The Victory, The Tragedy, The Drama: Carbon Offsets, Credits and Markets

Carbon offsets, as many of you know, are purchases and projects to avoid or sequester GHG outside of one’s own operations, in lieu of making GHG reductions within one’s own operations.  Those who look will find a wide range of perspectives on whether carbon offsets are good or bad.

Champions can’t imagine how others can’t see that their overseas forest restoration project is brilliant and badly needed, cost-effective and carbon-effective. Opponents see the programs as an end run by polluters in prosperous countries to avoid reducing their impacts on local communities by funding reductions elsewhere.

Are these projects effective or ineffective?  Enjoy the perennial cliché answer: It depends!

Several project dimensions should be investigated to help judge their merits:
Locale: Where is offset project based and what is the governance regime there?
Type: Land-based (trees & soli) vs. renewable energy vs energy-efficiency vs superpollutant destruction vs. other.
Rigor: Verified or unverified, and what level of verification, if the former.
Timeframe (critical, yet generally ignored!): How quickly will carbon be drawn out of the air to balance out the day or year of activity that put the carbon in the air?
Free Will: Regulated or voluntary. That is, is entity _required_ to drop their emissions? Or just choosing to invest in offsets?
If Regulated, Eligibility: Project just among regulated entities, or beyond.

All the above somehow manages to avoid the wonky “additionality” and “leakage” terms typically used when discussing offsets and their challenges.  Let me continue to try and use everyday English.

Whether domestic or international, operating projects in areas with good governance is key. Any project will be best when deeply designed and driven by the local community.  Outside of that, locality still matters to a real extent to support accountability. That doesn’t mean longer-distance relationships can’t work, but integrity all depends on the actions of the players involved (take that sentence out of context for wider applications . . . ).  One danger is incentivizing seizure of lands from current caretakers or indigenous peoples because potential financial returns have now been created through carbon credit markets and it is now more attractive to seize the land. You could argue that pressure is always there, due to any number of potential extractive industries, but the point is that we should be very intentional and seek the best outcomes for all involved (or realize the highest potential for the land, as my friends at Regenesis Group might say)

Project Type:
Where land use offset projects make a lot of sense: restoring damaged and depleted lands.
This includes coal-mine methane capture, where mine has been abandoned and/or under government or non-profit control; building soil carbon on farmlands that have been depleted of carbon; reforestation of deforested lands.  We know what these lands were previously like.  Restoring them is compatible with their ecological history and function.  We have tens of millions of acres of depleted soils to work on in the U.S. alone.  Capture and destruction of super-pollutants from damaged areas – like methane leaks from animal feedlots, landfills and abandoned coal mines – is important.

Where land-use offsets make less sense: taking over undamaged lands.
An area that has been a biodiverse, functioning ecosystem for decades could be negatively impacted by changing the habitat (e.g. adding trees).  If changing land management to increase carbon storage, that similarly holds potential to be unhealthy for the existing community of life on the land.  Protect existing healthy land function; be wary of altering ecosystems solely for carbon benefit. We should be thinking holistically. On farmlands, if you build soil carbon, but not total soil fertility (nitrogen, phosphorus and other nutrition), you run the risk of limiting potential for healthy agriculture on-site.

Where land-use offsets make no sense: incentives to damage ecosystems. I’ve seen way too many solar projects (not funded by offset money as far as I know) that involve removal of many acres of trees.  Let’s find better spaces to advance badly-needed renewables, not in green space, and leveraging other built infrastructure.  Another option is to seek stacking functions, as the permaculturists say, like ground mount solar that incorporates pollinator habitat, as Clif Bar has highlighted.  There are multiple benefits in well-designed projects.

Renewable and efficiency projects can otherwise avoid some of the complications of land-based projects, in simply improving the performance of GHG-intensive equipment or constructing new renewable infrastructure on a relatively small footprint, 50+ MW solar arrays not withstanding, if they have minimal other impacts (bird life, nuisance noise etc.). Projects like methane digesters can have multiple benefits: better manure odor control, generation of byproducts that can be sold, generation of electricity and/or biogas.

If it’s not verified, then it’s not verified.  Quality of verification matters. Different programs might have different frequency of reverification to confirm that carbon benefits are being achieved over time. Whether you do offsets in or out of a strict verification/certification program and/or with a third party is your choice – or more likely, the offset project developer’s choice – but measurement and tracking of benefits should certainly happen. (Full disclosure: I don’t currently sell verification and don’t generally verify offset projects)

This should be an entire article in and of itself.

If you produce a ton of emissions in a day, say through jet travel, and then plant enough trees that will take up a ton of emissions over 40 years, that’s a problem if we need CO2 levels significantly lower, like yesterday, and definitely lower in 10 years.  Rates matter. It’s not just magnitude.

I’ve seen virtually no one talking about this. I would be very interested to hear from offset providers how they’re thinking about this issue, as it must come up, and what they can do to better match timeframe (e.g. year of emissions drawn back out the following year).  Else, the atmosphere and oceans are still CO2 sinks under offset projects, as CO2 is drawn out of the air much more slowly than it is inserted into the air.

Free Will: Voluntary vs. Regulated:
It’s hard to argue against voluntarily investing in renewables, reforestation or other well-designed projects.  Do your due diligence, and once you’re sure any problems created by the project are relatively minimal, go for it. And do not stop intelligently reducing your emissions in the process. Serious companies are not slowing GHG reduction action – with its cost-saving, customer goodwill, public relations and other benefits – simply because they wrote a check to build wind turbines or methane digesters.

Where we have science-driven regulations, if an entity is supposed to drop their emissions, then they should just drop their emissions.  For one, it’s simpler in both messaging and execution to say that, you, country X or Fortune 1000 company, simply need to drop emissions, rather than build out a highly orchestrated system of offsite offset project standards and tracking.

If you want to invest in other countries or businesses to help them make reductions, as other parts of your philanthropy or sustainability strategy, great!  But let’s separate that from the requirement for you to drop GHG 30%-90% over the next two decades. It’s partly an issue of control (higher degree of control on what happens within our borders and own supply-chain), partly an issue of better information (our own operations are data-rich and data-accessible in a way that is challenging to emulate in many offset projects, particularly land-based projects) and partly an issue of our dramatic need to drop emissions everywhere.  Particularly in affluent countries, we have the responsibility to tackle the problem that we’ve created (see also historic GHG emissions chart by country).

Project Eligibility Under Regulation:
One caveat to my “if an entity is supposed to drop their emissions, then they should just drop their emissions”: if a regulated entity wanted to invest in GHG emission improvements in a peer entity under the same regulation, rather than their invest in their own plant, that should be eligible.  It’s reminiscent of the original cap and trade that worked well for sulfur pollution in the Ohio River valley.  If the pool of total regulated emissions goes down, that’s serves the goal.  When we reach outside the regulatory boundary to get credit offsets, that’s where it’s easy to get into trouble.  Researchers at both UC Berkeley and USC documented that in-state emissions under CA cap and trade program were actually able to increase, due to offsets and drop in out-of-state imports.

The silver lining is that the more entities that fall under the regulation, the more opportunities there are to invest in offsets at other entities.

Power Of Offsets
I don’t know that we’ll ever see consensus around offsets, but real dialogue around the benefits and shortcomings of offset projects, among a range of perspectives, is important.  My own opinion might well change, but you’ve now read where I’m currently at.

For meaningful climate action,
– David J., inNative