Carbon offsets explained

Green Lifestyle magazine

Purchasing credits to offset greenhouse gases can be either a really good idea, or a really bad one. The trick is to separate the greenwash from the real deal.


Green Lifestyle’s investments in renewable energy includes the MRF wind power project in Tamilnadu, India, managed by Enercon India Limited.

Credit: Louise Lister. Styling: Emma Bowen.


The Hyacinth macaw is found in the Cerrado region of southeast Brazil. Habitat destruction and nest poaching negatively affect this endangered parrot. Green Lifestyle has purchased carbon credits that help to preserve the native forests that provide this bird – and other local wildlife – with habitat in Brazil.

Credit: Thinkstock

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Check your mangoes. That’s the first lesson of carbon offsetting, and it comes courtesy of a famous British rock band. In 2002, Coldplay announced it would offset part of the environmental impact of its second album, 'A Rush of Blood to the Head', by planting 10,000 mango trees in India. But when The Telegraph checked on the project more than four years later, at least 40 per cent of the mango saplings had died, and some of the money promised for their upkeep had never arrived.

The market for voluntary carbon offsets has become more formalised and regulated since then, so such embarrassing stuff-ups are far less likely to occur. But Coldplay’s fruitless venture still provides a potent warning for anyone interested in counterbalancing their carbon footprint – be sure to choose a genuine, verifiable project that’s selling credits for emissions savings that have already occurred.

What is offsetting?

When you drive a car, catch a plane or even produce a much-anticipated rock album, greenhouse gases are released into the atmosphere, contributing to climate change. Carbon offsets allow you to compensate for these emissions by funding another activity that reduces, avoids or absorbs an equivalent amount of greenhouse gas elsewhere. It’s pretty simple in theory – your everyday actions create emissions, and you pay someone else to cancel those out. The complexity arises in calculating, tracking and verifying the offsets.

How do you know they’re genuine?

In 2008, the Federal Court of Australia declared that GM Holden had made false or misleading claims about carbon offsets in ads for Saab. The ads claimed that, by planting 17 native trees, the carbon emissions from a Saab car would be neutral over the life of the vehicle. In fact, the trees would only offset emissions from a single year of driving.

In the case of Saab, the company was misleading the public, but the underlying offsets were genuine. However, there are also documented cases of carbon offset firms selling fake and worthless credits. In 2011, The Sydney Morning Herald published an exposé on carbon credits company shift2neutral, which claimed to have generated more than $1 billion worth of credits by saving jungles from logging. The NSW Supreme Court later found the newspaper’s accusations were true.

Martijn Wilder, head of Global and Environmental Markets practice at law firm Baker & McKenzie, argues that there has only been “a limited number” of such dodgy claims. “On the whole it’s been pretty solid.” Chris Riedy from the University of Technology, Sydney, who led a report assessing carbon offset retailers in 2008, says a lot of the so-called carbon cowboys have been weeded out since then. “There are fewer players in the market now, but most of them seem reliable.”

In 2010, the Australian Government introduced the National Carbon Offset Standard (NCOS), which provides guidance on what is a genuine carbon offset. Eligible credits include those issued under the Carbon Farming Initiative, the Greenhouse Friendly Program, the Gold Standard and the Verified Carbon Standard (VCS). It’s an alphabet soup of acronyms, but the bottom line is that these credits can be trusted. Major airlines (Virgin, Qantas, Jetstar) and big banks (ANZ, NAB, Westpac) have signed up to the NCOS carbon-neutral program, so their offset schemes are also backed by the national standard.

Another important safeguard against false claims is transparency. Your carbon offset project should be listed on a publicly available database or registry such as Carbon Catalog, Markit, VCS Project Database, CDM Bazaar or the APX VCS Registry. (We warned you about the acronym overload.)

If you’re ever in doubt, ask your offset provider information about the project your money will fund. The Australian Competition and Consumer Commission has compiled a basic list of questions in a fact sheet available at www.accc.gov.au/publications/your-consumer-rights-environmental-claims.

