The market for carbon credit lemons

Bad money drives out good.

The idea of selling indulgences — the right to sin, for a price — has been controversial for the past 500+ years, since Jan Hus’s condemnation of the practice. And yet here we are, in the age of carbon offsets, where forgiveneess for torching the planet is for sale.

The fundamental premise of carbon offsets is that capitalism — that machine for socializing costs and privatizing gains — isn’t the problem, it’s the solution. Rather than having the state intervene to ban certain conduct, practices or products, we just need to set a price for sin, and the market will trade those indulgences, discover their price, and allocate them in pareto-optimal fashion.

Like all vendable indulgences, offsets are the “bargaining” phase in the (controversial) five-phase grief model. Bargaining (“I’ll make billions subsidizing electric cars by selling SUV offsets”) is what follows denial (“climate change isn’t real”).

https://pluralistic.net/2021/03/24/greenwashing/#bargaining

The same is true of Papal indulgences: can’t I just keep amassing gold off the back of the peasants and then pay to get my camel through the eye of the needle?

But there’s a key difference between indulgences and offsets: the market mechanism. Papal…