Aclymate Was Born Out of Frustration…

What you need to know about carbon offsets

Mike Smith
November 3, 2022
Lake surrounded by trees and mountain in the background

We were frustrated that every time we spoke to people who wanted to act on climate, we ended up having to educate them on all the complexities of carbon markets and climate change. That as sustainability professionals at large companies created the tools for dealing with their problems, they were creating a system and a language that was inaccessible to the layperson. We decided it could be done differently. We want to make powerful climate action available to everyone.

One of the first things that most people decide to do is buy carbon offsets. They often don’t know why, just that it feels like the right thing to do. As someone who developed the largest carbon reforestation project in US history, I’ll be the first to tell you that offsets are important. There is no path to our climate future without continuing to develop high-quality, carbon offset projects.

But to be clear, the first and most important priority in any company’s climate action plan is to reduce emissions first. We cannot offset our way out of the problem, based upon the limits of physics and biology. Offsets will only be part of the solution, which is why we’ve made our climate accounting and analytics tools free to everyone. We believe that you have the right to know what your footprint is.

The other problem with offsetting is that it leaves a company concerned about the legitimacy of the offsets that it is purchasing. There are a lot of reasons to be worried, as we hear increasing stories of why one offset project or another doesn’t add up to what it claims to be. In part, these stories are correct, but they’re missing the bigger picture — the most responsible companies offset in addition to having an emissions reduction plan. You don’t need to be that worried about offsets coming back to bite you if you’re already doing the hard work.

So do the hard work. But also, offset what you can’t yet eliminate. Because offset projects have some really amazing secondary benefits in addition to their climate outcomes, and as a whole, you can be proud of what you have helped create.

Now, let me tell you what you need to know about carbon offsets

Temperature map from 1900 to 2100 ranging from blue to deep purple

The basics:

The Earth is warming due to a variety of gases we release into the atmosphere known as “Greenhouse Gases” or GHGs. The most common and having the greatest impact is carbon dioxide (CO2). The other gases include methane (aka natural gas), nitrous oxide, and a variety of industrial gases. As they’re less common, their affect upon the climate is converted into an equivalent of carbon dioxide or CO2e. The standard unit of measure in climate is in metric tons of CO2e, usually written as tCO2e or sometimes as MTCO2e. That can be a lot, so typically people refer to it as a ton of carbon for short. So when you hear about carbon credits, they’re talking about buying or selling some multiple of tCO2e. At Aclymate, we think that’s a fine unit for the big guys, but for most of us, we need to measure our impact in units more suited to the average person, so we display things in pounds of CO2.

Highway with factories emitting pollution into the air in the background

What is an offset?

An offset is a way to pay to someone else to reduce the amount of carbon in the atmosphere. The idea is that what might be currently too expensive for you to achieve might be cheaper for someone else to do. Offsets generally fall into two categories: emissions reductions and carbon removals.

Emission reduction projects are when you pay someone else to reduce their emissions. These are projects that have met some minimum standards of additionality that without additional finance would not have been feasible for development. Some examples:

  • Mine Methane — The geology of coal produces a lot of methane — the deadly gas that made the canary in these mines so famous. As humans have been mining coal for our entire lifetimes, there are a lot of abandoned coal mines that continue to leak methane into the atmosphere and which have no legal requirement to stop it. Methane is a highly potent GHG, especially over the next 20 years, which is why it is the focus of the climate conference in Glasgow right now. Preventing these emissions can have an outsize impact on the climate but capturing this gas can also displace the burning of other fossil fuels, too, as this methane can be a substitute fuel source.
  • Livestock Methane — In animal feeding operations, manure is collected in holding ponds, where without being aerated, certain biological processes occur, releasing a lot of methane. Capturing that methane can both replace fossil fuels and reduce atmospheric methane.
  • Avoided Conversion of Forests or Grasslands — There are pressures on developing land into more intense uses, such as agriculture or housing. These natural and working landscapes have a lot of stored carbon in the soil and plants, so by plowing up the landscape, that carbon is released. Preserving that landscape not only saves the carbon emissions, it also allows it to continue absorbing carbon in the future, as well as have positive outcomes on habitat, water, and outdoor recreation.
  • Renewable Energy — Though renewable energy is increasingly cost competitive, there are cases where it can’t quite yet complete on cost with new fossil fuel energy projects. By helping to finance these projects, you’re preventing locking in decades of emissions from new fossil fuel projects.
A field with wind turbines and an orange sunset in the background

Carbon removal projects are when you pay someone else to capture carbon from the atmosphere. As this is a more intellectually pure argument — you make a mess and pay someone else to clean it up — removals are increasingly in demand, which of course affects the price. There is some change in the language in the market, where removals are seen as distinct from offsets, but that isn’t yet a standard. Carbon removals come in two flavors: nature-based and tech-enabled. Nature-based removals are projects that increase the capacity of natural and working lands to increase their capture and storage through photosynthesis — locking carbon up in the bodies of plants and the soil they live in. Tech-enabled removals try to capture carbon dioxide with machines or other manufactured processes. Some examples:

  • Reforestation — The poster child of carbon projects. When a forest is lost due to wildfire or some other disturbance, it takes time and money to replant. Forests are one of the best tools for capturing carbon from the atmosphere, so paying someone to replant these forests is important. These nature-based removals have huge positive impacts on water, habitat, and more, but they can be reversed by potential future disturbances.

