As climate leaders gather in Sharm el-Sheikh, Egypt for another instalment of the UN’s annual climate talks, one strategy that’s long been seen as a response to the climate crisis is coming under increasing scrutiny.
For decades, carbon offsetting has been touted as a way for people and industry to cut their emissions.
If you take a flight, you can pay for offsets that fund a forest. If you’re an oil company, you can invest in a wind farm, or in technology that captures carbon dioxide emissions and locks those emissions underground.
The idea behind offsetting is simple: pollution emitted anywhere in the world – say, a plane flying over the Prairies – can be accounted for anywhere else in the world – say, a tree planting project in Uganda, or a wind farm in Texas.
It’s a trading system that puts a value on greenhouse gas reductions or removals by issuing credits for the work.
Those credits, or vouchers, are worth real money. There are millions of credits floating around representing real emissions reductions.
But the system is imperfect, experts say, and not the solution for addressing the enormous problem of climate change.
One challenge is ensuring that a carbon offsetting project will be ‘additional.’ If a forest was never at risk of coming down, then it doesn’t make sense to generate offset credits for it – and yet that’s happened.
“It’s still a bit the ‘wild west,’” says Félix Boudreault, a managing partner at Sustainable Market Strategies, a Montreal-based research firm that advises large institutional investors on ‘green’ financial strategies.
“There’s some really good ones, there’s some really bad ones and everything in between.”
Offsets, in theory, are a way of mitigating climate change, says veteran climate policy analyst Mark Trexler. The fundamental flaw with them, though, is that they’re priced too low to incentivize people away from polluting in the first place.
“Everybody wants a large volume of cheap offsets,” Trexler says. The planet, as a result, loses out.
“The only person who’s not sitting at the table is Mother Nature.”
In other words, it’s cheaper to pollute and pay someone to offset than stop polluting in the first place.
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“Instead of acknowledging the harms, and looking for alternative ways to engage in the things that we do,” says Kate Ervine, an associate professor at Saint Mary’s University in Halifax, “offsetting basically says ‘Look, I can continue with business as usual because I’ve done this good elsewhere.’
“Offsetting,” she adds, “fundamentally, is not about eliminating the bad. It’s this idea that you’re simply cancelling it out.”
Even companies that defend the system acknowledge the need for the price of a credit to be much higher.
This would ostensibly incentivize polluters to actually cut their emissions rather than just relying on low-priced offsets to meet their targets.
It’s something even the CEO of United Airlines, Scott Kirby, has acknowledged.
“It’s the solution that if you’re sitting in the C suite, you can write a cheque and check the box and have a marketing message that ‘I’ve offset all my carbon’ but you really haven’t done anything,” Kirby told Bloomberg in an interview last year.
“I want that price to be high, and I want it to hurt,” says Guy Pinjuv, whose forest restoration firm, Pachama, is working to revolutionize how the system works.
Where there have been improvements in the system is in terms of transparency. It used to be the case that anybody could say they were offsetting with very little accountability.
There were “a lot of fake credits (and) no trust in the system,” Boudreault says.
Even today, anyone, he says, can start their own website “to say that they’ve offset something for you – but then you don’t get any proof of that.”
But at least now, he says, there are science-based accountability measures to ensure offsets are doing what they’re supposed to be doing and that they’re used in a limited way, and not as the only solution to cutting emissions.
“Transparency is something that investors are increasingly demanding,” Boudreault says.
“I’ve seen the worst of the worst. I’ve seen projects where people preserve trees and put natural gas fracking wells underneath them,” says Pinjuv.
These days, companies like Pachama use satellites and cloud-penetrating radar technology to monitor the progress of a project and to ensure no corners are cut. This includes monitoring if trees are being brought down where they shouldn’t. It’s the kind of work that used to have to be done by trudging into swamps and into remote forests. That can all be done remotely now.
An illustration of a Pachama project in the Brazilian Amazon. The protected area, about the size of the City of Toronto, remains undeveloped thanks to a monitored offsetting program that has kept the trees intact.
Credit: Pachama
But that technology still can’t account for one of the other unfortunate realities of climate change – a hotter planet means more of those forests are burning, taking the potential for offsetting emissions up in smoke with them.
“As you get more and more area burned, you’re going to have more and more trees dying, and that will mean more and more carbon being released,” says Craig Nitschke, a Canadian forest ecologist at the University of Melbourne in Australia.
That’s what’s happening in California. The state has a market for trading offsets using the carbon stored in its forests. Understanding that some of those forests would eventually burn, California established an insurance system called a ‘buffer pool.’
The pool was supposed to last a century, but intensifying fires in California have literally burned through 95 per cent of the available credits over the past 10 years. It’s like having a retirement savings account that’s supposed to last you a lifetime, except you burn through it in a 10th of that time.
“What we showed is that the portion of credits that are meant to protect against wildfire … have almost completely been used,” says Freya Chay, a researcher with CarbonPlan, a nonprofit that looks at emissions reduction strategies.
California, in other words, severely underestimated how fast fires would tear through its reserve.
“So the high-level conclusion is, wow, we are probably not adequately insuring against risks to come,” Chay says.
For decades, the world has been relying on the system of carbon offsets to help drive down emissions. That includes everyone from you, as an individual buying credits for a flight, to giant industrial polluters.
In theory, the system should work because we all share one atmosphere: a tonne of carbon dioxide emitted in one place is a tonne of carbon dioxide removed somewhere else.
Others, though, are more skeptical about the whole thing, seeing it as not long enough a stick to get emissions down.
“Carbon offsets won’t be enough,” says Pierre-Olivier Pineau, an expert in carbon pricing at the Université de Montréal’s business school.
“The idea of offsetting is that we emit,” he adds.
“You don’t offset something that is not emitted. We should not offset at all. We should reduce.”
