By Ed Mitchard, Chief Scientist, Space Intelligence.

Carbon offsets have faced criticisms from a number of fronts recently, with offsets produced through projects that protect or restore natural ecosystems under particular fire.

Many of the people criticising nature-based projects seem to have a problem with the whole concept of carbon offsets. They worry that the system encourages companies, individuals, and even countries, to just continue business as usual, while the world burns.

Such people hate this imagined advert: “Want to fly away on holiday? No problem, you can do that guilt free, just tick the box to offset your carbon emissions.”

Or at a company scale: “Your factory uses electricity from a grid that includes fossil fuels? No problem, spend a fraction of your sales on carbon offsets and you can claim your product is carbon neutral.”

The same even extends to whole countries, with the Article 6 process of the Paris Agreement allowing one country to purchase ‘extra’ emissions reductions from another country, to help it meet its own targets. Nature-based solutions (NBS) are likely to form a key part of such transactions, as many of the sellers of emission reduction benefits will be the least developed countries with few fossil fuel emissions, but high deforestation rates that external funding could reduce.

Critics of carbon offsets would rather the person just doesn’t fly, the company somehow purchased only electricity from renewable sources (ideally from new infrastructure it funded and built itself), and the country reduces its emissions itself by investment in green energy and economic transformation.

But the problem with this criticism is that it seems to assume that, were no offset available, the release of greenhouse gases to the atmosphere wouldn’t happen.

I don’t think that’s true.

If the offset was not available, would the person really not take the flight? Or the factory not produce anything unless it had access to 100% green energy (and that its whole supply chain was zero emissions)? Or the country fully transform its economy?

Possibly, but I suspect not.

People will still fly off on holiday, companies are unlikely to have the capital to convert their operations and supply chain to zero emissions – and even if they did, it will take time.  Countries cannot instantly transform their whole economies even if they wanted to: the necessary transformation will take decades in most cases.

Business as usual carries on either way, but if offsets are off the table, then no carbon offset projects are supported. This would be a tragedy, because while there are not enough nature-based solutions projects to offset the whole carbon emissions of the global economy, there are enough to make a significant dent in our annual emissions.

At the same time, most nature-based carbon offset projects have very significant co-benefits too. This includes protecting or restoring some of the world’s most biodiverse ecosystems (most nature offsets are about protecting tropical forests, which house at least half of the world’s species); transferring money to and offering education and other opportunities for some of the world’s poorest people; and increasing resilience to climate change.

Primary (previously undisturbed) tropical forests have been cleared at about the same rate for the past decades, as for example shown in the chart below from Global Forest Watch. As a species, we destroyed 3.75 million hectares of primary tropical forest in 2021 (the last year for which they have data available), an area about the size of the Netherlands or a bit larger than the US state of Maryland. This is approximately 0.5% of the primary forest that remained at the start of that year. This barely fell from the previous years, despite predictions that 2020 and 2021 would have lower deforestation thanks to the pandemic.

This is a tragedy.

Deforestation and forest degradation (damage to a forest but not to the extent that it becomes non-forest) is likely responsible for 10-15% of human-caused emissions of greenhouse gases to the atmosphere each year, as well as the major cause of biodiversity loss globally (source). It is especially tragic because the world’s remaining forests are sucking in carbon, reducing the intensity of climate change: we release a little over 11 Gigatonnes of carbon a year into the atmosphere, but the atmospheric load of carbon dioxide only increases by the equivalent of about 5 gigatonnes of carbon. The difference is caused by about 3 gigatonnes being absorbed by the oceans and 3 gigatonnes by the world’s forests. Cutting down forests reduces the capacity of the land surface to carry on absorbing carbon, meaning it accelerates climate change even more than would be suggested by the carbon released.

International efforts to stop deforestation have clearly not succeeded, despite many attempts. Deforestation was a major topic at the Rio Summit in 1992, with the Rio Declaration on Environment and Development talking about reducing forest loss, and building capacity so that all countries could ‘protect and conserve’ their forests by 2000. In fact deforestation accelerated through the 1990s, and on into the 2000s. More recently, the Sustainable Development Goals, which have been accepted by all the 193 members of the United Nations, had a target to “halt deforestation” by 2020 (link) – clearly this has also not happened.

Tropical forest protection (“Reducing Emissions from Deforestation and forest Degradation” – REDD+) projects cover a little under 1% of tropical forests right now. In general they work: mostly there is very little deforestation inside active REDD+ projects. There are questions as to how much there would have been without the projects (link), but in general I and most experts agree that good quality REDD+ projects do protect the forests they’re meant to protect. There is plenty of scope to enlarge this area, as the stubbornly high rate of global deforestation shows. Carbon offsets are a critical route to transfer money from rich consumers, profitable companies that damage the environment, and wealthy countries, to effectively stop this environmental destruction. I think that’s a good thing.

I think that some groups also object because REDD+ projects are often run by profit-making companies, and funded by private capital, often ultimately investors looking to make money. I do not see this, in itself, as a problem: I believe in (well regulated) private markets and capitalism in general. REDD+ projects are risky, long-term investments, often located in parts of the world that are hard to work in. NGOs and government aid departments should in many cases be involved to provide advice, services, and funding. But I believe that REDD+ projects will only expand and succeed at the speed we need to save nature if private capital and risk-taking are allowed.

Note the ‘regulated’ caveat above though.

There is effectively an international regulation of projects already: the asset being sold, carbon credits, have to meet rigorous standards (for example Verra’s Verified Carbon Standard, or the Plan Vivo Standard), which include the requirement to ensure local communities benefit, laws are upheld, and carbon credits are calculated in an accurate and conservative way.

I believe these could be improved through increased transparency, a move that is occurring in the industry anyway through the buzzphrase “Digital Monitoring Reporting and Verification” (DMRV), which effectively means moving project documents and maps from pdfs on hard-to-use platforms, onto public webmaps.

There is a plethora of other international initiatives to add trust, from Bloomberg Philanthropies’ Global Carbon Trust to Integrity Global Partners / https://vcmintegrity.org// https://icvcm.org/. Individual countries are also increasingly regulating the carbon operators inside their borders, for example Tanzania has just created a carbon trading law, with strong support from carbon project developers in the country. I believe Regulation and Transparency are critical to ensuring the benefits of private investment in forest protection, ensuring carbon credits help local communities in addition to protecting forests that are genuinely at risk.

People who want to stop carbon offsets say they want to do it because carbon offsets let companies get off the hook for reducing emissions.

I disagree.

Countries should be working hard to reduce emissions either way. But they cannot get to zero instantly, and they should be paying for offsets for their residual emissions: ideally from high quality, nature-based projects with high levels of transparency.

Many individuals, companies and countries have been scared off carbon offsets, worried they’ll be accused of engaging in greenwashing. This has been encouraged by bodies such as the Science Based Targets Initiative, which does great work encouraging companies to calculate their emissions and work to reduce them, but prevents companies from using carbon offsets to offset their residual emissions from for example energy production (LINK).

In conclusion, I do not believe carbon offsets are the solution to climate change, nor that they should be the central pillar of any country or government’s net zero plans. But I believe they are very important in the short and medium term – many emissions cannot be reduced away, but can be offset, taking that damaging CO2 back out of the atmosphere.

Any opinions published in this commentary reflect the views of the author and not of Carbon Pulse.