I’d like that chocolate bar, please.

Now that’s what I craved. Ah it’s finished, whoops the plastic wrapper flew out of my hands. But that’s okay, I’ll give 50 cents to someone who is litter-picking.

I am out of milk. I’ll quickly drive my car down to the local shop. I could have walked, but it’s late. I’ll just give a euro to a carbon sequestering project.

Easy. My lifestyle habits are cancelled-out.

Welcome to offsets and credits.

This blog article explores offsetting of different types, why it’s popular but why, in my opinion, it’s not a solution to help fight climate change.

Enjoy the read…

Offsetting vs. credits

Credits:

• Where corporates can buy and sell credits because of a pollutant i.e. carbon and plastic that they produce
• Compliance market, government regulated
• Companies are given an allowance of the pollutant
• If a company is close to reaching the cap it can buy more credits. If it is below, it can sell excess credits
• Companies are fined if they go above
• Governments can also trade credits

Offsets:

• Open market, voluntary participation
• Open to everyone: companies and individuals
• Give money to offset pollution
• Money goes into an eco-project of choice from restoration to conservation to green research and tech development
• Standards and auditing are needed, but this is not straightforward

So, offsets and credits are built on a similar idea: money for pollution, where one is compulsory and the other voluntary.

(Sources: Coorest, The Australia Institute)

💡So, what exactly is offset?

There are three main types of offsets and credits: carbon, plastic and biodiversity.

Let’s look at each of them in detail.

👉Carbon offsetting – our well-known friend (or foe?)

What? Global greenhouse gas (GHG) emissions:

• Carbon dioxide (CO2) = 75% of global GHG emissions. It stays in the atmosphere for hundreds of years. Main source: burning fossil fuels
• Methane (CH4) = 18% of global GHG emissions. It’s powerful and a ground-level pollutant (it warms the planet faster than CO2) but it has a short lifespan of around 12 years. Main source: from livestock
  • Have a read of my article on LinkedIn – methane
• Nitrous oxide (N2O) = 4% of global GHG emissions. Main source: agricultural (soil) practices
• Hydrofluorocarbons (HFCs) = 2% of global GHG emissions. Main source: industrial processes and cooling systems
  • 💡HFC is the less harmful version of the infamous CFC that destroys the ozone layer (banned globally in 2010 – or supposedly!)
• And a few other gases

(Sources: EPA & IPCC based on emissions to and including 2019)

Introduced? In 1997 The Kyoto Protocol was the first official emissions trading and carbon offset mechanism, introduced at COP 3. (CarbonBrief)

Measurement? 1 metric tonne of CO2.

Projects? Examples include reforestation, mangrove restoration, mechanical carbon removal.

👉Plastic offsetting – gaining popularity

What? Companies will pay others to recover plastic to become ‘plastic neutral’. The offsets are mostly for businesses that produce and use plastics. But individuals are offsetting too.

• Did you know that 380 tonnes of plastic is produced every year, and almost half of that is for single-use purposes? Check out my article on LinkedIn – plastics

Introduced? Late 2017.

Measurement? It started with tokens issued by the Blockchain Development Company. Now measurements are per kilogram. (Edie)

Projects? Focus on plastic recovery – mainly clean-up projects (land and sea) and some recycling.

👉Biodiversity offsetting – this goes back decades before formal systems

Let’s be clear. People should never destroy ecosystems.

What is biodiversity offsetting exactly? Projects that cause biodiversity loss can offset some losses. But with this comes a warning: there are limits with biodiversity offsetting. It can never compensate i.e. extinction of species.😢

• The Biodiversity Credit Alliance (BCA) – guides the private sector to invest in biodiversity as just as possible
• Biodiversity offsetting aims for ‘nature positive’ and a ‘net gain’ of biodiversity. But:
  • Real gain is uncertain, and the gain is not immediate (growth needs time)
  • It’s hard to calculate and compare like-for-like
  • The offsets depend on transparency and third-party scrutiny
• Offsetting should be a last resource. Any development/farming/other large-scale project should have built-in ‘environmental management’
  • Steps follow: Avoid I Minimise I Restore I Offset I Net gain = the mitigation hierarchy

(Sources: The Biodiversity Consultancy & NESP, Australia)

Introduced?

