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Dossier: carbon offsetting

  • Written by  Mark Rowe
  • Published in Climate
Tree planting schemes are the most popular and straightforward carbon offset projects – but how effective are they? Tree planting schemes are the most popular and straightforward carbon offset projects – but how effective are they?
24 Jul
2020
The IPCC embraced the notion of carbon offset schemes in the landmark Paris Agreement, but projects have faced criticism that they lack effectiveness and transparency. Mark Rowe investigates the world of carbon offsetting to determine the role it really plays on the path towards net zero

‘If you can’t do something, pay others to do it for you.’ To the cynical, that seems to be the message behind the concept of offsetting carbon emissions. For all the low-hanging fruit when it comes to reducing greenhouse gases – most notably the way that renewables are replacing fossil fuels in energy generation – a great deal of our global economy remains intractably linked to carbon.

Consequently, if the planet is going to have any hope of limiting climate change to a rise of 1-2ºC in line with the Paris Agreement, policy makers must find a way to reduce and eradicate fossil fuels from those harder to reach sectors, such as cement, steel and aviation.

There is a logic to offsetting emissions from these sectors, though success is reliant on any ‘offset’ proving to be meaningful. With the UK committed to a net zero economy by 2050, the extent to which any offsets of emissions truly stack up is key to this laudable aim becoming a reality. 

MAKING IT COUNT

Carbon offsetting assigns a cost to the right to emit carbon. Although an industry may continue to produce greenhouse gases, these emissions are counterbalanced by various means. Sometimes this can involve physical infrastructure, such as carbon capture and storage, to prevent immediate emissions entering the atmosphere. But more commonly it involves the funding of greener, cleaner schemes elsewhere. The principle was encouraged by the Paris Agreement – Article 6 outlines how countries can use offsets and carbon pricing to meet their Nationally Defined Contributions (NDCs) for reducing carbon emissions through international treaties, bilateral agreements between nations and in-country schemes.

Several such schemes abound, including the European Union’s Emissions Trading Scheme (EU-ETS), a World Bank carbon tax initiative, a national scheme in China and federal schemes elsewhere, such as those operated by California, some of the US east coast states and Alberta in Canada.

The trouble is that such schemes have poor track records, struggle to show meaningful emissions reductions and are frequently accused of amounting to little more than avoidance strategies. ‘It is entirely possible to pay for projects that do genuinely reduce emissions or absorb carbon,’ says Dr Doug Parr, chief scientist at Greenpeace UK. ‘The trouble is, they often don’t, they put off climate challenges we need to work on immediately, they greenwash unsustainable behaviour, and they are potentially inequitable between countries. They are largely unpoliced.’ Greenpeace is not the only campaigning group to have levelled an accusation of ‘climate colonialism’ at offsets by Western governments and companies, for using resources, such as land, that developing countries need for themselves. 

Saltmarsh3Aerial view of coastal salt marshes at Stiffkey, north Norfolk. Salt marshes sequester carbon from the atmosphere

Global Carbon Dioxide Emissions

map first

Carbon dioxide emissions matter from two different perspectives. Shown in these two maps are relative emissions in tons per capita in 2018. While the upper map shows these in a conventional map projection, the second map displays a cartogram where each country of the world is resized by its absolute fossil CO2 emissions (excluding effects of deforestation which account for over ten per cent of these emissions). By absolute quantity, China is the largest contributor, followed by the USA and India. The three countries account for approximately half the quantity of emissions in this dataset. At the same time these three countries differ significantly in their relative contribution: The USA, with almost 16 tons CO2 per capita, is among the worst contributors, while China emits approximately half that value (between seven and eight) and India a fraction of that (below two).

Another major concern of Greenpeace and others is that many offsets fail to create ‘additionality’ – in which a polluter in country ‘A’ funds a clean energy project in country ‘B’ that would not have otherwise happened. Parr cites a European Commission report which found that 85 per cent of carbon offset schemes have a low likelihood of producing additional emission reductions. Only two per cent of the projects were found to have a high likelihood of ensuring that emission reductions are additional.

