A Quality Continuum

There are numerous types of greenhouse gas (GHG) emissions reductions and enhanced sequestration that have been packaged as carbon offset projects, but very few can unequivocally satisfy the key offset qualification criteria:

  • Additional
  • Permanent
  • No Leakage
  • Measurable and Verifiable

One of the closest things to a “perfect” offset project might be injecting carbon dioxide into particular rock formations, triggering a chemical reaction that literally binds the CO2 to the rock. You can learn more about such an offset here. The sequestration is permanent, there is no obvious leakage potential, it is measurable and verifiable, and is almost certainly "additional." That’s because there is no reason to undertake such a project other than to mitigate climate change, and the project is dependent on mitigation funding.

That’s the good news. The bad news is that this kind of project won’t be local, it will have no social or environmental co-benefits, and it currently costs more than $500/ton of CO2 sequestered. That's far above today's willingness to pay for all but the most extreme offset purchasers. And it raises an interesting question that we won’t further explore: If you are willing to pay $500 for a carbon offset, what else could you spend that money on that might have a bigger impact in mitigating climate change?

While “perfect” offset projects like the one described above can exist, the vast majority of carbon offset projects can’t come close to the same profile when it comes to satisfaction of the key offset criteria:

  • The “permanence” of projects can range from “truly transient” to “truly permanent.” Very few projects, particularly when it comes to land use-based projects, can claim anything like the “permanence” of turning CO2 into rock.

  • Most projects will inevitably see at least some “leakage” of carbon benefit due to economic feedbacks of various kinds. Plant trees in one place for future harvest, and someone else may forego planting their trees. Shut down a coal mine, and more coal will be mined somewhere else. Protect one forest and the pressure on nearby forests may increase. Very few project types can claim anything like the “zero leakage” associated with turning CO2 into rock, and indeed can face leakage rates as high as 100%.

  • Very few offset project types can claim “clear additionality,” i.e. being entirely attributable to the workings of the carbon market. When it comes to energy efficiency, methane capture, and reforestation, for example, hundreds of public policies in the United States alone require such projects to be pursued for all kinds of reasons having nothing to do with the existence of a carbon market. While “additional” projects in these categories can certainly exist, very few project types can claim anything like the “clear additionality” of turning CO2 into rock.

The net result is that any given proposed offset project can be characterized by how robustly it performs against the key offset criteria. If you put all that information together you can compare projects to each other along an “offset confidence continuum.” A few projects like turning CO2 into rock might be at the “extremely high” end of the continuum, many more are likely to be closer to the “very low” end of the continuum, and the large majority will be somewhere in between.

In the image below, for example, you can see that the “average additionality” of different kinds of potential carbon offset projects can vary widely, and that there is no obvious “additionality threshold” to use in determine whether a project is or is not “additional.” We can see, however, that the additionality case for “permanent riparian reforestation,” will be much easier to make than for “nuclear energy.” Even then, depending on the size of the overall category, you may still need to act to limit non-additional riparian reforestation projects from getting into the offset pool. 10 or 20% of large category, for example, can still be a lot of tons that help to undermine the environmental integrity of the offset market.

The fact that offset quality can be thought of as a continuum has a lot of implications for designing carbon offset markets. Ideally, one would design an offset market to encourage purchasers to buy offsets located as far up the continuum as possible.

Instead, in today’s carbon markets purchasers have no way to differentiate between emissions reductions and carbon sequestration initiatives at the higher and lower ends of the continuum. Once an offset has been approved it is generally characterized as being of equivalent “quality” as another other offset. That has resulted in two different races that don’t promote the environmental integrity of offsets:

  • A race toward the bottom of the continuum where the cheapest offsets are available.
  • A race toward the offsets with the best stories

It’s worth noting that one can envision ways in which the necessary information could be communicated to purchasers, e.g. through an offset quality scoring system. You may see more information about scoring offsets as part of this Climate Site.