History of Carbon Offsetting

Carbon offsetting emerged as a concept during studies for the US National Air Pollution Control Administration in 1967-70, showing different abatement scenarios for mitigating air pollution and identifying cost effective response strategies. ‘Contration and Convergence,’ the method for funding clean development and reforestation whilst penalising greenhouse gas emissions was drafted in the early 1990’s and promoted by the Global Commons Institute as a fair way to tackle climate change .

The aim of the methodology to realise a workable transition from reliance on fossil fuels, to provide energy security, and to generate necessary revenue towards a sustainable future.

The Kyoto Protocol was adopted in December 1997 with the goal of achieving; ‘stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.’                      

A comparable benchmark was set at 1990’s levels to reduce it collectively. Governments then set a cap on the amount of pollutants, limiting emissions to an agreed level. Industries are then issued a certain amount of emissions permits, if they exceeds this level they are then required to purchase allowances or credits from elsewhere. Clean development projects generate these credits. When a project saves one tonne of CO2e (carbon dioxide  equivalent) from entering the atmosphere it will be issued with a credit, which can then be sold, creating necessary revenue. The majority of emissions trading takes place between established industrialised countries with less versatile infrastructure, and developing countires in emerging economies with less implementation costs.   

The price of carbon was negatively affected by the financial downturn in 2008. When industrial production slowed, emissions fell, and a large amount of allowances and permits then became available, leading to vast amounts of carbon credits flooding the market. The low price of carbon jeopardises the clean development projects due to decreased revenue from the credits, whist simultaneously giving the polluters less of a financial incentive to change. The price of carbon is flexible through the natural law of supply and demand, but is underpinned by the international commitment targets that are needed to avoid catastrophic climate change. This ‘invisible markets needs worldwide agreement to meet commitment targets that will work, giving confidence and impetus to this essential process, it is the only real option.

Carbon offsetting should not be seen as a long term solution to climate change, but as a necessary stepping stone towards the development of clean energy. It was conceived by scientists not industry, but will remain convenient to the polluters as long as the price remains low. Awareness and confidence in the precess is vital, for the process to work, and to find it’s real price. Our way of life can’t be sustained unless this essential transition has full worldwide commitment. It is the only real solution within our control.