This report was updated in January 2023 to reflect a change in price of Tradewater's offsets from $17/ton to $18/ton. The report as a whole was lightly updated in November 2022. The prior version of this report was published in January 2022. We may do a more detailed and comprehensive update in the future.
Overview of Tradewater
Tradewater is an organization that works internationally to find and destroy refrigerants and other gases with especially high warming potential; the refrigerants and gases targeted by Tradewater are categorized as ozone-depleting substances (ODS). Tradewater’s revenue comes completely from the carbon offset market, and it sells offsets to consumers through its website. Tradewater also sells larger batches of offsets directly and works with offset brokers as needed. Tradewater engages with a variety of organizations on refrigerant destruction. For example, this year Brown University purchased 137,500 offset credits from Tradewater. This National Geographic piece gives more information about Tradewater’s history and projects.
Tradewater has offset projects in Latin America, the Middle East, and Southeast Asia, certified through either the American Carbon Registry (ACR) or Verra. Our analysis of Tradewater uses details from a Verra-certified project in the Dominican Republic, which we believe is generally representative of its projects.
In this project, Tradewater gathers ODS from existing stockpiles and transports them to the USA (“or potentially elsewhere in subsequent monitoring events for destruction at a facility that meets the Montreal Protocol’s TEAP requirements”) for incineration. The project’s offset registry documentation is available here.
ODS destruction projects, including those conducted by Tradewater, are considered emissions avoidance as they reduce the intensity of emissions that would have otherwise leaked into the atmosphere.
As detailed in our research on refrigerant destruction offsets, we assess the causality of the offsets by verifying the following:
Converting the ODS into less harmful substances;
Establishing the counterfactual of ODS release into the atmosphere;
Ensuring that destruction of ODS does not lead to more production of harmful gases;
Accounting for the carbon footprint of the removal activities.
Conversion of ODS into less harmful substances
Tradewater removes GHGs by incinerating ODS, converting them into substances with lower warming potential.
Establishing the counterfactual of ODS release into the atmosphere
Would ODS gases have escaped in the absence of Tradewater’s project, or would they instead have been sequestered indefinitely in canisters and appliances? The Verra protocol allows projects to claim 100% of destruction when ODS are recovered from appliances at their end-of-life—meaning that Verra assumes 100% of ODS would have leaked if not destroyed—and 25% per year when they are recovered from canisters that could be sold into the market or sit unused in a warehouse. These rates are based on the Article 5 ODS Project Protocol, published by the Climate Action Reserve, a North American offset registry. Overall, the actual leak rate is a major source of uncertainty, as potentially gases in stockpiles could remain sequestered for a long time. However, we think that the overall concept that the gases would eventually leak into the atmosphere is valid. In the Dominican Republic, the majority of ODS that Tradewater destroys are from stockpiles, meaning that the 10-year cumulative emissions would total approximately 94% of the stock-piled ODS under an assumed 25% yearly leak rate.
There are no regulations in the Dominican Republic mandating that ODS be destroyed. Therefore it is assumed that the gases would not be destroyed without Tradewater’s involvement. Tradewater considers what would have occurred in the counterfactual scenario when quantifying the CO2e impact of their destruction events.
Ensuring that destruction of ODS does not lead to more production of harmful gases
Destruction of ODS may increase demand for the production of similar gases with high warming potential. According to Tradewater, this is not an issue with its projects because the captured cases of ODS have no further economic use. The appliances that use this type of gas are no longer in service, which is why the ODS is in stockpiles as opposed to being sold in the market.
Accounting for the carbon footprint of the removal activities
As part of its offset certification process, Tradewater accounts for the carbon footprint of obtaining and transporting the ODS. Tradewater uses a default factor of 7.5 tons of CO2e as determined by the Climate Action Reserve; we have used this factor as well in our project analysis in cell D36.
Overall, we feel confident that Tradewater’s activities are reducing the intensity of GHGs in the atmosphere.
According to Tradewater, it relies on the offset market for 100% of its revenue. Tradewater would not exist without the offset market, so this element of additionality is achieved.
Tradewater is undertaking multiple ODS destruction projects, and could invest all offset revenue into new projects. Therefore, it is certainly plausible that each offset purchased can directly lead to additional GHGs eliminated. We believe that there is a high case for marginal additionality given that Tradewater has grown from a project of 50,000 tons to undertaking projects avoiding 3 million tons annually. It has also expanded to 11 countries and increased from 6 staff members to 40.
However, there is some uncertainty about this assumption given that Tradewater is a privately held for-profit company. If Tradewater, via sale of offsets, is making profits above a reasonable reimbursement for the risk taken by its founders and investors, then it is possible that offset dollars are going towards profit-taking as opposed to carbon removal. In this case, not every offset purchased is truly additional, as Tradewater would likely destroy the same amount of ODS even if fewer offsets were sold.
