Carbon Credits.

The FTC is investigating companies that sell "carbon credits." These companies purport to do good for the environment in one place, and then offer to sell companies a share of that good so that they can offset pollution in another place.

This is a more exaggerated form of the carbon credit marketplace that failed and is undergoing major retooling in Europe. (wiki).

First, the idea of trading credits only works when companies that were polluting anyway, manage to beat emissions standards by enough of a margin that they can sell that margin to other polluters (who are slower to catch up) to help them reach the same standards. It provides an economic incentive to clean more, faster, and creates a higher cost for larger polluters. When you insert companies that do nothing but generate credits, you undercut this system by eliminating the incentive to clean up and replacing it with just an increased cost to meet emission standards.

Second, from a practical perspective, does planting trees or releasing algae into the ocean really help? If I am polluting in N. Carolina, a release of algae in the North Sea might help the globe, but it does nothing for N. Carolina or the United States, which is what the regulators really care about.

Finally, carbon offsets present something of an ethical dilemma. Accepting that pollution is bad, the solution is to require people to reduce, not to enable them to offset it with good acts elsewhere. For example, if cap and trade were permitted in the legal system, Jack Abramoff could have been able to argue that his extortive and corrupt practices were offset by the fact that so much of the proceeds went to charity. That doesn't make sense to us because we don't want people to rob the rich to pay the poor -- we don't anyone to rob anyone else, period. Same goes here.