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Can Australian ‘carbon offset’ help tackling climate changes?

Every day, Aussies are enticed to support products and services promising climate benefits – from “carbon-neutral flights”, to “net-zero beef” or “carbon-negative coffee”. These claims hinge on “carbon offsets”, a concept whereby a greenhouse gas-emitting entity funds another entity to reduce their pollution.

For instance, an airline based in a developed country that aims to cut its emissions can pay to conserve a section of rainforest in the Amazon, theoretically counteracting some of the airline's emissions.

Not only businesses, but also major economies are banking on carbon offsets as a mean to achieve their international emissions goals – offsetting is a frequent agenda at UN climate negotiations.

Supporters see offsetting as a win-win system funnelling billions into emissions-reducing initiatives in developing countries such as renewable energy projects or clean cooking initiatives.

However, offsetting also faces substantial criticism from scholars, the media, and law courts, with businesses accused of “greenwashing” due to their carbon-offsetting claims.

Increasing evidence reveals that offset initiatives, spanning from clean-cooking schemes to forest preservation plans, often exaggerate their emissions reduction capacities. A pending study indicates only 12% of marketed offsets contribute to “real emissions reductions”.

Projects have also been connected to cases of indigenous peoples being expelled from their lands and other human rights violations.

Years of nations trading carbon offsets have hardly made a dent in emissions and may have actually increased them.

This comprehensive Q&A article unpacks what offsets are, how they are being used by businesses and nations, and why they may be a contentious solution to climate change.

The article also probes whether a system, described as "deeply flawed" by an expert, could undergo effective reform.

So, what exactly are carbon offsets?

Carbon offsetting allows individuals, businesses or governments to offset their emissions by aiding projects that reduce emissions elsewhere.

In theory, after reducing their emissions as much as feasible, entities can fund low-carbon technologies or forest recovery to neutralise emissions they cannot avoid.

This could also support affordable climate action in developing countries and facilitate broader global ambition.

However, offsetting often allows these entities to continue their usual emissions levels under the guise of reduction claims.

Carbon offsets are tokens symbolising greenhouse gases that are avoided, reduced, or removed, and can be traded between a consistently emitting entity and an entity that decreases its emissions or sequesters CO2.

The intent is that while the first group continues to emit, the second group will equivalently diminish its emissions or sequester CO2. Offsets are typically quantified as a tonne of CO2-equivalent (tCO2e) and are referred to as tradable "rights” or certificates.

There's a subtle difference between the terms "carbon offsets" and "carbon credits", with the distinction residing in the marketplaces they're traded in and how they're mandated to deliver on emissions reductions.

Broadly, there are two types of carbon markets where offsets can traded. The first is the “compliance” market, regulated and involving legally mandated emissions reductions. Common examples include cap-and-trade emissions trading schemes, such as those currently used in the EU Emissions Trading System (ETS).

The other type is the voluntary carbon market, which is largely unregulated and features offsets used by corporations, individuals, and organisations without a legal obligation to cut emissions. Here, there is less oversight and even fewer examples of tangible emissions reductions.

Carbon offsets are divided into two main groupings based on the Oxford Offsetting Principles– an academic framework defining the "best practice" for offsetting. The first covers "emissions reductions", where an entity attempts to compensate for emission increases in one area by reducing emissions in another.

The other is "removals" offsets which are obtained from projects that absorb CO2 from the atmosphere. Presently, most removal offsets involve tree-planting projects, which don't guarantee permanent storage.

A new wave of more permanent removal offsets could be generated using machines that pull CO2 out of the air and techniques such as enhanced rock weathering.

Consumers should be aware that many available offsets have been labelled "junk" or "hot air" because they result from carbon-market design flaws and do not lead to real reductions of emissions.

Carbon offsets and trading have been around for about half a century and have continually been controversial, with allegations of land disputes, human rights abuses, impeding conservation and promoting coal use and pollution.

Lately, companies claiming carbon neutrality using voluntary offsets have been called out for making greenwashing claims.

The gist of the problem with carbon offsetting, as summarised by Robert Mendelsohn, a forest policy and economics professor at Yale School of the Environment, lies in its lack of impact on behaviour change and consequently, atmospheric carbon reduction.

Despite this, carbon offsets are still viewed by many as an effective way to boost corporate climate action, encourage more ambitious government emissions cuts, and channel climate finance to the countries most in need.

What does science say about the need for carbon offsets?

The science around carbon offsets underscores the need for nations to move towards a model of emissions reduction and CO2 removal to help meet global climate goals.

This discussion lays the foundation for understanding the complexity of carbon offsets and the challenges they present in the context of climate change. Keep this in mind next time you come across an opportunity to invest in a carbon offset project, and remember to critically evaluate its true potential in reducing global emissions. Carbon offset initiatives can range from investment in renewable energy projects that replace fossil-fuel plants to “clean” cookstove schemes, intending to decrease reliance on traditional fuels such as firewood, and subsequently lower emissions. Other offset projects focus on forest protection to reduce deforestation and thus help decrease emissions.

Additionally, long-term emissions reduction credits could be produced by adding carbon capture and storage (CCS) technology to fossil-fuel power plants. Also, there are "Removals” offsets, which deploy projects that aim to extract CO2 from the atmosphere. Most of these are still focused on tree-planting projects, which don't necessarily guarantee permanent carbon storage.

A newer generation of more permanent removal offsets is currently under exploration. This approach may involve using machines that directly extract CO2 from the atmosphere or techniques such as enhanced rock weathering.