Tradewater’s financials are not public, so it is impossible to know exactly how much of its offset income goes into project operations versus profits. Additionally, it does not disclose the amount needed to purchase the ODS, making it difficult to conduct an independent assessment of the financial flows of offsets. In conversations with Tradewater about this issue, it claimed that its mission is to remove as many refrigerants as possible and, therefore, that it reinvests any profit from a given project into the next project. It also claimed that its owners do not take profit disbursements above their salaries.
These are difficult statements to verify, and we encourage Tradewater to make its financials public. Tradewater claims that being a for-profit company allows it to access bank loans, which are needed to finance further removal efforts. We find this argument reasonably compelling. Since we first recommended them two years ago, Tradewater has become a registered B-corp.
When ODS is destroyed by Tradewater, emissions are permanently reduced.
In addition to reducing warming, preventing ODS from being released into the atmosphere also prevents ozone destruction.
As mentioned above, Tradewater receives 100% of its revenue from offsets. We therefore think it is reasonable to assume $18 per ton, the current cost at which Tradewater sells offsets, as a top-line estimate of cost-effectiveness, though actual costs may be lower. Since Tradewater is a for-profit LLC, we unfortunately do not have access to its financial records to assess costs in more detail.
To better understand Tradewater’s effectiveness, we assessed data from two Verra-certified projects in Ghana from 2018 and 2019. Since these data do not include project costs, we cannot use them to sense-check overall cost-effectiveness. Instead, we examined the plausibility of Tradewater’s estimates of (a) counterfactual baseline emissions from destroyed GHG and (b) project emissions. We lightly reviewed these data and found the methodology and inputs to be plausible. This gives us some additional confidence that Tradewater is not substantially overestimating net emissions avoided for its projects, which could in turn cause it to underestimate its cost per tCO2e avoided.
The total amount of CO2 averted is calculated by taking the amount of ODS actually destroyed, and converting this to a CO2-equivalent based on the global warming potential (GWP) of ODS. The calculation also includes estimates of how quickly the gas would leak into the atmosphere if it were not destroyed (the “leak rate”) as well as emissions created in the process of transporting and destroying the gas. Although there is some uncertainty in the model parameters, notably the GWP and leak rate, the calculations for Tradewater’s offsets use assumptions, approved by certification bodies like Verra, that we believe are reasonable.
The actual cost of destruction is murky, and we have not been provided with exact financials for Tradewater’s projects. However, given the claim by Tradewater that offsets are its only source of revenue, we think that its stated cost of $18 per offset is a realistic cost estimate.
Overall, we believe the offsets offered by Tradewater are highly credible and that purchasing Tradewater offsets has a direct link to decreasing the amount of GHGs in the atmosphere.
Our main concern is that Tradewater is a for-profit company, and therefore could claim offset revenue as profit instead of reinvesting it in further ODS removal projects. We urge Tradewater to make its financials public in order to reassure offset buyers.
Note: Tradewater is expanding its projects to include plugging abandoned and orphaned oil and gas wells in the United States that are leaking methane. It plans to begin selling credits for these projects at the beginning of 2023. While we have not currently conducted research on methane capture, we may expand our work to consider this sector in the future.
We thank Tim Brown, CEO of Tradewater; Sean Kinghorn, Senior Director of Market Development for Tradewater; and Kirsten Love, Director of Market Development for Tradewater, for a series of conversations that informed this document.
 The Catalytic Coalition. https://tradewater.us/catalytic-coalition/
 "As part of its Sustainability Strategic Plan, Brown will eliminate 137,500 tons of greenhouse gases through the purchase of high-quality carbon offset credits from Tradewater.” https://www.prweb.com/releases/2022/6/prweb18730717.htm
 "In summary, current regulations in the Dominican Republic do not mandate the destruction of
ODS material in the country, as other options for the management of ODS are suggested
and allowed besides just final disposal." https://registry.verra.org/app/projectDetail/VCS/2449
 “The emission factor shall be equal to 7.5 pounds CO2e per pound of ODS refrigerant destroyed. This emission factor aggregates both transportation and destruction emissions.” https://www.climateactionreserve.org/wp-content/uploads/2012/01/Article_5_ODS_Protocol_V2.0_Draft_for_Public_Comment.pdf
 Email communication with Tradewater. 2022-11-11
 We did not conduct an in-depth review of these data. Instead, we more closely examined important parameters such as the leak rate (how quickly the gas would have leaked into the atmosphere if it weren’t destroyed), project crediting period, and line items for project emissions.