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April 26, 2007


Dave Pratt

Thanks for your great blog Joel. It's too bad that offsets have become the distractions that they now are. I just started "TheGlobalWarmingBlog" yesterday. I hope I can bring some helpful information and real solutions to the process. We need to focus on realistic non-polluting strategies to stop our contributions to global warming. Perhaps the more gullible will have to follow the false promise of offsets in the meantime.

Erin Carlson

Totally agree that reductions have to be the focus first. And agree a company/consumer needs to be careful to get high quality offsets. But one issue you might be forgetting is that when a company is paying for offsets, it shifts the whole perspective of investment decisions in efficiency gains. I've already seen it in the minds of company facility folks. We understand that it’s more economical to invest in some efficiency options we may not have considered before if it means we don’t have to offset that energy use later.

robert veach

It is almost becoming like the religious preachers that drum on and on and get people to send money in to a good cause but never have the time or the resources to follw up and make sure that the money is not going into the wrong hands. I worry just as Joel does that there is a saturation being reached in the environmental arena.


I'm glad this conversation is coming up again. When you use the oat bran information, it made me think about the role of the FTC in this process. I think there's a possibility that the regulation of company carbon offset claims will come from the FTC, should they decide to get involved. If companies buy offsets from other offset providers and brokers, but the offsets aren't legit or additional, etc., that company marketing the fact that they have offset operations will be in a bind. Am I making sense? So the possibility of FTC review of company marketing claims could be regulatory, to some extent. Not sure though...

Jay Barnes

My website, www.energyrace.com, guides people through the process of making CO2 reductions and tracks their progress to sustain their interest.

I recently got a request to let people record CO2 reductions using offsets. A good idea. But the quality or at least inconsistency issue you describe is an obstacle. If the Offsets vendors could agree on a set of strict standards everyone would be better off.

You make an interesting comparison to oat bran. A less elegant comparison would be to the financial services market pre 1929 crash. Little or no regulation with people not really understanding exactly what they were buying.

Jason Smith

To their credit, TerraPass has gone back and done remarkable research on the project that BusinessWeek called into question and found that in fact the project was "additional".

Furthermore, the issue of whether or not a project is additional eschews the fact that what we need more than anything is a price tag on CO2 reductions so that projects, whether or not they are new, make more money merely by virtue of the fact that they reduce greenhouse gas emissions. We need to change the conversation and make it more economical and profitable to reduce emissions than it is to continue business-as-usual approaches. Once we get a clear price signal, well-regulated markets with transparent rules and regulations, and strict adherence to baseline assessments and reductions monitoring, this can work almost by itself to drive technological and efficiency improvements.

In the meantime, and thereafter, individuals and businesses that find it difficult or impossible to finance those technology or efficiency improvements in their own lifestyle can be part of the movement that drives the markets to achieve environmental benefits. All of this, while raising awareness about our personal and organizational impacts on climate change?

I think offsets are an appropriate and valuable tool for climate change action and education. That's one of the reasons I love what I do.

Jason Smith
Executive Director,
DriveNeutral.org and FlyNeutral.org


@Jason - "To their credit, Terra has gone back and done research..." I don't understand the need for BusinessWeek-postmortem research. Shouldn't they already know whether they are funding an additional product or not? Why are people paying them for offsets if they have no idea what types of projects they are giving money to? It sounds like you are saying, "Hey, look at that windfarm! Cool! We have all this money people have been paying for offsets, so let's take 70% of it and just give it to the farm. It's greener than a coal plant, right? And let's take the rest and live on it. We'll call it an administrative expense of doing business. Wow, we can just take a little off the top of everyone's offset money and be rich. And green businesses will get richer, too!"

In your second paragraph, you basically state there's no need to determine whether offsets go to additional or non-additional projects. If you give money to projects that were already going to happen, you're just giving more profit to businesses that already decided to make an investment in more efficient stuff. But the point of funding 'additional' projects is to incentivize carbon-light projects that may be expensive, right? To move the market in a lighter carbon direction, right? Projects that businesses wouldn't invest in due to being cost prohibitive, right?

Maybe I misunderstood what your arguments were.

