The Truth About Carbon Offsets: They Work, by Tiffany Potter, Chief Carbon Officer at Bitgreen. Published by Carbon Herald.
Carbon Offsets: Do They Really Work?
At Bitgreen, we’re often asked whether carbon offsets are an effective tool in the fight against climate change. This question has sparked much debate across industries, and it’s a valid concern for anyone serious about sustainability. Recently, our Chief Carbon Officer, Tiff Potter, spoke with the Carbon Herald to shed light on the realities of carbon offsets, emphasizing their role and effectiveness in achieving climate goals.
Tiff’s Story:
As a forester and biologist turned environmental finance advisor, I realize that to motivate some people to care about conserving water, forests, or energy, they may need to profit from it or at least save a serious amount of money.
That’s how I’ve ascertained that eco-assets, such as carbon offsets, renewable energy credits, and tax credits are vital tools for fighting climate change.
There currently isn’t enough money coming from philanthropy or governments to mitigate harmful climate impacts. Fortunately, the private sector is willing to voluntarily fund an energy transition and factor in the true costs of mitigation and adaptation. Carbon markets create a vacuum where the financial risks of innovating to reduce emissions fall on private actors — not government or taxpayers. The idea that private businesses will write checks to geologically store carbon or produce biomass energy, to me, is inspiring.
Putting A Cap On Carbon
Carbon offsets, however, are not the sole solution. Critics of carbon markets fail to realize that offsets are offered as one tool among a suite of tools, including comprehensive climate policy at the federal, state, or regional level. Those other tools are lacking.
In the US, offsets are being used voluntarily because the Federal government and many state governments are not telling big emitters to put a cap on carbon emissions. Also, offsets used in a voluntary way or in a compliance cap-and-trade market are meant only to be used as a transitional tool to lower the costs of shifting to a lower emissions economy over time and help put a price on carbon.
Relevant: Indonesia Court Reinstates License For World’s Largest Carbon Offsets Project
Offsets do not represent a sole replacement for lowering all of a user’s emissions, and they should be used with a cap and a plan to reduce them. The presence of an offset is not the issue; it is the lack of a cap on carbon emissions that is.
A high-quality certified carbon offset finances change in business-as-usual activities that would not otherwise happen without the money from the carbon market. This means an organization can be supportive of emission reductions in its supply chains in a more cost-competitive or compelling way.
For example, companies that have emissions from the use of plastic in their indirect supply chains may want to buy offsets or products from CarbonWave, which aims to replace petroleum-based products with seaweed. Companies that are generating emissions in their supply chains from the use of paper goods in North America may want to find offsets from afforestation projects in the US, such as those of Chestnut Carbon’s.
When To Buy Offsets
Buying offsets should be done after factoring the carbon footprint of a company and understanding its Scope 3 emissions, which are emissions that are typically not produced by the company itself and occur in the upstream and downstream activities of an organization. Companies should do everything they can to reduce emissions in their Scope 1 and 2 emissions (typically emissions from energy produced onsite and energy procured offsite) before resorting to using offsets.
Science Based Targets Initiative (SBTi) goes as far as stating specifically that offsets should only be used in three scenarios 1) in-value chain mitigation activities to substantiate emissions reductions (e.g. emissions outside companies’ value chains), 2) neutralizing residual emissions (e.g emissions that remain after an organization has implemented all technically and economically feasible opportunities, to reduce emissions from all sources), or 3) to support beyond value chain mitigation (BVCM) which are projects outside their operations that help reduce overall global emissions.
Communities Producing & Benefitting From Carbon Offsets
It’s important to note that some carbon projects are thriving, helping to improve livelihoods, and helping local groups participate in the climate economy. In the Southeast nation of Timor-Leste, Andrew Mahar of WithOneSeed and schoolteacher Leopoldina Guterres are leading 1200+ smallholder subsistence farmers to restore jungle destroyed during Indonesia’s decades-long occupation.
While each farmer plants and grows trees and gets paid an annual incentive payment for the trees kept alive, they’re creating a carbon store that enables them to participate in international carbon markets.
Relevant: EKI Energy Earns Prestigious Accreditation From ICROA For Carbon Offsets
In California, RenewWest, reforested 9,900 acres — the largest reforestation project in U.S. history. This re-established habitat for native species and created long-term carbon sequestration, funded with the use of offsets.
Meanwhile in Ethiopia, a carbon project collaborating with Fairtrade coffee farmers is protecting forests, reducing carbon, and improving the well-being of coffee farmers and their families. The Fairtrade Carbon Partnership is the largest coffee federation in Ethiopia and represents 400,00 farming families and cooperatives. On average, coffee farmers earn less than one Euro for every 10 to 20 Euros spent at the store. Carbon offsets are making up for this gap.
How Companies Can Better Navigate Carbon Markets
One of the biggest issues keeping companies from missing offsetting opportunities is that they’re afraid of possibly facing negative press or accusations of making false environmental claims. But there are ways to address both.
New vehicles like carbon insurance with Kita help lower issuance risks when investing in carbon projects. On a state level, policies evolving from AB-1305, California’s Voluntary Carbon Market Disclosures Act (VCMDA) are intended to address greenwashing by requiring detailed disclosure of environmental claims made within California. This strict new legislation clearly defines how corporations can market their emissions reductions and make credible claims.
As for cost, some companies are not budgeting enough money to buy high-quality offsets with ancillary benefits. High-quality projects are often associated with carbon standards that are endorsed by ICROA or I-Seal Alliance, have peer-reviewed methodologies, and have multiple sustainable development impacts in local communities. These projects also have transaction costs to cover credible reporting and long-term monitoring.
This brings us back to money. To motivate some people or organizations to take climate action, they may need to profit or save serious amounts of cash. Fortunately, we have tools available to us that have made this world a place where an ecosystem saved is money earned, and if harnessed properly this can be a win for the environment, companies, and local communities.
Key Takeaways:
- Carbon Offsets Are Effective: Carbon offsets do work — when properly implemented. They allow businesses to invest in projects that reduce greenhouse gases, making a tangible difference in global emissions.
- Criticism and Misconceptions: Carbon offsets are misunderstood, such as the notion that they allow companies to “buy their way out” of reducing their own emissions. However, these critiques often miss the bigger picture: offsets are not a substitute for direct action but rather a complement to a broader sustainability strategy.
- The Importance of Verification: Quality assurance and verification are crucial in ensuring that carbon offset projects deliver on their promises. Verified Carbon Standard (VCS), Gold Standard, and other certifying bodies play a critical role in this ecosystem, ensuring transparency and accountability.
Bitgreen’s Perspective:
At Bitgreen, we believe that carbon offsets are an essential part of a comprehensive carbon management strategy. We work with verified and high-quality carbon offset projects that not only reduce atmospheric CO2 but also generate social and environmental co-benefits. Our platform is designed to make it easier for corporations and institutional investors to find, acquire, and retire carbon credits, ensuring that their sustainability efforts are both impactful and credible.
Why It Matters:
In an era where sustainability is not just a buzzword but a business imperative, understanding and utilizing carbon offsets effectively can make a significant difference. They are not the silver bullet but a crucial tool in the broader fight against climate change.
