Imagine an entity that is currently heavily dependent on fossil fuels pledging to become "net zero" by calendar year 2050. This is not unique, as numerous countries, municipalities and companies have made exactly this public pledge. The concern is that many will not achieve these pledges because they rely heavily on the use of carbon offsetting, employing offsets obtained (or to be obtained) from voluntary carbon markets (VCMs), which activists and others have criticized as having dubious value. Even assuming all carbon offsets are perfectly accounted for, some have estimated that there are not, and will not be, enough of them available when the time comes to fulfill all of the outstanding pledges.
Late last year, a prominent bottled water maker was sued for claiming "carbon neutral" on every bottle, as it relies on offsets to achieve the claim - a position fully compliant with the Federal Trade Commission (FTC) Green Guides. A motion to dismiss is currently pending in that case.
More recently, Delta Airlines was sued in California federal court, with the plaintiff alleging that Delta had falsely claimed to be "the world's first carbon neutral airline." The case is not per se about whether Delta claims to be, or is actually, the "first", but rather whether it is now or can ever be carbon neutral at all.
The complaint against Delta takes aim at the company's reliance on VCMs, which as I have written before, are coming under increasing attack. In the plaintiffs' allegations, VCMs and associated certifications are a "greenwashing scheme."
Plaintiffs did not choose their target haphazardly. Airlines are frequently criticized as outsized emitters of greenhouse gases -- by one estimate, about 2.4% of global emissions of CO2 can be tied to aviation. And if airlines are successful in growing ridership, that amount is likely to grow. These observations sparked a United Kingdom Advertising Standards Authority (ASA) action earlier this year.
Indeed, several airlines will now permit environmentally concerned travelers to pay extra for their airline tickets in order to offset the per capita carbon emissions attributable to their flight. I have not seen any data regarding how popular this option is, but I suspect relatively few travelers are choosing it.
It's worth looking at what offsetting actually means and how it is currently implemented. In its purest sense, an offset is an accounting transaction where an emitter of carbon will purchase an equal amount of carbon removal, sequestration or avoidance. The right side of the equation is supposed to be tracked from cradle to grave by a carbon verification organization, of which there are several big ones. Organizations that generate offsets voluntarily can put them up for sale after they have been verified and registered. There is really no point to a "grey market" for offsets as their value lies in the their recordation on a ledger maintained by the verifier.
But how do the offset businesses generate offsets? Here is the rub of the issue. The entire concept of offsetting relies on the assumption that global warming is a global problem, and that an offset of one ton of carbon that arises for example in Indonesia can be used to offset one ton of carbon emissions from an auto plant in California. I have not seen this assumption seriously questioned.
There are several ways to generate offsets:
First, a company with the right to emit carbon can voluntarily forego that right by reducing emissions and selling those "rights". As most places in the world do not require carbon reductions, most reductions of this nature are in fact voluntary. Renewable energy projects that replace fossil fuel generation are a common method. The ability to sell offsets can be a material incentive in energy project finance.
Second, a one can remove carbon from the atmosphere using carbon-capture technology. Investors have been pouring money into this area, but few economically viable technologies exist today at scale.
Third, forests and agricultural enterprises can generate offsets through proper planting and management practices. Production of wood products itself fixes carbon by locking it up in the physical object, where the carbon remains until the product decomposes.
Scrutiny along several lines has begun to focus on the agricultural generation of carbon offsets. For example, although it is indisputable that a forest sequesters carbon, how do we know that the forest would not have remained there but for the carbon project? This involves a complex set of "what if" scenarios. From a biological perspective, does our carbon accounting accurately tabulate carbon removals during the requisite time period? What other carbon emitting impacts can result from associated changes in land management?
These are evolving issues. A change to any decimal point in the accounting can have a material impact on the number of offsets available, and their value. Major corporations have staked money and their reputations on all of the math being basically correct.
To be clear, I am not attacking the concept of offsetting. However, I am recommending caution when making carbon neutrality claims. This edifice will not come crashing down overnight. But, if any of the growing number of greenwashing cases gets through the goalposts, there will be many more attempts to discredit carbon markets on the way.