Carbon Offsets, Explained

Image: smokestacks in the distance. Topic: Carbon Offsets Demystified

A decade ago, a group of European scientists set out for the UN Climate Convention in Kyoto, Japan – without getting on a plane. Determined not to “contribute … to the problem that the convention was intended to solve,” they traveled across Europe and then through Siberia and China to Japan by train, boat and bike over the course of several weeks.

Even for those of use who aren’t ready to completely swear off traveling by air, the story of the “Climate Train” holds an important lesson about the climate impact of flying: A single international flight can emit as much greenhouse gas per passenger as a year of driving.

At those times when we have no choice but to take a journey by plane, we can still mitigate the harm to the environment caused by the flight by offsetting the emissions from that trip.

Carbon Offsets Defined

By purchasing carbon offsets, you help fund a project that prevents one ton of greenhouse gases from being emitted for each ton that you have caused. Carbon offset providers sell the greenhouse gas reductions associated with projects like wind farms or methane-capture facilities to customers who want to offset the emissions they caused by flying, driving, or using electricity. (Though they’re called “carbon” offsets, they offset all greenhouse gases that cause global warming, from carbon dioxide to methane.)

For example, if a scientist had had no choice but to fly to the Kyoto convention, she couldn’t prevent that flight from producing tons of greenhouse gases (GHGs). But she could balance out that impact by investing in a project that reduces global warming emissions, such as a new wind power project that displaces coal energy.

That's where carbon offset programs come in. They help a traveler easily calculate how much of an investment will result in a GHG reduction to match the GHGs generated by her share of the flight. By making that investment and offsetting her flight, a traveler can make her plane trip essentially  “carbon neutral.”

Carbon offsetting is one of many economic actions you can take to address climate change, and it is a powerful one. Many promising projects that would help to reduce greenhouse gas emissions lack the capital they need to get built; by directing your offset dollars to these projects, you can help finance new wind farms, solar arrays, and more.

First Step: Do the Math

The first step to reducing the net climate impact of your travel is to calculate how many tons of GHGs will be emitted over the course of your trip. Use an online calculator such as the one offered by NativeEnergy (click on “Travel Calculator”). A round trip flight from Washington, DC, to San Francisco, for example, emits more than two tons of GHGs per passenger.

A Variety of Carbon Offset Options

Once you know how many tons of GHGs you’ve added to the atmosphere, select an offset that will reduce GHGs by the same amount. While it’s no replacement for reducing our carbon emissions to begin with, buying carbon offsets is a “compelling way to channel funds to projects that will result in a low-carbon future,” says Adam Stein of TerraPass.

Your carbon offset purchases can support a wide variety of forward-thinking projects that reduce GHG emissions, including:

  • Green tags from current renewable energy generation. Energy customers who wish to support wind and solar power can already do so by purchasing renewable energy certificates, also known as “RECs,” or “green tags.” Green tags represent the environmental benefits generated by existing green energy facilities like wind turbines or solar arrays. Consumers without green power options can purchase green tags as a way of supporting renewable energy generation. Or, utility companies that offer their customers green energy options may simply purchase green tags on their behalf from an outside green power facility, rather than building their own.

Because putting more renewable energy into the electric grid will, over time, reduce the energy that GHG-spewing coal plants need to put in, renewable energy also promises to reduce global warming emissions. Therefore, some carbon offset providers sell green tags as carbon offsets. For example, the Climate Trust offers green tag offsets associated with wind farms in Oregon.

  • Green tags from future renewable energy projects. NativeEnergy takes an innovative approach to selling green tags as offsets. Instead of offering them from existing green energy facilities, it sells green tags from facilities that are yet to be built, representing the environmental benefits these future projects will generate. In this way, green tag and offset purchases through NativeEnergy help fund construction of new wind turbines and other projects. Better still, these green energy projects are all owned and operated by Native American tribes and small-scale farmers in the US, providing economic benefits to these populations.

In short, NativeEnergy’s model makes new green energy facilities financially viable that would have otherwise lacked the capital to go forward, increasing clean energy generation capacity and building the infrastructure for a low-carbon future.

