Carbon Offset Indulgences – Get ‘Em While They’re Hot.
Pun intended.
Photo by Evan Dennis on Unsplash
Call me cynical, but the carbon offset market reminds me of the Catholic indulgence scandals of the 11th and 12th centuries that I learned about in school. In summary, the church of the time turned sin forgiveness into a money-making venture. Somehow, those who donated to church causes or curried favor with the right Pope or Archbishop got their sins erased.
Sound familiar?
Today, individuals hoping to Ibiza on their private jets can buy carbon offsets to pay for their carbon sins. The same thing goes for companies and governments buying offsets, just on a bigger scale. These offsets could work in theory. Trees planted, a kelp forest sponsored, and enhanced rock weathering could all work. Carbon capture and storage and other ways to take CO2 or other greenhouse gases out of the atmosphere can “offset” carbon-intensive activities.
There is a problem though. The offsetting project must be audited, and the math must be done in an honest way so that we know that the carbon offsets are doing what they are supposed to be doing. That is not happening. As I write this, carbon offsets are often little more than green marketing or greenwashing that come from companies, governments, or individuals who want to signal that they are virtuous carbon warriors.
It’s indulgences all over again.
No shortage of sketchy offset stories.
A January 2023 investigation by the newspaper The Guardian, found that more than 90 percent of rainforest carbon offsets by the biggest carbon offset certifier, the company Verra, were essentially worthless. The investigation found that only a handful of Verra’s rainforest projects showed evidence of deforestation reduction. The threat to forests had been overstated by about 400% on average for Verra projects. This allowed Verra to claim credit even if deforestation increased.
Even if the original intentions of the offset sold are pure, it can all go wrong. What happens when a forest offset is purchased and then the forest burns down? The New York Times found that about 153,000 acres of forests that are part of California’s carbon offset project, burned in the Summer of 2021.
A study covering twenty-six carbon offset programs in six countries across three continents found that most carbon offsets linked to mitigating deforestation are failing to keep forests standing or decrease greenhouse gases.
A recent story on the carbon offset giant South Pole in the New Yorker revealed a company culture where the sales of offsets were all that mattered – never mind if they were actually doing what they were intended to do.
Carbon offsets aren’t a scam. Scams are better organized.
The main problem with offsets is that they claim to sell certainty when certainty is often impossible. If you buy a car, you get a physical car. If you buy a stock in the market, you can see that stock in your account. There are laws on the books all over the world to protect your rights as the owner of an item. Ownership of your house, your possessions, your assets, and almost anything of value you own, is usually easy to prove. There is a record of each purchase, and especially for large, expensive, or important items, plenty of laws and paperwork making ownership of an asset easy to prove.
If you buy and offset, often you are getting a promise of the delivery of something that cannot be promised.
Over a third of offsets deal with either avoided deforestation or afforestation and restoration. Forest-based offsets are rife with problems. Often these offsets assume that a forest is going to be cut down. So, if someone owns 100 acres of forest land and has no intention of cutting it down, they can still sell an offset to not cut down that forest.
Such an offset is not additional, so it should not be sold as an offset. What is going to stop people from threatening to cut down forests, even when they have no intention to do so? There are a lot of quick bucks to be made that way. That is a great business plan. Don’t do anything but threaten that you are going to cut down your forest. Collect the money from some virtuous sucker.
Offsets are sold for assumed benefits that last decades if not a lifetime. But what if there is a forest fire? What if an invasive pest kills much of the forest? What if people who were paid to plant the trees don’t do so? What if up to 90% of the millions of saplings planted die after just a few months? Is the money returned? Does the firm selling the offset, make things right by replanting those 90% of the trees, or returning the money?
Often the answer is … nope.
Offsets based on energy efficiency and “green technology” can fail to deliver on what was promised as well. Wind and solar projections can be off. In most cases what is being sold is a rough estimate of what the future state of the world may look like. Would you buy a car if it may work after you drive it off the lot? Cookstoves in India that were supposed to offer more efficient and lower carbon cooking, can stop working, making the offsets based on them worthless.
To whom do you present the receipt when your offset turns out to be worthless?
Usually, no one.
It might be funny if it wasn’t so dangerous. If carbon offsets give the false impression that something is being done and it isn’t, that is making the situation worse. If we sell these carbon indulgences and the result is no carbon offsetting, the public might be fooled, but Mother Nature isn’t. This is especially dangerous because these offsets are often bought instead of taking other carbon-reducing actions.
