The (Voluntary) Carbon Offsetting Market is Broken
Hundreds of millions of dollars are spent annually on voluntary carbon offsets. This money is likely not making a difference.
As the threats of the climate crisis become imminent, the number of individuals that are adjusting their behaviour is growing. Many are looking to reduce their carbon emissions by avoiding/reducing polluting habits. Unfortunately, this is inconvenient, so many would prefer to offset the emissions that they can’t reduce. I have been diving deeper into the idea of carbon offsets lately while working on my environmental startup, Neutro, and was quite shocked to learn how hard it would be to actually offset your emissions. You have likely seen an option to purchase a carbon offset if you booked a flight in recent years. At check out, you are offered the option to tick a box, pay a few quid and you get to relax in a guilt-free flight, confident that the 1.6 tonnes of carbon emitted per passenger as you hop across the pond, are fully offset by planting trees or some such strategy.
But perhaps you were not perfectly guilt-free. Have you ever suspected that this cheap and easy offset is too good to be true? Well, you were right! But likely not for the reasons you think.
Carbon offsetting schemes are based on what is called the voluntary carbon market, which comprises many, different carbon offsetting projects. (These voluntary markets contrast with the emissions trading system (ETS) established by the Kyoto Protocol for non-voluntary emission caps.) For example, the project ArBolivia II “seeks to implement reforestation through an association between local smallholders and ethical investors”. Well, so far so good! You are both supporting reforestation and also strengthening some local economies.
Like any market, some offset projects are effective and some are, well, less effective. Luckily, there are different standards bodies (sometimes called programs) that take it upon themselves to check the integrity and efficiency of carbon offset schemes. For example, the Gold Standard was created by the WWF (among others) to ensure projects are… well, good.
The project and the standards aren’t where things go wrong. Rather, the whole voluntary carbon market is fundamentally broken. How so? It’s because of the waterbed effect that is caused by countrywide pollution caps of the Kyoto Protocol. If I voluntarily reduce or offset one tonne of CO2 emissions in a country that has an overall emission limit, some other company can now increase their pollution by one tonne of CO2. So by offsetting my carbon emission, I am just funding some company’s pollution. Unfortunately, since the Paris Agreements, this is practically the case in the whole world. The US is a notable exception, having left the Paris Agreement, but many individual states have their own carbon caps.
Simply put, most countries have set CO2 emission caps, and one way or another the entire emissions quota will get used. If one person reduces emissions voluntarily, they just free up emissions for someone else.
So what’s a good citizen of the planet to do if they genuinely want to reduce carbon footprint? Good! Well, in its nature, carbon offsetting has limited horizons. You are trying to remove the emissions you are currently creating. You are not accounting for the hundreds of years of polluting that came with the innovation that made it possible for you to afford a flight across the Atlantic, let alone the pollution already made by commercial aviation in the last century. Imagine the carbon in the world is a full bathtub. The carbon is constantly pouring in through the tap and it is now overflowing and causing havoc in your house. In this analogy, carbon offsets are equivalent to frantically trying to remove as much water as you can with the biggest spoon you can find. If you found the very best carbon offsetting project you may be removing water with a ladle.
Offsets are temporary patches, we need to fix the infrastructure of our carbon-based economy. What I suggest is to support charities that invest in potentially highly impactful green energy technology. Another key goal is to affect legislation that dramatically reduces pollution. In our analogy, this would be equivalent to working on turning off the tap.
Likely the best example of such a charity is the Clean Air Task Force (CATF). They back investment in long term high impact projects of renewable energy technologies like using biofuels and converting current infrastructure to work on zero-carbon hydrogen and ammonia fuels. CATF is also well-placed politically to make an impact on US legislation with amazing results, including a more than 70% reduction in pollution-causing smog and soot.
Donation to a very effective charity can have a 100X impact on our environment per $ spent. Without investing in long term sustainable energy, the world is likely to miss its sustainability targets altogether. So currently, every time you remove some water with your spoon, someone else is opening the tap slightly more. Let’s invest our efforts in turning off the tap altogether.
