29.04.20 Can our emissions be undone? Hans-Joachim Ziegler • 5 min.

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Summary

Companies and individuals can use carbon offsets to redress their impact on the earth’s climate. But does assuaging one’s conscience really help protect the planet?

There were good reasons not to fly even before the coronavirus brought tourism to a standstill. Foremost among them: the significant carbon emissions associated with jet travel. In practice, however, few people join Greta Thunberg in crossing the Atlantic by ocean liner rather than airliner. But some passengers voluntarily purchase carbon offsets that fund, for example, reforestation projects. The idea is that the new trees sequester approximately as much carbon as an individual traveler’s share of the jet’s emissions. According to Marketplace, a nonprofit business news affiliate of Minnesota Public Radio, climate-conscious consumers voluntarily spent nearly $200 million in 2016 to offset more than 60 million metric tons of carbon dioxide.

Large-scale carbon offsets

Carbon offsets follow the have-your-cake-and-eat-it-too principle: don’t alter your behavior, simply pay for its negative externalities. The EU did it on a much grander scale for more than a decade.

The EU Emissions Trading Scheme (EU ETS), which took effect in 2005, stipulates that large energy and industrial companies must obtain enough carbon allowances to cover their greenhouse gas (GHG) emissions. The purpose was to promote cost-effective climate protection. From 2008 onward, companies could also earn allowances by supporting green projects in developing and emerging countries.

The idea was to combine development aid with climate protection. Beginning in 2020, however, these offset schemes were suspended. What had sounded like a win-win situation in theory turned out to be problematic in practice. The reasons behind this may be instructive for individuals interested in voluntarily offsetting their own emissions. 

How effective are offsets?

The EU abandoned offsets because they undermined the ETS’s purpose. The option of offsetting emissions by investing in developing and emerging countries was one of reasons that the price of ETS emission allowances fell to negligible levels. The problem was that the offset projects were comparatively cheap. A small investment in an emerging country yielded European emitters a large number of allowances, removing any real incentive to make their own operations climate-friendlier.

This would’ve been less of a problem if there had been real carbon savings in the countries where the projects were conducted. Opinions differ on this. It’s likely, however that the investments were often less effective than policymakers had originally intended. For example, some companies outside Europe first artificially increased their carbon emissions in order to then have EU companies pay to have them “reduced.” In another case, China overcharged to eliminate a particularly potent GHG and then used the money to develop an industry that could compete with Europe’s green companies.

Do the offsets really change anything?

The EU had strict guidelines to ensure that EU companies supported projects that were “genuine, verifiable, and additional.” But the latter point—whether a carbon reduction would have been achieved anyway even without the offset investment—proved problematic. Ultimately, it’s difficult to prevent other countries from using payments from the EU to reprioritize their own investments. A study published in 2016 concluded that there were serious doubts about additionality in as many as 85% of the projects supported.

Even leaving aside corruption and mismanagement, offsets are still fraught with difficulties. It starts with the method of calculating the GHG emissions being offset. As is familiar to anyone who has purchased a travel offset, providers often charge different prices for offsetting the same flight. It depends on what they count: just carbon dioxide or also other GHGs? What about water vapor, which can also have an adverse climatic effect at the high altitudes of passenger airliners? And shouldn’t the GHG emissions of the most viable alternative mode of transport—ship, train, or car—be subtracted from the total so that only the added emissions of jet travel are counted?

But even with the most stringent and accurate method of calculation, offsets have a clear disadvantage: the actual offset usually takes place much later than the carbon emissions. For example, it will take years for trees planted in 2020 to sequester carbon dioxide emitted in 2020. In the meantime, this gas could have an impact on the climate that may not be so easily reversible.

Europe seeks new solutions. Should you as well? 

These and other concerns were behind the EU’s decision to eliminate ETS offset investments from 2020 onward. They’re being replaced by linking the ETS with other carbon trading markets around the world. Ideally, this should enable EU companies to continue reducing carbon as cost-effectively as possible and also make it easier to monitor effectiveness. However, there’s currently a fierce debate about how to prevent abuse and ensure comparability. 

Purchasing offsets from reputable providers remains a viable option for individuals’ carbon emissions. It’s a good idea to remember, however, that offsets don’t undo carbon emissions. Looking ahead, the self-isolation brought on by the coronavirus has shown that business travel can be replaced by video conference calls. That might be a practice worth continuing after the crisis. 

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The contents of this website are created with the greatest possible care. However, Uniper SE accepts no responsibility for the accuracy, completeness and topicality of the content provided. Contributions identified by name reflect the opinion of the respective author and not always the opinion of Uniper SE.

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