It is human nature to take the easy option to solve a problem. And that is where we are with carbon offsets. Changing the way we live, eat, travel, work, and play can be difficult, and is oftentimes inconvenient. It is much easier to just write a check if that is an option. Offsets aren’t evil. They are just not working as intended. And we shouldn’t try to convince ourselves that they are doing the job when they aren’t.
Let’s give offsets the benefit of the doubt. Nah, let’s not.
According to a recent study, companies that use offsets are about twice as likely to be decarbonizing their operations year-over-year. These companies are also investing three times more in reducing emissions than their peers who are not using offsets.
However, this doesn’t prove that offsets work. It just shows that firms that are conscientious and want to do the right thing, are more likely to entail several climate mitigation solutions – including offsets.
We shouldn’t abandon offsets. But we have to be realistic about what they can and can’t do and be far more vigilant than we have been. Because our lives kind of depend on offsets not being greenwashing bullshit.
What to do?
Some standards are being developed to address the Wild West nature of the carbon offset market. The Integrity Council for the Voluntary Carbon Market is an independent governance body for voluntary carbon markets (offsets). They set global threshold standards to make sure carbon offsets do what they claim to do.
Another body is the Voluntary Carbon Markets Integrity Initiative (VCMI). The VCMI Claims Code of Practice is a rulebook on how companies can make voluntary use of carbon credits. The VCM Access Strategy Toolkit provides guidance for countries to engage in high-integrity voluntary carbon markets.
If someone is a buyer or seller in the carbon offsets market, there are a few rules of the road to live buy. Do your own research and add to this list as you feel necessary, but here is a good start:
Insist on an audit trail: The offset should have a paper trail that lets you know every detail you need to know, including updates on the asset that include performance measurement – is the offset doing what it is claimed? If this isn’t part of the offset – walk away.
No double counting: You should be able to find assurances that this asset is only sold once, to you. A forest can only sequester carbon once for the time period you are buying that offset. If the accounting doesn’t match Mother Nature’s accounting – walk away.
Additionality: Additionality means that the project would not have happened without the offset being created. The forest someone threatened to cut down but had no intention of cutting down doesn’t qualify. If you cannot easily understand the additionality of the project – walk away.
The science is based on physics and chemistry, not assumptions or estimates: There need to be scientists who can accurately measure and report on the veracity of offset claims. If there are no scientists involved, you can’t tell if there are, or if there are but they don’t seem qualified to do the work – walk away.
Timeline of the offset: How long does this asset you are buying last? Is it something that is naturally short-lived, or long-lived, and does the investment you make in that asset match the life of the asset? If you can’t tell, or the asset doesn’t match the time you want it to – walk away.
Risk assessment: The documentation describing the asset should be frank about the risks to that asset (forest fires, floods, and other risks). This discussion should include what your recourse is if such Acts of God occur and wipe out or severely devalue your asset. If this is missing – walk away.
The impact of your asset: There are plenty of stories about how a wind farm or solar farm was built at the expense of a natural habitat for wildlife. Saving one part of the world at the expense of destroying another part defeats the purpose. If the cost of an offset includes severe environmental damage – walk away.
Independent verification: Any audit of the project should be independent. If it isn’t – run away.
As broken as offsets are, we need them.
A 2021 report from Bank of America concluded that we may need the offset market to grow fifty-fold to meet 2050 net-zero emissions targets. According to the report, offsets issued in 2020 were equal to just 0.4% of global emissions.
That tells you that offsets are only a minuscule part of the fight against climate change. Offsets currently are equal to under 1% of global emissions. If we are going to get those emissions to zero, offsets may need to get up to about 20% of yearly global emissions.
If you just sighed and rolled your eyes, and maybe even swore out loud – so did I when I first read that.
Even if we max out on offsets, we still need to cover the other 80 percent of carbon emissions by just not using that carbon.
Remember, just writing a check for something is the easy way to deal with it. That is what offsets are. They are the easy part. The hard part – the part that will address that 80% of the greenhouse gases in our atmosphere - comes from changing the way we live our lives, so we don’t emit anything at all.
With all the controversy around offsets, they are only a bit player in a much larger story of moving away from fossil fuels. Most of this move will need to come from more rules and higher costs for using carbon.
A market with no, or very little regulation on carbon that promises that you can wipe out carbon by writing a check – gets you carbon indulgences.