The Victory, The Tragedy, The Drama: Carbon Offsets, Credits and Markets

Carbon offsets, as many of you know, are purchases and projects to avoid or sequester GHG outside of one’s own operations, in lieu of making GHG reductions within one’s own operations. Those who look will find a range of perspectives on whether carbon offsets are good or bad. 

Champions can’t imagine how others can’t see that their overseas forest restoration project is brilliant and badly needed, cost-effective and carbon-effective. Opponents see the programs as an end run by polluters in prosperous countries to avoid reducing their impacts on local communities by funding reductions elsewhere. 

Are these projects effective or ineffective? Enjoy the perennial cliché answer: It depends!

Several project dimensions should be investigated to help judge their merits:

• Locale: Where is offset project based and what is the governance regime there?
• Type: Land-based (trees & soil) vs. renewable energy vs energy-efficiency vs superpollutant destruction vs. other . . . and on what type of land/habitat is the project happening?
• Rigor: Is it verified or unverified, and what level of verification, if the former?
• Timeframe (critical, yet generally ignored!): How quickly will carbon be drawn out of the air to balance out the day or year of activity that put the carbon in the air?
• Free Will: Regulated or voluntary. That is, is entity _required_ to drop their emissions? Or just choosing to invest in offsets?
• Eligibility (under regulation): Is the offset project just among regulated entities, or beyond?

All the above somehow manages to avoid the wonky “additionality” and “leakage” terms typically used when discussing offsets. Try to avoid them as best I could, they’ll come up later.

Locale:

Whether domestic or international, operating projects in areas with good governance is key. Any project will be best when deeply designed and driven by the local community. Outside of that, locality still matters to a real extent to support accountability. That doesn’t mean longer-distance relationships can’t work, but integrity all depends on the actions of the players involved (take that sentence out of context for wider applications . . . ). 

One danger is incentivizing seizure of lands from current caretakers or indigenous peoples because potential financial returns have now been created through carbon credit markets and it is now more attractive to seize the land. You could argue that pressure is always there, due to any number of potential extractive industries, but the point is that we should be very intentional in offset project design and seek the best outcomes for all involved (realize the highest potential for the land, as my friends at Regenesis Group might say)

Project Type:

Where land use offset projects make a lot of sense: restoring damaged and depleted lands. 

This includes coal-mine methane capture, where mine has been abandoned and/or under government or non-profit control; building soil carbon on farmlands that have been depleted of carbon; reforestation of deforested lands. We know what these lands were previously like. Restoring them is compatible with their ecological history and function. We have tens of millions of acres of depleted soils to work on in the U.S. alone. Capture and destruction of super-pollutants from damaged areas - like methane leaks from animal feedlots, landfills and abandoned coal mines - is important.

Where land-use offsets make less sense: taking over undamaged lands. 

An area that has been a biodiverse, functioning ecosystem for decades could be negatively impacted by changing the habitat (e.g. adding trees). If changing land management to increase carbon storage, that similarly holds potential to be unhealthy for the existing community of life on the land. Protect existing healthy land function; be wary of altering ecosystems solely for carbon benefit. We should be thinking holistically. On farmlands, if you build soil carbon, but not total soil fertility (nitrogen, phosphorus and other nutrition), you run the risk of limiting potential for healthy agriculture on-site.

Where land-use offsets make no sense: incentives to damage ecosystems.

I’ve seen way too many solar projects (not funded by offset money as far as I know) that involve removal of many acres of trees. Let’s strive to use better spaces to advance badly-needed renewables, not in greenspace, and leveraging other built infrastructure. Another option that's more interesting than a greenspace moratorium is to seek stacking functions, as the permaculturists say, like ground mount solar that incorporates pollinator habitat, as Clif Bar has highlighted. There are multiple benefits in well-designed projects.

Renewable and efficiency projects can otherwise avoid some of the complications of land-based projects, in simply improving the performance of GHG-intensive equipment or constructing new renewable infrastructure on a relatively small footprint (50+ MW solar arrays not withstanding), if they have minimal other impacts (bird life, nuisance noise etc.). Projects like methane digesters can have multiple benefits: better manure odor control and generation of byproducts that can be sold. 

