The Problem With Carbon Offsets – and 5 Measures of Quality

13.07.2024 - 10:21 / skift.com

Carbon offsets have become controversial in recent years, and some say they’re just greenwashing. But have they been unfairly maligned?

Carbon offsets are a way for companies to compensate for their own emissions by reducing them elsewhere. The idea is that carbon emissions have the same effect wherever they are emitted. So organizations can offset their carbon footprint by backing initiatives that either remove or lessen CO2 or similar gasses.

Ideally, the process works as follows:

The travel industry is under a lot of pressure to reduce its impact on global emissions because it currently contributes about 8% of greenhouse gasses. Aviation gets particular scrutiny. Direct C02 emissions from aviation were steadily increasing in the decades prior to the pandemic and have been increasing quickly since 2020.

Of that 8%, transport contributes almost half. Transport more broadly (including outside of the travel industry) contributes 24% of global carbon emissions with aviation contributing 11.6% of that total.

Much work is being done to reduce the climate impact of air travel, with research underway on sustainable aviation fuel or hydrogen aircraft, for example. But these technologies are some ways off from being a viable strategy. 

Carbon offsets are appealing because they can be implemented at scale right now. But the carbon offset market has faced a lot of criticism and has been described as the “wild west.” 

One carbon credit may look like another but be much less effective at reducing CO2. 

This leads to bad incentives. For example, travel businesses want to use offsets to claim net-zero emissions at the lowest cost. This requires a large supply of cheap carbon credits that may not accomplish much. 

There’s little incentive for companies to pay a premium for high-quality offsets, as each carbon credit is seen as saving one ton of carbon, regardless of its effectiveness. 

Traders are pressured to supply abundant carbon credits, often compromising quality control. They are motivated to sell as many credits as possible, with limited market visibility on credit quality, leading them to overlook the legitimacy of projects.

Carbon offsets depend on a clear connection between the project and its positive environmental impact. 

Sometimes this link is straightforward, such as when companies use carbon capture technology to remove and sequester CO2 emissions, and there is concrete data that shows the reduction. There are recognized measures of quality:

Permanence: this means that the emissions avoided cannot be reintroduced to the atmosphere. But often there is no guarantee on the longevity of a project. For example, to effectively protect a forest from deforestation, revenue from carbon offsets for an avoided