Getting the Most Out of Your Organization’s Carbon Offsets

In October 2018, the UN-convened Intergovernmental Panel on Climate Change delivered a high confidence estimate that the world has 12 years to achieve net CO₂ emission reductions to limit global warming to 1.5° C. Shortly thereafter, Oxfam put out a blog post calling out the international development and aid sector for not thinking critically enough about our own carbon footprint, knowing that the most devastating effects of climate change will be felt by vulnerable populations in low-income countries. At the very least, the post suggested, purchasing carbon offsets would be a first step towards change.

We at CGD felt prompted to take a critical look at our own activities and began learning as much as we could about emissions associated with CGD’s travel and office operations, and how we might address these more effectively. One option—purchasing carbon offsets—came up again and again. Was this a straightforward way to walk the talk?

To answer this question, we had to first take stock of CGD’s emissions, and we estimated that in 2018 we emitted at least 544 metric tons of CO₂ equivalent from flight travel and 244 tons from office electricity consumption. We’ve spent the past year trying to understand how carbon offsets can best be used by CGD (and us as individuals) to reduce our carbon footprint, and we purchased offsets earlier this year to cover our 2018 emissions. Out of that research, we put together Ranking Carbon Offsets: A Primer for Organizational Buyers to help other (small-ish) organizations as they embark on their decarbonization journeys, we’re sharing this here. We also looked more broadly at what we could do—our take-home lessons are also included at the end of this blog.

Evaluating carbon offset types

We found that carbon offset types vary strongly in terms of their quality, but—for the moment—industrial gas capture projects are the highest quality offset category according to our rankings. Keep in mind that we are evaluating these projects on the basis of how useful they are to make up for the greenhouse gas (GHG) emissions that our actions have already caused. All of these projects have crucial roles in the greater task of decarbonizing the world’s economies, and we cannot emphasize enough that these are rankings for projects only insofar as they are motivated by a desire to offset GHGs. It’s just that these are all not equally useful as absolution for GHGs already emitted.

The key to a high-quality carbon offset is that it either removes GHGs directly from the atmosphere, or, compared to a counterfactual projection, it ensures that fewer GHGs enter the atmosphere. Quantifying how much carbon is removed from the atmosphere is a relatively straightforward empirical exercise, whereas estimating a counterfactual scenario is typically rife with challenges. To sort through the complexity, we graded the carbon offset types that are readily available on the retail market using three criteria:

• Additionality: A project is additional if and only if there are fewer GHGs in the atmosphere than there would have been had no offsetting activity taken place. Otherwise, nothing is actually “offset.”
• Uncertainty: Several factors have to be considered to satisfy the additionality argument. A project where carbon offsetting is driven by a profit motive (e.g., a wind or solar farm), or is required by regulations, is not additional because the emissions reductions would have happened anyway. Payments for offsetting can create perverse incentives to pollute more if not carefully managed. Substitution effects can arise where another supplier steps in to satisfy demand for a mitigated resource (e.g., wood that was supplied by a forest protected with offset payments is now sourced from another forest, resulting in the same emissions).
• Offset Supply: Are high-quality offsets even available for retail purchase? Yes, but the high-quality credits we identify are a bit harder to track down than the others, perhaps because they lack the same visibility, “clean” image, and easy comprehension of something like a wind power project.

The bottom line is that for carbon offsetting, projects which reduce emissions of the most harmful types of greenhouse gases are most likely to satisfy all our criteria. Table 1 below shows the rankings of four general categories of carbon offset types, project subtypes, and the pros and cons of each. As emphasized above, these rankings only measure the effectiveness of a project for offsetting emissions, and they are not intended to comment more broadly on the value of these activities.

Table 1. Carbon Offsets, Ranked by Impact

There are many offset options available to organizations, but our research indicates that offsets that reduce non-CO₂ emissions, including methane capture and avoidance, hydrocarbon reduction, and nitric acid production, are currently the highest-quality projects available. However, each offset option has its own pros and cons that should be carefully weighed by organizations looking to reduce their carbon footprint.

This research is not a final answer but is a product of the information and technology currently available to us in late 2019. GHG capture and measurement technology continues to improve and will change how we assess these projects. Additionally, new empirical research may fail to vindicate theoretical claims that motivate some of our rankings. Our criteria are very much underpinned by the assumption that markets for things like forest wood are nearly perfect—that it would be easy for global supply to shift from one producer to another with little friction. Those might not be correct assumptions—indeed, we hope they are not. Likewise, there is a need for good research which benchmarks offset types by price and uncertainty, so that more direct comparisons can be made between the offsets of varying quality.

Lessons we’ve learned

Through our research looking for ways to reduce CGD’s emissions footprint as an international development think tank, there have been surprises. Here are some of our top findings:

1. Greening your inputs is better than offsetting bad ones. It’s better to limit amounts of travel or use lower-impact forms of transportation like trains wherever possible. Reducing our energy footprint also means evaluating our office energy suppliers. The CGD Europe office already purchases renewable energy, while our DC office is working to make the switch as well.
2. People want to travel less than we assumed. It might be because we’re all junior staff, but most of the frequent travelers in CGD would prefer to do it less—and if anything, we might be guilty of too readily asking people to come to us. People are looking for alternatives to work travel.
3. Videoconferencing (VC) has yet to fully realize its promise as a communication tool, making people reluctant to rely on it. Part of this is due to poor internet connections (out of our direct control), but there’s also room to improve our VC etiquette to facilitate better use. It takes practice, and we’ve been working on it internally. Likewise, upgrading VC tech to solve some of these issues (which CGD recently did) can quickly recoup its costs in displaced flights halfway across the world.
4. We’re not alone. We were quickly plugged into the Sustainability Managers Round Table, which comprises dozens of organizations around the world collaborating to reduce their operational footprints. Get in touch if you want to learn more.

Adapting to climate change means that organizations cannot continue with the practices and expectations inherited from previous generations and making gains at scale means aiming for bigger impact than individual behavioral change. We are only beginning to decarbonize, and it’s clear that offsets are only a temporary first step in this process of change.