A Short Guide to Carbon Offsets

Carbon offsetting is deeply controversial on a number of levels. While we don’t endorse it, this feature deals with the best way to offset if you do want to do it.

What is carbon offsetting?

Carbon offsetting is based on calculating how much CO2 is emitted by a certain activity that you are doing, and then funding a project designed to reduce carbon emissions by the same amount elsewhere, such as renewable energy or forestry. This is supposed to “neutralise” the effect of your emissions.

Our analysis

Recommended offset types – renewables

There is a strong argument that renewables are the best form of official offset, as they are addressing the central structural issue that is causing climate change: our reliance on using fossil fuels for energy. 

As a rule of thumb, it is better to support wind and solar projects than any form of biomass (including biogas). Not only is biomass potential limited as growing fuel takes up so much land, but also, while biomass can do good, it can also do enormous harm if not executed well. 

Recommended offset types – DIY offsets

Another option worth considering is doing ‘DIY offsetting’ – giving to projects that are not official offsets but have a good chance of cutting emissions. Outside the world of quantifiable short-term emissions cuts, you can give to projects that may be able to create more transformational change, such as political and educational projects.

The 2008 UK Climate Act, for example, wouldn’t have happened without a major campaigning effort from Friends of the Earth, and all such things take resources. You could also give to charities, such as the Red Cross, that are dealing with the effects of climate change, such as those helping the victims of hurricanes and floods. 

These projects won’t have received the benefit of certification (see below), and there is a debate to be had about whether or not giving to projects that do not promise to cut a quantifiable amount of carbon should still be called offsetting. However, there are, nonetheless, good reasons to adopt this approach.

Official offsets lack a systematic approach 

Official offsetting is all about doing the thing that gives you a cheap, easy quantifiable win. And – you might ask – why not? Its cheerleaders are fond of saying “the atmosphere doesn’t care where you make emissions cuts”.

But the thing is that over time, the atmosphere does care (metaphorically speaking), just as your body cares whether you lose weight through starving yourself or through a healthy diet and exercise. Because some cuts are sustainable, and some are not. If you are purely interested in easy cuts you can make right now, you may well overlook the deeper structural issues needed to sustain them or make more profound cuts in the longer term.

The inefficiency of official offsets

A calculation of the cost of offsetting with Certified Emissions Reductions (see below) calculated that on average, only about 30% of the money makes it to actual projects, with the rest being taken by verification costs, overheads, and project developers’ profits.

The Clean Development Mechanism is notoriously bureaucratic, so this may not be representative of the voluntary market. However, nearly all carbon offsetting is done by for-profit companies, not charities. And all of the carbon counting, trustworthy or not, inevitably comes at a price. 

If you do DIY offsetting, you can choose to give to a conventional charity, and possibly circumnavigate a lot of the bureaucracy of the official offset market. 

Recommended offsets – energy efficiency

Energy efficiency projects sound like promising candidates for ethical offsets, as many of them would be a good thing irrespective of the climate. For example, one of the main types is improving the efficiency of cooking stoves in poorer countries, where indoor air pollution from open fires and smoky stoves is responsible for about four million deaths per year.

However, there are a couple of reasons for concern about energy efficiency offsets. The first is that energy efficiency can, theoretically, be subject to major rebound effects. When you make something more efficient, people save money or resources, which they can then spend on other things that use energy.

The rebound effect is a hard thing to prove, but there is a lot of data that is suggestive of it. For example, one academic paper estimated that between about 50% to 60% of the potential energy saving from German vehicle efficiency improvements between 1997 and 2005 was lost to increased driving. Furthermore, the ‘rebound’ is likely to be stronger in poorer countries, where people’s use of energy across many different areas is constrained by their resources. 

The second concern about energy efficiency offsets is about justice. Although these projects are marketed as benefiting local people, it is not always straightforward to determine what is a ‘benefit’ and what isn’t. Improving cooking stoves may improve respiratory health, but it can also be quite disruptive of people’s lives, as social activities are often based around collecting wood and traditional cooking methods.

That doesn’t mean that we should decide not to do it, but it does raise the question: should the priority in deciding how such projects are implemented be getting people who are poorer than us to reduce their emissions on our behalf, or should it be fulfilling their actual needs? Should it really be their job to reduce their emissions so we don’t have to reduce ours? 

How serious an issue this is, depends a lot on how the projects are implemented. Sarah Leugers of the Gold Standard certification scheme told us that there is a lot of input from the local community into cookstoves projects.

Non-recommended offset types

Tree planting

To many people, carbon offsetting means planting trees. However, tree planting is actually now relatively uncommon. This is partly because it has attracted a huge amount of criticism.

The key criticism is to do with permanence. CO2 has a long lifetime in the atmosphere, so when you release carbon dioxide from fossil fuels it is more or less going to stay there permanently. But trees are generally just temporary stores of carbon. They absorb CO2 slowly until they reach their maximum size, and then they sit there. But if you want them to continue to hold your carbon for you, you have to then ensure that they remain there – maybe for centuries. At a time of growing pressure on land resources, that is a big ask. 

