· 2 min read
Return to The paradox of carbon credits
Move to 8. The Ambitions paradox <> Move to 10. The Claims paradox
Here’s a paradox so prominent it’s become a cliche: the perfect is the enemy of the good.
Few decisions we make are based on certainty. They’re all based on probabilities derived from incomplete information: Should I quit my job to pursue my entrepreneurial dream? Will the tropical storm become a hurricane and should I abandon my house? Will this medicine cure my disease or are the side-effects even worse?
The bigger the stakes and uncertainties, the harder the questions—and the higher the risks.
Based on these risk-return probabilities, investors put billions of dollars into harmful businesses every day: forest logging, mining, or oil extraction. Nobody expects perfection. You get rewards if you are willing to take risks.
But paradoxically, when it comes to “doing good”, such as investments in climate mitigation, the principle of getting rewarded for taking risk does not seem to apply. Like in all other investments, carbon projects come with shortcomings and imperfections. Some work out well, others less so. And some fail.
But often, failures are not viewed as learning opportunities but as evidence that the carbon credits system is fundamentally flawed.
In short: Imperfections are fully accepted in projects that destroy the planet. But when in comes to carbon emission reduction projects, perfection appears to be expected.
This double standard makes carbon credit projects disproportionately vulnerable, and hence, paradoxically, a particularly risky investment.
What is your experience in addressing the Perfection Paradox?
In this series, two leading authorities in carbon uncover the secrets and contradictions of an entire industry – in the most fun and engaging way. Through 26 curated Carbon Paradoxes, you'll learn everything essential about this field, starting with the tensions we must address to make environmental markets thrive.
This article is also published on carbonparadox.org. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
