Why Trust is the Real Currency of Carbon Offsets

Mark Reddy

Trust is an important social construct—an essential one that encourages and enables the public to engage in climate-mitigating endeavors.

In the current era of healthy skepticism about facts and expert sources, people are increasingly demanding that we break down the fourth wall between corporation and consumer, fine-tune our transparency mechanisms, and work to create this essential foundation of trust. Companies that are making meaningful changes should also be able to claim their facts with certainty, and benefit from consistently making responsible decisions. This is all very possible. 

The Guardian recently addressed the demand for transparency in an article highlighting the UK Advertising Standards Authority’s (ASA) decision to crack down on carbon offsetting claims. It noted the public’s increasing concern about misleading advertising and questionable practices. This includes cynicism around net-zero claims, which lack a standardized framework for measuring and verifying, leaving consumers concerned about empty promises and greenwashing.  

The ASA is urging companies to provide evidence of their efforts towards carbon neutrality, and to be transparent about their net-zero commitments. They enacted recent enforcement against major corporations Lufthansa and Etihad about green claims, and a joint Guardian investigation found rainforest offsets certified by Verra (which operates a respected carbon standard) had disputable impact, despite being widely used by major companies to make environmental claims. (Verra is in the process of launching a new methodology for certifying credits). 

The vocabulary matters. Companies are increasingly being discouraged from claiming they have offset their emissions, and are instead encouraged to say they are making “climate contributions.”  Gucci, the famous Italian luxury brand, removed from its website the claim that it had, in part by using Verra’s offsets, become “entirely carbon neutral” in 2019. BP, while maintaining that its bundled carbon offset product can help customers to meet their sustainability targets, is careful not to refer to the offering as “carbon neutral,” nor will it use carbon offsets as the sole pathway to meeting its own net zero targets.  

High quality carbon offset credits act as a critical element in allowing us the time we will need to transition to a low-carbon economy. We need to ensure that they are recognized as a verifiable and reliable part of the solution.

Transparency is personal. It is not solely a corporate concept, or a marketing tactic—it can make or break trust. Successful climate change mitigation depends on building the public’s trust in the organizations that are providing climate solutions. It is reasonable for consumers and stakeholders to demand better evidence, and encourage companies to promote accurate reporting; however, trustworthy third parties play an important role in validating these claims by providing a transparent rating framework for the projects being invested in.

We can maintain an important foundation of trust through well-regulated projects that adhere to rigorous standards, allowing us to keep driving positive change.

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Permanence

Emission reductions are considered permanent if they are not reversible. In some projects, such as forestry or soil preservation, carbon offset credits are issued based upon the volume of CO2 that will be sequestered over future decades—but human actions and natural processes such as forest fires, disease, and soil tillage can disrupt those projects. When that happens, the emission reductions claimed by the project are reversed.

The destruction of halocarbon does not carry this risk. All destruction activities in Tradewater’s projects are conducted pursuant to the Montreal Protocol , which requires “a destruction process” that “results in the permanent transformation, or decomposition of all or a significant portion of such substances.” Specifically, the destruction facilities Tradewater uses must meet or exceed the recommendations of the UN Technology & Economic Assessment Panel , which approves certain technologies to destroy halocarbons, including the requirement that the technology achieve a 99.99% or higher “destruction and removal efficiency.” Simply put, this means that Tradewater’s technologies ensure that over 99.99% of the chemicals are permanently destroyed. During the destruction process, a continuous emission monitoring system is used to ensure full destruction of the ODS collected.

Accuracy

Some carbon offset projects necessarily rely on estimations or assumptions when calculating the emission reductions from project activities. Forestry projects, where developers make assumptions about the carbon that will be sequestered over future decades if trees are conserved, are a perfect example. Such projects sometimes result in an overestimation of the environmental benefit of the project.

Tradewater’s halocarbon projects avoid the issue of overestimation by consistently conducting extremely precise testing and measurement of the amount of refrigerant destroyed in each project.

  • Every container of ODS that Tradewater destroys is weighed by a third-party using regularly calibrated scales. The ODS is then sampled by a third-party and analyzed by an accredited refrigerant laboratory to determine its species and purity. These two steps combine to ensure that credits are issued only for the precise volume and type of refrigerant destroyed.
  • The destruction facilities that Tradewater uses continuously monitor the incineration process during destruction events to ensure that over 99.99% of the ODS is destroyed. This monitoring is mandated by regulatory protocols and is part of the verification process to which projects are subjected.
  • Tradewater accounts for the project emissions created during the collection, transport, and destruction of ODS, and the number of offsets issued is reduced by a corresponding amount. The protocols that we use also build in other reductions to account for substitute chemicals that will be used to replace the destroyed refrigerants. Tradewater publishes this information in the documentation for all its ODS destruction projects. These documents outline how the material was obtained, the project emissions calculations, the test results, and the amount and type of ODS chemicals destroyed, among other information.

    • Additionality

    It is a basic requirement of all carbon offset projects that the underlying project activities are additional. “Additional” means that the projects would not happen in the absence of a carbon market. Tradewater’s halocarbon projects simply would not happen – and the gases would be left to escape into the atmosphere – without the sale of the resulting carbon offset credits. This is because there is no mandate to collect and destroy these gases. It is still permissible to buy, sell, and use halocarbons that were produced before the ban. There are other reasons halocarbon destruction projects are additional:

    • There are no incentives or financial mechanisms to encourage halocarbon destruction. According to the International Energy Agency and United Nations Environment Program, “there is rarely funding nor incentive” to recover and destroy ozone depleting substances in storage tanks and discarded equipment. And collecting, transporting, and destroying halocarbons is time-intensive and expensive. The burden to collect and destroy these gases therefore remains prohibitive outside of carbon offset markets—meaning that if organizations like Tradewater do not do this work, nobody else will.
    • Countries are not focused on the need to collect and destroy halocarbons. The Montreal Protocol has been celebrated as a success because of its production ban. This success, however, ignores the legacy gases produced before the ban and is a blind spot for government regulators. In the U.S., for example, the Environmental Protection Agency (EPA) developed a Vintaging Model in the 1990s to estimate the quantify of ozone depleting substances left in circulation. Based on the inputs and assumptions put into the model, the EPA predicted that no CFCs would be available for recovery beyond 2020 in the United States. But this prediction did not prove accurate. Tradewater has collected and destroyed more than 1.5 million pounds of CFCs globally in recent years and continues to identify thousands of pounds per week.
    • International carbon accounting standards do not require corporations to measure or track emissions tied to halocarbons, and refrigerants are specifically excluded from Science Based Targets initiative (SBTi) commitments. These commitments derive from emissions reporting under the GHG Protocol, which requires companies to report on emissions only from new generation refrigerants, such as hydrofluorocarbons (HFCs), but does not establish any obligation to report inventories or emissions of refrigerants still in use, such as CFCs and HCFCs. All these factors combine to make Tradewater’s carbon offset projects highly additional. As Giving Green, an initiative of IDinsight, concluded: “Tradewater would not exist without the offset market, so this element of additionality is clearly achieved.” The case for additionality is not so clear for some other project types, such as forestry and landfill gas carbon projects. For example, some forests are already being conserved for their beauty, or for use as parks, and generate carbon offset credits only because those conservation efforts do not yet have full formal protection in place to avoid deforestation in the future. Similarly, methane from landfills can be used to make electricity or captured as compressed natural gas, thereby creating additional revenue streams to support the activities, beyond the sale of carbon credits.