For governments and organizations, carbon offsets play an important role in achieving emission reduction targets. Offsets are an “additional” climate benefit – preserving a forest that would have been cut down, planting trees, or investing in renewable energy projects – that “offsets” the emissions from polluting activities.
In theory, the use of carbon offsets allows some flexibility in emissions reduction that is essential to achieving climate goals but in practice, some organizations are taking advantage of the system and ultimately creating more emissions in the process.
In 2015, the Massachusetts Audubon Society, a conservation nonprofit that manages preserved forests in western Massachusetts, applied to participate in California’s forest offset program and claim carbon credits for conserving forest. As part of their application, they noted that they could log almost 10,000 acres of forest but will opt for preservation in exchange for carbon credits. As a result, the organization was awarded over half a million carbon credits, earning them about $6 million from oil and gas companies who bought their credits.
The issue with this transaction is the premise that buying carbon credits from Massachusetts Audubon Society preventing logging of its trees, in other words, these trees would have been cut down were it not for participation in the program. Given that the Society is a conservation organization, and not a timber company, it is unlikely that the land was destined for intense logging. Ergo, no emissions were actually prevented and instead, more emissions were allowed by selling of these carbon credits to fossil fuel companies who substitute the credits for their out actions to reduce climate change. The flaw is in the design; the California offset program creates the incentive to claim offset benefits for forests that are not under threat for logging.
This is just one example of the potential misuse of carbon offsets. In a study of California’s carbon offsets program, researchers found that--because forests for which credits were awarded were never under threat of logging--30 million tons of carbon dioxide equivalent credits, worth over $400 million, were awarded in excess of emissions prevented. Again, this is a flaw in the design of the program; regulators calculate the regional average of carbon storage and landowners of forests with a higher carbon storage can earn credits for the difference.
Without rules to ensure that carbon saving actions are performed because of the carbon credits – a concept called ‘additionality’ – carbon offset programs can unintentionally cause a net increase in emissions. Program developers and policymakers do well to keep these potential “loopholes” in mind when designing programs. Without careful design, carbon offsets are vulnerable to misuse.