‘Tree planting and other ecological projects don’t deliver because of inadequate project support or lack of adequate understanding of what would have happened anyway without the offsetting money,’ says Parr. ‘The offset cash might have subsidised them, but didn’t make them actually happen.’

Attempts by the UN Framework Convention on Climate Change (UNFCCC) to thrash out a carbon trading and offset scheme, instigated by the Paris accord, have made little progress. Meanwhile, a UN scheme to plant large areas of forest in developing nations, known variously as REDD and REDD+, has seemingly lost all momentum. ‘The general story around REDD and equivalents is that while wellmeaning, and sometimes associated with successful micro-projects, their impact on offsetting is small, and the disruption to existing livelihood practices often quite dramatic,’ says Professor Ian Scoones, at the Institute of Development Studies, University of Sussex.

Ocean bedSeagrass meadows sequester billions of tonnes of carbon from our atmosphere at concentrations up to five times greater than terrestrial forests

More widely, such schemes are simply failing to meet expectations. ‘I’ve really not heard anyone talk seriously about REDD for three or four years,’ says Andrew Scott, director of the Climate and Energy programme at the Overseas Development Institute (ODI). ‘Some people would like to think offsets will play a major part [in achieving net zero]. But offsets are just a diversion – if everybody decides to offset then the maths just doesn’t add up. For an individual business there is a certain type of logic to offsets – but from the planet’s point of view, all you are doing is postponing emissions reductions and plenty of people are explicitly using them for that purpose.’

The EU-ETS was the first international emissions trading system when it was set up in 2005. Involving a form of offsets known as ‘cap and trade’, it is applied by law to 11,000 heavy energy using sectors such as power stations and industrial plants. Emissions are capped at a certain level per annum, with this allowance reduced year on year, so that emissions must fall. However, companies can buy emissions allowances, which they can trade with one another – effectively offsetting their own emissions by chalking them up against another, less polluting company.

‘The problem with the previous rounds of EU-ETS is that they effectively gave away allowances to polluters, so there was no incentive to do anything,’ says Scott. ‘The hope is that the next phase [due to run from 2021- 2030] will have more teeth.’

Conservation organisations have also been quick to question the validity of such offsets. The pitfalls of measures such as carbon pricing, says Kelley Hamrick, policy advisor at The Nature Conservancy, include an over-eagerness by governments to persuade industry to buy in to the concept. ‘There’s a fine line when you set pricing, and governments can err on the side of being sympathetic to business,’ she says.

In the crosshairs: steel and cement

‘If we are going to get to net zero then a lot of things are going to have to change, including the kind of buildings we will need in the urban environment,’ says Andrew Scott, director of the Climate and Energy programme at the Overseas Development Institute. In practice this means countries taking a hard look at the extent to which they rely on cement and steel. ‘You can build buildings out of wood, you can reuse more steel than we currently do. There are technologies that use hydrogen to make steel, if that hydrogen comes from clean energy then the problem is solved,’ he adds. 

Other options involve rewarding such sectors for constraining their emissions,’ says George Day, head of markets policy and regulation at Energy Systems Catapult, a not-for-profit set up to accelerate the transformation of the UK’s energy system. ‘They either invest in measures to decarbonise or they invest in offsetting their negative emissions. If governments set that out clearly then everyone knows what the deadlines, incentives and consequences are.’

Over time, such a process may stir innovation in the production of alternative materials for big infrastructure projects. ‘Either they reduce emissions or the price goes up and that incentivises others to come up with materials that do the same job,’ says Day. ‘As a country, the UK uses very little wood.’

Realistically, though, Day’s gut feeling is that a wholesale change in the nature of construction techniques ‘is not going to happen’. Yet he feels that even changes at the margins ‘could be significant’. 

