Carbon Offsetting

21-07-2021

Reducing carbon dioxide emissions is increasingly a priority for governments, businesses and people around the world. A common goal is to reach net-zero CO2 emissions within the next two to three decades. But what happens when it’s simply not possible to avoid emitting CO2? In this post, we’re considering one of the alternatives to emissions reductions – carbon offsetting.

The United Nations Carbon Offset Platform defines offsetting as “the act of claiming the environmental benefit of greenhouse gas mitigation activities in order to compensate for unavoidable emissions elsewhere.” In other words, an individual or organisation gives money to a sustainability effort which will ‘offset’, or account for, a standardised portion of their emissions. Money paid to offset programs is invested in projects that reduce greenhouse gases through carbon capture or carbon reducing technology. Such a project could involve planting trees, protecting forests and bogs or investing in clean energy in the form of solar panels or wind turbines. These projects serve either to reduce emissions that have already been emitted into the atmosphere (carbon capture) or to prevent future emissions by investing in technology with low emissions.

WHY AND HOW WE OFFSET EMISSIONS

Air travel is often mentioned in the context of offsetting. The aviation industry alone is responsible for about 3% of the world’s emissions. Many people avoid flying for this reason and instead choose to travel by train or not travel at all. But instead of avoiding air travel, some people offset their flight’s emissions by paying an amount of money towards a project that will reduce the same amount of CO2 that the flight emitted. To offset the emissions of a return flight between Spain and New York (which emits around 1000 kilograms of CO2 per passenger), one can pay towards a project that will reduce 1000kg of CO2 emissions.

Image source

One can buy offsets from a wide range of providers. To ensure that your purchase actually goes towards reducing CO2 emissions, offset programmes must comply with certification standards, with two of the most well-known being the Verified Carbon Standard (VCS) and the Gold Standard Verified Emissions Reductions (VER). Carbon Footprint, a British carbon offset platform, uses the VER standard, while CeroCO2 is a Spanish carbon offset platform which employs both VCS and VER. The UN has its own certification standards for approving projects. Examples of projects can be found here and here.

THE ORIGINS OF OFFSETTING - INTERNATIONAL LAW

As described above, offsetting can be done by individuals, where people offset emissions from their daily life, such as their commute to work or the energy consumption in their home, by paying into carbon offset programmes. But carbon offsetting has its roots in one of the earlier international initiatives to fight climate change (the 1995 Kyoto Protocol under the United Nations Framework Convention on Climate Change), which enabled countries to offset their emissions on a national scale by engaging in carbon trading. Along with mandatory emissions reductions for each participating country, the Kyoto Protocol introduced three “mechanisms” to enable countries to comply with the limits on emissions, without necessarily reducing their own. These were known as the “Clean Development Mechanism”, the “Joint Implementation Mechanism” and “Emissions Trading”. These mechanisms enabled countries to finance emissions reductions in another country instead of reducing their own emissions. Those reductions would count as their own reductions, and thereby enable them to comply with the international reduction requirements. The mechanisms introduced the concept of a ‘carbon credit’ which can be bought or sold – giving one tonne of CO2 a monetary value. Each tonne of CO2 allotted was considered a ‘credit’. If a country did not emit the maximum, they could sell their remaining credits to other countries, or save them to use for later. For example, if you and I are each legally allowed to emit 10 tonnes of CO2 each year, I could buy one credit from you, so I can emit 11 tonnes and you can emit 9.

THE SCIENTIFIC, ECONOMIC AND SOCIAL DILEMMAS

Against this backdrop, several factors suggest we should be cautious about offsetting. For offsetting to be effective, it is crucial that 1) the offsetting programme actually reduces the correct amount of emissions and 2) the project would not have gone ahead were it not for your money. In other words, the emissions reductions have to be ‘new and additional’. They also have to be permanent, which is difficult to guarantee. If these factors are not ensured, the only effect of offsetting is to ease our conscience and justify our continued emission of CO2. On a global scale, creating a market for emissions reductions could prove effective, provided the price of carbon is high enough to provide an incentive to reduce emissions. One of the reasons these international mechanisms haven’t been successful is that the price of carbon was too low, and credits were too readily available, allowing high-emitting countries to easily buy their way out of reducing emissions by buying carbon credits from low-emitting countries. Secondly, there needs to be a limited amount of credits available on the market. Without these factors in place, there is no real environmental benefit of these mechanisms.

