The value of carbon offsets

Hanna writes*

While the dictionary definition of “offsetting” refers to “something that counterbalances, counteracts, or compensates for something else,” in the context of climate change it refers to the compensation for negative externalities of a specific activity or whole business operations on the environment, especially greenhouse gas emissions.

Carbon offsetting has recently become one of the more popular strategies to contribute to carbon emission reductions for individuals, corporations and institutions alike. In the long run, the ambition is to reach the goal of carbon neutrality.

Now, while there is a trend to offset carbon footprint, there are still many who don’t. Why is that?

Confusion remains on how exactly carbon offsetting is done and whether the sum of small monetary contributions to pay to allow an organisation to plant trees can build towards that goal or if it’s more like greenwashing to polish the annual report or fool customers.

There is actually no one way to do it and options range from the improvement of cooking stoves in households in India to planting trees to strategic investments in the development of renewable energy.

Reasons why people chose not to offset their footprint say when they purchase a flight, are multi-fold. The most common ones are: “I feel like I do enough by reducing my meat consumption and recycling” or “I am not sure if my five euros will actually have an impact.”

These may be valid doubts, but something needs to be done. The first argument puts recycling and offsetting in the same bucket while in reality this is like comparing apple and pears. “Just two hypothetical short-haul return flights and one long-haul round-trip in a given year would outweigh otherwise exemplary behaviour.” The second doubt relates to the effectiveness and the low costs associated with it. But certain measures used to offset, such as providing energy-efficient lightbulbs or cooking stoves are actually quite inexpensive.

The lack of trust in some of the mentioned offsetting schemes stems from insufficient transparency and a lack of internationally recognized standards and regulations. A critical task ahead!

Bottom line: While mindset shift and systemic change are needed to really tackle climate change, every contribution counts. Individual, corporate and public offsetting of all sizes needs to become part of how we go about our lives and prepare the ground for the adoption of regulation and large-scale solutions.


* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

3 thoughts on “The value of carbon offsets”

  1. I did a carbon footprint calculator and found out that compensating my whole carbon footprint five-fold would only cost 7 euros a month, which is ridiculously cheap – carbon neutral life costs less than Netflix (although of course, if everyone would start compensating their footprints, the cost would go up as there are only so many trees we can plant and improvements we can make). The cost being so small, the biggest obstacle for me to offsetting my footprint is the effort of doing the transaction on a separate site: When I booked flights with KLM and the compensation cost (3€) was one of the extra options, it was obvious that I would pay it. However, the times when I did not have the change to pay the fee so easily, I have just gotten lost in the compensation sites, and eventually said “fuck it, I’ll do enough by being vegetarian”. Therefore, I do think that the best way of advocating the compensations would be to have them easily available with purchases, which would also make the externalities visible in the prices. I also second your point that increasing the standards and transparency are important. If I pay for someone to plant trees this year, I cannot be sure that they will not be cut down in 10 years, or if we want trees in the west side of the country, perhaps more will be cut in the east side. I also once heard my friend calling these compensation schemes a complete green-wash, as she had heard that in some developing countries, the scarce resources that the poor citizens would need for growing food have been used for planting trees for the compensations, which is obviously unfair.

  2. Really interesting topic. I remember actually discussing the issue of transperency with my mom, who was complaing that the offset’s varied greatly across different airline companies. This meant that she was always left a bit in the shadows as to what exactely it was that she is contributing to by buying this offset. So transperency is, I believe, a big issue.
    Seeing as stopping people from flying will be extremely difficult, offset’s seem to be the best solution for now, even if they are very cheap most of the time and quite insufficent considering the amount of carbon realeased with each flight. Looking forward to your paper !

  3. I enjoyed reading your blogpost Hanna! The reservation that I have against these offset schemes is that I think it could create the illusion among consumers that buying offsets is an alternative to lowering their consumption. Recent research estimates that in 2100 the world population will fly nine times more kilometres per year and that even a 200 percent tax on tickets will not be enough to halt this development (https://www.cstt.nl/userdata/documents/peeters-phd2017-thesis.pdf). The ability to offset emissions could be a clever marketing tool that airlines can use to convince even people who would normally have reservations about flying to still buy those tickets. Therefore, I think they could potentially even increase the demand for flights, since the offsets are so cheap and optional.

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