“Offsetting is an accounting concept only, and does not affect actual emissions”

Dr Clemens Kaupa’s recent paper highlights what’s wrong with offsetting

Yesterday’s post on REDD-Monitor looked at a consumer complaint to the European Commission against greenwashing by 17 airlines. The complaint was brought by 23 member organisations of the Bureau Européen des Unions de Consommateurs (BEUC) and built on a June 2023 report titled “The legality of climate-related marketing claims by the aviation sector under EU Directive 2005/29/EC”. (EU Directive 2005/29/EC is the Unfair Commercial Practices Directive.)

The report, written by Dr Clemens Kaupa of the University of Amsterdam, includes a section on the problems with carbon offsets. The following is a summary of that section.

Kaupa starts with a description of offsetting as the idea that greenhouse gas emissions reduced or avoided by one organisation can be transferred as a carbon offset to another organisation and used by that organisation to “compensate”, “neutralise”, or “offset” its own emissions.

He writes,

However, “offsetting” is an accounting concept only, and does not affect actual emissions. Consequently, the use of offset credits created in a non-aviation sector reduces emissions in the aviation sector only in a nominal sense but does not actually contribute to the decarbonization of the aviation sector.

Kaupa notes that the creation, trade, and use of offsets is unregulated and not subject to public oversight. Various activities generate carbon offsets, including protecting existing forests, planting trees, energy efficiency, renewable energy, and capturing and destroying gases from industrial processes, waste, and resource extraction.

The effectiveness of private governance frameworks such as Verra or the Gold Standard is “highly contested”, Kaupa writes.

“Highly uncertain”

“Whether offset credits represent actual emission reductions or removals is highly uncertain,” Kaupa writes.

He lists four major sources of uncertainty:

1. Quantifying the mitigation effects of offset project is highly subjective, and prone to manipulation. The number of offsets generated by a given project is calculated by “comparing the estimated actual emissions with the ‘baseline scenario’, a hypothetical scenario in which the offsetting activity does not take place”. The assumptions made to establish the baseline scenario and the emissions estimation result in significant differences in the number of offsets generated. “This inherent subjectivity of the process of quantifying the mitigation effects of offset projects makes it prone to manipulation,” Kaupa writes.

2. Offset projects frequently trigger feedback loops that can partly or fully neutralize their climate benefits, or even cause an overall increase in emissions. This is called “leakage”. For example, renewable energy project are assumed to replace energy from fossil fuels. But the replacement rate has been estimated to be less than 25%. Harmful activities may just be displaced rather than eliminated. If a specific area of forest is protected, that does not affect the global demand for timber, wood pulp, and pellets. “Consequently,” Kaupa writes, “a reduction of logging in one area will likely lead to an increase of logging elsewhere.”

3. Offset credits can only be assumed to be causally responsible for specific emission reductions or removals if these had not occurred in the absence of the offset project. This requirement is called “additionality”. If the reduction or removal would have happened without the sale of carbon offsets, then the project is not additional. Kaupa notes that “Studies have shown for a wide range of offset activities that additionality claims are not reliable.”

4. The temporal effects of the emission reductions or remvals of offset projects cannot be assumed to match those of CO₂ emissions. Kaupa quotes a 2009 study that states that “climate effects of CO₂ releases to the atmosphere will persist for tens, if not hundreds, of thousands of years into the future”. To compensate for the emissions from burning fossil fuels, offsetting projects also need to remain operational for a similar timeframe. They must, in other words, be quasi-permanent. “However, no offsetting activity currently meets this requirement,” Kaupa points out. He gives the example of forest-based offsetting project that are “always reversible”. Fires, pests, degradation, and land use changes can all turn a land-based sink into a source at any point in time. To make matters worse, offset projects are often set up for 20-30 years. And the ability of forests to continue absorbing and storing carbon is far from certain as the climate crisis gets worse.

Offsets not equivalent to genuine emission reductions

Kaupa writes that,

Due to these uncertainties there is a consensus in the research and policy literature that offset credits are not equivalent to genuine emission reductions. For example, the EU’s Environmental Footprint methods reject the use of offsets in the calculation of the carbon footprint. Similarly, the ISO standard 14067:2018 on the carbon footprint of products recommends accounting separately for biogenic and fossil carbon. Separate accounting has also been advocated by numerous researchers in the fields of climate science, climate policy and life-cycle analysis.

Kaupa’s section on offsets concludes that,

Offset credits are an accounting instrument to reduce an entity’s GHG emissions on a nominal level, but do not affect them in a practical sense. Consequently, offset credits cannot contribute to the decarbonization of the aviation sector. Moreover, it is highly uncertain whether offset credits represent genuine emission reductions or removals.

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