May 6, 2020

How to Buy Carbon Offsets

By Rachel Ashley

The carbon offset market is one of the least reliable and efficient markets in the world. We're on a mission to change that. Here's what we've learned.

Not all carbon offsets are created equal: some are much, much better than others. When we choose to spend our money to support carbon reduction projects, we should hold those projects to a high standard.

Our research into carbon offsets over the past year has helped us begin to distinguish higher-quality offset projects from lower-quality ones. In Joro, we feature only the highest-quality offset projects we find and don't accept any incentives from projects to feature them. You can read more about the handful of projects we've prioritized and why here.

No matter where or when you choose to buy carbon offsets, we hope this short guide will help you spend your hard-earned money wisely.

What are carbon offsets? 

A carbon offset is created when one metric ton of greenhouse gas emissions is reduced.

Companies, governments, and people can buy carbon offsets to compensate for the emissions they create by investing in projects that reduce greenhouse gas emissions. 

Carbon offset projects come in many shapes and types. They include reforestation projects, which pay for trees to be planted to absorb greenhouse gases; renewable energy projects, which pay to finance clean energy to replace dirty energy on the grid; and even direct air capture projects that use machines to suck carbon dioxide out of the air. Any project that reduces greenhouse gases could be a form of carbon offsetting.

There is some debate on what types of offset projects are best. Some experts prefer natural capital solutions - offset projects that use resources like soil, water, and plants to capture carbon as occurs naturally in earth's carbon cycle. Others believe investing in direct air capture or novel technological approaches is the best way to reduce emissions

To be honest, at this point in time, we believe this is mostly a matter of personal preference. We need all of the reduction we can get. Theoretically, any project that reliably reduces greenhouse gases can be considered a high-quality offset.

What should I look for in a carbon offset?

The worst offset projects do not result in reduced greenhouse gases at all, and redirect money away from good projects. Reports find that most offset programs dramatically overestimate impact. 

The market for voluntary carbon offsets in the US remains unregulated, so there is no single standard for quality. Monitoring is spotty and unreliable. Third parties siphon away significant fees. Enforcement markets are weak, and retailers may try to sell the same offset more than once.

So what should you look for? Based on research across many relevant standards and conversations with dozens of experts in the space, we find that credible carbon offset projects consistently share 5 key characteristics. You could say good offsets "PAAVE" the way for emissions reduction:

  • Permanent — A project must demonstrate it has taken steps to ensure it won’t be destroyed by natural or human causes during the emissions reduction period.
  • Additional — A project must show strong evidence that the emissions reduction it creates wouldn’t have happened without the project.
  • Airtight — A project must demonstrate it hasn’t caused emissions to increase somewhere else. For instance, this could happen if a forestry protection project simply displaces logging to another forest.
  • Verifiable — A project’s reduction in emissions must be measured and verified by a trustworthy, independent third party.
  • Enforceable — We need evidence that carbon credits issued from a project are backed by a contract with exclusive ownership — that is, they can’t be sold more than once. Seems crazy, but this really happens.

While the above criteria are broadly accepted by most experts, we also take a further, slightly more opinionated stance on what makes a high-quality carbon offset stand out from one that is merely credible. We believe the best projects also offer:  

  • Equity & Justice - The climate crisis presents enormous equity and justice challenges. The poorest and most vulnerable populations are affected most by changing climates. Where possible, we support projects that benefit these populations.
  • Additional Co-Benefits - The best projects create benefits beyond carbon reduction, including job creation, conservation and biodiversity, climate adaptation benefits, or demonstration potential for future projects.
  • Recent Vintage - We prefer to buy carbon credits that are recently verified. Tying a purchase to a recently created offset reinforces the case for additionality.
  • Partner Efficiency - We work with partners that demonstrate transparency in fee structure and operational efficiency. We aim to reduce complexity and fees in the supply chain from project developer to consumer.
  • Ecosystem Alignment - We support projects that advance the globally-recognized UN Sustainable Development Goals and Project Drawdown Solutions.

Do offsets work? 

In theory, offsets work; in practice, poor quality, moral hazard, and equity issues are real risks. Overall, offsetting using high-quality projects is better than not offsetting at all, especially when paired with reduction.

By paying for high-quality offsets, people can play an important role in financing projects that reduce greenhouse gas emissions. 

However, supporting bad offset projects can be worse than not paying for offsets at all. Ineffective offset projects divert capital from truly useful emissions reduction initiatives. They also erode trust, and make people feel that the climate crisis is insurmountable. 

Furthermore, relying solely on offsets can be distorting. They can make people feel that they can continue to produce greenhouse gases, because they are paying for their guilt to go away. This is a classic example of moral hazard, which occurs when someone has an incentive to take risks that make a system worse off overall because they do not bear the full costs of that risk. 

They can also exacerbate equity and justice issues. If rich people can continue to pay to pollute, poor people will continue to bear the worst consequences of the climate crisis. A more sustainable future is one in which we all adapt our lifestyles in moderate ways to result in a just and thriving future for everyone. 

We believe that offsetting can be effective when it supports high-quality offsets and when we pair it with reduction. The best way to move to a low-carbon future is to build a society that simply uses less fossil fuels. 

Just as companies create reduction plans and offset to compensate for what they can’t at first reduce, people can be most effective by taking a reduce + offset approach.

Sources: 1. Overseas Development Institute Clean Development Mechanism, 2009. 2. National Resources Defense Council, 2016. 3. 3 Degrees Carbon Offset Claims Guidance, 2019.

Stay in the loop.

Subscribe to our bi-weekly newsletter to get the latest on climate news and action tips.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.