Interviewees:
Elias Ayrey, chief science officer, Renoster
Danny Cullenward, senior fellow, Kleinman Center for Energy Policy, University of Pennsylvania
Transcript
SFX rainforest
This is Living Planet
Neil: Hi, this is Neil. Now, if you've ever wondered whether it's worth offsetting your flight, this might be the perfect episode for you because we're doing a deep dive on the world of carbon offsets to try and figure out just, you know, whether they're going to help us lower CO2 emissions or if they're in fact making the problem a lot worse. And I'm joined in the studio now by Kathleen Schuster, my colleague, who's been trying to figure out how they work for personal reasons. Kathleen, welcome.
Kathleen: Hey, Neil.
Neil: And yeah, personal reasons I mean you're from the US, right? So, this is you've got a vested interest in trying to minimize the damage you do with your flight, I assume, right?
Kathleen: Yeah, exactly. I mean, I've been trying to lower my carbon footprint as many of us have been, but I can't really avoid flying back to the US because that would then mean I don't get to see my parents or some other relatives.
So, I decided to do a bit of research and I'd like you to try something out for me. So, if you could google “offset my flights” and I'm going to do this at the same time.
Neil: Yeah.
Kathleen: And do you see this? Does the website come up for you called Trees for all?
Neil: Yeah, got it.
Kathleen: OK, that was so. That was one of the first search results that I got. OK, so the scenario is return flight departure Frankfurt Airport.
Neil: OK.
Kathleen: Destination, we're going to say Atlanta. So that's Atlanta
Neil: Atlanta.
Kathleen: So, it's ATL is the.
Neil: ATL? because I've got a ACY.
Kathleen: This is supposed to be a simple experiment. Somehow this is very complicated…
Neil: OK, I've got it. I've got.
Neil: Three persons, right? Yeah. Calculate emission. It says here. 6.98 tons of CO2.
Kathleen: OK. Yeah, exactly. So that's what I got. And then it says, so one way I could offset this would be paying a one time amount of €139, that's about 150 U.S. dollars or a monthly amount of 11.63. And so, I thought this was really interesting because I don't know about you, but I mean, I know this amount of CO2 that's more than what a car and that's being driven for one year like I think a car is estimated at about 4.9 or something like that.
But I find it really abstract. It's like, where did they get that number from? Is this legitimate? Just looking at the website, I mean, I can go ahead and pay and then have my sins absolved, so to speak. So, I decided to put in a few calls to experts who look at this sort of thing and I found this one expert who I found very intriguing named Elias Ayrey and he co-founded a company called Renoster. And like their whole job, is to help other companies determine whether carbon offsets that they want to purchase are legitimate or just a bunch of bunk. And yeah, he's the chief science officer. So I told him these numbers and this was his reaction.
Elias: That would be far too low.
Kathleen: Why is that?
Elias: Well, I mean. These are only global averages, but I would say on average it usually costs about $20 to $30 a ton to really have an impact. If you're going to be either planting trees or competing with timber production. So that's what it actually costs to either do the work or to, you know, take a forest out of timber production and prevent it from turning into agriculture.
Neil: OK. But hold on, I mean these products are not all necessarily forests, right, so? I mean, what’s the…?
Kathleen: Yeah, exactly. So, you know, if you start looking at these websites, there are all different types of projects out there. There are like renewable things, you know, like solar, wind. But I was really intrigued by the forest angle because somewhere between 40 and 50% of these projects out there that somebody like you or I could invest in, so to speak, to offset our carbon footprint. And they're forestry projects, either planting a forest, protecting a forest from deforestation, whatever, and also, there's something really appealing about, I don't know, any other way to put it, but like, you're causing this pollution, maybe you can't avoid it, or that's what we tell ourselves. We can't avoid it. And then somewhere in the world, there's a beautiful tree helping us out, but sucking up all the carbon, right? I don't know, to me there's a very like it's a very romantic notion.
Neil: No, I mean it could also be a tree that burns down in the forest fire, you know we’re having a lot of those.
Kathleen: Well, yeah. And I mean, and that's the other thing because it's like because of climate change, we're also seeing these unpredictable weather patterns and so I also wonder like how, how sure of a thing is this?
