car registration to offset their emissions.
It is not a surprising initiative from the treasurer and energy minister, Matt Kean. He is one of many Australian leaders to spruik “values-based capitalism” in the last few years.
It is a stance though that threatens the important balance between private and public sectors and is all the more galling when it is being promoted by key figures in right-leaning parties.
However, this particular policy is harmless enough while it remains voluntary. If individuals want to spend money to offset their emissions based on the usage of the “average car,” then good for them.
Two items are particularly interesting. The first is the cost to offset the emissions of a car. According to the justifications provided, it costs only $80 to offset the emissions of around $2,000 of petrol consumption—only four percent of the fuel cost.
Put this another way—suppose I were to buy an electric car and somehow power the car on 100 percent renewable electricity. If I powered it only with solar, it would require all the energy from a roughly $5,000 solar system to generate the same energy.
I would save $2,000 a year on fuel but would need to repay the greater cost of the car and any other peripheral systems (for example, batteries) required so I can charge it when needed, not just when the sun is up. And I’d have to weigh the nuisance of being limited on how far I can drive and where I can drive.
I could do all that to eliminate my transport emissions. Or ... I can just pay just $80 each year, and someone else will atone for the sins of my exhaust pipe.
In fact, even if I managed to go entirely off-grid with my solar-electric car solution, I could not claim to have offset all my vehicle’s emissions. It takes energy to manufacture solar panels, batteries, and electric cars, and they have to repay that energy before they are considered to be contributing to emissions reduction.
The cost gives the impression that net-zero should be easy. Only a four percent increase in the world’s energy cost to offset its emissions?
Yet this is very far from a scaleable reality.
Very soon, all the opportunities to grow new trees and bury carbon will be taken, and the cost of carbon offsetting will increase significantly.
The Left Think It’s Not Good Enough
The second interesting item is that this proposal raises more objections from the green left than it does from the right and from conservatives.The carbon credit system redistributes money, which the political left usually approves of. Through this voluntary payment, technologies that emit CO2 will subsidise technologies that do not (nothing new—this already occurs through a range of other government initiatives anyway).
From a climate activist’s perspective, though, this doesn’t go nearly far enough. Will the payments make a significant difference to anything? Almost certainly not.
Many on the green left are concerned that this type of initiative disincentivises reducing emissions the hard way. While carbon offsets include avoidance offsets and not just sequestration offsets, they just provide a way for people to trade virtue rather than actually pulling carbon back out of the atmosphere.
It isn’t the sort of initiative that can drive the energy transition that the green left dream of. But it is precisely the sort of initiative that is voluntary today and becomes compulsory tomorrow—then neither side of politics will be happy.
