by Parke Wilde
Sellers of aviation offsets use the mantra, “reduce what you can and offset the rest.” But some offsets are fraudulent, many offsets overstate their net carbon reduction, bad offsets distort the carbon market by suppressing prices across the board, and we do not need offsets as much as we might think.
Carbon offsets are controversial financial instruments that seek to compensate for the climate-harming greenhouse gas emissions of institutions or individuals by making payments to others to reduce their emissions. The most notable offset markets are for aviation emissions. Many airlines now sell optional offsets when customers buy tickets. British Airways in 2019 started directly offsetting its emissions on some flights, and U.S. carrier Jet Blue in 2020 announced a similar policy. Offsets are central to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), developed by the International Civil Aviation Organization (ICAO), a UN agency.
Supporters say offsets allow buyers to help address climate change while continuing activities that may be essential for institutional or personal goals. In the environmental online magazine Ensia, a 2019 column by Christopher Preston argued, “If you are flying, you should be buying carbon offsets. Air travel has a gigantic carbon footprint. And, contrary to popular belief, carbon offsets do make a difference.”
Critics say some offsets are little better than medieval religious indulgences to comfort the buyers’ guilty consciences without really helping mitigate climate change. In a 2012 column in Nature, climate scientist Kevin Anderson said, “Offsetting is worse than doing nothing. It is without scientific legitimacy, is dangerously misleading and almost certainly contributes to a net increase in the absolute rate of global emissions growth.” At the January 2020 meeting of global business leaders in Davos, Switzerland, Swedish activist and noted non-flyer Greta Thunberg said, “We are not telling you to ‘offset your emissions’ by just paying someone else to plant trees in places like Africa while at the same time forests like the Amazon are being slaughtered at an infinitely higher rate.”
Many writers seek a middle ground, trying first to reduce flights and then encouraging offsets for the remaining essential flights, despite recognizing flaws. For example, a 2018 Wired article concluded, “[O]ffsetting isn’t an easy out, but it is a stopgap solution until these companies can figure out entirely green transportation with electric motors.”
This essay argues that institutions and individuals in academia should skip offsets entirely. My main target reader is people in the middle group. I have two recommendations. First, for climate mitigation globally, institutions and individuals should support emissions reduction activities directly and generously, without undermining or zeroing out their benefits through flying. Second, for our own aviation impact, as institutions and individuals, we should reduce what we can and not offset the rest. If our travel really deserves to be recognized as essential, we can own the emissions proudly.
How offsets are supposed to work
In offset markets, the buyers estimate the greenhouse gases they have emitted, measured in units of metric tons of carbon dioxide equivalents (CO2e). The offset sellers engage in some activity that reduces net greenhouse gas emissions, such as planting trees, repairing methane leaks from old coal mines, or providing improved wood-burning cookstoves to rural families in Honduras, measuring the savings in the same metric of CO2e. Buyers and sellers agree on a price, such as $15 per metric ton of CO2e.
In the large research literature on carbon offsets, authors typically begin by summarizing desirable qualities of a good offset scheme. For example, see a report from the Stockholm Environment Institute by Bailis et al. (2016) or a paper by Kim and Pierce (2018) offering advice to scientific societies that wish to reduce their climate footprint. The qualities include the following:
- Permanence, so carbon that has been sequestered in an emissions reduction activity does not return to the atmosphere at a later time;
- Absence of Leakage, so an offset does not give credit for an emissions reduction when really the emissions were just moved from one location or time period to another;
- Verification, so claims of emission reduction are confirmed by a credible authority; and
- Additionality, meaning the emissions reduction activity would not have happened anyway in the absence of the offsetting scheme.
If an offset scheme really met these four criteria, we could think of the carbon-emitting activity (such as flying) being balanced against the climate-saving activity (such as improving cookstoves), for a net carbon impact of zero.
