The threat of climate change to change the world for ever, more and more businesses are promising to cut their environmental footprint. However, reducing greenhouse gases does not happen in a matter of minutes. Many big companies have used carbon offsets to help bridge the gap.
“It’s an instrument for transition,” says Sarah Leugers Chief Strategy Officer for Gold Standard, a voluntary carbon offset scheme based out of Switzerland. “A business should be on a decarbonization process and employ carbon offsets to be accountable for the emissions that occur throughout the process.”
Carbon offsets are the process by that an individual or an organization who has an emission reduction objective is paid by another party to decrease emissions. Scientists look at carbon mitigation as well as the greenhouse effect in relation to the entire planet. This implies that the damage to the atmosphere caused by carbon dioxide emissions from factories in Chicago could be offset through the reduction in CO2 from projects that introduce electric stoves in villages of rural India. Carbon offset programs typically are carried out in countries in the developing located in the Global South because the costs for taking actions like the planting of forests (or the cost of paying for people to stop cutting trees down) or constructing wind farms are much less than those in industrialized countries.
Many of the most vocal supporters of carbon offsets are of the opinion that they’re not the panacea. However, there are those who offer an even more harsh criticism. “In many instances, carbon offsets] serve as a substitute of someone who is reducing their own carbon emissions, and they are able to justify or ease the guilt of continuing to emit,” says Barbara Haya Director of the Berkeley Carbon Trading Project at the University of California, Berkeley.
The system is under scrutiny because it has not delivered on the promises of reducing emissions. The two of them, Haya as well as Danny Cullenward, policy director at the California-based research firm CarbonPlan The system is “broken,” relying on flawed methods and incentives that have no oversight. Both suggest that companies should focus on reducing their emissions in their own operations, including cutting down on business travel, using electric vehicles for fleets, or shifting to renewable energy instead of an investment of significant amount in offsets.
The market for carbon offsets has seen a dramatic increase in recent years, with big companies such as Google and Amazon vowing to be zero emissions partially through purchasing offsets, and airlines such as United and American offering offsets to consumers that are equivalent to the tonnes of carbon emissions emitted by their flights. The 2021 market value of carbon markets that are voluntary (VCM) was estimated at $2 billion as per Ecosystem Marketplace, an initiative of Forest Trends, a nonprofit environmental finance group based located in Washington, D.C. That number is four times the amount of VCMs in the year before at $520 million.
As the market becomes to the mainstream, you will find a myriad of carbon offset schemes with big environmental claims, but little information to discern which ones are genuine and which aren’t. This article explains how this process works and what business needs to consider when it decides to utilize carbon offsets.
Certification is a Vital Part of the System
Carbon offset programs include a range of types of projects. However, the most popular ones are Renewable energy sources (such as solar, wind and hydroelectric) methane capture and combustion (burning methane transforms it into an environmentally friendly compound that can then be used to fuel) as well as efficient energy use (such such as electrification) and forest-related (like forest reforestation) According to the Carbon offset company based in Las Vegas. 8 Billion Trees, which has large plantation activities in the Amazon Rainforest.
A carbon offset credit is one metric tons of carbon dioxide absorbed by the atmosphere, either through avoidance or the capture of CO2. Prices differ based on the nature of the project timeframe, location the cost of materials and labor as well as other variables. The project must calculate the amount of CO2 saved and provide this information to carbon offset registry which converts the climate impact to individual credit that may be purchased and sold through an open market.
For international recognition of credits for financing, projects must be accredited through one of four carbon offset registries which set the industry standard. The four major registries according to experts include four: the American Carbon Registry (ACR), Climate Action Reserve (CAR) as well as Verra (Verified Carbon Standard)–all three are located on the U.S.– and the Swiss-based Gold Standard.
The certification process involves an audit conducted by a third-party verifier, who is appointed by the developer of the project. The project’s protocols or methods that are that are approved by Verra such as Verra must be scientifically valid, with the ability to measure emissions for a long time that are estimated conservatively, meaning the methodology isn’t overestimating the environmental benefits of the project.
“Make sure that the carbon credit] comes from an international standard since there are lots of new organizations who claim the right to offer carbon credits, but do not possess the essential characteristics,” says Leugers, of the Gold Standard. A lot of projects, for instance do not have conservative base settings to calculate emission reductions, or could have occurred without intervention by the program. Choosing projects that are internationally certified will help to reduce this problem.
But, Haya is skeptical of the methodology employed for carbon offsets. “We’re in a bad process,” she says. “Because the amount of credits produced which exaggerate the impact of projects The prices are also too low. At the current price, they’re not enough to reduce emissions.”
She believes that registries must establish stricter standards for what constitutes an offset credit for carbon within a given project. A project that is lenient in its approach will eventually exaggerate the amount of credits earned and the value for the planet. If registries do break down on rules, developers are often able to locate another registry that is willing to accept their flexible procedures.
Monitoring Reporting, Monitoring and Verification
Any protocol project must have a strategy to report progress as well as how emissions are calculated and credits are granted. When the plan is in place it is time to enter in the reporting, monitoring and verification, also known as MRV the phase.
