Offsets: good or bad?

It’s a tricky question, which Greenbang isn’t exactly sure about. There’s a lot of on-the-one-hand but on-the-other-hand debate going on about it. Some of the debate centres around fraud and so on, which is a more obvious concern, but other aspects are more complex.

There’s an interesting argument going on at this blog about the issue, which quickly runs off into a relatively obscure economic argument. One of its arguments is effectively that economic growth is directly linked to a rise in energy consumption (and thus increased emissions).

“Many of these schemes are not accounting for the economic multiplier effect of the offset investments,” he said. “For example, if you take one popular offset project in the form of donating low energy bulbs to a Jamaican hotel you have to ask, what is the full impact of that investment? Electricity in Jamaica is expensive, so what does the hotelier do with the money he saves? He may use it to pay for a flight for himself or he may invest in extending the hotel, both of which could cancel out the initial emission reductions.”

But this Greenbanger doesn’t believe that’s necessarily true. Although it’s been the case in the development of economies like the US, economic development can be delivered along with a decline in energy use–in part because of typically tighter regulation and better technology (like the EU mandating better minimum energy standards on appliances).

In fact, McKinsey recently backed up this very argument:

McKinsey research shows that the growth in worldwide energy demand can be cut in half or more over the next 15 years without reducing the benefits end users enjoy. The key is a concerted global effort to boost energy productivity.

Any thoughts?