Transcript for Episode 6: Carbon Offsetting

This is the transcript of Episode 6: Carbon Offsetting of the How to Make a Difference podcast. Go to the episode page to listen to this episode and for the show notes. Furthermore, we encourage you to read our blog post on carbon offsetting.

Anja Kollmuss: And you know, I’ve talked to many of the auditors, I’ve talked to project developers, I’ve talked to the people who are working in these standards: It’s difficult. I mean, many people try to do the right thing. It’s just really difficult to do it. 

Introduction: 0:46

Elisabeth Ignasiak: Hey everyone!

Chinmai Gupta: Hey everyone

Elisabeth Ignasiak: This month, we’re bringing you a really interesting, but also controversial topic: Carbon Offsetting. Before we dive into the nitty-gritty, let’s quickly cover some basics: What is carbon offsetting?

Chinmai Gupta: So, many of our daily activities like cooking or taking a hot shower cause emission of greenhouse gasses. So, carbon offsetting is the act of investing in companies that reduce carbon emissions from the environment. A good example would be investing in say a reforestation project. And, before we go on, there’s two commonly associated terms with offsetting. One is being carbon neutral – when you help companies reduce the exact amount of carbon that you release and being carbon negative is when you help companies reduce more carbon that you release. 

Elisabeth Ignasiak: Carbon offsets or as they’re also often called, carbon credits, can be created in a lot of ways. Some classics are planting trees, renewable energy projects, or installing solar cookers for families that would otherwise use coal to prepare meals. 

Chinmai Gupta: The best thing to do of course is to try and reduce our emissions – by say switching our bank account as we’ve discussed in episode 2, cycling to work, or reducing wastage. However, offsets are a great way to reduce our carbon footprints too, as we constantly create emissions with our activities. Offsets are the only way to get to zero carbon emissions. As of today, about 0.5% of global emissions are being offset

Elisabeth Ignasiak: One of the most common counterarguments against the concept of carbon offsetting is that it could encourage people or companies to just ‘pay off their conscience’ and keep emitting large amounts of CO2 rather than changing their destructive lifestyle habits or the way business is done.

Chinmai Gupta: I’d say that’s a fair point. Offsetting should not be about buying your way out of this problem and clearing your conscience. The mantra should be measure, reduce and offset. That means offsets along with reduction, not instead of. Since we are in a bit of a crisis here, we need to work on all solutions in parallel.

Elisabeth Ignasiak: Yeah, that’s true. We need to get to 0 emissions, fast. And the only way to get there quickly is via carbon offsetting. 

The way I think of it is this way: Let’s say you care about animals, then you might donate to a charity like the World Wildlife Fund, or you care about ocean plastic, then you donate to a charity that removes plastic from the ocean. And with climate it’s very similar: If you care about climate change you can donate to organisations that remove CO2 from the atmosphere, which is exactly what carbon offset projects do. 

Chinmai Gupta: That makes sense. But as always, reality is more complicated. Let’s take a closer look.

Elisabeth Ignasiak: There have been a number of issues with offsetting in the past. There were reports of human rights abuses, their effectiveness has been questioned and there was little regulation.

Chinmai Gupta: This is why ‘standards’ were established – to ensure the credibility and quality of the offsets. They involve 3rd party verification and audits of projects that offset carbon. 

One of the most common criteria is “additionality”. Projects have to prove that they have an additional effect, compared to what they are required to do by say law or would have achieved without the money we pay them. I.e. Our money is what makes the difference. To give you an example, if a country requires methane capture at landfill sites by law, you cannot sell carbon offsets for capturing methane at those landfill sites. 

One of the strictest standards for CO2 offsetting is the Gold Standard. On top of criteria like “additionality”, every project has to also show that it contributes to the United Nations Sustainable Development Goals in more than one way. E.g. the project contributes to say gender equality or lifts a community out of poverty on top of its climate benefit.

Elisabeth Ignasiak: This all sounds great. However, we wanted to dive even deeper – Can standards really ensure that offsets are effective? For this, we spoke with  Anja Kollmuss, who spent more than 20 years researching carbon markets.