There have also been a number of major tree-planting offset scandals in which local people were evicted from the land to make way for the trees, or the trees were allowed to die almost immediately after planting, or inappropriate species were used that damaged native forests. One particularly egregious example was a 2011 project in Uganda in which around 20,000 people were violently evicted to make way for tree plantations being planted as offsets by the London-based New Forests Company. This project was a ‘compliance’ rather than ‘voluntary’ offset project (see box on CERs).

The new type of forestry offsets – REDD

Because tree planting has been so discredited, offsets that attempt to protect existing forests have become more popular instead (called REDD projects – Reducing Emissions from Deforestation and forest Degradation). 

However, these offsets are also controversial, as the causes of deforestation are often complex social issues and it is hard to be sure that they are helping rather than hurting. Many concerns have been raised about negative effects on indigenous people or social justice. REDD – being market-based – inevitably tends to go after the easiest and cheapest ways of reducing deforestation, like targeting the poor, rather than dealing with the tycoons and multinationals making really fat profits out of cutting down the forest. There are also many concerns about whether REDD schemes just shift deforestation around.

Overall, it is probably best to steer clear of forestry offsets. 

Retiring carbon credits

Another type of offset that some organisations have promoted is buying and retiring EU Emissions Trading Scheme (ETS) credits. 

However, the big problem here is that the EU ETS is dysfunctional, most notably because of a huge oversupply of credits. Even Sandbag, one of the organisations that had formerly promoted this form of offsetting, has now pulled out, saying:

“After a decade of reform, the EU Emissions Trading System (ETS) is unfortunately no closer to driving emissions cuts … Sandbag can no longer be sure that the cancellation of an allowance directly and immediately stops polluters from emitting a tonne of CO2; the surplus is so huge that polluters can simply pick another spare allowance and use that instead … As a result, we feel Carbon Destruction on a large scale cannot currently provide a credible way to cut emissions.”

Quality standards 

Once you have decided on a project type, you then need to choose an individual project. 

Almost all official offset projects are now verified by a third-party standard. These standards are supposed to ensure that offsets exhibit a set of features that are sometimes abbreviated (with a bit of effort) as VALID. These are:

• Verifiability – there is a robust audit trail.
• ‘Additionality’ – the carbon savings are additional to what would have happened anyway.
• ‘Leakage’ avoided – emissions are not just moved elsewhere.
• Impermanence avoided – carbon savings will be sustained over time.
• Double-counting should not occur—reductions are only claimed once.

Carbon offset verification is a horrendous alphabet soup – there are dozens of different types and they are frequently just listed as their acronyms: GS VERs, CCBS, CAR, QAS or VCS. The key one to be aware of, however, is the Gold Standard (GS, or GS VERs).

The Gold Standard

The Gold Standard requires projects to benefit the local population as well as cutting carbon, and it certifies about 19% of global offsets.

We recommend the Gold Standard out of all of them because it is the standard most supported by social and environmental groups. However, it is worth being aware that the tiny amount of independent scrutiny it has been subjected to has still raised major issues.

Like all the other standards, the Gold Standard allows program developers to collect their own data on how much carbon is being saved, without independent monitoring. A recent academic study looked at a Gold Standard approved project in Kenya supplying water filters. The filters were intended to reduce the need to boil water, but the academics found that many recipients weren’t using them. As a result, only a quarter of the claimed carbon savings were really being made. The Gold Standard disputes these findings however.

Certified Emissions Reductions (CERs) 

There is an important issue to be aware of when choosing offsets, and that is that there are actually two offset markets. The first is the voluntary market, and the second is the much larger ‘compliance’ market, which allows companies to buy themselves out of their actual legal obligations through a UN scheme called the Clean Development Mechanism (CDM). Offsets certified by the UN are called Certified Emissions Reductions (CERs), in contrast to Voluntary Emissions Reductions (VERs). 

There is nothing stopping voluntary offsetters also buying CERs, and some companies sell them. However, the UN certification should not itself be considered to guarantee high quality. The CDM has been a travesty in many ways. Until the practice was banned in 2013, about half of the money was going to chemical plants in return for their destroying a stupendously powerful greenhouse gas called HFC-23. Not only is HFC-23 easy to destroy, but there is plenty of evidence that plants were creating it merely so that they could get paid for destroying it again.

CERs can, however, have Gold Standard certification on top of their UN certification, which should ensure higher standards. 

How much you ought to give 

The overriding reason for objections to carbon offsetting is the narrative that it promotes about everyone’s moral responsibilities. It is, after all, based on the belief that there is a certain amount that you are morally required to do, which is to get a hypothetical score table to zero. 

If you accept this narrative, you can calculate your emissions using the free carbon calculators available on the websites of any carbon offset company, and decide what to give based on the carbon prices on the market. Climate Care’s standard portfolio price is £7.50/tonne, although if you give directly to projects many prices are much lower – some are in the region of US $1/tonne. 

An alternative approach, for those who are less convinced by the carbon offsetters moral narrative, is to decide what to give on the basis of what you can afford. However, this is, of course, no longer carbon offsetting. 

The state of the market

Despite the enormous backlash against offsetting, the market is still growing, although it is not individuals who are behind this. Corporations, mostly multinationals, bought 98% of voluntary carbon offsets in 2015. Individuals bought less than 1% of them, and their share has been shrinking.

Please note that a few points on this article have been amended following input from the Gold Standard scheme.