Carbon Offsetting, in Gory Detail

Problem and Solution

I was planning earlier to write a grand review of the carbon-offset options out there on the market, but lately I’ve been focused on news about clean-car innovations. (More on that subject, if you want, is here, or check out Hybrid Car News and Treehugger.) So here’s the long-promised carbon-offset review!

Wait — carbon what, you say? Okay, here goes: the concept of carbon offsets is that a person figures out roughly how much carbon dioxide (the major contributor to climate change) gets released into the air from their own actions — driving around, flying somewhere, or just using lights and air conditioning throughout the year. Then, using that estimate, you do things to balance out that harm, by either taking CO2 out of the air or reducing how much gets released from other sources. Since you probably don’t have time to plant trees and build windmills yourself, you can donate to organizations full of people who do. That’s called buying a carbon offset.

It’s an attractive idea. Committed environmentalists who can’t make it living in a subsistence-style commune can undo a part of the damage that comes from the unavoidable routines of everyday life. Less passionate people have an opportunity to tie a donation amount to something personal: a person who flies a lot ponies up a bit more, and one who bikes to work gives a bit less and gets to feel good about not being part of the problem. Finally, it helps everyone see the link between their actions and the environment.

But here’s the big question: is carbon offsetting legit? Do we actually undo our CO2 production by sending cash off to those nice organizations, with their pretty websites, or are we just making a guilt-driven donation in hopes of karmic forgiveness?

The answer is: it depends.


Sometimes the connection between cash and CO2 is pretty direct. One project raises dollars for solar panels in poor 3rd-world communities, which in turn displace demand for dirtier-burning fuels like coal or kerosene. Another uses the cash to buy and retire tradeable carbon emissions credits. (If you said “Tradeable what?” then click here.) Those two options feel pretty believable — the money funds a project which almost-directly reduces use of a polluting fuel.

But sometimes, the tangible result of the project is more remote. For example, tree-planting projects pay off slowly — over dozens, possibly even hundreds, of years. And other times, the link is really flimsy: NativeEnergy, for example, has one program that uses donated money to create future sale-price guarantees for small renewable-energy startups, thus insulating them from the risk of price downturns in upcoming years. This, in turn, allows them to seek investors more successfully because they have those guarantees in hand. (Basically it insulates small green businesses from risky price fluctuation, making them more attractive to venture capital.) This model doesn’t create a satisfyingly direct connection between your cash and less CO2 in the air.

Two popular options, Terrapass and Carbonfund, bundle together various types of projects — reforestation, landfill capping, exchange trading, solar/windpower investments, etc. — into one offer, priced per ton of CO2.

So, how much does it cost? Carbonfund says it will offset 23 tons of CO2 for $99 a year. Most estimates I’ve seen say the average American is responsible for about that amount. Terrapass.com breaks it up by activity; it sells air travel offsets at about $10 for every 6,000 miles you fly, car offsets for $30-80 a year depending on your mileage, and home offsets at about $10 per ton of CO2. Trying to offset everything — a house, a sedan, and flying four people to Florida for a vacation — would cost about $250 to offset through Terrapass. Both sites have calculators if you want to customize your estimates.

Also, Expedia and Travelocity will sell you an offset for your flight as you check out.

So what does the future hold? We think offsetting will live and die on trust. It’s not yet widely known, and if the first thing people learn about offsetting is that some guy bought a condo in Nassau with a bunch of embezzled donations, that would bode ill for widespread acceptance. I’d like to see 3rd-party audits, which aren’t yet standard. Also, the for-profit model will probably win out over time, because it can outpace non-profits in the areas of fundraising and marketing.

Also check out:

  • Ecobusinesslinks.com ran its own survey of carbon-offset services.
  • The Conservation fund also offsets; see it here.
  • Another debate over offsets is here.
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One Response to Carbon Offsetting, in Gory Detail

  1. John says:

    One should be very careful with anything related to EXPEDIA. EXPEDIA is listed in the top ripoff link at the bad business bureau ( http://www.ripoffreport.com ) and has two “dedicated” websites due to poor customer support and lies: http://www.victimsofexpedia.com and http://www.shameonexpedia.com

    Kind regards

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