How offsets overstate their benefits
Many offsetting schemes fail to achieve the first three desirable qualities, as Lisa Song explained in a devastating 2019 expose for ProPublica. For example, an environmental non-governmental organization (NGO) may sell offsets for a forest protection plan, without really having the political power to enforce the plan permanently in the face of future pressure from local residents. Or a logging company may sell offsets for not harvesting a particular forest, and then harvest as much timber as it needs from a different forest. A recent report from UC Berkeley found that the forest offset protocol for the California Air Resources Board assumes only a 20% rate for such leakage, but published studies estimate the rate is 80%. A report on forest offsets from Norway’s Office of the Auditor General finds uncertain results, unsatisfactory monitoring, and insufficient follow-up regarding instances of fraud.
Even fewer people understand a subtle but pervasive problem with the fourth desirable quality, additionality. To demonstrate additionality, offset sellers must develop a formal counterfactual scenario, describing what they think would happen in the absence of the offset purchase. The offset buyer is supposed to get credit for the portion of the project’s emissions reduction that goes above and beyond what would have happened anyway.
To use one common example, if a non-governmental organization (NGO) sells offsets for providing fuel-efficient cookstoves to low-income households in Honduras, its counterfactual scenario may stipulate that low-income households would have continued using unimproved wood stoves, so the offset buyer gets credit for the full difference in carbon emissions. But, in a more realistic counterfactual scenario, many things might have caused some households to stop using the unimproved wood stoves:
- If the fuel-efficient stoves really work, some households would have made or purchased them;
- Some rural households will be reached by rural electrification projects, and others will move to cities or towns where there are electric and gas stoves;
- Some households are given improved cookstoves by NGO or government initiatives using direct funding, without offsets; and
- With rapid deforestation in rural areas, some households will run out of wood, unable to continue using the unimproved stoves.
In short, some but not all of the cookstoves funded by offset schemes are additional, in the sense that they only happened because of the offsets. A 2016 study, from researchers at the Stockholm Environmental Institute and the Institute for Applied Ecology, entitled “How additional is the clean development mechanism?,” reported that cookstove projects likely “considerably over-estimate the emissions reductions due to a number of unrealistic assumptions and default values.” The study similarly found implausible additionality assumptions in claimed emissions reductions for wind, hydro, waste heat recovery, fossil fuel switch, efficient lighting, and many common project types in offsetting schemes. Leakage and unrealistic counterfactuals cause offsets to be priced too low.
How offsets might cause harm
Beyond being merely ineffective or underpriced, offsets may cause harm. Lisa Song quoted Larry Lohmann, a long-time researcher on this topic, saying, “Offsets themselves are doing damage.” In a 2019 working paper for Stanford Law School, Barbara Haya and colleagues described potential unintended consequences. “Financial incentives created by an offset protocol can also inadvertently increase emissions,” they write, “for example by increasing the profits of high-emitting activities, creating disincentives to enact legally binding climate regulations, and inducing business-as-usual mitigation projects to shift their activities to earn offset credits.” As a case in point, the authors describe how the Bureau of Land Management contemplated requiring methane capture at coal mines on federal lands, but stopped seeking such a requirement and went with an offset program instead.
Some offset marketing emphasizes emissions reduction first, but other offset marketing takes a disparaging tone toward emissions reduction and treats offsetting as a robust remedy. UN Climate Change (UNFCCC) posted and then later took down a video for an offsetting program, mocking consumers for modifying their lifestyles instead of offsetting.
Source: Climate Home News (2018).
For ICAO, the UN agency responsible for international aviation, the offsetting scheme under CORSIA has successfully delayed action on actual aviation-sector emissions reduction. Under CORSIA, ICAO says it seeks to hold “net” emissions at 2020 levels, allowing actual emissions from international aviation to grow but offsetting the new emissions. I have asked ICAO what the target is for actual emissions from aviation, but the agency will not say. In formal comments on CORSIA, I reported my inability to find a single candidate offset scheme among the many proposals that used a realistic counterfactual scenario in its additionality provisions. ICAO has blocked the Twitter handle for our initiative and others, echoing the rhetorical approach toward critics used by the Trump administration, wrongly accusing us of “fake news” and “spam,” even though my questions always have been respectful. The process for certifying offsets under CORSIA is not transparent. As noted by Baroness Bryony Worthington, executive director of Environmental Defense Fund Europe, “[G]iven the massive lack of transparency around ICAO generally and the board in particular, there is as of yet no guarantee that CORSIA overall will result in genuine carbon offsets and thereby make a meaningful contribution toward climate protection.”
