Carbon Offsets

An Overview for Scientific Societies

Richard Kim and Benjamin C. Pierce

Executive summary

Carbon offsets are mechanisms allowing individuals and organizations to “offset” activities (such as air travel) that emit CO2 and other greenhouse gases, by funding mitigating activities (such as landfill methane capture) elsewhere. For scientific societies, where air travel to conferences plays a central role, carbon offsets offer an immediate response to the issue of climate change while the organization formulates longer-term, more comprehensive plans to reduce its carbon footprint.  

The world of carbon offsets—what kinds of offsets are available, what organizations offer them, how they are vetted and evaluated, which ones are considered good, how much they should cost, etc.—is rather complex, and there are arguments both in favor of and against purchasing them.  This report is an attempt to summarize what we have learned about this world while developing recommendations for SIGPLAN, the Special Interest Group on Programming Languages of the Association for Computing Machinery, as part of a larger effort to evaluate potential ways for SIGPLAN to respond to the issue of climate change.  We conclude that, on the whole, purchasing carbon offsets is a good short-term strategy for mitigating the climate effects of conferences.  

There are four basic criteria that are commonly used to evaluate carbon offsets (additionality, permanence, absence of leakage, and verification) and several standards (such as the Verified Carbon Standard, the Gold Standard, and the Clean Development Mechanism) that are used by vendors (such as atmosfair and Cool Effect) to certify that particular carbon-offset projects satisfy these criteria to an acceptable degree.  Types of offsetting projects range from renewable energy development and energy efficiency improvements to reducing carbon emissions from industrial and agricultural processes, biosequestration (e.g., planting trees), and deploying technologies for carbon capture and storage.  The Stockholm Environmental Institute has found that the types of projects most likely to deliver reliable greenhouse gas reduction while furthering (or at least not damaging) sustainable development goals were methane capture projects such as wastewater treatment, manure management, and landfill gas capture.  Offsets also vary widely in cost (from less than $1 USD to more than $50 USD), depending on project type, vendor, certifying standard, geographical region, and other factors.  A typical cost for rigorously certified offsets from a reputable vendor  seems to be around $9–$15 USD per ton of CO2e (“CO2-equivalent,” the standard unit of measure for greenhouse gases), but an exact number is frustratingly difficult to pin down.

There are still differences of opinion about whether carbon offsets are a good idea at all.  In particular, critics point out that the convenience and inexpensiveness of offsets may lead organizations to delay challenging conversations about how to actually reduce their emissions.  Proponents, on the other hand, point to the fact that offsetting can reduce emissions significantly in the short term, while more permanent solutions are being developed.  On balance, we agree with the proponents that, when used as one part of a larger strategy for addressing carbon emissions, offsets are a useful short-term tool.

With this in mind, we offer some specific recommendations.  We recommend supporting projects that use the Gold Standard, the most demanding of the three common standards.  We currently recommend purchasing offsets from either Cool Effect or atmosfair.  Cool Effect offers a range of project types including some that seem to have a very high likelihood of reliable carbon reduction; works with a number of established organizations in science, technology, and the environment; and claims to donate an impressive 90.13% of funds collected to the sponsored projects. However, Cool Effect’s Web site is unfortunately U.S.-centric and doesn’t accommodate currencies or addresses from other countries.  Atmosfair also works with project types with a high likelihood of reliable carbon reduction, has received consistently good reviews, and is notable for exclusively sponsoring Gold Standard-certified or Gold Standard certification-pending projects. Its website works well with purchasers from multiple countries; however, its offsets are quite expensive compared to Cool Effect and other high-quality vendors.

Your comments on this report are greatly appreciated!  The text is available as a live Google Doc, where you can add comments and suggestions directly. 


What are Carbon Offsets?

Carbon offsets are a “credit for negating or diminishing the impact of emitting a ton of carbon dioxide by paying someone else to absorb or avoid the release of a ton of CO2 elsewhere.” (http://www.co2offsetresearch.org/consumer/Glossary.html#A) Simply living means that your individual effect on the planet is carbon-positive (because animals such as humans emit CO2, if nothing else); however, by paying for the reduction of carbon emissions elsewhere, one’s net effect can theoretically be carbon-neutral or even carbon-negative.

For example, you might purchase a carbon offset that funds a project that supplies more-efficient cookstoves in a developing nation. More efficient cookstoves mean decreased carbon emissions from wood or charcoal burning.

Criteria for Quality Carbon Offsets

Environmental experts have identified a number of criteria to look for in a carbon offset. Some of the most common criteria are Additionality, Permanence, absence of Leakage, and Verification.

Additionality refers to whether the carbon emissions reduction or mitigation would have happened without the offset. If, for instance, the carbon offset project pays a factory owner to install new, less-carbon-emitting equipment, but the factory owner had planned to install the equipment anyway (either because the equipment would pay for itself or because regulation compelled the owner to do so), the carbon offsets would not be additional.

Permanence refers to whether the carbon emissions reduction or mitigation continues for the stated life span. A simple example of this might be regarding a project to plant trees, forecasting that the trees will remove carbon from the atmosphere over a certain number of years. The project must guarantee that the trees will remain in place over the life of the project, instead of being cut down prematurely.