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NET ZERO IN THE UK

Offsets have come into even sharper focus over the past year, as the UK has pledged to achieve a net zero carbon economy by 2050. Essentially ‘net zero’ means that by 2050 the amount of greenhouse gases the UK adds to the atmosphere must be equivalent to that which it takes out.

This doesn’t mean the government is aiming for no carbon emissions whatsoever. Rather, greenhouse gas emissions in the UK will be offset by carbon-storing or carbon-rescuing projects, some in the UK, some overseas. In a net-zero scenario residual emissions from fossil-fuel using sectors are allowed as long as they are offset by removing emissions using natural or engineered sinks. Most straightforwardly, this can involve planting more trees to absorb CO2 through photosynthesis.

Even according to the UK’s own figures, any offsets will need to be substantial. The Committee on Climate Change calculates that, even if existing technologies to decarbonise the energy, heating, transport, industry, agriculture and waste sectors are maximised, there will be around 130 million tonnes of carbon dioxideequivalent (MtCO2e) a year of residual emissions, which will have to be removed by equivalent action. Industry will account for 24 per cent of this 130 million tonnes, aviation and shipping for 31 per cent, and greenhouse gases other than CO2 (chiefly from agriculture) for 36 per cent.

Unsurprisingly, some observers suspect that net zero will be embroiled in just the same pitfalls as existing offset schemes. ‘When we looked at offset schemes, the result was rather depressing, as none really shone,’ says Professor Scoones. ‘This links to net zero commitments, as it is just these sort of offset projects that the “net” is supposed to be realised through.’ Despite failures to date, there are analysts who feel it is imperative to make offsets work. ‘It’s likely that even with new technologies we will need some negative emissions to offset residual emissions in those sectors that are hard to decarbonise, such as aviation, industry and agriculture,’ says George Day, head of markets policy and regulation at Energy Systems Catapult, a not-forprofit set up to accelerate the transformation of the UK’s energy system. ‘The potential pay-off from offsets is quite high – so long as they are meaningful and lead to significant, immediate lowering of emissions.’

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If offsets do prove essential in the short term, says the ODI’s Scott, they must be transparent. ‘That way we know whose emissions are offset against what, otherwise there is potential for either financial or emissionscounting corruption. At the moment these things are generally voluntary so there is no comeback, unless an action is proved to be a genuinely fraudulent exercise.’ For this reason, Scott has doubts about the effectiveness of the most popular offset policy of tree planting. Along with protecting existing forests within the country, this appears central to the UK net zero strategy: the basic science means that trees convert carbon dioxide into harmless oxygen and wood. Yet Scott points out that it takes many years for the carbon capture potential of trees to kick in. As he says, ‘there are no guarantees that the trees will live long enough and that makes the offset environmentally invalid.’

Day agrees that whatever protocols are set up for offsets must have teeth. ‘There’s a case for something like a carbon regulator, or industry equivalents.’ The Environment Agency has the power to issue multimillion- pound fines to water companies that pollute rivers. ‘A carbon regulator would need similar powers.’ In addition, any authority would need to be backed by science in order to push back against legal challenges. ‘The accounting for carbon has to be empirically sound,’ says Day, ‘it must be underpinned by accurate measurements.’ He acknowledges that such a body would require a degree of international co-operation and a similar multilateral appetite to make behaviour and fi nes stick. ‘But somehow we just have to go ahead and start creating that accounting and regulatory framework,’ says Day. ‘If one or two countries begin to forge ahead with this then it will encourage more global action.’

Changes in global distribution of CO2 emissions

map 2

The 1997 Kyoto Protocol was the first serious political effort to implement measures to reduce the impact of global warming. These maps show how little – or in fact no – progress has been made, with CO2 emissions steadily rising globally. The three cartograms (top row) show much the rise of Asia has changed the global share of emissions since 1970. Each map shows the countries proportional to its total carbon dioxide emissions in 1970, 1990 and 2015. The second pair of cartograms (bottom row) shows the extent to which individual countries have been contributing to increases of CO2 emissions, and to a much smaller extent, which countries have managed a relative decline since 1990. The largest increases between 1990 and 2015 came from emerging economies, especially China and to a smaller extent India, amongst others. Other regions, especially Eastern Europe, Central Asia, and Russia, have seen declines in the same period.