Steve Voien

Reduce, Reuse, Recycle, and if all else fails...

Good column. As the ethics eggheads and anti-corruption crusaders tell us, sunlight is the best disinfectant. Scrutiny will clean up the business and enlarge its impacts. But I disagree that offsets are the equivalent of oat bran (which, by the way, cereal makers still sell massive quantities of; oat bran was a genuine market shift, albeit not so large as it initially appeared). There's a hint of moral judgement in that argument (making a difference is supposed to be hard!) that obscures the point: Yes, we want less carbon to go up the chimney, but we also want some of it to come back down. Sequestration is good. Trees are good. If a whole lot of us buy offsets in a cleaned up market - which a whole lot of us seem prepared to do - it will make a substantial difference over time. And if people have fun using that little offset calculator, some of them will bring it into the workplace and take it scale.

People often feel like enviro problems are just too big and too hopeless, so they do nothing. Offsets give us a small opportunity to break out of that apathy. Suddenly I can measure and reduce my individual contributions to the biggest scariest problem ever. I feel better about the odds that my Bay-level front porch will be dry under my rocker when I collapse into it, and about the planet my grandkids will grow up (paddle around?) on. I don't have to wait for the next election's political party or the EPA or RAN or the faith-based green movement or anyone else to do something.

Tell me what's wrong with feeling good about that? My guess is that letting people feel happy about a small accomplishment will propel some of them toward more substantial action. Offsets might be their baby step onto a virtuous slippery slope - the downward carbon trend line we all want to see.

I see that some of you are waving your hands in distress, so let me set up a premptive forward defense perimeter. Yes, we do have to put offsets in perspective for those that buy them. They aren't the Answer. They're just a tool in the box, and should be a tool of last resort at that.

So let me propose a new green action hierarchy. Print the following on every cute little carbon offset certificate that sells: Reduce, Reuse, Recycle, and if all else fails ... Offset.

(You may have to be a parent to get the lame joke with which I'm going to wrap up this post.) Hey - I wonder if I can get Jack Johnson to rerecord that R-R-R song on the Curious George album? If he won't, I'm sure I can get through to the Black Eyed Peas.


@Steve, I'm not trying to take over this post, this is my last comment, but I think another good phrase for this situation is "conserve first, offset second."

Ken Ott

Joel, thanks for the breakfast companion piece. Offsets definitely remind me of indulgences and I've been waiting to see a definitive label such as TransFair's "Fair Trade" label become widespread before jumping in. Such a label should strictly enforce additionality.

Offsets are definitely light/bright green. I agree with the posts above that measurable individual results, home by home, are a good way to generate a culture of darker green. We need bulletproof data collection to show baselines and progress in reducing GHG's. Carbon calculators are good for this; walking, bicycling, and taking the train are better than offsets and should be the ultimate goal.


Ken Ott

Jason Smith


I think there is some misunderstanding but even more, perhaps, a difference in opinion. Let me see if I can clarify the misunderstanding.

I said, "To their credit, Terra has gone back and done research..."

TerraPass, who I do not like defending because frankly I don't think offsets should be a for-profit proposition on a moral level, did do this research before the BusinessWeek article came out. They felt very confident the project met the necessary standards to qualify as additional before they began selling these credits. The BusinessWeek article brought to light some of the complexities behind doing this type of research and TerraPass said “OK, we will consider your criticisms and reexamine the project publicly for all to see”. They still came to the same conclusion. The project is additional.

You said, "It sounds like you are saying, 'Hey, look at that windfarm! Cool! We have all this money people have been paying for offsets, so let's take 70% of it and just give it to the farm. It's greener than a coal plant, right? And let's take the rest and live on it. We'll call it an administrative expense of doing business. Wow, we can just take a little off the top of everyone's offset money and be rich. And green businesses will get richer, too!'"

That's one major reason I am against for-profit offset companies. All the money that is made by the transaction should go to expanding the audience and participation of offsets so that we can really achieve the mission of averting a climate crisis. In terms of quality projects, these are a must for all legitimate players in the industry. The question is what constitutes quality and while CCX rules are transparent and rigorous, not everyone agrees with them. It's a young and still maturing market. That said, in the retail world, there are very, very few “rogue, get rich quick” companies out there and yet there are a lot of accusations that don't match this reality.