Choose the right project

Although all carbon offset projects avoid, reduce, or absorb greenhouse gases, they do so in different ways. Forestry projects capture carbon in trees, whereas renewable energy projects achieve emissions reductions by displacing fossil fuel electricity generation. In recent years, focus has shifted to projects that also have a social benefit for communities in developing countries. Providing African families with clean, efficient stoves can cut emissions by reducing the need to burn wood or charcoal for cooking, while also improving indoor air quality and women’s health.

With so many offset projects available, you can choose one that fits your personal values or business interests. For example, Zoos Victoria has a captive breeding program for Tasmanian Devils, so it purchases offsets that protect native forests in Tasmania from logging. All the projects that we’ve picked have got some link to what we do on the ground, says Zoos Victoria Manager of Environmental Sustainability Kiam Yoong. It helps protect biodiversity, which means it’s protecting wildlife as well.

Continuing criticisms

Carbon offsetting still attracts criticism from some sections of the environmental movement. Companies stand accused of using offsets to distract attention from less praiseworthy practices, or to ‘greenwash’ inherently unsustainable products. As Guy Pearse showed in his book Greenwash: Big Brands and Carbon Scams, several banks claim to be carbon neutral while conveniently ignoring the emissions from their fossil fuel investments.

Another example comes from the forestry sector. Australian paper manufactures Reflex Carbon Neutral office paper, certified under NCOS, but Amelia Young from Wilderness Society Victoria says the company still sources wood pulp from the mountain ash forests of Victoria’s central highlands. “Logging these carbon-rich forests cannot be truly offset – it is the large, older trees, and the intact, complex forest that store the most carbon for the long term.”

Critics also argue that carbon offsetting allows people to assuage their guilt without actually changing their behaviour. “By selling us a clean conscience, the offset companies are undermining the necessary political battle to tackle climate change at home,” environmental journalist George Monbiot wrote in 2006.

Iain Smale, joint managing director at carbon management company Pangolin Associates, says this is a valid point, and he doesn’t believe organisations and individuals should use carbon credits to “buy their way out” of responsibility. The number one step is to reduce emissions as much as you can. “But you will get to the point where you can’t reduce your carbon emissions any more, so the best thing is then to help someone else somewhere else in the world to reduce their carbon emissions.”

When faced with these criticisms, Freddy Sharpe, CEO of carbon management company Climate Friendly, says we need to return to the basics. “Make no mistake, when you buy a carbon offset, you are funding a tonne of emissions reduction that otherwise would never have occurred. So it’s a really important weapon in the battle against climate change.”

Our offsets

Green Lifestyle purchases carbon credits to offset the magazine’s greenhouse footprint, which is currently based on emissions estimated for the July/August and September/October 2009 editions. The carbon credits are under the Verified Carbon Standard and listed on the financial registry Markit here. Prior to this, offsetting of the magazine was via a NSW government scheme.

To date, all the investments have been in renewable energy, including several small ‘run-of-river’ (small-scale) hydro power stations in China and a wind farm in India. One of the most interesting projects from a few years ago involved switching fuel at a small ceramics manufacturer in southeast Brazil. Previously, the manufacturer used wood from native forests to fire its two kilns. Thanks to funding from selling carbon credits, the kilns could be fired with ‘renewable biomasses’ such as sawdust, sugar cane residue, wood chips, coconut husks and bamboo.

In total, Green Lifestyle has offset 352 tonnes of greenhouse gases since May 2010. “That’s equivalent to taking about 100 cars off the road for a year,” says Iain Smale from Pangolin Associates, which handles Green Lifestyle’s carbon credits.

Greg Foyster was an advertising copywriter who won awards for his work on major brands, such as Holden, Heinz, ANZ and News Limited. He quit his job in 2008 for ethical reasons, and now knows all the greenwashing tricks that mainstream marketers use without making real, binding commitments to environmental efforts.