The Use and Impact of Carbon Offset Credits
- Thomas Burga
- Jan 29, 2024
- 4 min read
Updated: Dec 22, 2024
The Use and Impact of Carbon Offset Credits
Airlines are a significant contributor to greenhouse gas emissions and have committed to net-zero emissions by 2050 (Eaglesham, 2022). In an effort to appear “green,” airlines are issuing carbon offset credits. The United Nations has required airlines, through the 2016 "Carbon Offsetting and Reduction Scheme for International Aviation," to purchase carbon offsets or use lower-carbon emitting fuel. Most airlines have chosen the carbon offset credits; these credits are issued in two ways:
(1) After calculating the amount of an airline's carbon dioxide (CO2) emissions, airlines will buy credits that will fund projects focused on environmental protection, sustainability, and research for cleaner energy (GHG, 2020).
(2) Airlines sell these credits to passengers, offering to match the consumer's purchase in points/miles.
Some believe the airlines are appeasing climate change advocates by selling credits while not dedicating more resources to long-term alternatives. Additionally, the use of carbon offsets is not regulated. Companies can easily claim the "green tag" and market themselves as Frontier Airlines has - "Mother Earth's preferred airline" (Eaglesham, 2022).
While the goal for airlines, according to the International Air Transport Association, is net-zero carbon emissions by 2050, 97% of clean energy measures in the airline industry will come primarily from carbon offsets through 2025 and are expected to steadily decrease through 2050. These credits are often questionable as "each credit is supposed to offset one ton of carbon emissions, and their cost ranges from a few dollars to around $20. Nevertheless, cheaper credits usually emerge from projects that have little or no environmental impact" (Eaglesham, 2022). While airlines say they are working to reduce carbon emissions, if their primary source of mitigating carbon emissions comes from cheap carbon offsets, then airlines will not have as significant an impact as they lead us to believe.
Aviation industry groups are fighting back against climate change goals because they believe that initiatives reducing carbon emissions will not be cost-effective in the long run and will cause airlines to lose a lot of money (Eaglesham, 2022). Since renewable energy sources for planes are not yet developed and available, industry groups are focusing on how they can save money rather than pay for climate change. Also, due to the reduction in flights during 2020, airlines are more focused on selling tickets to eager-to-travel customers than combating carbon emissions.
One industry where carbon credits are prominently used is oil and gas companies. Shell and other businesses like ExxonMobil rely on carbon offsets because their carbon emission rates are incredibly high; however, these companies treat carbon offsets differently than the airlines. Oil and gas companies buy entire carbon offset projects or the companies that will develop the operations (Lellis, 2021). This is not surprising because these companies are some of the largest greenhouse gas emitters, and they need to claim a responsible sustainability focus for investors. For example, ExxonMobil plans to invest $15B in lower carbon emission projects, with most of the funds given to their "Low Carbon Solutions Business" (Woods, 2021). Investors and stakeholders will have to determine if ExxonMobil's plans are greenwashing or if they are enough to combat the effect of Exxon Mobil's emissions.
Another company that buys carbon offsets is Apple. Carbon offsets are not the main source of Apple's carbon reductions, as they have recently gone carbon neutral. Apple has stated that "…80% of the energy we use is clean…most of the energy that we need, we had to build on grids..." (Lovejoy, 2021). Environmental advocate Lisa Jackson, the former Administrator of the Environmental Protection Agency (EPA), decided to work for Apple due to their pre-established and significant effort toward their clean energy and carbon-neutral goals. Jackson was hired in 2013 due to her experience drafting policy for the EPA (Blagdon, 2013). As vice president of environmental, policy, and social initiatives, Jackson has stated that Apple seeks to influence other companies and suppliers through its sustainability practices (Apple Leadership). By spearheading modern sustainability policies, more companies will prioritize environmental protection in other ways than using carbon offsets to counteract non-clean energy standards. Since Apple is now carbon neutral, Jackson will work to achieve Apple's new goal of becoming 100% carbon neutral for its supply chain and products by 2030 ("Apple Commits," 2021). Apple should serve as evidence that carbon offsets can be helpful if they are used properly, not for appeasement to government regulators or investors. Carbon offset credits should be used as a tool to deliver tangible sustainability improvements, not as a diversion tactic.
While carbon offsets are a suitable way for companies to invest in sustainability projects, they are a short-term solution to combat greenhouse gasses. Oil and gas are still the primary energy sources, and solar, hydroelectric, and wind energy are not at the level needed to surpass them; carbon offsets are a beneficial way to fund the growth of renewable energy sources. Although carbon offsets fund these projects' research and development, many expensive credits must be purchased to make a difference. As seen through Apple's efforts, companies should invest money and time in working with government agencies to reach sustainability goals. While emitting high levels of carbon, funding projects is simply not enough to make a substantial impact. There are several small steps that airlines can begin implementing in order to build momentum across the industry to make sustainable improvements. These include reducing inflight single use plastic waste, investing and partnering with suppliers on improved sustainable aviation fuel alternatives, and demanding tangible improvements in fuel efficiency from airplane manufactures as part of their multi-year bid contracts ("How Airlines," 2023). Carbon offsets should act as an additional source of combating carbon emissions rather than as the sole or primary sustainability effort.
Sources
https://www.offsetguide.org/understanding-carbon-offsets/what-is-a-carbon-offset/ https://www.offsetguide.org/understanding-carbon-offsets/other-instruments-for-claiming-emission-reductions/
https://9to5mac.com/2021/10/14/apple-buys-carbon-offsets/ - :~:text=Lisa Jackson says Apple buys,80%25 is real clean energy&text=Environmental lead Lisa Jackson has,of the company's total usage.
Comments