You interpreted what I said regarding additionality as, "If you give money to projects that were already going to happen, you're just giving more profit to businesses that already decided to make an investment in more efficient stuff".

That's an incomplete assessment of what I said and intended. My point is this; if we know that company X had a 10,000 mton footprint in 2001 and we set up a cap and trade in 2003 and company Xs footprint is 8,000 mtons in 2004, they should get credit for those reductions, even if they were planned (but not implemented) in 2001. What's important is that we show a clear price signal on real and durable reductions against a qualified business-as-usual emissions baseline. If companies can make more money by doing the right thing, we will see more of the right thing happen and more companies and industries get involved. More of the right thing happening equals "additionality". We get the same results with a different upfront focus. I firmly believe that the baseline is more important than the concept of additionality because they lead to the same result and we get a bigger more mature market if we think this way. This is, in fact, almost precisely how the CCX is designed to operate. And it works well.

My guiding commitment in this is to help allow the markets to have a chance to work instead of damning them to failure before they've had a fair shake. There is too much to lose if we don’t get it right and work together to make it work in a reasonable and effective way.

Hope this helps clarify my position.

Thanks for the conversation,


Its about time the companies selling offsets are exposed to the light of day. I certainly believe that offsets can be a part of the solution but not without adequate reporting, verification, and additionality standards. More importantly without additionality standards the verification and reporting are meaningless. A verified non-additional offsets is exactly that. Which brings me to the posting by Jason Smith about terrapass' internal audit of the landfill gas project. Terrapass's conclusion was that the project meet CCX additionality standards and therefore is addtional and its CO2e reductions can used as offsets. The problem is that CCX doesn't have any meaningful additionality standards. They have Carbon Financial Instruments (CFI's) for sale in their market. CFI can come from any CO2 reduction project, regardless of where the project was truely additional.

Again offsets can play a valuable role but not unless offset providers start taking additionality seriously.

Tom Stoddard

Hi Joel - thanks for acknowledging that offsets have a place - alongside and after reducing. Let's keep hammering that theme, both to the folks who say we shouldn't offset, we should reduce instead, and to the folks (if any) who promote offsets as an alternative to reducing.

I read your piece overall as a warning: Offset marketers, clean up your act or the market will dry up underneath you. I read your warning as focusing on two issues: first, the potential for backlash due at least to the perception that offsets are being promoted, or even used, as an alternative to reducing, and second, additionality.

After 9 years in the RE/offsets market, I view the concern that large numbers of people are offsetting, or will, instead of reducing, does not comport with experience. The fact of the matter is that as a rule, those who don't care enough to reduce don't care enough to offset either. So far, false alarm. I can't predict whether that will change, but I expect that with proper education and encouragement from offset marketers, the pace at which any increase occurs in the numbers who offset instead of reducing will be slower than it would otherwise. It is our responsibility as marketers to do what we can to prevent such an increase. But we also have to keep in mind that many of us face very real limits on the amount we can reduce. Offsetting can be a valuable means to make up for the emissions we can't avoid, if done properly.

Which brings me to the second issue: additionality. Here I'd like to amplify your warning. My views on additionality - and NativeEnergy's - can be summed up as follows: Businessweek, Financial Times, and on May 7, the Nation.

No matter how long and hard you argue that additionality is unnecessary, you will never escape the fact that people, when they part with money for offsets, assume or want to know that they are making a difference. Non-additional CO2 reductions are defined as those that would have happened anyway - they are defined by the fact that buying them makes no difference.

As long as there are significant quantities of non-additional CO2 reductions being sold as offsets, there will be significant numbers of articles of the Businessweek / Financial Times / The Nation theme, until the sale of non-additional CO2 reductions and the articles they spawn, take the market out from under real offsets. When that occurs, we will have lost a valuable tool in the fight to stop global warming.


