Carbon Credits 💳

Roughly a month ago, I submitted another letter to the Straits Times forum. It got published.

The Submission

I am writing this in response to “Carbon credits may be giving companies a way out instead of reducing actual emissions (15 Nov)”.

First, the author makes the fallacy of asserting that “buying carbon credits does not reduce companies’ actual emissions.” That is like saying “jailing criminals does not reduce societies’ actual crime rates”. If it costs an entity to do something, it is indubitable that it does less of it than if the activity were free.

Also, in making the above-mentioned statement, the writer misses the spirit of a carbon credit policy. The whole point of such a system instead of a hard, inflexible ban or quota, is so that individual companies have the latitude to make decisions that account for conditions concealed from policy makers. The carbon credit policy, if done accurately, already sets the socially efficient level of carbon emissions.

As such, I propose an alternative title to the author’s letter: “Carbon credits give companies a way out and reduce actual emissions”. Flexibility is an intention and a feature of market-based solutions like this.

Moreover, companies are not “outsourc[ing] their environmental and social responsibilities to someone else by buying carbon credits”, as the author contends. Companies are doing precisely the opposite. As outlined in his article, firms are paying to produce carbon, so they are being held liable for the environmental and social costs they cause, and hence bear the responsibilities and costs.

What companies are outsourcing is the work involved in the environmental projects. They do that because that is how specialisation and markets work. We outsource umbrella-producing too.

The writer’s second point is about carbon credits funding dismal and inadequate environmental projects. This concern is valid and relevant, though it would be more appropriate to aim it at lawmakers rather than companies.

The author does not grasp the issue he writes about. Maybe it is not so “simple” and “intuitive” after all. The corporations described in the author’s article appear to be going about their business very much within the confines of the law and the reasonable expectations of a well-informed citizen.

Comments

In yellow are the redacted parts. The stuff they deleted moderated the tone. I would like to have had “We outsource umbrella-producing too” retained.

The Published Letter

This is the link.

This is how my article looks like in print.