Rigor:

If it’s not verified, then it’s not verified. Quality of verification matters. Different programs might have different frequency of re-verification to confirm that carbon benefits are being achieved over time. Whether you do offsets in or out of a strict verification/certification program and/or with a third party, measurement of benefits should certainly happen. (Full disclosure: I’m not generally selling verification or verifying projects)

Timeframe:

This should be an entire article in and of itself. 

If you produce a ton of emissions in a day, say through jet travel, and then plant enough trees that will take up a ton of emissions over 40 years, that’s a problem if we need CO2 levels significantly lower, like yesterday, and definitely lower in 10 years. Rates matter. It’s not just magnitude.

I’ve seen virtually no one talking about this. I am very interested to hear from offset providers how they’re thinking about this issue, as it must come up, and what they can do to better match timeframe (e.g. year of emissions drawn back out the following year). Else, the atmosphere and oceans are still CO2 sinks under offset projects, as CO2 is drawn out of the air much more slowly than it is inserted into the air.

Free Will: Voluntary vs. Regulated:

It’s hard to argue against those voluntarily investing in renewables, reforestation or other well-designed projects. Do your due diligence, and once you’re sure any problems created by the project are relatively minimal, go for it. And do not stop intelligently reducing your emissions in the process. Serious companies are not slowing GHG reduction action – with its cost-saving, customer goodwill, public relations and other benefits – simply because they wrote a check to build wind turbines or methane digesters.

If regulated, under science-driven regulations, we have entities with known amount of emissions that need to drop those emissions. If allowing offsets, let's assume they're verified, as with allowable offsets under California's cap-and-trade program. We still have the timeframe, additionality (clarity that offset project would not have happened without offset funder money), leakage (avoided impacts at project site go else where, like avoided deforestation driving deforestation elsewhere) and other uncertainties of project success (even if verified, complications can happen, like wildfire or management changes). That leads me to the position that those entities, whether a country or Fortune 1000 company, should simply drop their emissions rather than complicate the scenario with a complex system of offsite offset project standards and tracking, that may or may not deliver CO2 ppm reductions in the necessary timeframe. Particularly in affluent countries, we have the responsibility to tackle the problem that we’re responsible for creating and continuing to create. I'd really like overseas and offsite offset projects to work, as the economics can be attractive, but see too many complications if our goal is credible emission reductions.

The offset provider industry can still have a real role to play, though, in supporting improvements within the regulated organizational boundary – on-site efficiency, on-site renewables, and emerging carbon capture and storage (CCS) solutions that are starting to show promise. If the entity was a country rather than a facility, even more project options with which to play. Yes, some measurement and uncertainties would remain, but they're now within the organizational boundary and affecting the GHG emissions themselves.

Regulators should certainly think about the implications of requiring drastic emission reductions on companies whose competitors may not be under the same regulation. To me, that's more of an argument to soften the goal, if there's an actual hardship, rather than get into off-site/other country emissions and attempt to credit the benefit.

Project Eligibility Under Regulation

One caveat to my “simply drop their emissions” position: if a regulated entity wanted to invest in GHG emission improvements in a peer entity under the same regulation, rather than their invest in their own plant, that has merit. It’s reminiscent of the original cap and trade that applied to sulfur pollution in the Ohio River valley. If the pool of total regulated emissions goes down, that’s serves the goal. When we reach outside the regulatory boundary to get credit offsets, that’s where it’s easy to get into trouble. Researchers at both UC Berkeley and USC documented that in-state emissions under CA cap and trade program were actually able to increase, due to offsets and drop in out-of-state imports. This still won't meet all the concerns of the environmental/climate justice community, and you can still have valid reasons to keep those GHG reductions local.

Power Of Offsets

I don’t know that we’ll ever see consensus around offsets, but real dialogue around the benefits and shortcomings of offset projects, among a range of perspectives, is important.  My own opinion might well change, as it has already, and I'll certainly keep tracking the space.