As a follow up,
Jason you seem to have a very different view of additionality than most people:
"If companies can make more money by doing the right thing, we will see more of the right thing happen and more companies and industries get involved. More of the right thing happening equals "additionality" "
here is a definition i like, and one that i think most people who buy offsets agree with:
A dollar spent on project x will be the proximate cause of x lbs/tons of CO2 keep out of the air.

by this definition CCX's CFIs are not necessarily additional. In fact morst CFIs are not additional by this definition.

what i trying to say is that if the reduction is going to happen anyway why pay for it? why not save your dollar and use it to buy a CFL and send it to a friend.

Jason Smith


In answer to your question, "what i'm trying to say is that if the reduction is going to happen anyway why pay for it? why not save your dollar and use it to buy a CFL and send it to a friend".

While I won't go so far as to say that CCX credits are not additional, I will agree that their standards of additionality are not universally accepted and may not conform to the demands of some assesments.

So why buy CFIs as offsets? Because in all cases these credits represent real reductions below business-as-usual emissions. That's a fact considering the emissions baseline standards of the CCX. Consider this in contrast to RECs where there is no baseline at all.

RECs can represent more wind power going into the grid even as the demand for electricity from that same grid outpaces the increased power provided by wind. What this means is that the grids carbon footprint can continue to grow despite your purchase of wind RECs.

However, if you cap the grids carbon footprint and give the company who owns the grid CFIs for real reductions, you can only get credit for the wind energy that outpaces the growth in demand and you get real reductions. That's the CCX approach: real verified reductions today.

Lastly, CFIs put a price tag on pollution and a profit on the appropriate behavior given the current state of our climate. Therefore, voting for CCX CFIs with your offset dollars gives CCX members the signal to plan on and implement more reductions. That's why it's a great tool for offsetting. The market mechanism used means you get more leverage for your contribution because you are, in effect, driving the markets to do what they do best; lead to real reductions below the business-as-usual baseline. You may disagree with this approach but it couldn't be more effective and certain to lead to real reductions from an economic perspective.


I couldn't agree with you more that CCX CFI represent real reductions. That is a fact. I also agree with your statements about RECs. without a quantifiable real reduction they shouldn't count as offsets. I think you hit the nail on the head when you state "That's the CCX approach: real verified reductions today".
The issue i'm trying to raise is that reductions do not necessarily equal offsets. There is an important distinction between a regulated market and a voluntary offset. While CCX is voluntary it is structured as if it were a capped, regulated market where every sector of the ecomony is required to partake. I think you are mistaking offsets and real reductions. CCX CFIs represent real reductions but without high, meaningful additionality standards, like CDM standards their CFIs shouldn't be move from their 'regulated' market into the voluntary market.

When people buy offsets in the voluntary market they are assuming that their dollars are the proximate cause of the reduction they purchase. They assume their purchase is an offset not just a reduction. This is why they purchase 'offset' and not a product called CFIs.

their needs to be a clear distinction between the voluntary offset market and regulated market for CO2 reduction. CCX although voluntary is structed as a regulated market might be in the future. CFIs are not offsets just because they represent real CO2 reductions.


Jason - you don't understand what a baseline is. A baseline is not a cap and only a cap, as you seem to describe. A baseline is simply the measure of what was happening and would have continued to happen, in the absence of the CO2 mitigation project.

And so you are 180 degrees incorrect when you say that there is no baseline in the context of RECs. Wind farms displace power from fossil fuels, period. It doesn't matter if demand on the grid is rising, falling or static. If the wind power wasn't produced, that much more power would have been from fossil fuels. If the wind power is produced, that much less power is produced from fossil fuels. The difference between those two - between the "with wind" case and the BASELINE "without wind" case represents a real reduction. To deny that wind farms create real reductions even in the context of rising overall electricity use is the same as saying that it does no good for individual people to reduce their own electricity use, if their reductions are going to be outmatched by growth in industrial electricity use. It is the equivalent of saying we shouldn't bother trying to slow global warming unless we can stop it completely.

Adam Stein

There has been a very good exchange of ideas on this thread, and I don't have too much to add, but I do want to point out that one of the central contentions of Joel's post is not in fact true:

...companies and consumers might soon tire of, if not rebel against, marketing claims that they could effortless buy their way to climate salvation by writing a small check.

No responsible retailer of offsets makes such a claim. A quick survey of the major offset retailers shows that they place an emphasis on the need to conserve first and then offset. Indeed, it is critics of offsets who make statements about "buying environmental salvation," not the providers.

