Carbon Offsetting: What You Need to Know and How You Can Get Involved
The challenges, opportunities, and what you can do to help.
In fact, global carbon emissions could decline by as much as 5% in 2020 compared to the year before, which would be the largest annual drop in recorded history.
If emissions keep falling by 5% every year from now until 2030, the Paris climate agreement goal of keeping temperatures from rising more than 1.5 degrees Celsius would become achievable — and the worst consequences of climate change would likely be averted.
This best case scenario would require countries to embark on an ambitious “green recovery” after the pandemic, to transform infrastructure and decarbonize economies.
But scientists expect emissions to climb once economies open up again. As a result, climate action trends that were gaining momentum prior to the pandemic have to be accelerated.
One of the most rapidly growing climate action trends in recent years has been carbon offsetting.
Carbon offsetting is straightforward in theory. Entities that emit carbon or other greenhouse gas emissions can pay for initiatives — such as planting trees or regenerative agriculture — that remove carbon from the atmosphere. As a result, their emissions get reduced or cancelled out, at least in theory.
If enough companies, governments, and individuals commit to offsetting their emissions, then global warming could theoretically be stopped — because for every emission released into the atmosphere, someone would be paying to have it offset.
But offsetting is more complicated than a simple subtraction problem.
Carbon offsetting — shorthand for offsetting emissions in general — is an incredibly complex and diverse field that holds significant potential for helping the planet and spurring a larger transition toward green economies.
At the same time, there are pitfalls that have to be addressed within the field, and offsetting programs can’t be a substitute for preventing emissions, which need to fall dramatically in the years ahead, from entering the atmosphere in the first place. Some environmental groups warn that offsetting programs distract from the more urgent project of transitioning the global economy to low emissions by suggesting that emissions can simply be erased.
Investments in carbon offsetting doubled in 2017 from the year before and doubled once again the following year, according to Austin Whitman, the CEO of Climate Neutral, which certifies companies that offset their carbon emissions, allowing people to make informed consumer choices.
“Assuming we won’t stagnate in the global recession for too long, we will see a major uptick in demand in this market,” he said. “[We have to think about] how the market changes in light of the increase in demand, whether it’s through greater project types or thinking about how the carbon offsetting mechanism can be used to decarbonize a whole range of sectors.”
Carbon offsetting is here to stay, so here’s what you should know.
Types of Carbon Offsetting
Carbon offsetting happens on a voluntary or compliance basis; either companies or individuals buy offsets at their own discretion, or offsets are compelled by government policy.
As countries commit to reducing their emissions in order to achieve the Paris climate agreement, more compliance measures are being enacted, and more companies are being forced to buy offsets.
Whatever the motivation, carbon offsetting takes many forms.
Nature-based offsetting programs cover restoring or creating habitats such as wetlands, forests, and marine ecosystems that absorb carbon over time.
In 2018, nature-based solutions totalling $300 million offset an estimated 100 million metric tons of CO2, according to the nonprofit Forest Trends. To put that into perspective, around 37 billion metric tons of CO2 were released into the atmosphere last year.
Beyond absorbing emissions, nature-based solutions have numerous other environmental benefits. They can support plant and animal populations, clean the air and water, protect communities from flooding and natural disasters, and foster sustainable economies.
Agricultural offsets focus on either reducing the methane emissions that come from livestock by feeding them a special diet, or maximizing the ability of soil to store carbon. The Terraton Initiative, for example, started by the agricultural company Indigo Agriculture, aims to remove 1 trillion tons of carbon from the atmosphere by storing it in soil. The group alleges that this would be enough to wipe out all of the carbon released into the atmosphere since the Industrial Revolution.
Some methods need to be scaled and improved in order to have any meaningful impact.
Direct air capture, for example, covers programs that outfit power plants and factories with filtration devices that remove carbon during the exhaust process. Critics argue that this approach does nothing to remove existing carbon in the atmosphere, and fails to redirect resources away from fossil fuels.
Directly removing carbon from the atmosphere is another offsetting method. The company Climeworks, which specializes in this process, filters air, removes the carbon, and then buries it underground in basaltic rock formations. This approach is still in its early stages.