A green forest

  • Direct Air Capture — An emerging technology, huge machines suck CO2 directly out of the air (hence the name) and inject it underground for permanent storage. Since they permanently keep the carbon out of the atmosphere, these projects are starting to gather significant attention, but they’re also very expensive and require significant amounts of clean energy to work.
  • Improved Forest Management — A nature-based removal, these preserve existing forests and manage them for increased carbon capture. Most of these projects are paid for some existing carbon storage above the surrounding landscape, so it can be a bit of shortcut to offset production, which makes these project types a little less a straightforward removal and more of a blend between a removal and an emissions reduction offset.
  • Mineralization — There are processes where certain types of rock or concrete can absorb carbon dioxide from the atmosphere and lock it up in the mineral itself.

Who Makes an Offset?

There are a few players in the offset market:

A diagram of the offset market structure from project developer to end buyers

Offset Registries: These are typically non-profit organizations that create the marketplace. They have a process for identifying different offset project types, creating a standard methodology for measuring the projects ability to reduce emissions and/or remove atmospheric carbon, and running it through a scientific review process for legitimacy. Once a methodology is approved, offset project developers can use it to create offset projects, for which the registry will issue offsets to the developer as proscribed by the methodology. An issued offset can then be sold and traded as an asset until it is consumed, at which time it is permanently retired. The registry maintains track of the offset from its creation until its retirement. Reputable registries include Climate Action Reserve, Gold Standard, Verra, American Carbon Registry, and more. New registries like Nori and NCX are emerging by creating improved practices in remote project monitoring and offset tracking and issuance, but are still working to establish broader market credibility due to their size and shorter track record.

Project Developers: The people and organizations who do the work of finding, financing, and developing offset projects. A particularly specialized field of work, it requires the ability to speak to financiers, land owners, registries, auditors, and more. In many ways, these people are building our climate future.

Verification Bodies: Every reputable registry requires that offset project developers not only adhere to the methodology they choose to develop a project, but that their projects go through an independent audit or verification by an accredited third-party. These verification bodies check the paperwork and processes to guarantee that high standards of authenticity are being upheld.

Brokers / Retailers: Project developers frequently lack the connections to the large corporations to sell their offset volumes. Intermediaries would facilitate these transactions for a fraction of the sale. This market favored bundling multiple offset projects into a single sale for very large corporate buyers. This is part of the space that Aclymate occupies because we think that small companies should not only have access to these projects, too, but that instead of bundling projects into one sale, we can help to bundle multiple buyers into increasing their purchasing power.

Offset Buyers: Historically, offset buyers have been very large corporations with teams of sustainability professionals. They have been doing really important work in supporting and directing the carbon markets, but there’s a big risk that these large buyers are going to block the ability of smaller businesses to make meaningful action. Aclymate is here to democratize carbon market access.

How to choose the right offset?

If you’re a small business in the United States, there isn’t yet a regulation requiring you to offset your emissions, so offsetting is part of a story you’re telling a key stakeholder. For some, that stakeholder are your current or prospective employees. For others, its about demonstrating ESG directionality to investors and clients. Or it might be around demonstrating action to customers. Or perhaps its just about an ethos of the management. Deciding about the right offset means telling the right story to the right people. Make sure you know what they’re looking for.

The characteristics of the right project often include some mix of the following:

Project Location: Companies generally like to demonstrate to their employees and customers that they’re good members of the community. Offset projects that these stakeholders can potentially visit or benefit from often are a priority.

Co-benefits: Some companies have particular impacts on the environment beyond climate, so being able to tell a story about water, habitat, outdoor recreation, and rural or urban development can be an important attribute to these companies.

Environmental Justice: There is clear evidence that the burden of development falls disproportionately upon the poor, the disposed, people of color, and the developing world. Investing in projects that help these communities can be part of a restorative investment in justice.

Project Type: To be blunt, some projects just have a better feel-good story. Though destruction of certain industrial gases is incredibly important to our climate future, the pictures and story associated with planting trees is just an easier sell.

Removals vs. Emissions Reductions: Our future increasingly will depend upon the banning of high-consequence emissions. Investing in those projects now can help build that future.

Finally, don’t let perfect be the enemy of good.

Offset projects are hard to develop and the perfect project might not yet exist. Or, if it does, its supply may already be spoken for. You can spend a lot of time looking for that perfect project, but you probably won’t find it, there’s a good chance you won’t do anything as a result, and the time you wasted could have been spent doing something more productive like finding ways to reduce your emissions. At Aclymate, we bring you a lot of offset projects — more than anywhere else — so you can spend your time doing things that matter.

If you’re ready to begin your climate journey, please sign up for a 33-day free trial or click here to learn more. Our team of climate navigators is here to help you find the course to the outcome you want and the community you need at a time and price that will surprise you.

Mike Smith
November 3, 2022

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