Green fence with reflection of trees in front of chimneys and exhaust fumes.
Andrey Rudakov—Bloomberg
October 21, 2022 4:20 PM EDT

Another summer of extreme drought, destructive wildfires, and record-torching heat waves has beset the Northern Hemisphere, reminding the climate-conscious of the dangers of the world’s deep dependence on fossil fuels. While most national governments have vowed to reduce emissions of greenhouse gasses, their promises hardly guarantee us a cool future.

Already, experts fear we’re on track to miss the 2015 Paris Agreement target of keeping warming below 2 degrees Celsius above pre-industrial levels, and preferably no higher than 1.5 degrees. Scientists warn that warming the planet to these levels and beyond will have devastating consequences for life on Earth.

The lack of government-level ambition to reduce emissions makes it more important than ever that businesses do their part to help mitigate the climate emergency. The most direct way to achieve this is simple: immediately reduce one’s own emissions with things like improved energy efficiency in buildings, rooftop solar panels, and replacing conventional vehicle fleets with electric ones.

Businesses may also help calm the climate crisis by lending financial support to climate-friendly programs that protect land, develop clean energy, or explore technology for removing carbon from the air. This type of climate change action can be grouped into two categories: buying carbon offsets and making climate contributions. They are essentially the same thing: putting money toward the goal of slowing global warming. But it’s how these actions are respectively framed and flaunted that creates important differences.

Climate contributions are simply a philanthropic gesture, often in the form of a financial donation to a nongovernmental organization that works on environmental issues. Carbon offsets are more complicated, and a bit controversial.

Offsets are typically purchased via a broker, like the Switzerland-based Gold Standard or United States-based CoolEffect. These services sell carbon credits offered by NGOs and governments that, using offset proceeds, plant mangroves, distribute clean-burning stoves, preserve grasslands, and install digesters to capture cooking gas from manure among other types of projects.

When a person or business buys carbon offsets, they ostensibly cancel out some degree of their emissions without necessarily changing parts of their lifestyle or business practices. That’s the rub for many climate activists who feel the very concept of carbon offsetting promises an impossibly happy ending—that the wealthy corporations of the world can continue with business as usual, guilt-free, if they simply pay a fee.

Too Good to be True?

First employed at substantial scales in the 1990s, global carbon offset trading has grown rapidly in recent years and today, between voluntary programs for individuals and companies and compliance-based ones for polluting industries, constitutes a multibillion-dollar economy. Carbon offsets help businesses—including many airlines—improve their own climate credentials while kicking money toward climate-friendly projects.

Part of what makes carbon offsets so appealing is how easy it is to get engaged. It is often little more than an accounting exercise for the buyer, who clicks the mouse or taps the phone screen—sometimes when purchasing flight tickets—for a dose of instant climate karma.

If it seems too good to be true that’s because it usually is, says University of California, Berkeley, researcher Barbara Haya, the director of the Berkeley Carbon Trading Project. Haya has studied carbon trading for two decades and says most carbon offsets fail to deliver the climate benefits they claim to. One of the most problematic aspects of carbon offsets is something that climate economists call additionality—that is, whether or not the climate benefits created by an offset purchase would have occurred otherwise.

For instance, if a company hopes to offset its emissions by shelling out some cash for an ongoing forest replanting project or a geologic carbon storage system (by which carbon is captured, then pressurized into liquid form and injected into the earth) already past the ribbon-cutting stage, try again. The project is underway, and while helping its managers carry it out might be a gallant effort, it probably isn’t going to mean additional trees planted or additional carbon sequestered and buried.

Similarly, buying offsets to help protect a forest in no danger of being logged does not provide additionality. The Nature Conservancy has infamously become embroiled in a controversy over this very issue. After years of partnering with landowners to sell carbon credits to large corporations, an investigation by Bloomberg revealed that the purported carbon offsets were largely bogus, as in not additional. (The Nature Conservancy said its projects “adhere to peer-reviewed methodologies developed by independent registries and that each project is validated by third-party auditors,” Bloomberg wrote of the organization’s response to its investigation.)

