What comes to mind when you think about carbon offsets? Maybe you believe that carbon offsets are great! A clever instrument which allows you to compensate for your emissions by buying a carbon offset which is generated by an environmental project, typically in a developing country and without your support may otherwise not have happened. Or, do you think carbon offsets are all smoke and mirrors, a way to continue business as usual with our carbon intensive lifestyles while assuaging our guilt and appearing virtuous by supporting “such and such” a forestry project in a country no one has ever heard of?
The truth, as always, lies somewhere in between. The voluntary carbon market is growing at an impressive rate, according to Ecosystems Marketplace “Voluntary Carbon Offsets" Market 2020 Research Report, it is currently valued at $193.4 million and is expected to reach $235.2 million by 2026. But, despite its size, in terms of sophistication it is still emerging from its infancy. There is too much fragmentation and a distinct lack of transparency. For the consumer or business looking to offset this means widely varying prices and standards (or lack of them!). Too often, when offered offsets while booking a flight, or perhaps browsing an offset provider’s portfolio, we are confronted with a story of the aforementioned forest planting regime in a remote corner of the world, followed closely by an arbitrary price tag. The current state of this market does little to inspire confidence, even in the most environmentally conscious consumer.
This does not mean that Voluntary carbon offsets are always ineffectual or worse, disingenuous. Take the Verified Carbon Standard (VCS) for example. Its Verified Carbon Units (VCUs) are generated by projects which have been developed under the standards of VERRA, a non-profit organisation. These projects are not only legitimate and closely scrutinised, but also often contribute towards the Sustainable Development Goals (SDG) in the host country. VCUs are the most widely used Voluntary carbon offset resulting in an increasingly liquid and transparent market. They are traded and used by companies and individuals alike, being accepted (according to additional criteria) for compliance within CORSIA which is an offsetting regime for Airlines.
In a nutshell, a successful Voluntary Carbon market need not reinvent the wheel. Rather, it should build upon and integrate with the well-established compliance market. By voluntarily purchasing high quality offsets, individuals and businesses can be assured that they are making a real and quantifiable positive environmental impact, while ensuring that they get value for money. Moreover, through the purchase and cancellation of offsets, we are reducing supply and thus increasing the cost for the participants of compliance markets to offset. In their best form, carbon offsets can allow us to compensate for the emissions we cannot avoid while we wait for fundamental changes in the systems around us e.g. transport, energy and agriculture; while at the same time elegantly accelerate this transition by incentivising the decarbonisation of the economy.