The social value of offsets
How many offsets are really needed to offset 1 tonne of carbon emissions? Many nature-based offsetting projects are not eternal. A forest protection project may be effective in protecting the forest for 50 years, but be converted into agricultural land thereafter. Alternatively, the land underneath a successful reforestation project may have been reforested anyway 50 years later even without funding for offsetting. In such a case the project stops being effectively ‘additional’ after 50 years. In another situation, the forest may burn down and stop being ‘additional’.
In this paper the authors develop a method to establish the value of temporary offset projects with a given risk of failure and show that this value is always positive. They find that to compensate for one tonne of fossil fuel emissions, 2 to 3 tonnes of carbon need to be stored in a forest if the project stops being additional after 50 years. The current practice of offsetting 1 tonne of fossil fuels against 1 tonne of carbon stored in nature-based solutions is in fact an eternal contract, because the projects need to store the carbon for eternity to be equivalent. That is overly optimistic.
This insight can be used to develop more transparent and resilient offsetting contracts. A project developer can commit to storing 2.5 tonnes of CO2 for 50 years to compensate for 1 tonne of carbon. In that case, the damages from the emissions are fully compensated after 50 years and the eternal contract is avoided. If the project developer can make the convincing case that the forest is still being additional, they can emit and use offsetting credits for a new period of 50 years.
Groom, B., Venmans, F. The social value of offsets. Nature (2023). https://doi.org/10.1038/s41586-023-06153-x