Interview with Anja Kollmuss: 5:45

Elisabeth Ignasiak: So we’re talking to Anja Kollmuss today

Chinmai Gupta: Thank you for joining us today, Anja.

Elisabeth Ignasiak: Could you maybe just tell our listeners, what you do and who you are.

Anja Kollmuss: I’m Anja Kollmuss. I’m Swiss. I researched for many many years, carbon markets. So that means emission trading schemes, but also offsetting markets. After 25 years in the climate field, I’ve decided to change careers. And I have become a primary school teacher.

Chinmai Gupta: That’s wonderful. Maybe we can ask you the first question. Could you give us a bit of background into carbon offsetting?

Anja Kollmuss: Yes. So the idea behind it is pretty simple since. Since climate change is a global problem, it doesn’t really matter where you reduce emissions. It’s good for the climate, no matter where you reduse them. Unlike for example with water pollution, where you have to clean up the pollution, where it occurs. So that’s the first idea. The second idea is if you have a limited amount of money it makes sense to reduce your emissions where it’s cheapest, then your money will go a longer way to to reduce emissions. In other words you can reduce more with the money you have. So that’s the kind of the basic idea behind it.

Elisabeth Ignasiak: Thank you Anja. We explained in the introduction to this episode that offsetting standards were established mainly to ensure the quality of carbon offsets. If our listeners buy offsets certified by one of these standards, can they be sure they are actually compensating their emissions?

Anja Kollmuss: In theory, that’s right. In practice, it gets very complicated quickly because you have a lot of counterfactuals. So that you have to make quite a few assumptions. So that’s where it becomes kind of messy. And so let me give you a few short explanations why it’s so difficult to actually do offsetting successfully. And by successfully I mean, doing them in a way that you have the same result for the climate as if you had reduced your own emissions. Let’s take the example of a wind farm. If that wind farm developer would have built this wind farm anyway, not because you are purchasing those offsets, later on, you are, you cannot claim that with your money you have reduced emissions.

Elisabeth Ignasiak: That’s what additionality is all about, right? So you actually have an additional effect to what would have happened anyways.

Anja Kollmuss: That’s exactly right, so the technical term for this is called additionality, so that means, if you purchase offsets, you have to be sure that your money actually contributed to making this project feasible. In other words, without all the offsetting money, the project would not have happened. This is difficult to prove! It’s difficult to prove on a project to project basis. So there’s a lot of projects that you know we already planned, and some of them already implemented years before they decided to become offset projects, you know. Then it’s pretty easy to say: it’s just not additional. Because if the project was implemented before the project developer had the idea to make it an offset project – then clearly it happened for other reasons. 

So, the additionality question, even though there’s you know all the CDM projects have gone through an elaborate additionality proof, you know, when we then later on, looked at the projects in total, we just found that in the majority of cases, the additionality test, just is not sufficiently good to ensure additionality. So additionality is one. One big hurdle. 

Chinmai Gupta: Right, sure. 

Anja Kollmuss: The other one is double counting, which means under the climate accord, all countries now have reduction targets. So, if you buy emissions reductions from a project, say in India, how do you make sure that that emission reduction is not also counted by the Indian government towards its own climate target? And this is actually not so simple to do.

Elisabeth Ignasiak: And would the same be true in terms of double counting in the voluntary market so if I, as a private citizen, go and buy an offset.

Anja Kollmuss: Yes, because if you buy an offset that comes from Peru and Peru counts the emissions reduction, it will, the emission reduction will show up in their inventory. You know, if they inventory their emissions and their emissions have gone down because have have captured all their landfill gas that will show up in their inventory and if they don’t, kind of artificially, add in those emissions again, because you purchase emissions reductions they will just automatically count it towards their target.

Chinmai Gupta: Right. So if I buy an offset from the voluntary market, it might be counted twice – once by me but also once by Peru.

