Issue Date: April 23, 2007
Greenhouse Gas Offsets
We agree with Bette Hileman's Insights article "A Dubious Way Out of CO2 Emissions" that many of the greenhouse gas "offsets" being sold in the U.S. market are of dubious quality (C&EN, Feb. 19, page 31). But please don't throw out the baby with the bathwater. Offsets, if done right and implemented in the proper context, can be an important tool for fighting climate change.
The Climate Trust is a nonprofit organization that has been pioneering the U.S. offset market for 10 years. The Climate Trust is the largest institutional buyer of regulatory-grade offsets in the U.S. We have invested $9 million in 18 projects that are expected to offset 2.7 million metric tons of CO2 over their lifetimes. To date, 92% of our expenditures have been on offset-related programs. Although most of our offsets serve regulatory purposes, we do provide offsets to the voluntary market as well.
All of the trust's offset projects meet the highest quality standards used in the U.S. They must meet a "funding additionality" test, meaning that they must demonstrate that offset funding is essential for the project to move forward. Furthermore, we only invest in new projects that are implemented after our funding commitment is secured via contract. In addition, each project is quantified using state-of-the-art techniques implemented by independent third-party experts, with an emphasis on rigorous baselines and conservative greenhouse gas accounting. A review of other environmental impacts and benefits is important to our project selection process. Since the commodity we buy is intangible, we have developed sophisticated contracts that secure the transaction, address performance risk, and prevent double counting.
The promise that an offset makes is that, from the atmosphere's perspective, the results are essentially the same as if a business (or individual) had met its reduction goal by investing in emissions reductions in its own facilities. If a business chooses to invest in a project in its own facilities, quantifying the results is straightforward. However, if it chooses to invest in an emissions-reduction project elsewhere, the project must meet an additionality test if it is to make good on an offset's basis promise. The efficiency project in its own facility clearly would not occur without investment by the business. In choosing to invest elsewhere to affect its emissions reductions, the business must also find a project that is clearly reliant upon the offset funding in order to be implemented.
Finally, if offsets are the first type of emission reduction that a business considers, then perhaps it is appropriate to consider this an "indulgence." However, the Climate Trust views offsets as the last step of a balanced four-step process for achieving emissions reductions: cut waste, invest in efficiency, buy renewables for electricity, and offset the rest.
If the voluntary market upheld quality standards pioneered by the Climate Trust—high additionality thresholds, new projects, putting the vast majority of funding to work on offset programs, and marketing offsets as closer to a last resort than a first resort—there would be little need for articles of concern about offsets.
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