What on Earth is a ‘carbon offset’?

© Charlie Shoemaker

Editor’s note: From “climate adaptation” to “blue carbon,” from “landscape approach” to “ecosystem services,” environmental jargon is everywhere these days. Conservation International’s blog looks to make sense of it in an occasional explainer series we’re calling “What on Earth?”

In this installment, we break down carbon offsets, a way to help reduce greenhouse gas emissions that contribute to climate change.

So: What is a ‘carbon offset’?

Put simply, it’s a reduction in greenhouse gas emissions to compensate for emissions made somewhere else. Purchasing a carbon offset enables people and businesses, then, to reduce their carbon footprints.

What about a carbon tax — is that the same thing as a carbon offset?

Not exactly. A carbon tax is essentially a vice tax (a tax on something deemed harmful to people and society as a whole, such as cigarettes) that aims to shift production and consumption away from fossil fuels and towards more renewable forms of energy. Carbon taxes function by including the environmental cost of goods and services that are produced using fossil fuels in the total cost that companies and consumers have to pay.

The revenues from carbon taxes usually go to general budget expenditures, since earmarking tax revenues for specific purposes isn’t allowed in most countries. However, in some countries, carbon tax revenues have been used for health, education, clean energy research and development and conservation initiatives.

So, carbon offsets and carbon taxes are both ways that people and companies can “pay” for the carbon emissions they create, and while they function differently, they both help to decrease humanity’s carbon footprint.

What exactly is my ‘carbon footprint’ again?

Your daily actions — from heating and cooling your home to binge-watching Netflix to sending text messages and email attachments — consume energy and produce greenhouse gas emissions like carbon dioxide. Carbon emissions also derive from the energy and materials used to source and produce the products you buy.

Add in transit — including driving a car, flying, even using public transportation — and you have your carbon footprint: an estimated sum of your annual greenhouse gas emissions. (Use Conservation International’s calculator to measure your carbon footprint.)

Okay, I calculated my footprint. What do I have to do to offset it?

It’s pretty simple: Numerous online platforms make it as easy as a few clicks. Let’s say you determine your annual greenhouse gas emissions are 17.62 metric tons (the average per person in the U.S.). You can balance your impact out by offsetting the equivalent amount — or even more, to go “negative” — through an online service. Do your research, though, and choose a trusted, transparent entity — such as Conservation International (CI) — that only tenders offsets verified to have met rigorous standards by an independent third party.

What standards?

Let’s bring in an expert to answer that one.

“In order to ensure that the offsets are robust, credible and precise, projects must demonstrate that the emissions reductions meet a specific set of measurement and verification criteria,” explains Natasha Calderwood, director of projects for CI’s Carbon Fund. “This includes showing that the reductions would not have been generated without the project — meaning that they are ‘additional’ to a business-as-usual scenario.”

She adds, “Projects are also monitored on an ongoing basis with independent verification of results. Once carbon offsets are purchased, they are then retired on a public registry, thereby ensuring that they cannot be used or sold again.”

CI’s projects, for instance, are in compliance with the most widely recognized and rigorous voluntary carbon market standards: the Verified Carbon Standard to verify the emissions reductions, and the Climate, Community & Biodiversity Standards to ensure that the projects deliver strong social and environmental benefits.

What kind of benefits are we talking about?

When you offset your emissions through a platform like CI’s, you will contribute to protecting forests in Madagascar, Peru and Kenya that store carbon dioxide absorbed from the atmosphere — a critical part of the solution to climate change.

Protecting forests means protecting habitats as well — and people benefit, too. For example, in Kenya’s Chyulu Hills, revenue generated through the purchase of carbon offsets supports employment of forest or game rangers; safeguards a critical water source for thousands of people, livestock and wildlife; and provides improved social services like health and education.

What about larger emitters, like companies and governments? Shouldn’t they offset their carbon footprints, too?

Individuals who choose to offset their carbon footprint are operating in what is called the “voluntary carbon marketplace” – meaning you decide on your own that you want to take responsibility for your own emissions. There is no law regulating you to do so.

Some companies operate in this voluntary marketplace as well, namely for corporate social responsibility or reputational reasons. For instance, United Airlines allows passengers to offset the carbon footprint associated with their air travel and support CI’s Alto Mayo Protected Forest carbon project in northwestern Peru.

On a larger scale, however, is the “compliance carbon marketplace”: companies and governments buy carbon offsets in order to comply with mandated caps on greenhouse gas emissions. For example, in the European Union, companies that emit greenhouse gases are required to cut their emissions or buy offsets from the market.Is any of this really going to make a difference?

Is any of this really going to make a difference?

Let’s go to the expert again.

“Climate change is a global, complex issue, and it often feels like there is little room for individual action,” Calderwood says. “Offsetting alone is clearly not the ultimate means to tackle climate change. It’s one piece of the puzzle, but it’s a piece that people and businesses can put in place right now to be part of the solution.”

While it’s critical for people and businesses to do what they can to reduce their emissions, it’s difficult for most to reduce down to zero. Offsetting enables climate action to take place in parts of the world that might otherwise not have the means to do so.

“We must move to a low-carbon development pathway as quickly as possible, and individuals, governments, businesses and NGOs all have a role to play in helping achieve that,” Calderwood explains. “But offsetting unavoidable emissions is also a critical step.”

But are people and businesses actually taking this step?

According to a 2016 Forest Trends report, 1.1 billion metric tons of carbon offsets have been purchased in the voluntary marketplace since 2005. In 2016 alone, voluntary buyers paid US$ 191.3 million to offset 63.4 million metric tons of carbon dioxide emissions – comparable to Morocco’s emissions in 2016.

However, that number dropped 24 percent from 2015, and a near equal amount of offsets were left unsold; at the same time, global carbon dioxide emissions in 2016 were about 32 billion metric tons – so there is still a long way to go.

So what does this look like down the line?

A few developments point to a potential uptick in offset purchases. For example, the International Civil Aviation Organization is starting to craft its own offsetting scheme to guide airlines to meet emissions reduction goals and increase fuel efficiency. Additionally, as companies seek to make good on their commitments to reduce deforestation in their supply chain, they may turn to offsetting once they have taken other measures to decrease their carbon footprints.

Factor in international policy efforts and growing public awareness about reducing individual greenhouse gas emissions, and voluntary offsetting may play a larger role in the near future to help limit global warming.

“Offsetting is an opportunity for countries, businesses and individuals to come together and scale up climate mitigation efforts,” Calderwood says. “Supporting projects that deliver social and environmental benefits alongside reducing carbon emissions can have an immediate positive impact on the ground – and, more crucially, help emitters bridge that gap between internal reductions and meeting meaningful commitments.”

Calculate your carbon footprint — and offset your emissions — here.

Cassandra Kane is the communications manager for CI’s Conservation Finance Division.

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