Jodi Manning Jodi Manning, vice president and director of partnerships and marketing for Cool Effect, a California-based company Cool Effect, a nonprofit carbon offset service reports that the reporting times for their projects differ. Cookstove projects could be reviewed every year, while forest projects could be evaluated once every 3 years. However, Cool Effect says it needs to be updated every six to twelve months, and conducts frequent site visits, including photos and interviews.
The Gold Standard Gold Standard, most projects must report back every year at least once, Leugers says. She also points out Gold Standard’s association in the International Social and Environmental Accreditation and Labeling Alliance (ISEAL) and its grievance procedure–to file complaints about Gold Standard or projects–as a way to ensure for accountability and transparency.
Cullenward CarbonPlan’s Cullenward CarbonPlan believes that strict conformity to protocols could be insufficient. “We have a process for affirming that we’ve adhered to the guidelines,” Cullenward says. “We do not have a way to determine whether the rules are reasonable.”
A lot in the confusion is related to carbon offsets in general The uncertainty is inherent to carbon offsets in general, says Haya. “We have a way of measuring emissions. In the case of offsets, you’re calculating emissions reductions. You also have to compare them against a counterfactual version of what could be the case without the program. It’s a huge amount, and the uncertainties are being deliberated by a group of people who all gain from the greater credits, but with poor quality.”
Analyzing the quality of the Carbon Credit
To assess a carbon offset credit’s quality, there are four major terms to know: additionality, permanence/durability, buffer pool, and leakage.
Many experts agree that the long-term benefits to climate change of carbon offsets are based on the notion of additionality. That means that credits should only be used for projects that could not occur without funds from carbon offset schemes. “If the funds are used to plant trees that could have been planted otherwise and no offsets is required for the forests,” Haya says. “You’re not cutting emissions, you’re paying someone else to do what they’d have done in the first place.”
Cullenward states that some carbon offset companies overstate the value of their projects. A study that looked at the wind power industry in India discovered that at the very least 52 percent of carbon offsets are in connection with projects that could have been constructed without assistance from the UN-run Clean Development Mechanism, an international offset program that was established in the Kyoto Protocol in 1997.
“Time and again,” he claims, “when academics and financially uninterested groups conduct research projects in order to be careful about the validity of these claims as a baseline They find burning trash fires.”
Permanence refers to the notion that the benefits of the project’s contribution to the planet is indestructible and durability is the measure of how long this effect will be sustained. Certain reduction initiatives can be a long-lasting solution; for instance making fewer trips and switching on an electric cook stove will stop greenhouse gas emissions from taking place in the first place.
“When we add CO2 to the atmosphere due to combustion of fossil fuels can have long-lasting effects,” Cullenward says. “The effects on the atmosphere as well as the oceans goes beyond the geologic time. If you decide to make use of the offset credits to claim”It’s okay I emit CO2 into the atmosphere (from flying or drivingfor example], the time span of the claim being used must match the time span of the impact from CO2 emissions.”
Others projects aren’t assured of being permanent. To benefit from the environmental advantages of forest projects, trees have to last for 100 years in order to store one metric ton of carbon. However, fires and droughts and diseases can happen and, when trees die, carbon dioxide releases. Therefore, developers of projects must be aware of these risks when designing their protocol.
To prevent natural disasters that can impede an environmental advantage of a plan and other obstacles, carbon offset companies set up a buffer pool for insurance. In every project there is a range of between 10% and 25% of the credits are kept in a corporate pool. This ensures that the project is able to meet its objectives.
Furthermore “if there’s an incident of flame,” Cullenward says, “the buyers and sellers of traded credits through the carbon credit exchange remain intact, provided that those credits are retired from the buffer pool in order to account for the losses. If a million tonnes of CO2 ignites in the forest, then a million credits could be removed from the buffer pool. As long as the system is in good health it will achieve its longevity promise.”
However, buffer pools aren’t completely safe. In a study that was conducted recently of California’s offset program for forestry, Cullenward and fellow researchers discovered that wildfires had reduced the carbon credits that are in the buffer pool over the first 10 years of the program. This means that the loss of carbon from wildfires is far more significant than the climate benefits of keeping trees with this offset program.
Protocols must take into account leakage as this is the concept that projects could create emissions that are higher than the areas producing offset credits. Haya claims this is the case in a few forests conservation projects. “If an owner of land commits to reducing their emissions by cutting down on the amount of wood they harvest [but not changing] the demands for timber products the conservation of one area of the land will simply replace the harvesting of timber elsewhere,” she says.
When looking at the carbon offset scheme Many companies concentrate on the benefits that come with projects which include sustainable development employment for locals within the area, community empowerment and health improvement as well as the conservation of biodiversity.
Dee Lawrence, founder of Cool Effect, says she always seeks projects with an environmental justice stance which goes beyond carbon-free benefits. She cites recent projects by the company. These includes restoring mangroves in Myanmar that improve the quality of life in communities that are struggling by offering jobs, as well as a biogas digester in China that converts methane gas produced by trash into sustainable energy, and enhances the health of people by providing healthier air. “If the carbon offset is carried out properly, it could be transformative,” Lawrence says.
For Haya she suggests considering carbon offsets as just one tool available in the toolbox. However, in the end, she believes the process of cleaning up one’s own operations will make the greatest impact.
