Achieving Carbon Neutrality: Offsets

Jeff Klein
Jeff Klein

We saw in the post about Navigating Carbon Neutrality what carbon neutrality is and why it matters. But how do we get there? And how do we get there reliably?

The first step of course is reducing carbon emitting behavior within our control. Making behavioral changes like turning lights and equipment off. Doing basic energy upgrades like replacing inefficient lights with more efficient ones is also important and cost-effective. So is doing advanced energy upgrades that optimize the performance of your building. Generating renewable energy on site is often cost-effective, too.

But there is always a limit at which point it’s no longer cost-effective to reduce your carbon impact, and that is where carbon offsets and allowances come in.

Let’s look at some history. In 1997, the Kyoto Protocol pledged nations to combat climate change and reduce carbon pollution. This was the monumental action on climate change until the Paris Agreement of last year when 177 member countries signed up for more aggressive action to stop climate change. As part of the 1997 Kyoto Protocol, Kyoto’s Clean Development Mechanism (CDM) established a market for carbon offset credits.

These offsets range from direct reduction in greenhouse gas emissions through renewable energy, energy efficiency, or greenhouse gas destruction, to mitigation of future greenhouse gas emissions through land use changes or forestry projects.  The way the projects are conducted is a third-party company working on say, a wind farm calculates the metric tons of carbon dioxide that would be displaced by the project, and then sell certificates in order to help fund the building or maintenance of the project.

Unfortunately, the first 15 years of carbon offset markets were littered with scandals of improper or outright fraudulent scandals. The UN reported that the margin of error in measuring carbon reductions could be as high as 60 percent in energy and 100 percent in agriculture. One-hundred-percent means all of it could be wrong. A Stanford study of 3,000 projects worth $10 billion found that one-third to two-thirds of those projects would have been built without the carbon credits, calling into doubt whether these offsets are actually adding any additional carbon reductions to what would have happened anyway. Vatican City in 2007 declared itself carbon neutral by purchasing offsets, yet the “Vatican Forest” had not been started by 2010. A Greenpeace executive worried that for voluntary carbon offsets, “I think you are looking at 75 percent as garbage, at least.”

Part of the problem for offsets came from lax oversight, part from the fact that some for-profit purveyors were able to sell the emperor’s new clothes.

Despite these problems, many carbon offsets are reliable. It just requires greater scrutiny. Non-profit purveyors like do not seek financial gain through their carbon offsets and therefore don’t run the same risk of greed at the expense of carbon reductions. Similarly, there are many types of carbon offset projects that are harder to fudge the numbers on. Most renewable energy projects produce measureable, reliable, and limited certificates. So too, domestic methane flaring projects are easily measureable and verifiable.

There is an interesting, little-talked about alternative to carbon offsets, too, called a carbon allowance. We look at them here: Achieving Carbon Neutrality: Allowances

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