  • Sustainable development projects. Some providers use offset purchases to fund “clean development” projects in developing countries, which both fight poverty and reduce GHG emissions. MyClimate (which sells offsets in the US through Sustainable Travel International) has created a small hydraulic power station in Indonesia that will generate clean, reliable energy for a Sumatran community. In Eritrea, they have installed hundreds of solar water heaters for schools.
  • Farm and landfill methane projects. NativeEnergy also uses offset purchases to install methane digesters on family farms in Pennsylvania to capture methane, a potent greenhouse gas generated by livestock. “Digesters” use the methane to generate power (described lovingly as “re-moo-able” energy). Other offset providers support similar projects to capture and convert methane that rises out of landfills​​​​​​.
  • Other projects. Offset providers support other creative projects that reduce GHG emissions. The Climate Trust sells offsets to fund the electrification of truck stops, so trucks won’t have to idle while they’re waiting to refuel, and to support a “Climate Cool Concrete” program that gets Portland construction projects to use a blended cement that causes lower emissions.

What to Look for in Carbon Offsets

The market in carbon offsets has grown rapidly, and standards for the industry are still evolving. Particularly because you can’t see or touch a reduction of greenhouse gases, and because prices per ton vary widely among providers, purchasing a reputable offset can be confusing.

“Almost anyone can offer to sell you almost anything and claim that this purchase will make you carbon-neutral,” concludes a recent study by Trexler Climate + Energy Services. “It is very difficult for consumers … to differentiate between a high-quality and a low-quality offering.”

Below, we offer a few general guidelines for selecting a high-quality carbon offset:

  • Reduce your impact first. Only purchase a carbon offset after you’ve looked for ways to reduce your emissions by flying less, driving less, driving a higher mileage car, or reducing your home energy use.
  • Look for offsets that support specific projects. Don’t settle for a vague claim from an offset provider. When travelers purchase a Flight TerraPass™, for example, they receive a “product content label” describing the specific carbon-reducing projects “contained” in their offset.
  • Look for offsets that will cause carbon reductions that wouldn’t have happened otherwise. For an offset purchase to be meaningful, the purchase has to cause a new carbon reduction corresponding with the new emissions you caused, rather than taking credit for a reduction that would have happened anyway. MyClimate , for example, is careful to support specific clean development projects where their investment will make the difference between the project happening (and reducing GHGs) or not happening.
  • Look for offsets whose GHG reductions will happen on a clear timeframe. Ask offset providers when the offset you are buying today will result in a reduction, and use that information in selecting a provider.
  • Look for offset providers that ensure your offset can’t be re-sold. Offset providers deal in an invisible product, so they must take pains to demonstrate that they sell each offset only once. For example, NativeEnergy retires all green tags purchased as offsets by donating them to a nonprofit so they can’t be double-sold.
  • Look for offset providers that are independently verified. There is currently no common standard or certification that guarantees offset quality. The best offset providers find various ways to assure customers that a knowledgeable third party has examined and approved their practices. For example, TerraPass hired the Center for Resource Solutions (CRS) to perform an independent audit of their program, and it made the document available online.

Several organizations, including CRS and the Climate Group (TCG), are currently working with offset providers to develop a common standard for carbon offsets. A certification of offsets, such as CRS’ “green-e Greenhouse Gas Reduction Standard,” or TCG’s “Voluntary Carbon Standard,” may be available to guide customers within the coming year. We’ll announce it in our Real Green newsletter when new shared standards and certifications become available.

  • Avoid offsets based on tree-planting projects. Planting trees feels good, and projects that plant trees can be easier to love than projects involving something as mundane as cow methane or cement. However, there are much better offset programs than those that involve trees. It’s very hard to calculate how much CO2 a given forest will “breathe in.” And, some offset providers base their calculations for a tree planted today on the CO2 it will take in over its entire lifetime, which is decades after the emissions associated with the flight or drive being offset. Bottom line: when it comes to carbon offsets, planting trees is not the best bet. However, planting trees has other environmental benefits, and we encourage tree planting for these reasons.
  • Avoid offsets that purchase “allowances” on a climate exchange. When companies want to reduce their emissions, they can trade GHG reductions that exceeded their targets with other companies by using the Chicago Climate Exchange (CCX). CCX does good work in the business sector, but you may want to avoid purchasing offsets based on CCX allowances.

Offset providers that purchase allowances from the CCX and offer them to individuals as carbon offsets often cannot name the specific projects that generated the reductions they are selling. Offset customers have a right to know exactly what reduction they are purchasing, and to receive assurances that it wouldn’t have happened without their purchase.

If you’re a conscientious consumer who tries to live a low-emission lifestyle, consider offsetting the remaining emissions for which you are responsible. And spread the word to others—many offset vendors will send a luggage tag when you purchase air travel offsets or a bumper sticker when you purchase car offsets.