Offsets: solution or fraud?

as THE GREENS negotiate Labor’s safeguard mechanism bill this month, there’s been a lot of talk about carbon offsets. But do they actually contribute to emissions reduction, or are they just an excuse to continue business as usual?

Co-editor of the Greens (WA)’s Green Issue



reenhouse gas offsetting refers to an action that compensates for the human-induced emission of carbon dioxide or other greenhouse gases (GHG) to the atmosphere.

The most obvious example is the planting of trees, or other forms of revegetation, which absorb atmospheric carbon dioxide through photosynthesis. Other more dubious examples include desisting from previously intended tree felling or other vegetation removal, installing renewable energy, increasing energy efficiency and sequestering carbon in the soil. 

In Australia, GHG offsets are quantified by means of Australian Carbon Credit Units (ACCUs). Each ACCU issued represents one ton of carbon dioxide equivalent (tCO2-e) stored or avoided by a project. Near the end of 2022, each ACCU was valued at around $28 – a de facto price on carbon.

In March 2022, Professor Andrew Macintosh – former chair of the Emissions Reduction Assurance Committee, a statutory body tasked with vetting the integrity of carbon offset schemes under the government's Emissions Reduction Fund – concluded that the ACCU scheme was essentially a rort. His concerns were backed by studies of CSIRO scientists. They highlighted major integrity concerns around human induced vegetation regeneration, claims of avoided deforestation and landfill methane abatement schemes.

In response to these criticisms of ACCUs, the incoming Labor government set up a review of the scheme led by former Australian Chief Scientist Professor Ian Chubb. The review panel concluded that the ACCU scheme arrangements were essentially sound but that improvements were needed in several aspects. These included the need for an independent integrity assessment, much greater degree of data sharing and transparency, five-yearly checks on human revegetation projects, abandonment of any new “avoided deforestation” projects, revision of landfill gas projects, and improved accreditation and regulation of carbon service providers.

The Chubb review focused on theoretical administrative concepts: what should be done in an ideal world. The review states that “the Panel did not review individual projects”. Professors Ian Macintosh and Don Butler, the original proponents of the scheme, considered that the Chubb Review was shallow and ignored well documented reporting of a lack of integrity in the way the scheme has been applied.

The arguments against the current operation of the ACCU scheme certainly resonate with me. Many offsetting schemes overseas have even more blatant flaws than the ACCU scheme; for example, the continuing logging in forest areas designated for offsetting in Papua New Guinea. 

But I have deeper concerns about the philosophy of offsets themselves. My main concern is that they are invariably used to justify ongoing – and even increased – GHG emissions. That is, use of offsets effectively delays the reduction of GHG emissions, which inevitably delays action on climate change, an action we can no longer afford to delay.

Some offsetting methods are clearly fraudulent. Firstly, as acknowledged by the Chubb review, with regard to desisting from previously intended vegetation removal, it is highly subjective – and hardly verifiable – to claim that vegetation was not being removed due to climate change concerns, and thus open to abuse.

Other more plausible reasons to keep vegetation intact include biodiversity concerns, a decision that land clearing for agriculture was uneconomic, or advocacy by First Nations people. However, the Chubb review recommended that only future offsetting schemes should not use this methodology, but that the many existing schemes using this methodology should be untouched.

Images of Adam in forest and carbon pollution silhouette



ffsets can be claimed by an organisation installing renewable energy or increasing energy efficiency. However, this is largely done for purely economic reasons – it saves money in the medium to longer term – and is not reliant on financial support from GHG emitters who might buy such offsets. It is likely to proceed in any case and is therefore not compensating continued GHG emissions by any particular emitter. If an emitter replaces their own GHG emissions by switching their operations to renewable energy then that is to be encouraged – but this process is replacement, and not offsetting.

On the surface, compensation of GHG emissions by growing trees or other vegetation seems fine. But there are some problems here also, related to time scales.