We cannot treat offsets as a harmless additional step after our own emissions reductions have been achieved. Due diligence is needed before purchase and especially before recommending them to others.
How offset prices reveal their flaws
We should be especially concerned about offsets with low prices. On current offset markets, it is easy to buy offsets for just $3 per metric ton of CO2e or less. From sellers with stronger verification, widely considered legitimate, prices are typically between $9 and $15 per metric ton of CO2e. No matter what your opinion on offsets in general, these cheap offsets should set off your implausibility detector alarm.
The average annual per capita carbon footprint in the USA is approximately 16 metric tons CO2e, and a rare frequent flyer may use 40 metric tons. To believe there are legitimate offsets for $3 per metric ton, you would have to believe that exceptional frequent flyers, with emissions many times higher than the global average, can fully offset at an annual cost of $120. Even with a price of $15 per metric ton, the annual cost would be only $600, which is a small fraction of a frequent flyer’s annual income. This is too good to be true.
Even supporters of offsets sometimes have wondered why the prices are so low. The 2018 Kim and Pierce paper mentioned earlier, offering advice for scientific societies, acknowledged, “We don’t fully understand why the vendors we’ve investigated sell carbon offsets for $9 to $15/ton while the average price in voluntary carbon markets overall (according to Ecosystem Marketplace) is merely $3/ton.” They list potential explanations for the price variation, such as bulk purchases or differences in profit margins. These explanations do not seem sufficient. Instead, the low prices and wide price variation indicate deep flaws with offset markets.
In principle, offset markets should guide financing to the lowest-cost emissions reduction activities first, then medium-cost activities, and then, if there remains enough demand from buyers, high-cost activities last. For example, improved cookstoves could be a low-cost activity, but with a limit on the total emissions reduction possible from this approach. Analysts can list a wide variety of emissions reduction activities, each with their own corresponding cost and limit on total potential: reforestation, carbon farming, bioenergy, and so forth. At the upper end, engineers may scale up technologies that have unlimited potential, such as directly capturing CO2 from the air, but the cost will be high, perhaps $400 to $600 per metric ton of CO2e plus capital costs. In economics jargon, well-behaved offset markets would have an upward-sloping supply function, where the price rises as the quantity grows. With effective offset markets, the low-cost options would be quickly exhausted and the market price would climb.
Thus, the current low prices on the offset market reveal weak certification standards. For example, an illuminating analysis by Warnecke et al. in Nature Climate Change investigated the market for old certified emissions reductions (CERs) available for sale under the Clean Development Mechanism, which unfortunately may be treated as legitimate under the ICAO’s CORSIA aviation offsetting scheme. For many of these old offsets, the emissions reduction activity is not at risk of being discontinued when the offset funding stops. Further sale of these offsets should not count as additional, because they do not reflect emissions reduction beyond what would happen in the absence of the offset purchase. Yet, so many of these old offsets are available for sale that they will suppress the market price. The authors have a nice chart illustrating the vast quantities of dubious offsets that will be available at near-zero prices if the weaker standards are accepted by ICAO. With strong standards that exclude dubious older offsets (in green and blue), the supply function is steep, leading to higher prices as the quantity increases.
Marginal costs of supplying CERs for the period 2013–2020. “The left part of the ‘base case’ curve is relatively flat because it mainly includes projects with low vulnerability. These projects only have to cover ongoing CDM transaction costs—but no marginal abatement costs—to issue CERs. The right part of the curve is steeper because it includes mostly projects with high or variable vulnerability. These projects also have to cover GHG abatement costs. The figure also illustrates scenarios for vintage restrictions under consideration for CORSIA. Please note that this figure includes only the supply from registered projects.” Source: Warnecke et al. 2019.