SAVING SOIL & BLUE CARBON

Despite the pitfalls, offsets do have their place, particularly if they involve innovative thinking, says Hamrick, of Th e Nature Conservancy. ‘Offsets are here to stay for the short and medium term, they are a key tool in the box,’ she says. ‘Companies and countries are setting these ambitious targets but they cannot predict what the future will be like in 2050 or if the technology to address issues will exist.’

The Nature Conservancy believes that natural climate solutions, such as greater care of soils, more selective felling of trees for forestry and restoring mangroves can make a greater contribution to corporate and governmental eff orts to address global warming. With judicious implementation, says Hamrick, they can be incorporated into carbon pricing and off set schemes. ‘These can fund essential emission reduction activities that would not otherwise occur,’ she says. A study by her organisation indicates that natural climate solutions can offer up to 37 per cent of the climate change mitigation solutions needed by 2030. Of the 30 gigatons (one gigaton is equal to one billion metric tons) of excess carbon emitted into the atmosphere every year, 11 gigatons could be removed using natural solutions.

Measures that could be deployed, according to The Nature Conservancy, include activities that enhance or protect natural systems such as forests, grasslands and wetlands. Better farming practices have the potential to reduce carbon emissions associated with feeding the global population, while also increasing food security; protecting forests and grasslands from conversion to other uses can avoid the release of stored carbon; while increased tree planting has the potential to remove carbon present in the atmosphere. Protecting or restoring coastal wetlands can both avoid carbon emissions and help protect coastal areas from flooding.

Hamrick points to a Working Woodlands project in which Th e Nature Conservancy staff work with landowners to improve the effi ciency of trees they log. ‘Landowners harvest trees for revenue but with help they can cut down fewer trees and still get the same economic yield,’ says Hamrick. ‘It’s about much more than fi ne margins. If this gets scaled up across a wide area, such as the Appalachians, then it makes a big diff erence.’ A similar project backed by the conservancy in Indonesia helps landowners fell trees more strategically, to identify hollow trees and leave these standing rather than cut them down.

Nature-based solutions could even be something as simple as paying for land not to be cultivated. ‘Left to themselves, forests regenerate, they tend to be quite good at that,’ Hamrick points out. The role of healthy soils in managing carbon change is also a rapidly unfolding area of research. Studies led by The Nature Conservancy and Conservation International suggest that the total carbon-storing power of global soils represents up to 25 per cent of total nature-based solutions, with 40 per cent of this potential delivered by protecting existing soil carbon reserves and 60 per cent from rebuilding stocks through soil health practices and peatland restoration. Furthermore, the research shows that soil-based strategies can play an important role in mitigating carbon across a variety of landscapes – ranging from nine per cent of total carbon mitigation potential in forests, to 47 per cent within agricultural lands and grasslands, and 72 per cent in wetlands.

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‘We already know that nature has a powerful role in mitigating runaway climate change,’ says Conservation International’s Dr Bronson Griscom, ‘yet we’re in danger of missing the forest for the trees when it comes to the crucial role that soil carbon has to play. While there is no such thing as a single “silver bullet” for mitigating the environmental crisis through nature-based solutions, soils – with their powerful associated benefi ts for everything from wildlife to farming – deserve more prominence among these climate-critical strategies.’

Another option is the concept of ‘blue carbon’ – namely replanting mangroves and sea grasses. ‘Mangroves have multiple benefits,’ says Hamrick. ‘They don’t just absorb CO2, they shelter land from hurricanes and sea surges and support wildlife.’