Neil: I mean, to be honest, the whole topic, I don't know, but I've always been quite skeptical.
Kathleen: Yeah, this winding Rd. of, like, looking at these websites and trying to figure out as a consumer like how legitimate is this like just talk about opening a can of worms because Elias isn't the only person that I talked to, but he's one who definitely has a really interesting story as to why he even works in the market because he's actually a huge critic of carbon offsets. But he's also trying to get people to buy good ones. So, he's completely intriguing.
Neil: Or confusing. I’m just sort of wondering, I don't know what the story is going to be. I'm going to come back at the end of the show what you discover of course.
Kathleen: Well, I’m curious to hear your opinion cause I know you’ve worked on this topic before, so we’ll see if we can surprise even you.
Kathleen: A few years ago, Elias Ayrey, who we just heard from, stepped into the world of carbon markets thinking he knew what the problems were. He’d just finished his PhD in forest science in Maine and then got a job with a carbon broker.
Elias: My role at that broker was essentially to evaluate projects that we were looking to broker and figure out if they were good or bad. And the broker that I worked for […] put a lot of effort into figuring out if the credits were good or bad.
A carbon broker buys and sells carbon credits. Essentially, Elias thought, the problems with carbon credits was a technological one. Better technology would mean better offsetting. Or so he thought.
Elias: And so in my role there I think I was one of the first people in the markets to really do a market wide survey of carbon credits that were floating around there, and what I found was really disturbing.
He says about half of the projects that came through were low-quality – and in some cases, the projects were selling bad credits. Really bad credits.
Elias: People knew there was bad stuff happening in these projects. It just wasn’t being reported on.
So, one of the earliest projects that we looked at had massive amounts of deforestation inside of it. And this is a project that was designed around conserving the forest
Kathleen: Where?
Elias: In Brazil. So, it was the edge of the Amazon rainforest. What happened essentially was that a large project developer enrolled a lot of community land and the community didn't really have the capacity to stop deforestation in and around its community. And the police in the community had no intention of putting their lives on the line to stop deforestation. And so essentially that project had failed to stop deforestation, and yet its credits were still and still are circulating around.
Kathleen: They’re still circulating?
Elias: Oh, yes, very few carbon projects have ever been cancelled following a scandal, in fact single digits, um…
Kathleen: Wait, so…sorry. I just want to make sure I'm understanding you correctly. So, if I were to find some great projects in the Amazon rainforest that says that they're helping preserve the forest, and I think great, I can offset a flight, I'm going to do this, it could actually be the case that it, it that it hasn't done anything. That it's actually been deforested?
Elias: Yes, and it happens quite frequently that the trees are already cut down and they just haven't reported it and probably never will.
Having come to that conclusion, I was really shocked and I wanted people to know that a lot of these carbon credits that they were buying weren't having the impact that they thought they. Because at the end of the day, I do think of myself as a climate scientist. I mean, I have a PhD in in this space and I I'm not here necessarily to broker credits. I'm here to have an impact on climate change.
Kathleen: So, then Elias does a 180. He leaves the carbon broker firm. And he also starts…putting himself out there…on YouTube…
Clip: Carbon credit contract lengths make no goddamn sense. And I’m not just talking about the obvious
Clip: … videos nobody watches. So, I want to dump all of the ways in which people can cheat and force carbon projects into a single list with real examples in the most click-baity way possible
Clip: … because I’m just some carbon, just some tubular carbon and I …
Kathleen: To be fair, he does not sing in most of his videos.
Clip: … And it’s a long long journey from the trees to the city…
Kathleen: But it is kind of refreshing to see someone try to make an incredibly complicated and depressing topic at least a little bit entertaining.
Clip: …But I hope to be a credit someday….
And he doesn’t stop there with his work, but we’re going to come back to his story in a moment.
Clip: … preserved to … someone’s offsetting bill …
Ok, let’s back up really quickly. We’ve skipped over a lot of information. And if you really want to know what’s behind carbon offsets, the first step is to wrap your mind around the carbon market
First, there’s the voluntary carbon market. That’s where pretty much anyone can go to buy a carbon credit. Like the website we heard about at the beginning of this episode.
