Recent press coverage has questioned not only individual offset projects, but seemingly the whole practice of carbon offsets. If were interested in doing something to show that we care about climate change, how should we respond to these questions? By Dr. Mark C. Trexler

As recently as several months ago, individuals and corporations pursuing carbon neutrality (also referred to as "climate neutrality") were almost universally applauded in the press as climate heroes. Today, you could easily get the impression that those same individuals and corporations are not climate heroes, but climate dupes. Recent press coverage has questioned not only individual offset projects, but seemingly the whole practice of carbon offsets. As a result, many consumers and companies must be questioning the whole concept of carbon neutrality. If the perception spreads that offsets are some form of eco-fraud,ƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ , a prime example of no good deed goes unpunishedƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ , carbon offsets could be in trouble.

If were interested in doing something to show that we care about climate change, how should we respond to the questions being raised about carbon offsets? Its actually a two-part question: 1) do offsets advance climate change mitigation objectives, or do they actually undercut such objectives; and 2) how can interested consumers and businesses be confident they are contributing to climate change mitigation when they purchase offsets.

To jump to the punch line, Id offer up the following:

1. It is fair to point out that corners have been cut in the early stages of voluntary offset market development. It is far too easy to select emissions reductions as offsets that are in fact business as usual.ƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ This has given critics plenty of fodder with which to challenge the environmental credibility of todays offset markets.


2. While emissions trading is far from a silver bullet when it comes to climate change, it is generally recognized as an important part of a climate change mitigation tool kit.


3. Voluntary offset markets are one form of emissions trading, and have a particular role to play in climate change mitigation efforts. While differentiating offsetsƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ from business as usual emissions reductions can be challenging, offset programs can be structured that will deliver a high level of environmental integrity.


4. There are a number of steps we can take to enhance and preserve confidence in the integrity of the offset market. From developing better ways to characterize offset quality for consumers, to simply asking what youre buying when buying offsets, we can all contribute to the objective of a credible market.


5. If we want to combat climate change, we need to use all the tools in our toolbox. Recent negative press coverage may give the offsets field the push it needs to solve some of the problems were seeing reported.

Point #1: Offsets Are Important

With global emissions currently exceeding 25 billion tons of CO₂ per year and likely to double by 2100, we need to make significant reductions in global emissions. Emissions trading is one of several available approaches. Emissions trading allows us to go after the most cost-effective emissions reductions first, and to establish a market signal (expressed as a $/ton value for reductions) that can help drive development of technologies that can advance longer-term emissions reduction goals.

Voluntary carbon offset markets, which rely on individual consumer and business purchases, may not substantially reduce global GHG emissions by themselves. But they can play important roles in building climate change mitigation momentum. First, if corporate carbon neutrality becomes common, the amount of offsets could become significant. Moreover, if companies want to sell carbon neutral products and services (which well see many more of in the near term), they first have to educate consumers about climate change. The same goes for retail offset providers. A more educated public, in turn, increases the prospects for meaningful national and international climate change policy. This may seem like an indirect route to climate change mitigation objectives, but I believe it will prove a crucial one. Offsets, whether as part of regulatory or voluntary markets, have important roles to play in advancing climate change mitigation objectives.

Point #2: Yes, Offsets Are Challenging

There are many things that reduce or displace greenhouse gas (GHG) emissions. Existing nuclear energy andenergy efficiency standards, landfill methane control rules, renewable portfolio standards, more efficient power plants , the list is almost endless. Offsets, however, have to represent more than a ton of reduction or displacement thats happening through the means listed above. For the purchase of offsets to really result in carbon-neutrality, the offsets must result from additionalƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ emissions reductions.

The idea behind additionalityƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ is simple. Emissions reductions are additionalƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ if they are caused to occur by the existence of offset markets. There are many different additionality testsƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ in use, but demonstrating the additionality of a carbon offset fundamentally means showing that the associated GHG emissions reductions wouldnt have happened under business as usualƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ conditions, or without the attention and incentives provided by the offset markets.

Carbon offset critics have appropriately focused on the key role of offset additionality. If offsets are being claimed from projects and activities that would have happened anyway, youre simply moving the reductions around the landscape. By their very nature, reductions happening anyway are inherently incapable of rendering a person or company carbon neutral, no matter how much you pay for them.

Point #3: We Can Design Credible Offset Programs

The challenge facing offset markets is how to systematically distinguish between emissions reductions that are truly additional and those that arent. There is no magical test to determine whether a project is happening for GHG mitigation purposes, or would have happened anyway. Repeated attempts have been made to develop quality standards for voluntary offset markets. A key objective of such a standard has to be to distinguish additional from non-additional offsets, and theres a fundamental problem. While a certain fraction of emissions reductions can clearly be seen to be additional, and another fraction can clearly be dismissed as business as usual, theres a continuum between the two extremes.

Identifying a specific point on the continuum, above which all reductions should be considered high quality and additional and below which all reductions should be considered low quality and non-additional, can be misleading. And there is no such thing as a perfect additionality standard. Any standard will let some fraction of business as usual projects slip through, and exclude some fraction of truly additional projects. Indeed, our experience with offset standards suggests that we may want to consider alternative approaches to maintaining the environmental integrity of voluntary offset programs and communicating the attributes of offsets to consumers. There are a couple of options worth particular consideration:

1. First, to build offset portfolios for voluntary markets we can focus on emissions reductions sectors that are particularly likely to generate additional emissions reductions (they do exist!).


2. Second, we can think of alternative means by which to convey relevant information to offset consumers. An offset scoring system, for example, would avoid the pitfalls of coming up with a single point on the additionality continuum as part of a standard-setting process. At the same time, a scoring system would let consumers better understand what theyre buying.

Conclusions

Voluntary carbon offset markets can play an important role in climate change mitigation efforts, even though they shouldnt be portrayed as the solutionƒ†â€™ƒÂ¢¢â€šÂ¬…¡ƒ¢â‚¬Å¡ƒâ€š‚ to climate change. The question is not whether or not to offset. The question is how to use voluntary offset markets to truly advance global warming mitigation goals. Individuals and businesses interested in offsets and perhaps carbon neutrality would do well to consider three questions:

1. What steps have you taken to reduce your own emissions? Offsets allow you to negate those emissions you cant avoid. The opportunity to purchase offsets or go carbon neutral should not make you feel that you dont have to pay attention to your own energy decisions.


2. In choosing an offsets provider, have you paid attention to the quality of the offsets you are purchasing, so that you can realistically assert that you are carbon neutral? You can find out how through the recently released A Consumers Guide to Retail Carbon Offset Providers (PDF).


3. Is going carbon neutral the beginning of your global warming mitigation journey, or the end? Addressing global warming will require much more than voluntary carbon neutrality. Consumers need to supplement their individual efforts by pressing for public policies that promote a wide range of measures intended to combat climate change.

____________

Dr. Mark C. Trexler is director of EcoSecurities Global Consulting Services, a market leader in the business of sourcing, developing, and trading carbon credits generated from greenhouse gas emission reduction projects.