Five Things Everyone Should Know About…Carbon Offsets

1.     Carbon offsets are economic arrangements where businesses or individuals pay someone else to counterbalance their CO2 emissions. To comply with regulations on greenhouse gas emissions, or to make themselves more environmentally friendly, some businesses and individuals now pay others to trap and store carbon in plants, soils or below-ground reservoirs. The idea is that these actions, which remove carbon from the atmosphere, can help cancel out their own emissions, bringing them closer to being “carbon neutral.”

2.     For farmers and landowners, carbon offsets can provide some income. In the United States, formal carbon credits are sold on the Chicago Climate Exchange as part of an arrangement with the National Farmers’ Union. These credits pay a market rate for carbon that farmers and landowners sequester by taking steps such as planting trees, restoring grasslands or adopting no-till farming practices. As of May, the going rate was about $7 per metric ton of carbon stored. This means that a typical Midwestern farmer with 200 acres could earn around $700 per year just by not tilling.

3.     Buyers beware: The offsets you pay for may not actually exist in nature.
Verification of actual carbon sequestration is difficult and expensive. It requires collecting and processing numerous plant and soil samples and complex computer modeling. Instead, the quantity of carbon offsets assigned to any given land is based on generalizations. For example, all permanent grasslands across the eastern two-thirds of the United States are allocated the same offset value—one metric ton per acre—even though the rate of carbon storage varies significantly with climate, soil type and vegetation planted. So when you buy a carbon offset, there’s usually no way of knowing if it’s really removing that much carbon from the atmosphere. Sometimes you might be getting more than you pay for, sometimes less.

4.     Carbon offsets are not a silver bullet to stop global warming. Scientists believe that we may be able to offset only 10 to 20 percent of annual carbon dioxide emissions with sequestration. And carbon dioxide isn’t the only greenhouse gas accumulating in the atmosphere. Molecule per molecule, nitrous oxide and methane have even greater potential for creating warming. In any case, we will need a wider approach to stabilizing our climate.

5.     There are still good reasons to do the things carbon offsets encourage. Practices such as no-till agriculture and prairie restorations have many other important environmental benefits. Increases in soil carbon are connected to improved crop productivity, increased water-holding capacity (which reduces the potential for floods), and better water and air quality. Turning land over to prairie can also promote biodiversity and provide wildlife habitat while reducing fertilizer runoff that can contaminate rivers and well water. There is also enormous potential for grasses and trees grown on conservation reserve lands to be used as feedstocks for future biofuel production, which may cut greenhouse gas emissions by reducing our need for fossil fuels.

Chris Kucharik is an associate scientist in UW-Madison’s Center for Sustainability and the Global Environment, part of the Gaylord Nelson Institute for Environmental Studies. He researches the role that different natural and managed ecosystems play in the planet’s carbon cycle. He has recently studied the soil carbon-storing potential of prairie restorations across southern Wisconsin.