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April 28, 2021

So Are All Carbon Offsets Bad?

Mark Trexler

You've probably seen a recent and powerful Bloomberg video criticizing a particular Nature Conservancy carbon offset project. I'm extensively interviewed, albeit not about that specific project. 

The video has gotten more than 200,000 views, and my LinkedIn post to the video has received much more than the "typical" LinkedIn reaction, including a comment from carbon markets expert Steve Zwick:

Mark Trexler, as written up, this project looks fishy, but he seems to be saying they’re all bad. I remember the Darkwoods project got a similar rap, and it turned out that the Nature Conservancy of Canada (no relation to TNC) had no trouble finding donors to buy properties, but they had trouble finding donors to maintain them — so the project actually made sense. Also, 12 years ago, wasn’t the big challenge in the US about finding ways of helping private forest owners pay their bills without chopping trees? I remember when Obama came in, that was the big concern. As I recall, these IFM methodologies grew out of that. Or am I mixing things up? Either way, there’s a larger context that seems to be missing.

So I wanted to bring a bit of nuance to the conversation that is hard to get across in a short video or just in a LinkedIn comment.

First, I'm definitely not saying all offsets are bad, and I don't think Ben Elgin is suggesting that either. But that's certainly a possible takeaway from the video. So ....

The real question is, is this a "gotcha story" ala periodic welfare fraud stories where it turns out someone has been collecting multiple checks and drives around in a cadillac? The problem with stories like that is that there is no such thing as a perfect system when it comes to qualifying anyone for anything, and there will always be outliers that don't mean much for the efficacy of the larger system. While the welfare story makes for good headlines, it tells you nothing about the larger system of welfare payments (which actually is pretty robust).

Is that what Ben Elgin is doing in this piece? Targeting the one bad apple in barrel full of good apples? I don't think so.

  • First, Ben has been covering this topic for a decade, and I have been working in this area for 30 years. Lots of bad apples have been uncovered.
  • Second, it is hard to envision one bad apple in a barrel. Rot spreads through the barrel pretty rapidly, and that's not a bad analogy to the voluntary offset market. If one person can get away with something, others will be forced to do the same in order to stay competitive in that market.
  • Third, there's a lot of literature out there questioning these markets. One study concluded that 80% of the Clean Development Mechanism offset market was probably non-additional, and that was a regulatory market! (I'm not vouching for that number by the way)
  • Fourth, there are plenty of other examples of bogus offset credits. Hundreds of millions of Renewable Energy Certificates were sold as offsets with no environmental benefit at all. And I recently came across a new offset seller, Silviterra, that as far as I can tell is already selling offsets to Microsoft and others based on delaying timber harvests by a year that are not additional, are not permanent, and likely suffer from 100% leakage. Seriously?

But here's the real takeaway. As I explained in another post earlier this week, doing carbon offsets right is HARD. Additionality, as it turns out, is TRULY difficult to effectively implement. If you want to see what I think is a really interesting case study of the challenge, take a look at that post!

Let's step back from the weeds of this particular offset project and story. Thinking about carbon offsets from a systems perspective, what do we know?

First, we know that additionality is a real challenge. Here's the short version:

Trexler quote re designing pregnancy test

Second, we know that the potential supply of non-additional "offsets" dwarfs the supply of of actually additional offsets, and market demand. (If you don't accept this statement as factual get in touch with me. It's absolutely true!)

graphic showing false positives in additionality

Third, we know that given human nature, offset rules will be gamed.

graphic with quote re 1000 smart people waiting to game climate policy

Given these three realities, doing carbon offsets well is going to be hard! It's going to require asking ourselves at every step along the way: what's the possibility I'm getting this wrong, and what would be the implications for the offset market?

So that's what happens, right? Um ... no.


As long as this remains true, it's impossible to have much confidence in offset markets. Are there things we could do to improve offset markets absolutely! Score offset projects for one! But because so many projects would end up with a low score, no one wants to do that.

Originally posted in substantially same form on LinkedIn.

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Mark Trexler

Mark has more than 30 years of regulatory and energy policy experience. He has advised clients around the world on climate change risk and risk management. He is widely published on business risk management topics surrounding climate change, including in the design and deployment of carbon markets. Mark has served as a lead author for the IPCC and holds advanced degrees from the University of California at Berkeley.

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