You might have also heard of something called compliance markets. Those are the carbon markets that are government-regulated. Like what the EU has, and California has one, too.
But that’s not all of it. There are also programs like Article 6 of the Paris Agreement, which sets how countries can transfer their carbon credits to help other countries meet climate targets.
If you’re thinking, wow, that’s a lot. Yes, it is. It’s a huge market and it’s worth billions. The compliance market alone, so the government-regulated ones, were worth 909 billion US dollars as of 2022.
And by comparison, voluntary carbon market is actually pretty small. In 2022 it was “was worth about 2 billion dollars. But that’s actually an astounding number, it’s four times what it was worth in 2020.
That’s really important to consider, because the everyday people buying these carbon offsets are doing so under the assumption that they’re doing something that will help slow down climate change.
I wanted to get another opinion on those websites for offsetting my flight. So, I reached out to a climate researcher who’s seen the same problems crop up over and over again with carbon offsets for years.
Danny: I’m Danny Cullenward and I’m a senior fellow with the Kleinman Center for Energy Policy at the University of Pennsylvania.
Kathleen: Danny’s a climate economist and lawyer. He’s also a member of different technical advisory groups from California’s cap-and-trade to the Paris Agreement.
But here in this capacity, he’s just speaking as a researcher.
We go through the same spiel.
Kathleen: Is there anything initially that you see where you say, OK, I've seen this before and this is kind of this is legit (laughs) or this is kind of shady?
Danny: I mean, I've seen all of these words before. Part of the problem is there's things I look for as an expert that are usually not presented to consumers, which is what's the project? What's the methodology that goes straight to the technical information? Because pretty much all of the words are on certification and monitoring, it's all nonsense talk and the only thing that matters are the technical standards, and that's where I need to go to start answering these questions.
So, those technical questions Danny wants answered really need an expert eye. Let’s say the project claims to be protecting a forest from getting cut down.
The most important questions are, first, was this forest definitely going to be cut down in the first place? That’s what’s referred to as “additionality.” In other words, is the project truly leading to new carbon reductions?
The next question Danny and other experts would ask is, what’s the “baseline?” So, if the forest gets cut down, how much CO2 would that have released into the atmosphere? And by not cutting it down, how much CO2 would it be storing?
Keep in mind, those are only two of the questions Danny says need to be asked. There are many other questions about how long the project will last, whether it will have any knock-on-effects to surrounding areas etcetera. Etcetera. Etcetera.
Danny: It turns out the rules are really hard to write to create sensible market structures and high-quality outcomes because all of these rules are premised on what we call counterfactual baseline scenarios. So, you say to somebody, what would you do if I didn't pay you? Were you going to do something bad? Were you going to put pollution in the atmosphere? Were you going to cut down the forest? Well, maybe I can pay you to not do that.
And ultimately you can't verify what that person says they were going to do. They can tell you the story about what they were going to do to their forest, or they were going to build a coal power plant, but they never actually do it. They do something else instead, and we can never really see what they would have done. And all of the incentives in these programs are in place for people to exaggerate and sometimes falsify their claims.
And I think that's really at the root of what's made it hard to create high quality credits. You're asking people what they would do if they don't get paid and they have an incentive to tell you a particular story. It's hard to write rules that turn the screws and make better answers come out of that situation.
So, who exactly is writing these rules anyway? Could I, for example, just plant some trees in my backyard and sell some carbon credits? Well, no, probably not is the short answer. And that’s because there are four entities I’d have to deal with.
First, you have what are called “registries.” They’re generally the ones who are writing the rules and issuing the credits.
Then you have the project developers. They create the projects and sell the credits.
After that, you have the auditors who make sure the projects comply with the rules. And remember, the registry generally is the one who wrote them.
And last but not least, you have the brokers. They buy and sell the credits. Some take a magnifying glass to the projects – like the company Elias worked for. But he says not all of them do that.
So, there’s not really much oversight if any. That’s a problem. Especially considering the top project developers are based in the US and the EU – while most of the forest-based credits are in the Global South.
