You may have heard dazzling promises attached to the purchase of carbon offsets, that it will save the world’s forests and reduce greenhouse gases, while delivering economic benefits. These promises suggest that if you buy enough carbon credits, you have done your part and are excused from having to worry about the existential threat that is climate change.
But should you really be sleeping more soundly simply because you have offset your emissions? Where I work at, my team and I have thought long and hard about how to approach the climate crisis. We have since come to the conclusion that it can only be solved with behaviour change at scale.
We need to reframe the role of offsets in our collective climate strategy — offsets will never excuse our energy-intensive behaviours. They should instead be treated as one of the tools to be used, while we encourage behaviour change.
What are carbon offsets?
Carbon offset credits represent an investment in a project that avoids, reduces, or removes carbon. Offsets have become increasingly popular as companies adopt new Environmental, Social and Governance (ESG) standards and people become more aware of their personal carbon footprints. McKinsey estimates that, in 2020, credits equivalent to 138 million metric tons of carbon dioxide have been issued. Ecosystem Marketplace sees voluntary carbon markets on track to reach US$1 billion this year.
The credits fund a variety of different strategies to bring down emissions. Some projects reduce carbon by planting trees, storing carbon in the soil or turning carbon dioxide into rock. Others avoid emissions by replacing fossil fuel-burning machines or by protecting forests that would have been cut down.
There are some amazing technologies being developed for offsetting purposes. Climeworks recently started operating a plant in Iceland that captures carbon dioxide from the air and turns it into stone. Carbon Cure captures carbon dioxide in concrete. Running Tide is growing kelp forests that can be sunk to the bottom of the ocean, where they will hold the carbon dioxide.
High-quality offsets can be hard to find
Unfortunately, as great as offsets sound, they have also been riddled with inconsistencies and inefficiencies. In order to achieve the desired results, carbon offsets have to possess three qualities that can be hard to attain: additionality, verifiability, and permanence.
Offsetting carbon emissions only works if the reduction upon which the credit is based happens solely because of that contract. This principle, known as additionality, has particularly afflicted credits linked to deforestation projects. JP Morgan Chase, Disney, and BlackRock bought carbon offsets to prevent deforestation, to later discover that the forests were never in danger of getting cut down. The credits did not create any incremental benefit.
Verifying that projects are being carried out successfully can also be very difficult. Entities could overstate their carbon capture, which may result in fraud. There are some third-party verifiers like Gold Standard and Climate Action Reserve that attempt to counteract this problem by assessing projects against a rigorous set of standards, but not all projects are subject to such accountability measures.
There is environmental value only if the issuer can guarantee the carbon reduction or removal for the expected duration of the project. This means that projects must be managed well for years after the credit is sold. What if the trees you paid for are later cleared for agriculture, like some of the Brazilian forests included in the United Nation (UN)’s REDD+ program, or what if they are destroyed in a forest fire, as has happened in California? Projects usually have some buffer to protect against situations like this, but with increasingly volatile weather patterns, many are at risk of burning through that pool.
The bottom line is that not all offsets are equal, and it can be especially challenging for consumers to identify high-quality offsets. A consumer app like Joro helps demystify good offsets, bringing together a team of experts to evaluate and monitor projects for impact and equity considerations.
Lets do the numbers
Even if all conditions are met, there is another challenge for the success of carbon offsets. Here’s a little math. How much do we need to reduce emissions to prevent the worst effects of climate change? According to the UN’s most recent Emissions Gap Report, to stay within two degrees Celsius of global warming, annual global emissions need to fall to 41 gigatonnes of carbon dioxide equivalent (GtCO2e). In 2019, global emissions reached a new high of 59.1 GtCO2e, which means that over the next nine years, we need to cut our annual emissions by 18 GtCO2e.
According to Ecosystem Marketplace, 188 megatonnes of carbon offsets were sold in 2019. That is 0.18 gigatonnes, significantly lower than the reductions we would need. By comparison, reducing global food waste, which does not need groundbreaking technology, could reduce emissions by up to 3.3 GtCO2e.
There are many things that can be done to complement the offsets mechanism and some of those things have an enormous impact. Offsets just provide a sense of security and can encourage a belief that the status quo can continue. To fight the climate crisis, we will need investment in carbon reduction and removal projects. At the same time, behaviour change at scale is needed.
We cannot stop at offsets
Just as carbon offsets have their evangelists, they also have vehement critics who see them solely as a form of greenwashing. We want to advocate for a more balanced outlook on what offsets can and cannot provide in the fight against climate change.
Though not a silver bullet, offsets do have benefits. They represent an accessible way to invest in our climate future. Think of it as crowdfunding for the health of the planet. The vast majority of people do not have US$7 million lying around to invest in carbon reduction projects, but offsets allow them to contribute to a collective that could fund a multi-million dollar project.
We could also draw parallels to the human physique. Many think of the body’s energy balance as a simple net calculation, that overeating can be “zeroed out” with a good workout. Instead of counteracting a surplus of calories with exercise, it can be more efficient to simply reduce calories.
The same holds for carbon offsets. In lieu of neutralising an excess of energy usage, we should reduce our consumption. Making smart investments in green technology, of which offsets are one form, is an additional strategy we can use to make our planet healthier and decrease our annual carbon emissions.
John Kim is the Managing Partner and Co-Founder of Amasia.