There are also ethical concerns surrounding carbon trading and offset programmes. The carbon credit system has been criticised for providing an avenue for wealthy countries to avoid the responsibility of reducing global emissions, using their wealth to place that responsibility on developing nations. On the other hand, there is also an argument that emissions should be reduced where it is cheapest to do so. The problem with that argument is that Western countries emit much more CO2 overall than countries in the global South, and it is a necessity to reduce emissions in the Western world. Carbon trading may serve to incentivise developing countries to invest in cleaner energy whilst growing their economies, but is problematic insofar as it places the burden on these countries to reduce global emissions. Another flaw is that the carbon trading system has resulted in cases of ‘double counting’ – where both the country that purchases credits and the country that earns them through low-carbon technology or behavior take the credit for those emissions ‘reductions’, which ultimately results in more emissions being released than legally are allowed (where there is a legal cap on emissions or emissions reductions requirements).

ALTERNATIVE WAYS FORWARD

We can conclude that while a carbon trading market and carbon offsetting could go some way towards reducing global emissions, it does not do so at the rate necessary to avoid climate breakdown over the next several decades, and the various flaws could even result in more harm than good. Alternatives to reducing emissions depend on the functioning of the market and the future development of green technology – neither of which are quantifiable nor even guaranteed. The solution therefore must be to reduce emissions. Subjecting carbon emissions to the market can be a useful supplement, but should be limited to such. The hard reality is that we have less than a decade to reach net-zero emissions in order to stay within a temperature rise of 1.5oC. This cannot be done without rapidly reducing emissions on a systematic and national scale.

On a national scale in the immediate term, in light of the conclusion that carbon offsetting is not the way forward, we would recommend the implementation of a carbon tax. This is being considered by various national governments, including Denmark, which is considering taxing certain high-emitting activities, such as flying, before incorporating a carbon tax more broadly across society. This should arguably be extended to industrial activities such as mining and extraction of fossil fuels. Economists behind the Report of the High-Level Commission on Carbon Prices argue that in order to comply with the Paris Agreement (and keep temperatures below 1.5oC) a CO2-tax at USD 50-100 per tonne CO2 emitted is necessary.

As an individual, reducing your own emissions will contribute to the system change needed – eating local, eating less meat and dairy, using less petrol, reducing use of single-use products, buying less, and purchasing offsets for the unavoidable emissions through one of the programmes mentioned above. These actions have a small direct effect (on the planet) and a meaningful indirect effect (when your actions influence others). Reducing your institution’s or workplace emissions is the next step. The more individuals, homes, schools and businesses that are actively engaged in emissions reductions, the more this will become an issue of national political priority, and the smoother the transition to a circular economy and zero-emissions society.

There is no easy fix to our complicated system of over-emission, and no one party can bear all the responsibility. Nations, businesses and individuals must all do their part to address the carbon crisis – carbon caps and offsets are just a piece of the puzzle.

For another perspective and example of the complexity and controversity surrounding carbon offsetting, see Verra's 'Response to Guardian Article on Carbon Offsets Used by Major Airlines'.

REFERENCES

Carbon Footprint, Available here.

CeroCO2, Available here.

Duncan Clark, 'A complete guide to carbon offsetting' The Guardian, Available here.

European Comission, ‘Reducing emissions from aviation’, Official website, Available here.

Gold Standard Emissions Reductions, Available here.

Hannah Ritchie, ‘Climate change and flying: what share of global CO2 emissions come from aviation?’ Our World in Data, Available here.

International Civil Aviation Organisation, 'Aircraft Engine Emissions', Available here.

International Energy Agency, 'Aviation Tracking Report', Available here.

IPCC, 'Special Report: Global Warming of 1.5ºC' Intergovernmental Panel on Climate Change, Available here.

Melissa Denchak, 'Paris Climate Agreement: Everything You Need to Know', Natural Resources Defense Counsel, Available here.

Mike Childs, 'Does Carbon Offsetting Work?' Friends of the Earth, Available here.

Navin Singh Khadka, 'Paris Agreement: Will India lose millions of carbon credits?' BBC, Available here.

Niko Kommenda, 'How your flight emits as much CO2 as many people do in a year' The Guardian, Available here.

'Report of the High-Level Commission on Carbon Prices' Carbon Pricing Leadership Coalition, Available here.

'Retfærdig CO2-skat: De største klimasyndere skal betale' Mellemfolkeligt Samvirke, Available here.

Shai Barzilay, ‘Cover image’, Flickr, Available here.

Sustainable Travel, Official website, Available here.

United Nations Carbon Offset Platform, Available here.

'UN certification of emission reductions' United Nations Carbon Offset Platform, Available here.

Verified Carbon Standard, Available here.

'Verra Response to Guardian Article on Carbon Offsets Used by Major Airlines' Verra, Available here.

'Your Projects' Native, Available here.