Carbon offsets: What are they and do they work?

So what is this, exactly? The idea is that any carbon emitting process, from long-haul flight to generating electricity, can be offset by paying someone else to plant trees, preserve a forest, or create renewable energy.

In other words: You can take that flight to Hawaii without harming the planet.

In principle, it’s a great idea and helps people feel less guilty about polluting activities. The carbon offsets market is expected to reach $ 200 billion by 2050, according to German bank Berenberg, making it a business with enormous potential.

But the sector is still relatively young and extremely complicated. Experts have questioned the climate benefits of some compensation programs and there is no better way to protect the planet than to rapidly decarbonise our energy systems and industries..

Enter Kyoto

Carbon offsetting has its roots in the historic 1997 UN climate agreement, the Kyoto Protocol, in which industrialized nations decided to reduce their carbon emissions. This has given rise to “compliance systems” where countries and companies that have exhausted their carbon share can purchase credits from entities that have not fully used their share.

“Compliance systems work because it is a legal framework and therefore companies have to work very hard to comply,” said Mark Maslin, Professor of Earth System Science at University College London. “Drive efficiency and lead companies to decarbonise as efficiently and quickly as possible because there are some industries that can decarbonise much faster than others.”

But the system has its flaws. A 2015 study by the Stockholm Environment Institute estimated that a mechanism designed to facilitate the exchange of carbon credits allowed 600 million tonnes of carbon dioxide equivalent to be released into the atmosphere than “would have been if countries had achieved their national emission targets “.

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This is because several nations inflated their carbon emission targets in the beginning, thus creating large credit surpluses which they were then able to sell to allow others to continue polluting.

However, teething problems did little to derail the idea of ​​carbon offsetting. As the climate crisis increased in public consciousness, so did the desire of individuals and companies not subject to compliance schemes to offset their emissions through voluntary offsets.

Power of the people?

The voluntary market is small but growing rapidly. In 2020, consulting firm McKinsey estimates that around 95 million tonnes of carbon dioxide equivalent were offset, or more than double the 2017 level. Despite a sharp increase, that figure is still only about 0.25% of the 38. billions of tons issued in 2019.

“I think there is an appeal [to the public] because it seems to be an easy way to tackle a very, very complicated problem, “said Louisa Casson, senior political strategist at Greenpeace International.

Buying carbon offsets is really easy. Many airlines offer consumers the option to compensate for flights for a small fee. Meanwhile, more and more food and even some petroleum products are being labeled carbon neutral because producers offset associated emissions.

Voluntary compensations are not yet controlled by any regulatory body.

“In the voluntary carbon market space, there is very little, if any, regulation. It’s kind of a Wild West,” Casson said. “This means we are seeing very different standards.”

Easier said that done

The criticisms of the voluntary market usually concern the methodology by which carbon savings are calculated.

For example, some offer credits to preserve an existing forest, not to plant a new one. The models predict how much of a forest would have been cleared had it not been protected, then calculate the carbon benefit of saving the trees. Which can then be sold as credit.

There is a lot at stake. According to the International Union for Conservation of Nature, about 12% of global emissions are caused by deforestation and forest degradation.

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But the models are notoriously unreliable. A study published in the Proceedings of the National Academy of Sciences of the United States of America analyzed the effectiveness of some carbon offsetting projects in the Brazilian Amazon. The study found that three-quarters of forest protection areas “are unlikely to represent further emission reductions” due to continued deforestation.

Then there is “climate colonialism”, in which the needs of the wealthy outsiders they seek to compensate take priority over those of indigenous peoples. For example, an Amnesty International report revealed that the Sengwer people of Kenya was violently displaced from its homes in Embobut Forest and dispossessed of its ancestral lands as part of a government plan to reduce deforestation. A representative of the Kenyan Forest Service justified the evictions to Reuters by saying: “We have to protect the forests. They shouldn’t be in the forest. It’s against the law.”

Sengwer community members living in Embobut Forest gather to march to President Uhuru Kenyatta's office.

When done right, however, offsets can be a lifeline for carbon-absorbing ecosystems threatened by human invasion.

When Covid-19 hindered the tourism industry, many protected areas around the world lost a major source of conservation funding. However, in Kenya’s Chyulu Hills, the loss of eco-tourism income was more than offset by carbon offsetting projects, which allowed authorities to hire more rangers to tackle poaching and deforestation, according to Conservation International.

In addition to blocking carbon stored in trees, forest conservation and reforestation promotes biodiversity, improves soil health and protects against erosion and flooding.

Ultimately, however, offsets can only do so much to prevent climate change.

“We have to be very careful when we look at carbon offsets because they are an added benefit when dealing with climate change, but they are not the solution,” Maslin said. “The reforestation or reforestation of the world can only go so far … The solution to climate change is the rapid decarbonisation of our energy systems.”

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