Absence of Leakage refers to whether the carbon emissions reduced or mitigated do not occur somewhere else. For instance, if a forest is prevented from being cut down, perhaps a logging company will just cut down a different forest, resulting in no net carbon decrease.

Verification refers to whether all of the above can be independently established by a credible authority.

Standards

Various organizations verify the quality of carbon offsets that are sold, under standards/guidelines that they publish.

The most commonly-used standard (by carbon offsets sold under that standard) is the Verified Carbon Standard (VCS), followed by the Gold Standard and the Clean Development Mechanism (CDM). Other common standards are the Climate Action Reserve and American Carbon Registry. (Unlocking Potential: State of the Voluntary Carbon Markets 2017, 15.)

VCS is a standard founded in part by the International Emissions Trading Association, a consortium whose members include major energy and chemical companies, banks, and law firms. Unlike the Gold Standard or CDM, VCS has no requirement that its carbon offset project have additional social benefits, allowing for a wider range of projects.

The Gold Standard, founded by organizations that include the World Wildlife Fund, differentiates itself by requiring that carbon offset projects also meet various “sustainable development” goals—beyond offsetting emissions, also contributing to the economic and social welfare and development of the people where the project is taking place. It claims that “[t]he difference we make is to ensure that each dollar of funding goes further." The Gold Standard’s sustainability requirements are more stringent than those of VCS or CDM. Perhaps as a result, the Gold Standard focuses on a narrower range of projects, including renewable energy, energy efficiency, waste management, and land use and forests.

CDM is a UN standard established under the Kyoto Protocol, and is to some extent the baseline standard against which other standards are compared. CDM allows for a wide range of projects, although not as wide as VCS (for one, CDM projects are exclusively in developing nations), and has sustainability requirements more stringent than VCS but less stringent than the Gold Standard. CDM has been criticized for backing projects that fail additionality requirements. (How additional is the Clean Development Mechanism?, 152).

Vendors

Voluntary carbon offsets are sold by a number of providers. Some of the notable vendors of carbon offsets found our research are briefly mentioned here:

Types of Carbon Offset Projects

Carbon offset projects seek to avoid or absorb a specified amount of carbon emissions while selling credits for the resulting carbon reduction. Sometimes these are developed in close partnership with carbon offset vendors; other times the vendor has a more distant relationship. Projects are typically verified under a third-party standard.

The Carbon Offset Research and Education (CORE) Initiative outlines six main types of carbon offset projects:

(This set of categories is neither universally agreed upon nor exhaustive.)

The Stockholm Environmental Institute (SEI) examined different types of offset projects and rated them on (1) confidence of environmental integrity (their likelihood of delivering the promised carbon offset) and (2) confidence in delivering additional sustainable development goals.

SEI found that projects most likely to deliver both were methane capture projects such as

but not coal mining methane capture.

Projects that had only medium environmental integrity confidence but that were still likely to bring sustainable development benefits included

Cost

Pricing of carbon offsets can vary wildly, for reasons that are far from transparent. While theoretically carbon offsets could function as commodities, with every metric ton of CO2e being fungible independent of price, a few commentators have compared the voluntary purchase of carbon offsets to buying real estate, in that “even if two houses have an identical size and make, there are an infinite number of factors that might affect the selling price.” (Unlocking Potential: State of the Voluntary Carbon Markets 2017, 8). Some of these factors might include project type, location of project, which standard verified the project, etc.

Ecosystem Marketplace’s report on voluntary carbon markets found that the average price of carbon offsets in 2016 was $3 USD/ton, although prices paid ranged from little as < $0.5/ton to as much as > $50/ton. (See Unlocking Potential: State of the Voluntary Carbon Markets 2017, 8). The average price of offsets sold under the Gold Standard was $4.6/ton. Offsets sold under CDM averaged $1.6/ton, while those sold under VCS averaged $2.3/ton when not additionally covered by the Climate, Community and Biodiversity Standards (CCB Standards); those sold under VCS + CCB averaged $3.9/ton. (16)

On the other hand, the vast majority of the vendors we examined sell offsets to individuals at between $9 USD and $15 USD per ton. Notable exceptions include on the low-end Go Climate Neutral Now!, which as of January 2018 sold offsets at prices between $.38/ton and $8.50/ton, and on the high-end atmosfair, which sold offsets at 23 EUR / ton (around $28 USD / ton).

We don’t fully understand why the vendors we’ve come across sell carbon offsets for $9 to $15/ton while the average price for voluntary carbon markets overall is merely $3/ton. Some possible explanations and data points:

The opacity of pricing remains concerning. It would be a good idea to do further research on this topic, including getting price and cost breakdowns directly from vendors. 

What Are the Main Concerns with Carbon Offsets?

