What Are Carbon Offsets & Should I Buy Them?

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You may have heard that some people and companies are buying carbon offsets as a way to help fight climate change. But how do they actually work, how much do they cost, and are they a good idea or (as some people believe) a con?

Today we'll answer all your questions about carbon offsets, so you can decide for yourself.

What Are Carbon Offsets?

We all have a carbon footprint which is caused by activities in our everyday lives.

Whether it be greenhouse gases caused by our daily commute, the electricity we use which comes from burning fossil fuels such as coal or natural gas, or simply the food we eat or the clothes we wear.

Climate data shows that nearly everything we do has associated greenhouse gas emissions either directly or indirectly, and this all contributes to climate change.

We know that the problem is largely caused by human activity, and it's down to humans to stop it.

what are carbon offsets

As part of a drive to live a more eco-friendly lifestyle, we should be doing everything we can to reduce our personal carbon emissions in the future. But there is a limit to what we can realistically do, and we also need to take steps to try to deal with the carbon that has already been produced.

Carbon offsets are one way in which we can try to achieve that.

When you buy a carbon offset, you are investing in a scheme or renewable energy project designed to reduce carbon dioxide and other greenhouses gases in the atmosphere.

How Do Carbon Offsets Work?

Carbon offsets can be purchased by individuals, organizations or even entire countries.

The idea is that you look to invest in schemes that actually remove carbon emissions from the atmosphere. If you can remove as much greenhouse gas as you produce, then you have in theory achieved a net zero carbon footprint.

In the past, most carbon offsets would involve planting more trees. Because trees sequester carbon dioxide, they are a natural, effective way of removing greenhouse gases from our atmosphere.

However, these says there are a wider choice of schemes you can invest in.

Some carbon offset examples would include:

  • Renewable energy projects (large scale wind turbines or solar panels)
  • Methane capture schemes
  • Energy efficiency technology
  • Reforestation or tree planting projects

Carbon offsets are an important tool in the fight to address climate change. But only if used correctly. They are certainly not a silver bullet and they will not make the problem go away.

How Much Do Carbon Offsets Cost?

The cost depends on the size of your carbon footprint, and whether you intend to go entirely carbon neutral. But there are different ways you can purchase carbon offsets.

  • When you take a flight, you can choose to pay a bit extra to make your flight carbon neutral. The airline will then make the carbon offset investment for you.
  • Some energy companies offer carbon offsets, promising to generate an equivalent amount of renewable energy elsewhere for every unit you use.
  • You can also choose to invest in private carbon offset programs. You have the option to calculate your own carbon footprint and then invest the recommended amount, or simply contribute as much as you can afford.

If you don't know or don't have time to calculate your carbon footprint, you can also choose to buy carbon offset packages that are based on average carbon emissions.

Typically, a flight might cost an extra $7 to make your seat carbon neutral. An average American might spend $70 per year on carbon offsets in order to balance out the greenhouse gas emissions created by a typical everyday lifestyle.

Are Carbon Offset Projects a Good Idea?

Opinions are divided in terms of whether carbon offsets are an effective way to address climate change.

One of the disadvantages of carbon offsets is that most of them can only reduce the level of greenhouse gases produce in the future. Planting a tree is great, but it needs several years to grow before it can be effective. Providing renewable energy for developing countries is fantastic, but these clean energy solutions need to be build and then adapted.

So you get potential emission reductions somewhere down the line, but carbon offset projects do not reduce overall emissions that are happening now.

The other issue is one of complacency.

There is a danger that businesses and governments will seek to buy their way out of the problem of greenhouse gas emissions, instead of addressing it at source.

For example, money is better spent on adopting renewable energy rather than using carbon offsets to justify burning more fossil fuels. Similarly, companies cannot justify destroying large sections of rainforest simply by planting more.

At an individual level, paying for carbon offsets every time we fly does not mean we should stop worrying about the effects of air travel, and offsetting our vehicle does not mean we don't need to bother with public transport.

The aim should be to bring actual carbon emissions to zero, and then any carbon offsets would in fact result in an organization becoming carbon negative.

Where To Buy Carbon Offsets

If you've decided to purchase carbon offsets to help reduce your carbon footprint in the short term, the next thing you'll need to decide is which carbon offset scheme should you choose?

In some cases it's simple. If you're offsetting your carbon emissions due to taking a flight, then in most cases it's fine to pay the extra direct to the airline and have them make the carbon offset investment for you.

If you're looking to make regular or adhoc individual contributions, then companies such as Native or Green Mountain could be worth checking out.


Are Carbon Offsets Effective In Reducing Greenhouse Gas Emissions?

The majority of carbon offset projects are taking actions that aim to reduce carbon emissions in the future. Very few have any impact on greenhouse gases that are being produced right now.

The long term effect is likely to be positive, but there is no substitute for taking action to reduce your carbon footprint today.

Is Carbon Offsetting Greenwashing?

Carbon offsets do not necessarily constitute greenwashing, but in some circumstances they could be seen that way.

If a business (or government) has done all they can to reduce carbon emissions as far as possible, and is then using carbon offsets to achieve "net zero" then this is a positive move.

However, if they refuse to take action on their greenhouse gas emissions and are simply trying to buy their way to net zero, then this is clearly a misuse of carbon offsets and could well be seen as a form of greenwashing.

As ever, the devil is in the detail and you should never take a businesses' claims of green credentials at face value.

Are Carbon Offsets Tax Deductible?

Yes, carbon offsets are usually tax deductible in the US providing you are buying from a 501(c) (3) non profit organization. If you're unsure, always consult a tax advisor.

Can Carbon Offsets be Traded?

Yes, carbon offsets are being traded, although this is an extremely questionable practice which needs to be regulated.

Where Does Carbon Offset Money Go?

If you choose to purchase carbon offsets, it is likely that the company you buy from will deduct an administration fee to cover their overheads.

The remainder of your money will go to support the project you have chosen to invest in, whether it be renewable energy, reforestation, methane gas removal at landfill, etc.

When companies trade carbon credits however, it gets a little more complicated. As with any market, there are brokers and exchanges involved who also take a cut. It is always best to double check whether a company trades carbon credits, and if they do, then you may want to look at their activities in more detail.

The Final Word

Many environmental groups, including Greenpeace, have expressed severe doubts about the effectiveness of carbon offsets.

They have a point. If they are not used as intended, there is a severe danger that carbon offsets could be used to gloss over the problem of greenhouse gas emissions, rather than actually solve it.

However, it's hard to argue that schemes to reduce carbon dioxide and other greenhouse gases are a bad idea. Fundamentally, we all want to eliminate our carbon footprint, and anything that helps with that has to be looked on favourably.

As long as we are all clear that carbon offsets are just one weapon in our fight against climate change, and that they do not absolve us of our responsibility to cut down our personal and collective carbon emissions, then they can certainly be a part of the solution for years to come.

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With her Master of Science in Renewable Energy Engineering (MSREE) from Oregon Tech, Steph is supremely well qualified to write on all aspects of renewable energy. She has already achieved a zero carbon footprint and her goal is to help as many other people as possible do the same. Her other hobbies include music, yoga, swimming and horror movies.
Stephanie Cole
With her Master of Science in Renewable Energy Engineering (MSREE) from Oregon Tech, Steph is supremely well qualified to write on all aspects of renewable energy. She has already achieved a zero carbon footprint and her goal is to help as many other people as possible do the same. Her other hobbies include music, yoga, swimming and horror movies.

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