• Ali Ahmed

Carbon Offsets Can Work

Updated: Oct 28

The real reason carbon offsets are useful - and how to make sure they move us in the right direction


Scrutiny and skepticism over carbon offsets and their use by corporations to achieve net zero and other carbon reduction goals has recently increased. Humorous sketches like this video from John Oliver poke fun at carbon offsets, but also highlight some of the real issues at the core of of the carbon offset concept. Yet even with their problems, carbon offsets can create a way for companies to create real change.


Quick Review of Carbon Offsets

Carbon offsets are created when a new activity impacts amount of atmospheric carbon, either by preventing or reducing an increased amount of carbon or by removing carbon. Offsets can be classified in three categories - preservation or conservation offsets which prevent existing stored carbon from being released, mitigation which reduces the amount of carbon an activity produces, and sequestration or removals which take carbon out of the atmosphere and store it.

Registries manage the protocols on how offsets are calculated and record when offsets are retired. There are a growing number of registries each with different focus areas and different rules on how the offset is created. Regardless of which protocol is used, creating a carbon offsets must take into account the following factors:

  • Additionality - ensure that the activity is a new activity and offsets are not double counting prior work

  • Permanence - keep the carbon out of the atmosphere for a long period of time

  • Leakage - avoid just shifting the problem away from the activity area to a different place

Any registry or protocol that does not measure and verify these elements should not be considered by a corporation.


The Problems with Offsets

First and foremost, offsets allow emissions by the purchaser to continue - and this is where companies can change the way they use offsets, so we'll return to this point.


Second, with any projection, assumptions are usually incorrect. Each of the factors mentioned above, additionality, permanence, and leakage, can be mis-estimated. Also, the offset project's impact can also be over or under estimated which in a complex system is often the case. With the exception of direct air capture, measuring the actual carbon is not easy to do being expensive, time consuming, and near impossible. We hope that this estimation and assumption errors are benign, but the way that the carbon offset ecosystem is setup encourages registries, protocols, carbon offset project companies and off-taker companies to be aggressive in their estimates. And these pressures create the opportunities for investigative reporters and comedians to point out clear issues.


Offsets Can Create Real Change

The way that a company views offsets and how they internalize the purchase and cost is where real change can be made. If offsets are budgeted separately, purchased ex post facto to achieve a certain goal, and done without regard to quality, then the value of the offsets is minimized. The offsets themselves may or may not lead to some reduction (depending on how good the project is and how accurate the assumptions end up being).

So the right way is use the offsets to create the incentive for change within the company, turning the offset cost into an internal carbon price or tax and creating awareness about carbon emissions within the parts of the company that can effect real change.


However, in many companies, this simple application is not the case, and is likely one of the key reasons that all our actions to reduce carbon is stuck in disclosure and accounting versus leading to real reduction. Ironically, companies do a fantastic job of allocating and managing traditional operational costs. If we apply the same rigor to the purchase and allocation of the costs of offsets, then even if the offset project itself wasn't the best in terms of delivering its projected outcomes, the result would still be positive as the company would be moving towards its own carbon elimination.


To learnore about how Green Strategies LLC can help you evaluate carbon offsets and build them into a successfulbcatbon reduction strategy, please email us at contact@green-strategies.com.





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