Angeli Mehta reports on how lack of credibility in the voluntary offsets market is a key barrier in the drive to reduce the environmental impact of the industry
Book a flight with an airline these days and you may have the option to offset your share of the carbon dioxide emissions from that journey. It may be a route to guilt-free flying, but is it a route to emissions reduction?
Tourism is an emissions-intensive industry – responsible for around 8% of global carbon dioxide emissions. Since last November’s COP26 climate summit in Scotland, more than 500 companies have signed up to the Glasgow Declaration on Climate Action in Tourism, which commits them to decarbonise tourist operations and restore and protect ecosystems.
What could be more attractive then, than mitigating the impact of travel while contributing to nature or local communities? In theory, each offset represents an amount of carbon dioxide that has either been removed from the atmosphere (for example, by trees) or avoided by providing, for instance, clean cookstoves, which also improve indoor air quality and reduce local deforestation. Avoiding or reducing emissions elsewhere doesn’t, however, tackle the CO2 that is entering the atmosphere as a result of the activity you’re offsetting.
Criticisms of the voluntary offsetting market are well-rehearsed. Issues centre on whether they provide carbon removals that are in addition to what would have happened anyway, and crucially, are permanent. This was dramatically illustrated last summer, when wildfires tore through forest projects on the U.S. west coast that had generated offsets bought by the likes of BP and Microsoft.
It’s got the whole team asking ‘is this the best routing (or) can I use a different vehicle here?’
A report in May from investment bankers Credit Suisse, described the voluntary market as the “wild west” with “poor transparency” and “low (if any) correlation between price and credit quality”.
Environmental campaigners also fear offsetting allows companies to delay the deep emissions cuts needed to avoid catastrophic warming. The Science Based Targets initiative (SBTi), which defines best practice in line with climate science, only allows companies to use offsets to go beyond their science-based or net-zero target.
Adventure travel company Explore Worldwide has just been through the detailed process of trying to measure emissions from all its trips, as well as the office, to start the process of cutting emissions by 50% by 2030. The numbers will get refined as methodologies improve, but it’s given the company a starting point, says sustainability specialist Hannah Methven. “It’s got the whole team looking at trips and asking; ‘is this the best routing (or) can I use a different vehicle here?’”
Offsetting is included in the cost of each trip (excluding the flights customers booked themselves – a challenge Methven is wrestling with) but she sees it as “the bottom of the rung”. Reduction “has to be our biggest priority. And then we look to mitigate, to support initiatives that are trying to help nature and biodiversity and use (those) to draw down carbon.”
These include projects with Rewilding Britain, and Cool Earth (which works to stop rainforest deforestation). For offsetting “we look for projects that are focused on preventing emissions in the first place and supporting renewable energies.”
Explore is sourcing its offsets through Climate Impact Partners. Mark Griffiths, managing director for Europe, insists his firm rigorously assesses potential projects to validate carbon-removals claims and make sure there are back-up plans in the event of forest fires, for example. It’s also investing in artificial intelligence and satellite technologies to provide ongoing monitoring. “It's our reputation that we are risking if we are promoting something that is not delivering according to its claim.”
Offset projects such as clean cookstoves cost between $6 and $15 a tonne of CO2 avoided
Explore’s website states that the cost of offsetting is less than £10 per person, though that will inevitably change as increasing demand is pushing up the price of offsets, says Methven.
Griffiths estimates offset projects such as clean cookstoves cost between $6 and $15 a tonne of CO2 avoided; mangrove or peatland restoration costs up to $30 a tonne, while renewable energy projects may attract less than $10 a tonne.
That’s a big contrast to the price of carbon on compliance markets such as the European Union’s emissions trading system (EU ETS), which has been as high as 96 euros ($102) a tonne this year.
And it certainly doesn’t reflect the social cost of carbon, which is defined as the economic impact of emitting a tonne of carbon. The U.S. government uses a figure of $51, while a recent economic analysis that took temperature-related mortality into account suggested it should be over $250 a tonne.
Last year, Forest Trends’ Ecosystem Marketplace initiative reported that the voluntary market exceeded $1 billion for the first time, covering almost 300 million tonnes of CO2. Forestry and land credits dominated, followed by renewable energy credits.
Now, demand is outstripping supply, particularly for “quality” projects. The reason, says Griffiths, is that companies are beginning to understand what their exposure would be were they to be taxed on carbon.