Anja Kollmuss: It’s something that is talked about in the Paris Climate accord, something that, that the negotiators actually still are negotiating over because there is disagreement so it’s politically a difficult topic. And then it’s actually also technically difficult to do. Because you have to have really good data, you have to, you know, a lot of these projects or in countries that have, you know, not such good data Collection. So double counting is an issue. 

Elisabeth Ignasiak: Interesting. So we talked about additionally, we have the issue of double counting, what else?

Anja Kollmuss: Depending on the project type, so if you have, for example, forestry projects you have issues with permanence. So you don’t know how long that forest will stand. So, you know, if you can really offset your fossil fuel emission with forest protection, or afforestation, it’s difficult.

Chinmai Gupta: So the issue with permanence is: how long is that CO2 being kept out of the atmosphere. I might buy a carbon credit from a reforestation project, but if that forest burns down in a wildfire and that CO2 is released again, my offset was really short-lived. 

Anja Kollmuss: Even though of course, afforestation and forest protection are incredibly important. And we need a lot of investment to ensure that these remaining forests are protected and that there is a large amount of reforestation and afforestation. But all I’m saying is that offsetting is not the ideal way of ensuring financing.

Chinmai Gupta: So are you saying that it’s not easy even for standards to ensure that offsets are effective.

Anja Kollmuss: Yes, absolutely. Absolutely. And you know, I’ve talked to many of the auditors, I’ve talked to project developers, I’ve talked to the people who are working in these standards: It’s difficult. I mean, many people try to do the right thing. It’s just really difficult to do it. 

Chinmai Gupta: So, I don’t think you’re a believer in offsetting. Can I say that?

Anja Kollmuss: It’s really for me at this point you know having worked on carbon offsets for 20 years, and in this time, we basically have squandered the opportunity to ensure a safe climate. It’s very hard for me to make a strong argument for the benefits of carbon offsetting. Because I have researched carbon offsets for such a long time and we found that you know almost three quarters of them just don’t represent emissions reductions they claim to have reduced. I’m sure there are projects out there that are good. I just think at this point, you’re better off, investing in, you know, in really transforming the finance sector and politics.

Chinmai Gupta: Thank you very much Anja for your views there. Those are really interesting views and I’m sure our listeners will really appreciate them. So thank you.

Elisabeth Ignasiak: Thank you.

Anja Kollmuss: Thank you so much for having me. 

Discussion: 15:35

Elisabeth Ignasiak: What did you think about what Anja said?

Chinmai Gupta: I think Anja did an excellent job of explaining some really difficult terms that we keep reading about – things like additionality, double counting, permanence. They’re not very simple terms to understand and I think she did a very good job of explaining them. So I think that was really helpful.

Elisabeth Ignasiak: Yeah, at the same time it’s also a little bit disappointing right you think of offsetting as this really simple solution, but it turns out it’s a lot more complicated than that. And it really makes you wonder, you know, is offsetting – is it an illusion? Is it dead?

Chinmai Gupta: I agree, but, on the other hand, I think, understanding that complexity is so important before you go invest your money. And I think this interview gave me that understanding, so that was really good. 

And since we don’t give up that easily. We decided to get a different view on the topic. So, for this we spoke with Lambert Schneider, a policy expert on carbon offsetting. 

Interview with Lambert Schneider: 16:48

Elisabeth Ignasiak: We are speaking with Lambert Schneider. He is the research coordinator for international climate policy at the Öko-Institut and a member and the former chair of the UNFCCC CDM executive board. And we’re super excited to have you here with us. Can we start with you just telling us a little bit about yourself and what you do?

Lambert Schneider: Yeah, I work with the Öko-Institut and that’s a non-governmental research Think Tank and I have been involved in carbon markets and offsetting for a long time in different roles.

Chinmai Gupta: Okay, thank you. So maybe I can jump in and ask the first question. So we’ve spoken to Anja Kollmuss before, who’s researched carbon markets for many, many years. And she spoke about the issue of double counting, concerns around permanence and questionable additionality. So my first question to you is about carbon offsetting, is it dead, and if not, then why?