Coastal wetlands – salt marshes, seagrass meadows and mangroves – sequester billions of tonnes of carbon from our atmosphere at concentrations up to five times greater than terrestrial forests. Scientists estimate that it only takes 100 metres of mangroves to reduce wave height by 66 per cent and a recent study found that wetlands prevented US$625 million in direct flood damages from Hurricane Sandy in the United States.

Yet, such approaches struggle to attract support – just three per cent of global public climate funding – from governments and companies seeking shinier and more tangible schemes. Scott thinks that it’s important to promote the potential of these projects as net-zero assets. ‘The focus needs to be on emissions reduction potential. You certainly get a lot of other benefits from mangrove planting, it makes sense to do that and a lot of the voluntary market in offsets takes such an approach. But they do risk diverting us from the emissions reduction question. They need to be robust to be effective.’

TreeThe amount of time it takes for trees to reach maturity weakens the effect of tree-planting schemes in the short term

Can tree planting ever be enough?

‘A tonne of fossil carbon is not the same as a tonne of forest carbon,’ says Greenpeace’s Dr Doug Parr. ‘Trees can die. Off set projects have seen trees not grow due to lack of aftercare or they get burned up in wildfires – which climate change is making more likely. Perhaps even more to the point, tree planting does not eliminate the immediate climate impact of emissions. ‘A growing tree takes time to grow and store carbon meaning that there will still be a warming impact even if the tree survives to maturity,’ says Parr. ‘A return flight to New York from London emits about one tonne of CO2. A mature broadleaf tree stores about a tonne of CO2 but takes 100 years to grow.’

INDUSTRY OBSTACLES

Implementing carbon offsets and making them effective faces another obstacle: that some sectors, such as cement and steel know that they are currently indispensable to the world economy. As Day, from Energy Systems Catapult points out, steel is a trade-exposed industry and may feel it has a strong bargaining position. ‘Every country has a vested interest in not squeezing steel too hard, otherwise a company may just move to another country where the legislation is less constraining,’ he says.

‘It also depends on how public facing your industry is,’ adds Hamrick. ‘Aviation faces a lot of pressure from people saying they are willing to pay more to fly greener and that airlines must do better. I’m not sure consumers have that same line of sight when it comes to cement.’

Scott agrees with Hamrick on public pressure. ‘The pressures and drivers for change vary from sector to sector. Airlines are very visible. But the people who build buildings do not occupy them, so do not always think about the emissions used by those who work in them. People who work in them don’t think about the emissions embedded in the concrete. That means the emissions become invisible to everyone.’ As Scott puts it, a cement factory or an architect designer does not draw the ire that is targeted at an airline or an oil and gas company.

Aviation

Planes

Stung by criticism that it might be the industry that uses the last drop of fossil fuel, the UN International Civil Aviation Organization (ICAO) is developing a new carbon pricing initiative known as CORSIA. This aims to address the increase in total carbon dioxide emissions from international aviation above 2020 levels though a ‘market-based measure’ that enables aircraft operators to offset emissions. CORSIA is expected to generate a significant additional source of demand for offsets: around 2.6 billion tonnes of CO2 by 2035.

The types of offset that will be admissible in the scheme have yet to be decided, but natural climate solutions could play a role (possibly up to seven per cent of emissions). However, Greenpeace is sceptical. ‘CORSIA offsets growth in emissions up to 2035, which globally is expected to be about six to seven per cent of current emissions,’ says chief scientist Dr Doug Parr. ‘However, it allows the aviation industry to continue to grow, while saying it is tackling climate change, but making the challenge of delivering a zero-emission sector even harder.’

A sea change in mentality is required, argues Scott. ‘Offsets are used by companies that don’t want to address the hard questions. These industries have created a culture where society assumes they are indispensable, and that their carbon intensity is similarly irreducible. It’s in a lot of people’s economic interest to persuade us we need sectors such as cement and steel.’

Despite criticisms, Greenpeace broadly backs the principle of net zero. ‘It is an important step in the right direction,’ says Parr, ‘but it needs to be seriously tightened up, and we need a strong action plan – backed up by government investment – to make it translate into change on the ground.’

