US Says Yes to Doublecounting
Jonathon Pershing, the lead negotiator for the United States, told us that the US is "ramping up" its bilateral and multilateral financial assistance and also has additional provisions for offsets. Having smelled the rat, I bluntly asked Mr. Pershing if he was insinuating that the US would be doublecounting its purchase of offsets to reduce its emissions with its financial obligations to developing countries.
He responded that the US doesn't know yet, but wanted to make clear that the offsets represent a financial flow. In addition, a portion of an offset is a subsidy, since the cost of the action is less than the clearing cost (the price one paid). Thus, the difference represents a type of financial flow. He seemed confident that the US will find a way to back out the portion of the offset that should represent a financial flow.
In reality, offsets represent a commodity purchased on the market. Industries don't have to buy them - they can reduce their emissions domestically, rather than buy an offset. But they purchase offsets because they are cheaper. Nobody is forced to buy an offset. And the subsidy argument is simply rubbish - every single one of us pays more than the actual production cost of an item, because the seller wants to make a profit. This is after all the way markets work. It is a bit ironic that the world's most capitalistic country suddenly has a problem that a seller may make a profit!
