In the late Middle Ages, there was a roaring trade within the Catholic Church in the sale of indulgences, as handy way for the sinful to wipe the slate clean by purchasing redemption. The abuse of this system is often cited as one of the key drivers for the Reformation. In recent years, a secular version of indulgences has made a comeback, this time in the form of carbon offsetting, as I explored in the Business Post in mid-September.
WHEN IS A measure that looks like it will protect the environment not actually a measure that will protect the environment? Sometimes, it’s when it involves carbon offsetting.
Put simply, a carbon offset is the promise of the removal or neutralising of a given amount of carbon dioxide (CO2). This is particularly appealing for sectors such as aviation, where there are few realistic alternatives to burning fossil fuels.
It could involve a company funding tree planting or clean water initiatives, both of which are very laudable. But is offsetting actually leading to measurable reductions in overall carbon pollution globally? Or is it, as many have claimed, a PR stunt that allows major polluters to continue to pollute while telling the public about ineffectual offsetting initiatives?
The US-based Nature Conservancy is the world’s largest environmental charity. It is also a major vendor of carbon offsets to corporations such as Disney and JP Morgan. In 2020, an investigation by Bloomberg revealed that it had sold offsets to companies by promising to save a 3,800-acre forest called Pennsylvania Ridges from being clear-felled.
It transpired that the forest was owned by the Conservancy itself, and that it was essentially being paid not to cut down the very forests it had already raised funds to preserve 20 years earlier. “This means it’s effectively protecting the forest from itself,” the Bloomberg investigation stated.
Other bodies have also been criticised over their carbon offsetting schemes. A 2017 study by the European Commission found that in 85 per cent of projects used by the EU under the United Nations’ Clean Development Mechanism (CDM), carbon offsets failed to reduce emissions.
In 2020, the UK’s Advertising Standards Authority ordered Ryanair to drop claims in its advertising that it was a “low CO2 emissions airline”. Two years earlier, the airline had introduced a scheme allowing passengers to voluntarily pay a small fee to offset their emissions. Only 3 per cent of customers took part, and offsets amounted to just 0.01 per cent of the airline’s total emissions.
The most popular corporate carbon offset is the commitment to plant trees, but this too has serious drawbacks. As global temperatures rise, more and more forests are being destroyed by fires, droughts, diseases and invasive pests.
Huge swathes of forests in California that had been “protected” via carbon offsets purchased by companies like Microsoft have been wiped out in the last two to three years by climate-fuelled wildfires, with all the supposed carbon offsets going up in smoke.
If forests do survive, it takes years, even decades, for a tree to pull even just a tonne of CO2 out of the atmosphere, and many saplings never reach maturity. And even where trees thrive, globally there is nowhere near enough available land to plant sufficient forests to sequester much more than a fraction of the 36 billion tonnes of emissions being dumped into the atmosphere each year.
Worse, experts argue that carbon offsetting is a figleaf that gives licence to some of the world’s major polluters to maintain and even expand their climate-destroying business practices while greenwashing their reputation with dubious offsets.
There are almost no binding international rules to govern this chaotic arena. The market “operates in the shadows”, with some good “but lots of bad in the system . . . that does actual harm”, Mark Carney, the UN special envoy on climate and finance, told the Financial Times last year.
Done ethically, carbon offsetting can have a useful, if limited, role. Stripe, the online payments giant founded by Patrick and John Collison, hired a Swiss company to capture CO2 from the air and store it in underground rock formations. While expensive at more than €750 per tonne, this is genuinely taking carbon permanently out of the atmosphere, albeit in very small amounts to date. But the initiative is very much the exception.
A study published last November by the London School of Economics found that half of offset funding went to projects such as renewable energy, that would have been built anyway. Shockingly, the study concluded that the sale of offsets to regulated polluters “has substantially increased global CO2 emissions”.
If you suspect that paying a few euro to erase the damage caused by taking a long-haul flight seems too good to be true, it almost certainly is.