By contrast, if a company’s donation will protect more land, install more carbon capture systems, or plant extra trees, then additionality has been achieved. In other words, these are legitimate offsets. Sort of, anyway. James Bushnell, an environmental economist from the University of California, Davis, who has studied offset markets and has advised the California Air Resources Board on the design of its carbon policies, says tree planting and other sorts of revegetation work—and land use offsets, in general—are weak offset tools since trees grow slowly, and it will take decades to achieve the promised offset. Trees also die, which raises the issue of permanence in carbon storage: A mature forest area, slated for destruction and then preserved thanks to cash flow from offset sales, can go up in flames in a wildfire overnight.

Researchers studying California’s forest carbon offset program recently published findings showing just how serious this problem can be. In a paper published Aug. 5 in Frontiers in Forests and Global Change, a team of scientists reported that wildfires have already destroyed 95% of the forest carbon buffer pool meant to protect carbon offsets against wildfire losses through the 21st century. The authors warned that California’s carbon credit program—based on forest protection across much of North America—is failing to provide permanent offsets.

Leakage is another issue that can undermine the efficacy of offset programs. It happens when emissions ostensibly prevented by a carbon offset sale are merely displaced, occurring at a later time in another place. Trees saved by an offset program might just be cut somewhere else; and a proposed coal plant blocked with the help of offset cash might just get built in another country. Without scrupulous accounting, oversight, and reporting—and generally knowing how one action in the entire global climate economy influences another—it is very difficult to keep offset leakage under control.

In fact, proving beyond a doubt that a carbon offset sale creates additional climate benefits is nearly impossible. “You’re paying someone not to do something they say they were about to do, but how do you know if they were really going to do it?” Bushnell says. He likens the vetting and verifying of carbon offsets to a comparison of parallel universes, one in which someone buys carbon credits, and one in which they don’t.

Contributing Directly to a Program

Even when everything checks out, and the offset is additional, permanent, and leak-free, offsets, critics say, have a fundamental flaw. Since the buyer is typically purchasing offsets in order to keep polluting, the scheme neutralizes one’s greenhouse gas footprint at a time when climate policy experts and leaders have called for aggressive emissions reductions and even carbon sequestration to reach not just net-zero emissions but net-negative—removing more emissions from the atmosphere than are being released into it. At the Environmental Defense Fund, Lisbon-based Pedro Barata, the organization’s senior climate director, says the world’s economies are at a point where they must move from merely reducing emissions to reversing them.

Offsets, Barata says, can play a role in this shift—but only as a complement to actual reduction measures, not a substitute for them. Barata says companies serious about reducing their climate change impacts should first estimate their own greenhouse gas emissions using an online calculator, then reduce them wherever financially feasible. Only once a company has stopped emitting wherever possible, he says, should they buy offsets to cover actions too expensive or otherwise infeasible to implement.

“A company cannot claim that they’re making steps toward carbon neutrality when all they do is buy offsets, because that is basically displacing the problem,” he says.

But Barata says his organization does not endorse contributions over offsets, and here’s why: Taking the carbon offset approach to supporting climate programs does give the buyer a built-in target for canceling out potentially a very large volume of carbon. With climate contributions, he says, “there’s no anchor in my emissions responsibilities.” This might result in less money donated, he says.

Haya sees it differently. She encourages people and businesses to avoid the temptation of buying offsets and instead make cash contributions directly to a climate-positive cause, like Union of Concerned Scientists, Unite to Light, or Tree People. This gets the money past the middlemen of the carbon offset business—such as firms that investigate and vet carbon offset programs—and more directly to the program one hopes to support. The climate benefits of offset programs, she says, are often difficult to quantify and wildly exaggerated. Buying offsets may even be counterproductive, weakening one’s interest in directly reducing their emissions.

“Offsets don’t really offset our emissions and I worry that they undermine action by offering a cheap way to pay a fee and meet an emissions target on paper,” she says. “We need to shift to a contributions approach.”

This article is part of a series on key topics in the climate crisis for time.com and CO2.com, a division of TIME that helps companies reduce their impact on the planet. For more information, go to co2.com

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