A team of researchers at the University of Exeter has developed a novel method for determining the economic value of temporary carbon reductions achieved through offsetting efforts. This study, which could have far-reaching implications for climate policy and offset markets, was recently published in the respected journal Nature. The study yielded a new metric called the “Social Value of Offsets” intended to measure temporary carbon offsets.
In layman’s terms, carbon offsetting is a process where an individual or organization compensates for their carbon emissions by funding initiatives that reduce carbon dioxide or other greenhouse gases in the atmosphere, like planting trees. However, these offsetting projects are often temporary and come with a host of risks such as project failure, fires, or diseases that may end up releasing the sequestered carbon back into the atmosphere.
To address this, the researchers came up with the Social Value of Offsets (SVO) metric. This framework helps policymakers measure the value of temporary carbon reductions in terms of the economic damages avoided during the lifespan of the offsetting project. According to the SVO metric, sequestering one ton of carbon for 50 years is equivalent to permanently sequestering 0.3 to 0.5 tons, considering different factors like risks and climate scenarios.
This new approach views a temporary carbon offset not as a perfect solution, but rather as a way to buy time and delay the damages caused by carbon emissions. It’s like pressing a pause button on the warming effect of a particular amount of carbon dioxide for a certain period. So, while the net carbon reduction might end up being zero if the carbon is eventually released back into the atmosphere, the temporary offset has value because it helps us avoid or delay climate damage.
This delay could prove critical for several reasons. It could buy time for significant climate responses, like ice cap melting, which depends on the duration temperatures are held at a certain level. It could also allow for economic and technological developments that make carbon removal cheaper and more efficient in the future.
The SVO metric also has the potential to be a powerful tool for comparing different offsetting schemes. It can help individuals and organizations assess the risks and decide how much carbon they should offset in temporary schemes to compensate for their permanent carbon emissions. It can also be applied to calculate the cost-benefit ratio of offsets or other temporary carbon storage solutions, providing a meaningful way to compare these with alternative technologies for mitigating climate change.
In summary, understanding ‘temporary offsets’ and their imperfect sequestering is crucial as it acknowledges that while these offsets are not a perfect solution, they play a crucial role in buying us time in our fight against climate change. This research shows that even temporary and risky offsetting projects have economic value in delaying emissions and thus, the associated climate damages. This is a significant step towards a more comprehensive and realistic valuation of carbon offsetting projects.
For a more technical audience, it’s crucial to note the SVO’s role in shaping effective net-zero policies. Efficient strategies will incorporate offsets if the SVO-to-cost ratio surpasses that of alternative solutions, offering a more nuanced perspective on the valuation of offsets. Importantly, the SVO establishes a method of equivalence, providing a matrix of factors for varying risks, permanence, and climate scenarios.
As an example, researchers estimate that one offset sequestering one ton of carbon for 50 years is analogous to between 0.33 and 0.5 tons of carbon permanently sequestered. This equivalence could potentially simplify the structure of carbon offset contracts, shifting from perpetual to more manageable short-term agreements. Moreover, the SVO could also play a significant role in carbon life cycle analysis and the valuation of carbon debts, providing a robust framework for comparing offsets of varying quality in both voluntary and compliance markets.
The Social Value of Offsets (SVO) concept was a piece of work pioneered by two researchers. Ben Groom, from the LEEP Institute at the University of Exeter Business School and the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, collaborated with Frank Venmans, also of the Grantham Research Institute, to develop this innovative framework.
Anne Lauer
Anna Lauer is a writer, gardener, and homesteader living in rural Wisconsin. She has written for Mother Earth News, Grit, and Hobby Farms magazines. Anna is writing a new book about growing your food for free and an ultimate guide to producing food at little to no cost. When she’s not writing or gardening, Anna enjoys spending time with her husband and two young daughters.