– The Economist, May 2020
With greater demand for corporate sustainability and reporting on Environmental, Social and Governance (ESG), numerous companies have entered the market to supply offsets. Yet not all offsets are created equal. They range in quality from science-based and verified to outright “greenwashing,” which claim to reduce carbon with little to no credible evidence.
While efforts to directly reduce emissions should always be the primary focus, offsets are needed to cover unavoidable emissions. “Reduce what you can, offset what you can’t,” is an appropriate mantra here. A two-pronged approach is required to achieve Net Zero.
The bottom line is that offsets need to be truly effective to be credible. They must be validated, registered, and auditable. Accordingly there are reputable agencies engaged in that work.
What are Emissions Offsets
What exactly are emissions offsets, what types are available, where do they come from, and what are their real values and benefits?
Emissions are not confined to carbon dioxide. Carbon is but one of the main Greenhouse Gases (GHGs), but it represents 80% of the GHGs in the US. Methane is the worst (30 times as toxic). It naturally breaks down into CO2 in 10 years, which can then last as CO2 for 100 years or more. Nitrous oxide and fluorocarbons add to the mix. They are normally converted into carbon dioxide equivalents and known as CO2e.
Definition: “A carbon offset is a reduction in emissions of carbon dioxide or other greenhouse gases (GHG) made in order to compensate for emissions made elsewhere.”
Offsets are generally referred to as Compliant and Voluntary and are considered tradable commodities in financial markets. They require verification and conformance to guidelines. Both compliant and voluntary offsets are measured by the ton of emissions (generally metric tons).
Certain industries and enterprises must observe rules set out by regional, national, or international organizations or governing bodies that have mandated emission reductions or controls. In these markets offsets are regulated and numbered to facilitate transparency, tracking, and prevent duplication. The best examples are:
- Cap-and-Trade regulatory programs, whereby utilities and industries emitting excessive GHG when generating power or in manufacturing must purchase “Allowances “ (aka credits and offsets) to operate above stipulated emissions caps. The strategy is intended as an incentive for fossil-fueled power-plants and industry to convert operations to clean energy. There are two such markets in the US:
- Regional Greenhouse Gas Initiative (RGGI) comprised of 11 eastern states, and
- The Western Climate Initiative (WCI) comprised of seven western states including California and four Canadian provinces.
- CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) that requires airlines to offset the carbon associated with international flights.
These provide the opportunity to purchase carbon offsets to meet corporate, institutional, or personal reasons without the need to fulfill mandatory requirements.
Voluntary offset credits can be created by a variety of actions that reduce GHG emissions or expand seizure of carbon (sequestration) and are produced by measuring the carbon footprint of various projects. Such Offsets can be derived from preserving forests and in agronomy where carbon sequestration is measured; these are often called “avoided emissions.” They can come from regenerative agriculture (storing carbon in soils) and reforestation (planting trees). They can also be Renewable Energy Credits (RECs) associated with developing solar farms, wind turbines, or hydro power. Each type must pass strict inspections and be regularly monitored to qualify and be validated as effective emissions reductions and control mechanisms.
Voluntary offsets are not allowed to be used in compliance markets and tend to be less expensive. Pricing generally reflects the proposed usage of the credits. Often, they simply serve as a way for the purchasing entity to position itself as a participant in the fight against climate change.
While voluntary offsets are not required to follow the strict regulations that compliance offsets require, there are many that adhere to their own standards to enhance credibility and quality. These standards vary drastically based on the programs in which they will be used.
Some buyers seek offsets that conform to principles of “Additionality,” which means the activity or project reduces emissions that would not have happened without the offset buyer or collective buyers in the market. The thinking here is: why should credit be granted if greenhouse gas reductions would have happened anyway?
Climate Remediation Foundation’s Position
With demand for offsets rapidly growing, the threats of “greenwashing” are rising. To make a valid and concrete impact, offsets must be proven effective. The way to do that is to make sure they are of the highest quality, verifiable and auditable so a company or organization can assure its customers, or members, of the validity of its actions.
There are many misleading claims of sustainability online that it is difficult to differentiate between truth and hype. The goal is to decrease GHG emissions as much and as quickly as possible, and it is only from honest actions that true impact on the climate can be achieved.
Our approach is to make sure that carbon offset projects are additional, permanent and non-duplicable. To provide a benefit to the climate, a carbon offset project must actually avoid or reduce emissions beyond what would occur without the project. Key criteria to look for in evaluating carbon offset programs are:
- A clearly defined protocol that determines which types of projects are eligible and how emission reductions will be measured.
- Independent third-party verification of compliance with the protocol.
- Registration of offsets in an offset registry, which tracks each credit with a unique serial number to ensure it is only used once.
- Transparency in project implementation and reporting.
Providing Your Organization with Bulk Certified and Auditable Offsets
The Climate Remediation Foundation deals only with certified, validated, measured, quantified and auditable bulk carbon offsets. We currently acquire offsets from two principal sources:
- Cap and Trade markets where offsets are sold by the ton at auction to fossil fuel power-generation plants as allowances for them to continue to emit Greenhous Gasses above recommended caps to give them time to convert to cleaner technologies. We enter these markets and permanently retire tons, preventing their use as permits to pollute.
- From voluntary markets dealing in reforestation and “avoided emissions” where carbon sequestration is measured. In many instances this results in additional income for small landowners and indigenous people who practice sustainable agriculture.
Organizations, governments and companies need to become more aggressive in meeting Paris Accord and UN Sustainable Development Goals (SDG) to achieve NetZero in the desired time frame.
Let us all work together to meet this existential challenge. There is no greater cause today.