Concerns with carbon offsets can be broken down into several categories:

  1. Concerns with the quality of the offsets—that they are fraudulent or in some way don’t deliver the promised reduction in emissions
  2. Concerns that carbon offsets don’t do enough or make things worse—that they avoid or even hinder more substantive personal or policy choices necessary to reduce emissions. For instance, purchasers might avoid taking steps to reduce their own emissions by buying their way out, in the process propping up older, fossil-fuel-based infrastructure. In a worst-case scenario, carbon offsets arguably could result in more carbon emissions, as purchasers over-emit more due to having purchased offsets (a “rebound” effect).
  3. Concerns with fairness—that they are a means to shift emissions reductions from the developed world to the developing world, or that in some cases (some fraudulent, but not necessarily so), they end up paying polluters.
  4. Concerns with unanticipated side effects—that carbon offsets might perversely incentivize behavior that increases carbon emissions (such as building a nitrous-emitting plant, then selling off carbon offsets to capture the nitrous before it’s released into the air); that carbon offset projects might have unintended environmental or economic effects or might be simply be unconcerned with such effects; or that carbon offset policies could be used to justify (and fund) land grabs or similarly exploitative actions
  5. Concerns with potential moral hazards—the “buying indulgences” issue (this is related to #2). Specifically, that carbon offsets are a way to avoid the “sinful” behavior of emitting carbon while paying others to avoid emissions for you, and that this is avoids taking real responsibility for one’s own emissions. Proponents of this argument might characterize this as inherently wrong, or harmful for the planet long-term.

Why Purchase Carbon Offsets?

Properly chosen, carbon offsets should reduce an organization or individual’s carbon footprint, enabling them to limit their contribution to climate change and global warming. Issues of quality, fairness, and unanticipated side effects should be able to be limited (if not wholly eliminated) by carefully choosing projects and vendors.

Carbon offset projects can also have additional positive social benefits, such as promoting a transition to renewable fuel sources, improving economic development or health, or promoting the advancement of women. For instance, projects approved by the Gold Standard must meet at least two UN Sustainable Development Goals (SDGs), in addition to addressing climate change (SDG #13). These additional social benefits can mitigate the fairness concern that the developed world is paying off the developing world to reduce emissions instead of doing so itself; in a best-case scenario, developed world funding helps poorer countries leapfrog to a renewable energy infrastructure and carbon neutral economy.

Purchasing carbon offsets can create a form of a voluntary carbon tax, creating a way for a individual or organization to recognize to some extent the social cost of carbon, and thus disincentivizing carbon-emitting behavior. For organizations, this can also be a way to start to plan for a more-regulated future, where we might anticipate there is a carbon tax or similar cost for carbon emissions.

There is some risk of a “rebound” effect—that given the chance to purchase carbon offsets, an individual or organization might increase carbon-emitting behavior. Research on this is mixed. Some researchers have found that given a chance to purchase “green energy” for household use, participants did not increase their energy use, while in a similar study another researcher found evidence of a rebound effect of 1%–3% of increased electricity use.

In either instance, concern about a rebound effect with respect to carbon emissions could be mitigated by simply measuring overall carbon emissions before offsets and ensuring that these stay fixed or are reduced. To the extent that purchasing carbon offsets can encourage greater awareness and measuring of carbon-emitting behavior, they could serve as a gateway to an overall carbon strategy that leads to changes in that behavior.

While carbon offset purchases are criticized as “buying indulgences, ” this analogy falls apart on some scrutiny:

Conclusions

Ultimately we agree with the UN and environmental organizations and NGOs such as NRDC and The Nature Conservancy, who conclude that, when used as part of an overall emissions reduction strategy and when carefully chosen, carbon offsets are a useful tool for reducing the carbon impact of individual and group activities.


We recommend projects that use the Gold Standard rather than CDM or VCS alone, as these standards have fewer safeguards, and we are skeptical of bio-sequestration (forest) projects, because of the difficulties with ensuring additionality, permanence, and no leakage.


Therefore at this time we favor
purchasing carbon offsets from Cool Effect or atmosfair.

We like Cool Effect for a number of reasons:

We also had some concerns with Cool Effect:

We recommend purchasing carbon offsets in Cool Effect’s projects in biogas and cookstoves (Honduras, Malawi, Peru, Uganda) in the developing world, all of which are certified by the Gold Standard. We do not recommend its U.S.-based projects, due to their limited additional social benefits, or its projects in forest conversation or wind turbines, due to verification/quantification concerns with biosequestration and wind projects. Also, Cool Effect’s U.S.-based and forest projects are not certified by the Gold Standard.

We also recommend atmosfair for a number of reasons:

We also had some concerns with atmosfair:

Ultimately, carbon offsets are not a guarantee of reduced emissions. In many ways, they’re more like an investment, with some degree of calculated risk. The surer way to reduce one’s carbon footprint is to reduce emissions at the outset. Even so, we believe that carbon offsets can be a reasonable way to take immediate action in the short-term, as each scientific society develops a longer-term, more comprehensive strategy.

Appendix A: Further reading

We recommend the following articles and reports for more information.

Appendix B: Who Purchases Carbon Offsets?

We’ve investigated carbon offset purchases by other non-profit organizations, including universities and professional organizations. Some examples of other organizations that have purchased carbon offsets or recommended purchase to their constituents:

Scientific Organizations

Other Professional Organizations

Universities