Beyond these general categories, there are a number of other offsetting programs that aim to optimize the economy in one way or another to prevent future emissions. For example, investments in renewable energy are sometimes framed as offsetting, and so is landfill management.
Here, at the margins of the offsetting market, programs begin to resemble “insetting,” which is the integration of offsetting efforts into an institution's operations.
For example, if a company offsets their emissions by protecting an endangered forest and then incorporates the sustainable management of that forest into their supply chain, then their overall environmental impact could be reduced. Meanwhile, if a company examines their supply chain to minimize waste and maximize efficiency, that could also be called insetting.
Offsetting initiatives are ultimately a bridge to more fundamental changes throughout the global economy.
If companies begin to voluntarily offset, more ambitious climate actions — such as rapidly scaling renewable energy, or electrifying transportation methods — may become more feasible from both a financial and political perspective.
Challenges and How to Fix Them
There are several challenges facing the offset market, according to the Environmental Protection Agency.
First, offsetting efforts have to fund something that wouldn’t have otherwise happened, or they’re not actually reducing emissions. This is known as “additionality.”
Companies can address this problem by designing customized offsetting initiatives with accredited groups, and by rigorously assessing whether a project goes beyond “business as usual.”
Next, these programs can only be effective if they have a permanent impact. If trees planted through an initiative get cut down in 20 years, then the offset is destroyed along with the forest.
It’s easy to ensure the permanence of projects that capture carbon from power plants or directly remove it from the atmosphere, because it’s a one-time action, but it’s harder for nature-based solutions that have to be protected for decades.
Many hard-to-control factors threaten nature-based solutions. For example, the election of a new government could strip protections from a forest or wetland and open it up to exploitation. In places with lax governance and oversight, protected areas could be illegally exploited or polluted, and natural disasters such as forest fires pose continual threats to nature-based solutions.
What’s more, because the offset market is still maturing, the accounting process is sometimes undermined by double- or even triple-counting, where numerous parties take credit for a single offsetting program. Similar to “additionality”, rigorous transparency and oversight measures can ensure offsets are being counted only once.
Leakage is another risk that has to be guarded against. Leakage occurs when an offset program causes a targeted carbon-producing activity to simply shift to another area. For example, if a forest is protected from logging, and then loggers move to another part of the forest, that’s leakage. If a power plant is converted to renewable energy, but the fossil fuels that powered it previously are moved to another power plant, that’s also leakage.
The final risk facing offsetting programs involves “greenwashing,” which is when an environmentally beneficial activity is used to disguise environmentally damaging activities or delay more meaningful action.
Companies from fashion brands to oil companies have been accused of greenwashing, putting on a front of sustainability while failing to fully reckon with their environmental impacts.
Companies can avoid these accusations by admitting they have a lot more to do beyond offsetting to improve their environmental footprint, while actively pursuing these sustainability efforts.
The carbon offsetting market is growing exponentially, but certain steps have to be taken to ensure it promotes viable climate actions that help the planet. Third-party validation and accounting methods and full corporate transparency can help the industry overcome these growing pains, according to Whittman of Climate Neutral.
“You can’t scale unless you have a good set of market rules that provide confidence that what’s being invested in is providing material benefits,” he said.
How You Can Get Involved
The majority of carbon offsetting takes place at the commercial level — companies buying massive offsets to reduce their emissions.
You can influence this market by asking your favorite brands to invest in offsets or by choosing to shop from brands that have already offset their emissions.
Whittman said that the majority of the average person’s carbon footprint comes from the embedded carbon footprint within the products that they buy. For example, buying a new cellphone has an enormous environmental impact, as does a hamburger.
“If a company takes action, they’re dealing with your emissions that aren’t usually counted,” he said. “Consumer spending is 70% of US GDP [gross domestic product]. That’s the main driver of what’s causing carbon emissions.”
Buying products that have offset certifications is a way to hold companies accountable while also limiting your own environmental impact, Whittman said.
Beyond this, you can individually purchase many of the same offsets available to companies. You could pay for protection of forests through Save the Trees, for example, or the removal of carbon directly from the air through Climeworks, or the improvement of soil through the Terraton Initiative.
You can offset your flights, your electricity usage, and even your diet. But the best way to reduce your environmental footprint is simply to avoid emissions-intensive activities in the first place.