Lambert Schneider: That depends, I think many of these problems are there and they are real but it also depends on how you use your carbon offset. If you use that to neutralise your own emissions, then these issues are very big concerns. If you say: okay, I want to do something good for the climate and I know that, maybe it will not completely offset my own emissions, or I try to even do more then it can still be good to buy these offset credits. Of course, the most important thing, in my view, is reducing your own emissions. Looking for all ways to reduce your own footprint. But then, if you want to take a flight and I say, I absolutely want to take this flight of course it’s better to then do something for the climate, than to do nothing.

Elisabeth Ignasiak: Yeah. So basically you’re saying, rather than seeing offsets, as the name suggests, as an offset to think more about an investment to reduce carbon from the atmosphere. And the more we do it the better. But we shouldn’t think of it as balancing out my negative activities. Does that capture it right?

Lambert Schneider: Yeah, I think so. So for example, in some instances, countries, they can also use the emission reductions to achieve their obligations under the Paris Agreement. But if you are aware of that, you can say well I financed this forest project with local farmers in a country and I know it will help the country to achieve its pledges under the Paris Agreement and and so, so that’s a different take towards it rather than saying, I’m completely offsetting my own emissions.

Elisabeth Ignasiak: Yeah, okay. So basically I’m not, as you said, I’m not offsetting my emissions, I’m helping another country towards their climate targets.

Lambert Schneider: Yeah, exactly. 

Chinmai Gupta: What impact can I actually have by buying individual carbon credits?

Lambert Schneider: I think this depends a lot on the project. Some projects. They really focus on the climate, so they may be very good for the climate, they may have a high likelihood of additionality like something very technical like the avoidance of N2O emissions in industrial gas projects, something like that. That’s really industry, but it’s clear that it’s additional and it helps the climate. There are also other projects who really help people affected by climate change, poor people in developing countries, poor communities, etc. So, so it’s important, I think, to look at these projects, not only from a climate perspective but also from a sustainable development perspective, and in particular projects with households. They often have a lot of co-benefits they reduce air pollution indoors, they help people develop, they give them access to electricity which would they otherwise not have, etc.

Chinmai Gupta: So are there certain type of projects that are less affected by, say double counting?

Lambert Schneider: I think double counting is an issue for nearly all projects, because all countries have no pledges under the Paris Agreement, right? And so there’s always the possibility that the country where the project is implemented also uses the emission reductions. One way to address that is currently these projects are not yet available but they will become available – that’s projects where the countries have authorised the project and have declared – okay we will not use this project to achieve our own climate pledges but we will when we make our climate balance we will not count this project. That’s called projects or credits with corresponding adjustments under the Paris agreement that’s a very technical term, but the idea is that countries balance these emissions. And so, then you are sure that this project goes beyond the climate commitments of the countries.

Elisabeth Ignasiak: Uh hmm. But you said that’s not an established mechanism, just yet.

Lambert Schneider: Yeah, it’s in the making. So currently, countries under the Paris Agreement, they are negotiating the rules for international carbon market approaches for offsetting etc. And these rules have not been adopted, hopefully they will be adopted by the end of this year, at the next Climate Conference in Glasgow. And once these are adopted countries will start authorising projects. For example, Switzerland and Peru, they already have a bilateral agreement for carbon projects and they have included in that bilateral agreement the possibility to use these credits in the voluntary market. So it’s credits from Peru, but Peru will then not use these credits to achieve its own climate targets.

Elisabeth Ignasiak: That, that does give me hope that this will change. That’s, that’s really cool to know.

Chinmai Gupta: Right, and what sort of projects should our listeners look out for?

Lambert Schneider: It’s always hard to say because in each sector, there are good projects and there are not so good projects. But I think there are some rules of thumb, right? So I personally like very much projects which have a lot of social environmental benefits. So, there are some standards for place particular emphasis to this, like the CDM or the Gold Standard in combination with CDM for example, or there’s a community standard which works together with the verified carbon standard etc. So there are some top up standards, which really verify that there are benefits for local communities and environmental and social safeguards in place. I would also focus on projects, developed by non governmental organisations. I mean, that’s a pure preference, personal preference. It’s not that, from profit companies both projects are not good, but from non governmental organisations who work with local people, if they make profits, they can reinvest these in other activities, their communities benefit from, right? And so typical examples are cookstove projects for efficient cooking, biodigesters which use methane from waste, also for cooking, energy efficiency improvements with households, things like that.