Australia was the first country to officially introduce a Nature Vegetation Framework in 2002 where nature credits could be bought to offset woodland clearings.

• But informally, this goes back to the 1970s, when a handful of large-scale projects acknowledged that compensation for nature loss had to be given
• From the 1970s onwards nature Acts were also put in place

Measurement? Difficult to measure and different approaches are used.

• In 2010 Treweek et al. suggested a formula: Area3 x Condition x Distinctiveness
• Other scoring systems are based on a score per green space, or a football-pitch area that is managed for X number of years, or environment improvement after X years

(Sources: Case Study: Helen Temple et al, 2010 & Louise Carver and Sian Sullivan, 2018)

Projects? This depends on different things, including the extent and location of biodiversity loss. An example is the restoration of the Tondwa Game Management Area in Zambia.

(Sources: WRI, EC, BCA, Our World in Data, EPA, The Biodiversity Consultancy, Offset Guide, UNDP, Carbon Brief)

⚠️Problems with credit and offsetting systems

• 📢There is no overall reduction of harm – true sustainability isn’t incentivised when a company can buy/trade credits and offset its harm
• It’s a temporary workaround that averts the problem but does not address it
• Corporates are interested in balance sheets, so they counterbalance emissions to continue as usual
• Gives rise to greenwashing – companies can play with offsetting for green credentials
  • Offsetting is often overestimated, and misleading marketing text is used
  • Certain formal offsetting practices are not green, e.g. burning plastic = more carbon. But certain third-party certifiers are allowing this because of lack of recycling facilities
• There is a worry that offsetting will disengage governments to act and invest
• When it comes to plastic offsetting the official terminology is ‘recovery’. This means picking it up. Then what? A very low percentage of plastic waste is actually recycled and most plastic can only be recycled once or twice

Third-party credit/offsetting platforms are under scrutiny for lacking rigour

• The Verified Carbon Standard (Verra) is the largest carbon offsets certifier (some Verra projects are open to the compliance credit market). But problems have come up with its verification standards
  • Carbon offsets have found to be “worthless” as described by The Guardian in a huge investigation into Verra and the offsetting systems (in early 2023)
    • The Guardian based its report on two scientific research investigations (and it worked together with Die Zeit and SourceMaterial). It found that the majority of offsetting projects “should not have been approved”.
    • Verra’s main offsetting projects are in rainforest areas, but deforestation reduction was found to be low
    • Verra has counter-argued this. Discrepancies remain…
• Third parties struggle to effectively monitor. There is a lack of transparency and missing information
• Out of the loop – companies don’t necessarily know what is happening with their money
• The rights of Indigenous peoples and local communities are not always respected
  • Although the carbon offset platform by UNDP claims that its main aim is to collaborate with people on the ground

(Sources: WRI, Verra, The Guardian, Carbon Brief, UNDP)

🙌There are always real solutions

First and foremost: reductions. Phase-out and stop producing pollutants and stop harming nature. So, what is needed?

• New mindset: what are the ways that projects can work around and with nature?
• Promote the Biodiversity Plan
  • Biodiversity Day was held on 22 May 2024 to raise awareness that we need a biodiverse world where ecosystems can thrive. This year, support is needed to implement the Kunming-Montreal Global Biodiversity Framework = the Biodiversity Plan that includes goals to reach by 2050
• Focus on research, funding and support into alternatives: fuels, materials and techniques

• Create and educate about circular economies to keep each element in use for as long as possible throughout a product life-cycle
  • If not longer usable – what parts/ingredients/material can be extracted?
  • Recycle through robust systems
• Large corporates should be more actively and genuinely involved. Research, talk, visit, plan and execute justly

👉Do offsets and credits have a place?

• They can be used as a transition, like a phase-out with a time limit – even some offsetting schemes say that this is an “interim solution”
• A company should work with a scheme that matches the industry that the company works in e.g. an airline is better off investing into renewable fuels, and a food outlet into new farming techniques, and a clothing retailer into sustainable fibres

(Sources: Convention on Biological Diversity, EEA)

We can all help when we find ourselves in a similar chocolate bar/car situation to think of a green alternative first.

See you at the next chapter! 🙌