A calculation is made of how much carbon would be sequestered by the vegetation over a time period of 20 to 30 years. This determines the quantum of GHG emissions to be offset. However, these emissions are usually either recently released or likely to be released in the near future.

Considering the growth curve of trees over a 30-year period, only 10 to 20 percent of the carbon is likely to be sequestered in the first 10 years and the bulk of it in the last few years. That is, the actual offsetting is postponed well into the future – well beyond the current critical decade when net GHG emissions need to be drastically reduced.

Calculation of forest growth curves over time is not so easy as they are highly specific to species, climate, soil type and microbial biome. It is not a simple matter of extrapolating from previously established growth curves.

This is further complicated by the onset of climate change that we are now witnessing. Temperature and rainfall conditions are changing from the historical record, often in ways that are difficult to predict at a local scale. Small changes in these conditions can have large effects on tree growth pattern.

Further, changing climate conditions can shift the balance of pests and diseases to which the given vegetation may become vulnerable, usually in an unpredictable manner. Rising temperatures with increased thunderstorm activity can initiate wildfires, releasing much of the carbon dioxide previously sequestered. To guarantee that a given quantum of emissions will be compensated by forest growth decades into the future is becoming an increasingly uncertain proposition – and an implausible one to me sitting under my ‘plant physiology’ hat.

Another means of claiming offsets is through build-up of carbon in agricultural soils. This can be achieved through such techniques as regenerative or conservation agriculture, whereby maximum crop residue and animal excreta are returned to the soil and the soil is not ploughed (ploughing hastens organic matter breakdown and hence return of CO2 to the atmosphere).

Having measured soil carbon in various countries over the past half century, I can testify as to the difficulties of quantifying soil carbon to the extent required to equate it to offsets. Firstly, soil carbon concentrations are spatially highly variable, depending on where a clump of residue or dung actually fell. Therefore, many soil samples are needed per paddock to get a realistic assessment of the carbon status of the paddock, let alone any changes over time.

Secondly, this soil carbon is quite ephemeral – carbon dioxide readily returns to the atmosphere depending on whether the soil is ultimately ploughed, temperature and moisture status, microbial composition and activity etc. 

Images of forest in WA's southwest



o realistically quantify a build-up of soil carbon over time to the point of being able to equate it to stable offsets would require a multitude of soil analyses, beyond the affordability of most. Nevertheless, it is strongly recommended that all attempts should be made to improve soil health by increasing concentrations of soil organic matter, but this should be considered as a separate process from compensating for current GHG emissions.

With regard to methane emissions from landfill, every effort should be made to minimise them, without those efforts being considered as offsets. Rather, administrators of landfills should be penalised or fined for not making best practice efforts to minimise emissions.

The Albanese Government’s revised safeguard mechanism, proposing to force the nation’s biggest polluters to reduce their greenhouse gas emissions by 4.9 percent per year from current levels to 2030, would come into effect in July this year if passed. This mechanism allows unlimited use of offsets, thus making it easy for big polluters to buy offsets rather than actually invest in reducing emissions.

Alex Hillman, lead carbon analyst with the Australasian Centre for Corporate Responsibility, says this is at odds with nearly all global standards. The European Union progressively reduced the permitted use of offsets and banned them in 2021. Britain does not permit them. China’s national emissions trading scheme limits them to five per cent, Mexico to 10 and South Korea to five. Canada has a limit of 75 percent, and the only other country that allows polluters to offset 100 per cent of their emissions, he says, is Kazakhstan. “No one else is above 20 per cent,” Hillman notes.

Ultimately what this points to is that the use of GHG offsets to combat climate change is at best a furphy and worst an excuse for wilful, continued GHG emissions. Efforts should instead be focused on direct reduction of those emissions, for which economically viable technological options are available. Reintroduction of a direct carbon tax would be the most effective way to encourage emitters to reduce their emissions, rather than prolong them via offsets.

A version of this article originally appeared in Green Issue. The views and opinions expressed in this article are those of the author.

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