Introduction to Carbon Offsets

Voluntary Carbon Offsets, often referred to as carbon offsets are when an organization completes an environmental project that either pulls greenhouse gasses from the atmosphere or decreases their emissions.

Examples of these projects include planting forests, building carbon capture facilities, or making existing infrastructure more green. After conducting research and performing calculations on the impact of their project, an organization can conclude that the completion of the project offsets a certain amount of greenhouse gas emissions. The environmental organization can then sell this offset as a sort of commodity, essentially selling the right to use this offset on corporate balance sheets to support internal climate action goals companies may have set. The profit from selling these offsets can then go into funding future projects.

Corporations that invest heavily in buying these carbon offsets include Disney, Apple, Google, and Amazon, all companies that have very hefty goals of being carbon neutral by 2030. These corporations rely on carbon offsets to legitimize these goals to their stakeholders.

From this description it seems like carbon offsets are the perfect solution to climate change. It promotes innovation in emerging environmental sustainability fields by attracting funding into the field. It also allows companies to essentially have a net zero carbon footprint without having to drastically change their business model or lose out on massive profits. However, despite these massive benefits there is one flaw in the system, it is reliant on these carbon offsets being just as effective as theoretical calculations predict they are.

A vast majority of projects don't meet their theoretical potential because of the complications that arise in meeting their own criteria for success. For example, if an organization were to plant 100 trees, they could assume that in 20 years they would save a total of 50 tons of CO2 from the atmosphere. On paper that calculation seems completely reasonable until you realize that

the organization now has to keep and protect this land for the next 20 years to meet their goals.

Long-term and consistent protection is clearly too much strain on many small environmental organizations (low on capital and manpower) that just want to plant as many trees as possible and simply need funding to make that possible, therefore many of them don't go through this effort to guarantee what they had predicted.

Sources:

• https://www.investopedia.com/terms/c/carbon_credit.asp#:~:text=Carbon%20credits%2C%20also%20known%20as,-and-trade"%20program

• https://www.reuters.com/article/us-climate-change-carbon-offsets/factbox-carbon-offset-credits-and-their-pros-and-cons-idUSKBN2AP1FZ

• https://www.nytimes.com/wirecutter/blog/does-buying-carbon-offset-help-the-planet/

• https://www.greenpeace.org.uk/news/the-biggest-problem-with-carbon-offsetting-is-that-it-doesnt-really-work/

• https://www.theweek.co.uk/news/environment/957476/pros-and-cons-of-carbon-offsetting

• https://www.southpole.com/carbon-offsets-explained

• https://www.c2es.org/document/us-state-carbon-pricing-policies/