The challenges of meeting the Paris accord ambitions are huge, Professor Scoones from the University of Sussex points out, and will mean a radical reshaping of economies and societies, ‘confronting carbon capitalism head-on’. Currently, he feels, the prospect of achieving this looks bleak, despite growing pressure from citizens, especially young people. ‘Experience of offset markets has been patchy, such that communities elsewhere in the world take on the burden. To meet the wider global challenge of climate change, the UK must commit to a zero-carbon economy at home.’

Other actions between now and 2050 will determine just how much we will rely on offsets. The extent will be shaped by how much change occurs in relation to diet and flying, says Day. ‘If we don’t change our habits we will need more offsets to meet our targets.’

All this will require tough, unpopular decisions to be made by governments, says Scott from the ODI, and they will no longer be able to wriggle out of awkward and inevitable obligations. ‘A lot of [how we get to net zero] will be down to government legislation, it’s going to be governments that have to stick a carbon tax on things and change industry standards and regulations. You see the problems everywhere – in the UK the government still refuses to increase fuel duty, which would be a hugely effective policy.’

Progress often happens when people speak truth to power. In this case, says Scott, it requires power to speak truth to people, to explain that certain measures simply have to happen. ‘Governments have a job to do, not just to introduce regulations but to persuade their reasoning for doing so. As a species we could do with consuming less. We have an economy built on people wanting things. There’s a huge behavioural mindset challenge to get people to believe that they can still have a happy and prosperous life without having to buy more stuff.’

Yet Scott struggles to see how the UK will meet its much vaunted 2050 net zero goals. ‘I think there will be some places in the world that are net zero by 2050 but I doubt the UK will be one of them. I’m sceptical we will meet the Paris targets. But we really don’t want to see warming of 3-4ºC. That would mean governments having to spend more on adaptation, flood defences and water adaptation – all of which will cost more than if we start putting measures in place tomorrow.’

Despite the cynicism and the track records of offsets, Day believes there is reason to be upbeat. ‘I surprise myself by being quite optimistic. The technology is there, the consensus on what needs to be done is there, it’s just about creating the incentives and policies to do something about it. I look at offshore wind – even seven years ago, the most optimistic supporters thought its price would drop to maybe £100 per gigawatt hour. Today, it’s less than half that. If offshore wind has come so far, so fast, we can achieve the same in other areas.

‘It may surprise some people, but the UK is well regarded and seen as a global leader when it comes to climate change policies. Other countries sat up and took notice when the Climate Change Act was passed. We tend to be quite good at this sort of accounting and law.’

Google: ‘the biggest green deal in history’

Last autumn, Google announced what it described as ‘the biggest corporate deal on green energy in history’. The company signed 18 different deals, known as power purchase agreements (PPAs) for wind and solar energy across three continents, bringing their renewable energy portfolio to more than 5GW of energy. The deals enable Google to offset 100 per cent of the power needed to run its vast data storage centres with renewable energy. ‘Economics have changed the picture and made contracts more appealing to private investors,’ says Kyle Harrison, a corporate sustainability analyst for BloombergNEF. ‘Every new solar or wind farm now produces electricity more cheaply than a coal or gas-fired power station. That’s a game changer and it’s led to an onslaught of demand for PPAs from corporates.’ PPAs, however, reflect the reality that renewable energy is far from ubiquitous and that virtual agreements are essential for companies to achieve zero-emissions. There is not enough clean energy to go round and the actions of vast energy-guzzling companies such as Google mean that smaller, less powerful businesses are unable to obtain clean energy contracts. ‘A lot of companies, such as Google and Amazon, feel they have to be seen to be conducting business sustainably, they consider it an asset when hiring talented staff,’ says Harrison. ‘It also makes them look good to investors. But their power demand is incredibly high, their data centres are hyper-scale, they use as much energy as a small country.’ In practice this means that grids will continue to contain energy from baseload sources, such as coal and gas.

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