A London to New York return is estimated as from 0.7-2.7 tonnes of CO2 emitted per person
So, for those hard-to-abate emissions, they’re now willing to pay more. And they will have to. A new focus for carbon markets is so-called blue carbon. A major project in Colombia to restore coastal mangrove forests has already seen the price of credits triple to $30-$40, according to the Colombian President, Iván Duque Márquez, who recently told the World Economic Forum in Davos that he expected credits sold in the next couple of years to fetch more than $100 per tonne.
Whether travellers will be prepared to pay more, however, remains to be seen.
According to Credit Suisse’s analysis, airlines were some of the biggest users of offsets, due to preparations for the industry’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) scheme, which aspires to make sure any growth in aviation emissions are offset elsewhere.
There’s huge variation between different airlines and footprint calculators as to how much carbon dioxide is emitted on a journey. A quick check for a return flight from London to New York reveals anything from 0.7 tonnes to 2.7 tonnes per person, and offsetting charges varying from $7 to $70 for an economy flight. How much of that reaches projects on the ground is unclear.
In the past few years, airlines including BA and Lufthansa have been giving customers the option of offsetting their flights more directly by contributing to their efforts to decarbonise by blending sustainable aviation fuel (SAF) into kerosene, which can be three times as expensive as fossil fuel. From 2025 the EU, through its ReFuelEU Aviation initiative, will mandate aviation fuel suppliers to include (initially) 2% SAF in aviation fuel at EU airports. Read more
What guarantees (are there) that the customer’s money will actually be used for purchasing SAFs
Carbon dioxide is still emitted when the fuel burns. There are also concerns about the sustainability of using vegetable oils in SAF. But if CO2 is captured from the air or industrial processes and combined with renewable hydrogen to make a synthetic or e-fuel, greenhouse gas emissions can be cut by as much as 85%, according to European campaign group Transport & Environment.
Lufthansa and BA make it clear that SAF isn’t being added to specific individual flights, as it can only be supplied at certain hubs, but Reinout Debergh, aviation policy analyst at Transport & Environment, says customers will want to know how sustainable the fuel choices are, and whether their own flight uses SAF or whether it is fuelling another.
“What guarantees (are there) that the customer’s money will actually be used for purchasing SAFs? Who will track that money and who will verify it? How do we know that airlines won’t double-price customers by passing through the costs of regulations, such as ReFuelEU, into ticket prices and additionally asking the customer to pay for SAFs?” asks Debergh.
And although neat SAF may boast carbon savings of up to 85%, in real use its mitigation potential is far lower, as it is only being offered today in blends with kerosene of 10-50%. (See also What's sustainable about soaring business jet use?)
That question of transparency is an issue for the whole offsetting industry. Climate Impact says its offsets are endorsed by Gold Standard, a leading standard-setting initiative.
But there’s no one official international standard – something that the Voluntary Carbon Markets Integrity Initiative is working to remedy. The multi-stakeholder VCMI has produced a draft Claims Code of Practice, and has just begun road-testing it with some corporates.
An Oxford University team is urging a shift to removal offsets, where carbon is ultimately locked away
Principles for offsetting developed in 2020 by a team at the UK's University of Oxford urged businesses to shift to removal offsets, where carbon is scrubbed from the atmosphere and locked away. This, too, will have to shift from efforts such as tree-planting, to long-lived storage, such as geological storage.
This nascent market is being encouraged by companies with deep pockets, including Stripe, Meta and Google’s parent Alphabet, who have signed up to a new platform called Frontier, which has committed to spend $925 million over the next eight years on technologies to remove carbon. (Read more)
In the meantime, Griffiths at Climate Impact Partners argues that the finance going into communities through offsetting schemes such as cookstoves, provides valuable employment, empowers women and delivers benefits to health and biodiversity along the way.
So perhaps, as Carbon Market Watch has argued, rather than claiming to compensate for emissions, companies could simply make a claim to contribute to climate action that also brings tangible benefits to people and environment.
Angeli Mehta is a former BBC current affairs producer, with a research PhD. She now writes about science, and has a particular interest in the environment and sustainability. @AngeliMehta.
This article is part of the summer 2022 edition of The Ethical Corporation. See also:
Hotel sector strives to make up lost time on sustainability
A bid to bring ‘regenerative’ tourism to the Red Sea
The drive to turn tourism from a prime threat to saviour of global biodiversity
Can business adopt a more sustainable flight-path post-Covid?
What’s sustainable about soaring business jet use?
Tailwind growing behind tackling aviation emissions
Can the cruise industry power itself to a net zero future?
Hurtigruten sets course for zero-emissions cruising
Carbon offsetting Glasgow Declaration on Climate Action in Tourism Transport & Environment Science Based Targets Initiative Explore Worldwide CORSIA ReFuelEU