Danny: Tropical forests around the world are some of the most important ecosystems. They're being deforested rapidly. There is a serious crisis there. And if there are things we can do to intervene in that crisis and stop it, that's a worthwhile thing to do. It's also turned out to be one of the most problematic areas of carbon crediting because the methodologies that are used in the industry to issue these carbon credits allow project developers to tell very exaggerated stories about how much deforestation would happen if they don't get paid.
And there's a really well documented example a team of authors published a piece in the scientific journal “Science,” arguing that about almost 95% of the carbon credits that are being sold from these tropical forest projects aren't doing anything.
And it's a very interesting finding because they actually found that several […] of the projects they looked at were making improvements. They were slowing down deforestation, they were having an impact. It's just that the baseline story that they told to earn carbon credits, what they say would have happened if they didn't get paid was so thoroughly exaggerated that 19 out of 20 of the credits weren't delivering anything real, so you were both supporting a little bit of good, but most of the credits weren't reflecting real climate benefits, and that should give you some sense of how out of whack these standards can get.
This is also what Elias was getting at in his story about deforestation in the Brazilian Amazon. He says the shortcomings of that project were really complicated because it did stop some deforestation, but the amount of deforestation that did take place was severely underreported. In other words, the people who bought those credits weren’t making the impact they thought they were.
Kathleen: So, going back to my own flight emissions. According to one website I need to offset 6.9 tons of CO2 for a return flight from Germany to the States. That’s for three people. Another website has a higher estimate that’s almost double that.
But how much CO2 does a tree absorb anyway? Well, it depends on the type of tree. It depends on the age of the tree – some forests can store over 1,000 tons of CO2 per hectare, while others, only about 10.
And what about the biggest sticking point of all for scientists – how long can we count on these forests being there, playing their role in carbon removal? Elias points out that the Amazon rainforest has been storing carbon for the last 55 million years or so. Again, he sees people as the problem, not the forests. But carbon offset projects are a mixed bag with problems that go well beyond climate change.
Elias: Really the reason I do what I do is because I don't think in any industry there's such a wide um divergence in outcomes. I have seen carbon projects that are paying over 200,000 small families in impoverished Africa to plant trees on their farms and, for example, the nation of Uganda, thanks to one of these projects, is visibly greener from space. So, without doubt, these carbon projects can have a really positive impact.
Kathleen: For the record, Danny agrees with this point, too.
Elias: But at the same time, on the same market and often being sold by the same carbon broker, you can have carbon projects that are almost entirely fraudulent and have human rights violations inside of them. And one of the ones that I've come across that I don't think has gotten enough attention is an avoided deforestation project in the Congo called Mai Ndombe.
Kathleen: A few things to note here. Mai Ndombe is a province in the western part of the Democratic Republic of Congo. It’s an area roughly the size of England, and most of it is covered by forest.
The project Elias is referring to part of the UN’s REDD+ program, which stands for Reducing emissions from deforestation and degradation in developing countries.
Elias: … and this project is set up by a Western project developer based in San Francisco. They've probably earned about $200 million in carbon credits so far.
We found the projects claims to be entirely unsubstantiated. We find the credits themselves to be almost entirely fraudulent. So, we think that the carbon project itself is getting 8 times more credits than it should because it's basically protecting a forest that is a swamp forest.
It's called a swamp forest. That's the actual name for it. And there's no reason that anyone on the ground would ever have to convert this land. You know, if they converted this land to agriculture, it wouldn't be agriculturally productive. And there's no real timber that you can get off this land because, you know, the trees are not typical commercial timber species.
So, the credits themselves we found are bad, but what's even worse is what's taking place inside this $200 million project because about 10 years after the project was started, a group of reporters and a non-profit group went and visited the site.
And the first thing that they encountered was that the project developer, again, this American company, tried to bribe the local officials, the local police, to arrest them for interviewing people. And, you know, we just have the word of this group of reporters, that this happened. But it seems fairly likely that this may have occurred.
When they were able to interview people, what they found was that 68% of people living inside this project didn't even know they were inside of a carbon project.