And the good news is that most people do in fact use offsets are part of a broader strategy to fight climate change. People who are willing to voluntarily tax their own carbon emissions are people who care about their impact on the world.

Carbon offsets themselves are clearly not enough to solve climate change. Neither are CFLs, plug-in hybrids, wind farms, or any other individual solution. A broad-based strategy is required, and offsets have a valuable role to play in financing the transition to a low-carbon future.

Adam Stein
Co-founder, TerraPass

Adam Stein

Darn, I thought I was going to get away with a single comment, but there is one other important factual mistake in the post:

In one example, a waste-disposal company was being paid for capturing methane gas emitted by a landfill, something that the disposal company had been doing for years, long before it sold the captured emissions as offsets

Again, this is simply untrue, although the mistake is BusinessWeek's not Joel's. A timing test for additionality is the simplest and most basic test applied to projects. You cannot generate carbon credits for projects that are too old for consideration.

Additionality is a complex topic, and there are many reasonable people who disagree over what criteria should be used to establish additionality or whether the concept is even practicable. But false statements of the sort found in the BusinessWeek article unfortunately only obscure these underlying issues.

Jessica Williams


Your post brings up an issue I have been thinking a lot about and feel like there is much confusion around, and that is the relative value of an offset versus a reduction as a balance to an individual's on going emissions.

I have the impression that you think offsets are better and/or that is what the public prefers. Is that correct? What makes you think that? Lately, as I understand the systems better, I have been leaning more towards reductions as being more beneficial. From a layperson's perspective they just seem more absolute and guarenteed to shift the level of emissions in the air than an offset. Am I missing something? Why do you feel like offsets would have a bigger impact?

I appreciate these continuing dialogues as the topic is complex. Every time I feel like I have a strong grasp of the issues a new angle is introduced.

Hun Boon

I'm not familiar with the intricacies of carbon offsetting.

But my impression is that it is vulnerable to figure manipulation, similar to the errant accounting we've encountered over the past few years.

Are there any auditing standards in place?

Dave Sag

Good analogy Joel.

Carbon Planet (http://www.carbonplanet.com) espouses a philosphy of:

* Measure (via formal ghg emissions audits that comply with the Greenhouse Gas Protocol in the Corporate Accounting and Reporting Standard 2004, an international standard),

*Reduce (via tailored emissions reduction strategies that focus of the main sources of your emissions as revealed by the audit),

* and then Offset using only properly accredited carbon credits.

We transfer legal ownership of those carbon credits to our customers, thus ensuring 100% transparancy.

We employ a very large team of chemical engineers, as well as a botanist, a marine biologist, fuel cell experts and other specialists who produce these emissions audits and recommendations, and have a very experienced carbon origination team to source quality offsets to suit any need.

In addition to that work we lobby governments for higher standards, run a schools programme teaching kids about emissions reduction, and are active supporters of the Greencode Project (http://greencodeproject.org), which aims to green the screen industries.

Offsets will not save the planet, that is obvious, but, done properly, and in support of wider, genuine enironmental aims, offset projects are something businesses can invest in right now to make a difference, channeling funds to an expanding pool of planet-saving projects. Done badly, offset projects are, alas, little more than a fraud.

There are many good offset projects out there and people, and buinesses who take environmental goals seriously must take the time to investigate their offset providers in the wider context of long-term emissions reduction strategies.


Dave Sag
CEO - Carbon Planet

Bill Barney

I learned of your blog through www.cleantechblog.com. I really enjoyed this post on offsets.

Where does your personal footprint begin and end? For example, if you pay someone to mow your lawn, does that emission belong to you, him, or his business? Are you responsible for emissions that you create in the line of your work?

A very brief and unscientific study I conducted while listening to the Red Sox tonight showed that my personal emissions vary from 7 to 53 tons depending on whose carbon calculator I use.


So as a typical consumer, if I am buying offsets, I buy from whomever gives me the lowest carbon total and the best overall price. Because as offsets become more popular, the "product" may be the ability to claim carbon neutrality, rather than an actual, measurable effect.

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