The low prices prevent large-scale offset purchases from reaching higher-priced emissions reduction activities that do more good. It matters little whether you or your institution choose a respected vendor with more rigorous verification standards than CORSIA’s. The prices on the offset market are not determined by you, but by the actions of the large and economically powerful participants, including the major airlines such as British Airways and Jet Blue mentioned in the introduction. If the ICAO and the major airlines use inexpensive offset schemes with weak certification criteria, it suppresses the offset price for the entire market.
Some readers may agree with this analysis of flaws in current offset markets, while hoping that the markets can be improved in the future. Suppose it ever should happen that offset markets were reformed, rigorous standards were imposed for all flying, and large-scale buyers entered the market and bid up the price to realistic levels. The resulting increase in the cost of flying would influence demand. For example, if the price of flying was increased by 50%, people might fly 20% less (assuming, in economic jargon, a price elasticity of -0.4). With implausibly low prices, offset markets give people license to fly without consequence. By contrast, paradoxically, if their flaws could be repaired, offset markets would support prices high enough to motivate us to fly less. In the end, for individuals and institutions that support climate action, the flying less part is unavoidable.
The problem with offsets is the flying, not the contributions to good causes
Faced with these arguments, colleagues sometimes tell me more forcefully about the merits of the emissions reduction activities supported by their offsets. For example, their favored offset program not only saves carbon, it also promotes social justice. In the same spirit, the Kim and Pierce paper recommends offset schemes such as the Gold Standard for “beyond offsetting emissions, also contributing to the economic and social welfare and development of the people where the project is taking place.”
This approach may betray the speaker’s distrust of the quantitative mechanics of carbon offsetting. It makes it seem only the following options are conceivable:
- Keep flying and not offset; or
- Keep flying and purchase offsets despite their flaws, to contribute to good causes.
But, in my view, we have two additional options to consider:
- Make financial contributions to good causes and keep flying; or
- Make financial contributions to good causes and sharply reduce flying.
This last option is the good option. The problem with offsets is not the contributions to good causes; the problem is the frequent flying. The world needs each and every ton of CO2e emissions reductions from the good activities we finance. We should not offset these good activities to support our flying.
We do not need offsets
Finally, many people feel reliant on flying for their quality of life and, more importantly, for the good they do through their work, including work that is valuable for addressing the climate crisis. Besides offsets, they ask, what is the alternative?
Fortunately, offsets are not as necessary as they appear. Consider the situation of an individual or institution whose intention is to reduce emissions by flying less where possible and then offsetting the remaining essential flights. The true merit of this approach depends on honesty in defining “essential.” In this section, let us think about how the remaining flights would be judged by an impartial observer who understands both the severity of the climate emergency and the social value of the individual or institution’s travel.
First, obviously, if the impartial observer would rule that certain flights are inessential, then an offset purchased under a flawed scheme will not really cancel the carbon debt. In this case, ethical standards require further reductions in flying.
Second, less obviously, if the impartial observer would agree that certain flights are essential, because of the great good they bring to humanity, then no offsetting is needed. In this case, why should one feel compelled to buy offsets?
Our psychological reliance on offsets betrays an uncomfortable truth. As individuals and as members of institutions with a public interest purpose, such as universities, we lack confidence that our reductions have been morally sufficient. We know that much of our flying deserves to be judged inessential.
In the end, why do individuals and institutions purchase offsets? Offsets reveal that, deep down, we know history will judge our flying badly. If we were proud of our emissions, we would want to stand nakedly like victorious Olympic athletes in ancient Greece, wearing nothing but our crowns of laurel. We would not need to hide. We would not need to clothe ourselves in offsets.
The next time an individual or an institution claims to have already reduced their flying as much as possible, ask them if they offset their remaining flights. Trust them more if they proudly own their emissions rather than offsetting them.