The third stage of grief is bargaining. When the climate emergency hove into sight, we started with denial (Exxon's criminal suppression of its own research on the looming crisis #ExxonKnew).

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From there, it was onto anger: slurs like "treehugger" and performative Drill-Baby-Drill-style incursions into protected lands.

But now we're into bargaining: can't we please keep the rapacious, immoral system that jeopardized our planet and species?

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In other words: carbon offsets.

Rather than punishing firms and executives who sacrificed our planet and species for their short-term gains, we'll just give them a path to realizing even handsomer rewards for not murdering us all.

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We decide how much carbon each country can emit, and then we let them trade those allotments between one another. If you forgo your carbon allowance - by not chopping down a forest, say - you get a credit that you can sell to a planet-destroying cruise-ship operator.

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This is supposed to provide the incentives needed to get the market to reduce its own carbon footprint, by putting a price on carbon and then turning capitalism loose to reduce its obligation to pay that price with all the ingenuity that the human mind can muster.

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"Incentives matter" is the rallying cry of the right. They're correct. And the incentive here is to reduce the amount paid for carbon by any means necessary, which is exactly what the market did.

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To understand what happened next, consider a labor law that causes companies to pay fines for hurting their workers. Depending on how the fines are structured, they might incentivize employers to make their workplaces safer.

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But there are other ways to respond. If the fine is low enough, it might be cheaper to maim workers than to upgrade your physical plant ("a fine is a price"). It might be cheaper to buy off the regulators and get the fines reduced.

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It might be cheaper to hire Pinkertons to spy on maimed workers and find ways to discredit and smear them so the fines are nullified. Regulation works best in the presence of personal liability for corporate execs, steep fines, and weakened corporate power.

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Carbon offsets have none of the above. What happened next is exactly what was predicted to happen: polluters were incentivized to find the cheapest possible carbon offsets, which turn out to be the most meaningless ones.

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To do so, they only had to perform the relatively straightforward chore of corrupting the largest environmental charity in America: @nature_org, a 69-year-old nonprofit that buys up endangered lands and prevents them from being logged or despoiled.

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Buying and preserving endangered lands generates carbon credits, and those carbon credits can be sold onto the world's worst polluters, which generates more capital to put into buying and protecting endangered lands. Sounds good, right?

https://www.bloomberg.com/features/2020-nature-conservancy-carbon-offsets-trees/

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But you can generate even more carbon credit profits by cheating: taking land that's NOT endangered and falsely claiming carbon credits for it, then flogging them to the oil, travel, and finance industry as imaginary offsets for very real planet-destroying carbon emissions.

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Last year, the Nature Conservancy generated $932m in revenues. As @ben_elgin writes for @bloomberg, that's more than the next three largest US environmental charities combined.

The Conservancy insists that the credits it generates come from real preservation efforts.

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But that's not supported by the data. Take the half-million tons' ($2m) worth of carbon offsets the Conservancy generated and sold to @jpmorgan and others for not logging 2380 acres of Pennsylvania forest.

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That forest is already a conservancy protected by the Hawk Mountain Sanctuary Association, which does not permit logging. The Association was misled into believing that its share of the credits would come from planting saplings.

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The credits came from the absurd assumption that the land would be logged The American Carbon Registry - which oversees the credits - says that you can't tell if the Association mightn't have changed its mind and logged the lands it's protected for 90 years.

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The Conservancy has a long history of cozying up to large polluters and allowing them to buy their way to respectability ("The only problem with tainted money is there tain't enough of it" -Patrick Noonan, Conservancy President, 1973-80).

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But procuring and selling phony carbon offsets doesn't just change how people feel about Conservancy partners like Exxon and Dow - it changes how they perceive the climate impact of their everyday activities.

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Maybe you've heard that cruise ships are destroying the planet, but if Disney Cruises promises you that the offsets it bought from the Conservancy more than make up for it, the cruise starts to look pretty good.

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Disney and the Conservancy know the offsets are bogus, but you don't. Market trufans call this "information asymmetry" and understand that over time, it leads to a "market for lemons" in which only defective goods are bought and sold.

https://en.wikipedia.org/wiki/The_Market_for_Lemons

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It's not a new idea. Gresham's Law (1860) says that "bad money drives out good" - the credits generated by "preserving" land that no one was going to log anyway are cheap to produce.

https://en.wikipedia.org/wiki/Gresham%27s_law

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Meanwhile, good credits - like those that @stripe gets from Climeworks AG for carbon sequestration at $775/ton - cost more than fake ones for not logging a forest that no one was ever going to log.

Incentives matter. Gresham's Law produces a market for lemons.

All of this is firmly within market orthodoxy. That's the core of the bargaining stage, after all: "Can't we just keep doing exactly what we've always done and hope for a better outcome?"

Nope.

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