Regardless of the method, the increasingly evident consensus is that carbon offsets represent just one piece of the puzzle in the fight against climate change. More importantly, they must be part of a broader, more comprehensive strategy that involves direct efforts to substantially reduce emissions.

The science indicates that techniques aimed at increasing emissions reductions and CO2 removal will need to be ramped up across Australia if we are to meet our climate goals. As consumers and businesses, we need to remain critical and informed about carbon offset offerings, to ensure they contribute genuinely to global emission reduction efforts. Continuing, it's essential to understand that while most of the current carbon-offset projects involve emission reductions, a smaller portion of them aim to remove CO2 from the atmosphere to compensate for an entity's emissions.

We're additionally seeing more advanced types of CO2 removal being tested and developed. Techniques such as bioenergy with carbon capture and storage (BECCS) grow plants that are later burnt to generate energy. The resulting CO2 emissions are then captured before they reach the atmosphere. There are also Direct Air Capture and Storage (DACS) methodologies, which use large fans to directly absorb CO2 from the atmosphere before it's stored underground.

Nevertheless, such technologies are still in the early stages of development and don't yet play a significant role in carbon offsetting in Australia.

All this is to emphasise that carbon offsetting alone won't solve the climate crisis. It should form part of a larger strategy that includes significant reductions in emissions and the development of sustainable, low-carbon technologies.

How are Australian businesses using carbon offsets?

For Aussie businesses and customers, it's more critical than ever to understand what carbon offsetting involves and its implications, ensuring that we choose to support genuinely effective and ethical carbon offset projects.

The future of carbon offsetting in Australia will greatly depend on government regulations, corporate accountability, technological advancements, and how informed Australians are about carbon offsets' reality. While it's no magic bullet, carbon offsetting has the potential to be a valuable tool that we can't afford to neglect in our broader fight against climate change.

Of course, while concerns about the integrity of carbon offsetting schemes and allegations of greenwashing continue, it’s vital to remember there are still many who consider them as a viable option for complementing emissions reduction strategies.

Some experts, like Bogolo Kenewendo, a member of the steering committee for the Africa Carbon Markets Initiative, remain optimistic about the potential for remedying the existing problems in the carbon market space, emphasising the need for “high quality and high integrity credits”.

Notwithstanding controversy and growing pains, carbon offsetting might still serve as a useful tool within a broader climate action arsenal for Australia. It has potential to finance emissions-reducing initiatives in developing countries, and to bolster corporate and national climate change efforts, provided there is robust regulation and transparency.

However, it's key to remember that offsets are not a cure-all solution. True progress in climate action requires a multipronged approach, including strong governmental policies, investment in renewable energies across Australia, and cultural shifts towards more sustainable lifestyles and business operations.

Australians must remain critical and informed about carbon offsetting, and hold corporations and lawmakers accountable for delivering tangible reductions in greenhouse gas emissions along with the adoption of cleaner, green technologies. With careful planning and judicious use, carbon offsetting can contribute to the broader, essential transition towards a sustainable future in Australia.

Certainly, it's imperative to recognise that while the tangible effects of carbon offsetting on global emissions are being questioned, several types of carbon offset projects, from forest conservation to renewable energy development, have led to beneficial results outside of CO2 mitigation. For instance, the protection of local biodiversity, enhancement of sustainable agriculture, and creation of new jobs, particularly in developing countries.

Furthermore, to level up the global climate ambitions, low-cost, effective climate actions backed by carbon offsetting can greatly help developing nations. However, offset purchases should not be viewed as a mechanism to extend the useful life of high-carbon systems in Australia or as an excuse to delay just transitions.

For the Australian market, it is crucial to ensure offset projects home and abroad are transparent, verifiable and meet high-quality standards. Local NGOs and organisations can play a pivotal role in auditing and providing clarity about the efficacy of these projects.

The future of carbon offsetting in Australia and globally will invariably continue to spark debate. Sharpened regulation and oversight, technological advancements, alongside a continual commitment to emission reductions, are the components required for the equation which leads Australia and the world to a sustainable future.

To protect our unique fauna, flora, and the beauty of our land, it's more important than ever that Australians, from Top End to Tasmania, stay conscious and well-informed about taking steps in the right direction to combat climate change, with carbon offsetting being part of - but certainly not the whole - solution.

After all, what Australians do today regarding climate action will define the kind of Australia we'll be living in tomorrow and passing on to future generations.

In conclusion, carbon offsetting is a tool with potential in the battle against climate change. However, for all Australians— from consumers to businesses, it's critical to be informed, critical, and understanding of what offsets can and can't achieve.

Offsets can contribute to emission reduction efforts and fund valuable initiatives, especially in developing countries. Yet, they mustn't be used as a loophole to prolong high-emission activities unchecked. Balancing the implementation of offsets with tangible action to reduce emissions at the source will be key to Australia's transition to a sustainable, low-carbon future.

Furthermore, participation in carbon offset schemes or purchasing carbon credits should come with high levels of scrutiny and accountability to ensure benefits are real and long-lasting. Every tonne of greenhouse gas emissions offset should correspond to a real, verified, permanent tonne that is either removed from or not released into the atmosphere.

Lastly, Australia's approach to climate change should continue to be all-encompassing. Carbon offsetting can play a part, but it's merely one facet of a broader climate action strategy. Advancing renewable energy technologies, improving energy efficiency, conserving our natural resources, and fostering sustainable practices on individual and corporate levels are all crucial.

As we continue reckoning with climate change, it's necessary to step back from the allure of quick fixes and instead invest in comprehensive, sustainable, and scientifically backed solutions. Together, all Australians have a role in combating climate change and safeguarding our remarkable continent's future.

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