Elisabeth Ignasiak: Okay. So to summarise, we want to look for standards, because they ensure other benefits right like that the local communities benefit and things like that. And you personally have a preference for NGOs, because we know that they use their profits not just as profit, but to reinvest in those communities and other projects.

Lambert Schneider: Yes, exactly.

Chinmai Gupta: I think I found the advice that you just gave in terms of what sort of projects our listeners should look out for, I found that really interesting, because I wouldn’t know where to start if I didn’t have a guiding point. So that’s really helpful. Would you give our listeners some general advice regarding offsets?

Lambert Schneider: Yeah, I think there are some sources in the web, which may be useful. For example, Stockholm Environment Institute has developed a guide which is called offsetguide.org. And that gives a lot of practical advice like what type of due diligence should you do when you buy a carbon offset credit. They also have a table where they list different project types, and they indicate the likelihood of additionality and the benefits that these projects have so you can see how they compare. We are working with WWF and with Environmental Defense Fund in the US, we are working together to develop a grading, or rating of carbon credits, where we also analyze all these different quality aspects and we give grades individually for each quality aspect because you cannot compare them or aggregate them. And so we hope that this will be ready in maybe half a year or a year and once that is ready. It will also be a useful resource but it’s not available yet.

Elisabeth Ignasiak: We will definitely be on the lookout for that. So, basically what you’re saying is, look out for the experts that investigate the various projects and give advice on which ones are effective for additionality and permanence and all these criteria, right?

Lambert Schneider: Yes, exactly.

Chinmai Gupta: Thank you very much for your time today. We really value your inputs. So thank you. 

Elisabeth Ignasiak: Thank you very much. 

Lambert Schneider: It was a pleasure, thank you.

Discussion: 27:04

Elisabeth Ignasiak: After everything we heard, what’s your view, Chinmai?

Chinmai Gupta: I really liked 2 points that Anja made. One was where she said that climate change is a global problem and so it doesn’t really matter where you reduce emissions. And the second point was that if you have a limited amount of money, it could be a good idea to invest where the projects are the cheapest. That would make your money go further and have an impact too. What were your thoughts? 

Elisabeth Ignasiak:

I really liked the point that Lambert Schneider made, where he said that rather than looking at offsets as compensating my emissions, I am helping another country to reduce theirs. 

Chinmai Gupta: I think that our collective conclusion then is that we need to use every trick in the book in order to bring down our emissions and that offsets play a really important role. It’s not an either or situation. We clearly need to reduce our emissions, plus we need to draw carbon out from the atmosphere too.

Elisabeth Ignasiak: Having said that you should be really quite careful and selective in where you purchase carbon credits, as Anja explained really, really well. And of course, we are all about making things easy for you, our listeners. We went on a hunt for trustworthy offsets and we did A LOT digging and research and we have 3 suggestions for you.

Chinmai Gupta: But rather than creating an information overload in this episode, we thought we could present them to you in smaller digestible chunks! 

Elisabeth Ignasiak: We will use the next 3 Mini-Episodes to present you our favourite offsetting solutions. So stay tuned!

Chinmai Gupta: And while we’re talking about staying tuned: Please give us a review on iTunes, Spotify, or whichever app that you use to listen to our show. 

Elisabeth Ignasiak: Or all of them. Go to iTunes, give us a review. Then download all the other podcast apps you can find and give us a review there too!!

Chinmai Gupta: If you don’t, we will know!

Elisabeth Ignasiak: You have until next week, otherwise.. otherwise what? Chinmai?

Chinmai Gupta: We’ll be sad.

Elisabeth Ignasiak: Yeah. We will be very sad.

Chinmai Gupta: So.. see you next time everyone! Bye Bye

Elisabeth Ignasiak: Bye bye