So, these people are supposed to be stopping deforestation in and around their houses. They didn't even know that they were part of this 94% of people inside the project didn't even know they were entitled to some chunk of this $200 million. And the actual revenue sharing ended up being after 10 years, somewhere between 10 and $0.78.
Kathleen: Sorry. And you said people got. I'm sorry, did I understand you correctly, $0.70?
Elias: Because these projects often don't disclose really basic stuff like how much money they're paying to people. The conclusions of that report found that somewhere between 10 and $0.78 per person after 10 years had been distributed on the ground.
Kathleen: A quick correction. It was actually between 10 and 76 cents, not 78 cents. Those numbers come from a 2020 report by the Rainforest Foundation UK.
Elias: The worst part may be that because this American project developer doled out the money, what little money they did actually share, they shared very unequally. So, they shared it with some communities and not others, and that caused violence between the communities that had received a little bit of the benefits, very small percentages and communities that received nothing.
So, there was widespread human rights violations inside this project in which the carbon credits themselves hadn't been doing anything for anybody.
Kathleen: So. Remind me again why you think it's good to buy carbon credits. How do you have? How do you have faith in this in this kind of scheme?
Elias: I have zero faith in the system getting it right, but there are groups that that do get it right.
So, the reason I still work in this space is because I I have seen it work and so my own companies numbers estimate that about 75% of the nature based credits that we've evaluated, we don't think are doing anything.
That's really terrible, right?
But it does still leave hundreds of millions of tons that have done something, and so the reason I still keep doing this is, is that the industry could be fixed if it were regulated. If common sense rules were put in place, it could work. And I know this because I have seen it work a lot of times. It just doesn't work the majority of times.
Kathleen: We’ll be right back.
Neil: OK. So we're back in the studio now, Kathleen. Very interesting. Also rather messy though, all round thinking about, you know, the carbon market, a lot of aspects there that you included in your story. I mean, one of my main questions is, you know, straight off the top would be, is anyone trying to clean up this mess?
Kathleen: Aside from Elias and Danny? Yeah, absolutely. There's a really interesting example I didn't get to, and that is that in California, they passed a law the beginning of 2024 called AB13O5.
And basically it requires any company who's doing anything with carbon credits, they would be marketing them, buying them, selling them, they have to be completely transparent about what projects they are, what the measurements have been, and basically if they fail to do this, they could be fined a maximum of half a million dollars for failing to do so.
Neil: Has that ever happened?
Kathleen: Well, the bill went into effect at the beginning of 2024, but the compliancy deadline doesn't start until 2025 from what I can tell. So yeah, we'll see.
Neil: We’ll see.
Kathleen: But it is really intriguing because you know, based on what we heard how would you do this? It's really, really complicated and we should emphasize again, you know, we're only talking about somewhere between like 40 and 50% of the voluntary carbon market. These forestry projects. What about the other 50% of renewable energy products? I mean, it's a never-ending story.
Neil: Yeah, but OK. I mean that at least would signalize there's a bit of hope that it's no longer a wild, wild West situation.
Kathleen: Yeah, and you know what else is making an impact? Because there has been so much bad press… you know, earlier, I said the voluntary carbon market had hit $2 billion. Now that was in 2022. Last year, that market plunged by 60%. So down to around $720 million because of all the bad press. So, you had a lot of companies going: Wait a second, should we really be sinking our money into this?
But as you and I saw you can still buy these credits. And like Elias was saying things that he worked on several years ago where it's, you know, they know for a fact that what is being claimed is not actually true or parts of it aren't true, you can still buy those credits.
So, it's interesting to see that the voluntary carbon market lose value but I mean, it's still worth a lot of money and there are still people out there who all you have to do is Google “offset my flights” and there you go.
Neil: So, I mean, what can consumers do to figure out if a carbon offset is real or not or if it's a good idea or not? What can you do?
Kathleen: OK, so the first thing that both Elias and Danny said was you need to look at what the projects are. You need to take a look under the hood, so to speak, but they also said they don't think it's possible for a consumer on their own to figure this out because they as experts, they need time to do this. This is their bread and butter and they have a hard time figuring it out.
So, I would say if you're dead set on buying a carbon offset, whatever it is that you want to offset, the first thing you should do after maybe figuring out where you want to buy an offset is to Google the project that you find and see if there's been anything written about it, whether it's, you know, problems with deforestation or a project that was already in the works, and this is just kind of, you know, smoke and mirrors or human rights violation. So that would be the smartest thing to do is you have to do a little bit of research on your own.
Neil: I mean, I also remember because I also did a story on this some time back and I talked to the CEO of Atmosfair back in the day. That's an offsetting scheme based in Germany.
Kathleen: Oh, I I looked at one of those.
Neil: You looked at one of those, right? Yeah. And he told me because I asked him one of the questions I asked him cause I was interested, if I put, say, X amount of money into this offsetting scheme, how much actually really ends up in the project that they're supporting? So, I was asking for their overheads basically.
And he was saying that they were about 5% back then. This is a couple of years ago and he said that was a pretty good value. So, I think that's also something maybe would be worth asking these companies. How much money is really going in? How much money is lost along the way to middlemen or God knows what? Because if they, if they're transparent, I'll tell you, they'll say OK, overheads are X percent. Yeah. And then, you know. So, I mean, that was one thing. I mean, the other thing I also wonder about, you know, with this story the whole thing I do find it suspicious that a lot of these projects are in distant, faraway lands. Where it's difficult to follow up in the first place, and I mean one statement that Elias also made in your story was that very few carbon projects have ever been cancelled following a scandal, right?
So even if they're caught red handed, nothing happens. They're not, they're not taken to court or anything. And I sort of wanted to know with the proximity aspect, if I wanted to, you know, hold these people to account, I mean, which lawyer can I hire that would actually take that on and be successful?
Kathleen: Yeah.
Neil: It's next to impossible, right?
Kathleen: Yeah, I mean, it's such a huge question, but Danny had a good point in saying that, you know, there's good reason to be protecting tropical rainforests. We're not even doing enough. We're, you know, we need to be doing more. But he disagrees that this would be the way to do it or he's very, he thinks there are good projects, but all in all of this, this market is just completely messed up.
I've wondered about that too, because you know what, if you could go out and drive and see, OK, there's my project, but I think even then not like, as a non-expert, if you're looking at a forest for example, or renewable energy product, there are still so many things that you wouldn't know to look for. I mean, it's just it's a, it's a huge promise and it really comes down to you're giving somebody permission to pollute and you know, and the message of a lot of these experts is, “OK. That's nice. It's a nice thought. It might make you sleep better at night.” Those are my words, not theirs.
But at the end of the day, if we want to do something about CO2, we actually have to reduce emissions. We can't just transfer the problem somewhere else in the world and say, OK, I'm going to be good now, and you can be bad and you can be bad, and I can be good. We really have to reduce emissions in a real way, otherwise, yeah, the problem will just continue to grow with climate change.
Neil: Mm-hmm. So next time you go to the US, will you be offsetting your flight?
Kathleen: Oh God… I knew you were going to ask me? No, I don't. I don't think so. But you know what I'm concerned about? Like buying a ticket where they have some sort of an option and being like, oh, that sounds good.
Um. No, I don't, I don't think this is the way to uh, to help my carbon footprint, but I don't know. Maybe if there were a really, really good project, I think I always bring a healthy dose of skepticism to most things that I do in life. So, I yeah, I feel very skeptical about this.
But it's funny because while researching this somebody I know posted something I think on Instagram about like offsetting flights and do something good for the planet. And I just thought I’m just going to bite my tongue now.
Neil: That's it. I think a good time to wrap up. Thank you very much, Kathleen. That was a very interesting episode.
Yeah. If anybody listening to this would like to comment or has any suggestions for other topics that they'd like us to cover here on Living Planet, please do send us an e-mail or a voice message to livingplanet@dw.com. You can also engage with us via DW Podcasts on YouTube or leave ratings and reviews on podcasting platforms such as Apple Podcasts. Five stars always very much appreciated there, obviously.
This episode was produced by Kathleen Schuster and edited by me. Neil King, our sand engineers Michael Springer and Jürgen Kuhn. And yeah, that's it. Thanks for listening, and bye for now.